-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FgpiPPfsovII9UpSNKJb0HtoLTmUSRf934mtTXPl2eVUR62A28JCfQyGxOcbSgZO B7iIg6xBb5aVm/B23aMXRQ== 0000898430-97-000219.txt : 19970127 0000898430-97-000219.hdr.sgml : 19970127 ACCESSION NUMBER: 0000898430-97-000219 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 28 FILED AS OF DATE: 19970124 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC INDUSTRIES INC CENTRAL INDEX KEY: 0000354707 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 990208097 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-18809 FILM NUMBER: 97509955 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: 900 RICHARDS STREET CITY: HONOLULU STATE: HI ZIP: 96813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I CENTRAL INDEX KEY: 0001029528 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 526829385 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-18809-01 FILM NUMBER: 97509956 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: PO BOX 730 CITY: HONOLULU STATE: HI ZIP: 96808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II CENTRAL INDEX KEY: 0001029529 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 526829386 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-18809-02 FILM NUMBER: 97509957 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: PO BOX 730 CITY: HONOLULU STATE: HI ZIP: 96808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III CENTRAL INDEX KEY: 0001029530 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 526829387 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-18809-03 FILM NUMBER: 97509958 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: PO BOX 730 CITY: HONOLULU STATE: HI ZIP: 96808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEI PREFERRED FUNDING L P CENTRAL INDEX KEY: 0001029534 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 522007237 STATE OF INCORPORATION: HI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-18809-04 FILM NUMBER: 97509959 BUSINESS ADDRESS: STREET 1: 900 RICHARDS ST CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 8085435662 MAIL ADDRESS: STREET 1: 900 RICHARDS STREET CITY: HONOLULU STATE: HI ZIP: 96813 S-3/A 1 AMENDMENT NO. 1 TO FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 1997 REGISTRATION NO. 333-18809 333-18809-01 333-18809-02 333-18809-03 333-18809-04 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. HAWAII 99-0208097 (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER OR CERTIFICATE OF TRUST OR LIMITED PARTNERSHIP) INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 900 RICHARDS STREET, HONOLULU, HAWAII 96813 (808) 543-5662 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES) HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I DELAWARE 52-6829385 HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II DELAWARE 52-6829386 HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III DELAWARE 52-682387 (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER OR CERTIFICATE OF TRUST OR LIMITED PARTNERSHIP) INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
C/O THE BANK OF NEW YORK, 101 BARCLAY STREET, 21ST FLOOR, NEW YORK, N.Y. 10286 (212) 815-5084 ATTENTION: CORPORATE TRUST TRUSTEE ADMINISTRATION (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES) HEI PREFERRED FUNDING, LP DELAWARE 52-2007237 (EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS CHARTER (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER OR CERTIFICATE OF TRUST OR LIMITED PARTNERSHIP) INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
300 DELAWARE AVENUE, SUITE 1704, WILMINGTON, DELAWARE 19801 (302) 427-5738 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES) -------------- ROBERT F. MOUGEOT FINANCIAL VICE PRESIDENT AND CHIEF FINANCIAL OFFICER HAWAIIAN ELECTRIC INDUSTRIES, INC. 900 RICHARDS STREET, HONOLULU, HAWAII 96813 (808) 543-5641 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) -------------- COPIES TO: DAVID J. REBER, ESQ. DAVID P. FALCK, ESQ. GOODSILL ANDERSON QUINN & STIFEL WINTHROP, STIMSON, PUTNAM & ROBERTS 1099 ALAKEA STREET ONE BATTERY PARK PLAZA HONOLULU, HI 96813 NEW YORK, NY 10004 (808) 547-5600 (212) 858-1000
-------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the 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 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE - -------------------------------------------------------------------------------------------- Debt Securities of Hawaiian Electric Industries, Inc. ("HEI") (3).................... (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Trust Originated Preferred Securities of Hawaiian Electric Industries Capital Trust I..... (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Trust Originated Preferred Securities of Hawaiian Electric Industries Capital Trust II.... (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Trust Originated Preferred Securities of Hawaiian Electric Industries Capital Trust III... (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Partnership Preferred Securities of HEI Preferred Funding, LP (3)............................ (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- HEI Guarantees with respect to Trust Preferred Securities..... (4) (4) (4) N/A - -------------------------------------------------------------------------------------------- HEI Guarantee with respect to Partnership Preferred Securities..................... (4) (4) (4) N/A - -------------------------------------------------------------------------------------------- HEI Guarantees with respect to certain debentures of its wholly-owned subsidiaries (the "Subsidiary Debentures")....... (4) (4) (4) N/A - -------------------------------------------------------------------------------------------- Preferred Stock of HEI.......... (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Common Stock of HEI............. (1) (2) (1) N/A - -------------------------------------------------------------------------------------------- Total......................... $300,000,000 N/A $300,000,000 $90,910 - -------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------
(1) Subject to the following sentence, there is being registered hereunder an indeterminate principal amount of HEI Debt Securities (including Senior, Senior Subordinated and Junior Subordinated Debt Securities), an indeterminate number of shares of HEI Common Stock and Preferred Stock and an indeterminate number of Preferred Securities of Hawaiian Electric Industries Capital Trust I, Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III (collectively, the "Trusts"). In no event will the aggregate initial public offering price of all securities issued under this Registration Statement exceed $300,000,000, exclusive of accrued interest and dividends (if any). Junior Subordinated Debt Securities (referred to as "Company Debentures" when issued in connection with the sale of Trust Preferred Securities) may be issued and sold by HEI to any of the Trusts in an aggregate principal amount, or Partnership Preferred Securities may be issued and sold to any of the Trusts in an aggregate stated liquidation preference amount, in either case corresponding to the aggregate stated liquidation preference of the Trust Preferred Securities issued by such Trust, in which event such Company Debentures or Partnership Preferred Securities, as the case may be, may later be distributed for no additional consideration to the holders of the Trust Preferred Securities of such Trust upon a dissolution of such Trust and the distribution of the assets thereof. The proposed maximum aggregate offering price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. (2) The proposed maximum offering price per unit will be determined from time to time in connection with the issuance of the securities registered hereunder. (3) Company Debentures or Partnership Preferred Securities may be purchased by any of the Trusts with the proceeds of the sale of the Trust Preferred Securities of that Trust, together with the proceeds received from HEI in respect of the common securities to be issued by that Trust to HEI. No separate consideration will be received for such Company Debentures or Partnership Preferred Securities. (4) No separate consideration will be received for HEI Guarantees with respect to the Trust Preferred Securities, the Partnership Preferred Securities or any debt securities issued by subsidiaries of HEI (the "Subsidiary Debentures"). Company Debentures and Subsidiary Debentures will be purchased by HEI Preferred Funding, LP (the "Partnership") with the proceeds of the sale of the Partnership Preferred Securities and the sale to Hycap Management, Inc. of the general partner interests in the Partnership. No separate consideration will be received for such Company Debentures or Subsidiary Debentures. EXPLANATORY NOTE The preliminary Prospectus Supplement filed with this registration statement will be used as a supplement to the Prospectus forming a part of this registration statement in connection with an offering of the securities referenced therein and is included with this registration statement because of the current plans of HEI, subject to market conditions and other factors, to commence such an offering following effectiveness of this registration statement. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION + +OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN + +FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT + +BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION + +STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS + +SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY + +NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH + +SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR + +QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JANUARY 24, 1997 PROSPECTUS SUPPLEMENT - --------------------- (TO PROSPECTUS DATED JANUARY , 1997) 4,000,000 TRUST PREFERRED SECURITIES HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I % TRUST ORIGINATED PREFERRED SECURITIES/SM/ ("TOPrS/SM/") (LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY) GUARANTEED TO THE EXTENT SET FORTH HEREIN BY HAWAIIAN ELECTRIC INDUSTRIES, INC. ---------- The % Trust Originated Preferred Securities/SM/ (the "TOPrS/SM/" or "Trust Preferred Securities") offered hereby represent preferred undivided beneficial ownership interests in the assets of Hawaiian Electric Industries Capital Trust I, a statutory business trust formed under the laws of the State of Delaware (the "Trust"). Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company" or "HEI"), will own all the common securities (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities") representing undivided beneficial ownership interests in the assets of the Trust. The Trust exists for the sole purpose of issuing the Trust Securities and investing the proceeds as described below and engaging in activities incident thereto. The proceeds from the sale of the Trust Securities will be used by the Trust to purchase partnership (Continued on next page) SEE "RISK FACTORS" BEGINNING ON PAGE S-13 OF THIS PROSPECTUS SUPPLEMENT FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TRUST PREFERRED SECURITIES, INCLUDING CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The Trust Preferred Securities have been approved for listing on the New York Stock Exchange, Inc. (the "New York Stock Exchange"), subject to official notice of issuance. Trading on the New York Stock Exchange is expected to commence within the 30-day period after the initial delivery of the Trust Preferred Securities. See "Underwriting." ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO THE PUBLIC COMMISSION(1) TRUST(2)(3) - -------------------------------------------------------------------------------- Per Trust Preferred Security....... $25.00 (2) $25.00 - -------------------------------------------------------------------------------- Total............................... $100,000,000 (2) $100,000,000 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- (1) HEI, the Trust and the Partnership have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) In view of the fact that the proceeds of the sale of the Trust Preferred Securities will ultimately be invested in investment instruments of HEI and certain of its subsidiaries, HEI has agreed to pay to the Underwriters as compensation (the "Underwriters' Compensation") $ per Trust Preferred Security (or $ in the aggregate); provided that such compensation for sales of 10,000 or more Trust Preferred Securities to a single purchaser will be $ per Trust Preferred Security. Therefore, to the extent of such sales, the actual amount of Underwriters' Compensation will be less than the aggregate amount specified in the preceding sentence. See "Underwriting." (3) Expenses of the offering that are payable by HEI are estimated at $500,000. ---------- The Trust Preferred Securities offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that delivery of the Trust Preferred Securities will be made only in book-entry form through the facilities of The Depository Trust Company ("DTC") on or about February , 1997. ---------- MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. DEAN WITTER REYNOLDS INC. A.G. EDWARDS & SONS, INC. LEGG MASON WOOD WALKER INCORPORATED ROBERT W. BAIRD & CO. INCORPORATED ---------- The date of this Prospectus Supplement is January , 1997. - ----- /SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co., Inc. (Continued from cover page) preferred securities (the "Partnership Preferred Securities"), representing the limited partner interests in HEI Preferred Funding, LP, a Delaware limited partnership (the "Partnership"). All of the partner interests in the Partnership other than the limited partner interests represented by the Partnership Preferred Securities are owned by Hycap Management, Inc. ("Hycap"), a Delaware corporation, which is a wholly-owned subsidiary of HEI and the sole general partner of the Partnership (the "General Partner"). Substantially all of the proceeds from the sale of the Partnership Preferred Securities and the capital contribution from the General Partner will be used by the Partnership initially to purchase debt instruments of HEI (the "Company Debentures") and debt instruments of one or more of its subsidiaries (the "Subsidiary Debentures" and, together with the Company Debentures, the "Debentures"). In addition, approximately one percent of the proceeds from the sale of the Partnership Preferred Securities and of the capital contribution from the General Partner will be used by the Partnership to purchase certain U.S. government obligations and commercial paper of entities not affiliated with HEI (the "Eligible Debt Securities"). See "Supplemental Description of the Partnership Preferred Securities--Partnership Investments." Holders of the Trust Preferred Securities will be entitled to receive cumulative cash distributions accumulating from the date of original issuance and payable quarterly in arrears on each March 31, June 30, September 30 and December 31, commencing March 31, 1997, at an annual rate of % of the liquidation amount of $25 per Trust Preferred Security (equivalent to $ per Trust Preferred Security per annum) if, as and when the Trust has funds available for payment. See "Supplemental Description of the Trust Preferred Securities--Distributions." Distributions not paid on the scheduled payment date will accumulate and compound quarterly at a rate per annum equal to %. The distribution rate and the distribution payment dates and other payment dates for the Trust Preferred Securities will correspond to the distribution rate and distribution payment dates and other payment dates for the Partnership Preferred Securities, which constitute the sole assets of the Trust. As described above, the assets of the Partnership will initially consist only of the Debentures and, to a limited extent, certain Eligible Debt Securities. The payment of distributions by the Trust and payments on liquidation of the Trust or the redemption of Trust Preferred Securities, as described below, are guaranteed on a subordinated basis by HEI (the "Trust Guarantee") to the extent the Trust has funds legally available therefor as described under "Supplemental Description of the Trust Guarantee." The payment of distributions by the Partnership (if, as and when declared by the General Partner) and payments on liquidation of the Partnership or the redemption of Partnership Preferred Securities, as described below, are also guaranteed on a subordinated basis by HEI (the "Partnership Guarantee") to the extent the Partnership has funds legally available therefor as described under "Supplemental Description of the Partnership Guarantee." In addition, payments in respect of the Subsidiary Debentures are fully and unconditionally guaranteed, on a subordinated basis, by HEI (the "Investment Guarantees") for the benefit of the holders of the Subsidiary Debentures. The Trust Guarantee, the Partnership Guarantee and the Investment Guarantees (individually, a "Guarantee" and collectively, the "Guarantees"), when taken together with the Company Debentures and HEI's obligations to pay all fees and expenses of the Trust and the Partnership, constitute a guarantee to the extent set forth herein by HEI of the distribution, redemption and liquidation payments payable to the holders of the Trust Preferred Securities. The Guarantees do not apply, however, to current distributions by the Partnership unless and until such distributions are declared by the General Partner out of funds legally available for payment or to liquidating distributions unless there are assets legally available for payment in the Partnership, each as more fully described in the next succeeding paragraph and under "Risk Factors--Insufficient Income or Assets Available to Partnership." HEI's obligations under the Guarantees are subordinate and junior in right of payment to all liabilities of HEI and rank pari passu with the most senior preferred stock (if any) issued from time to time by HEI, with each other and with any guarantee hereafter entered into by HEI in respect of any preferred security of any affiliate of HEI, and its obligations under the Company Debentures are subordinate and junior in right of payment to all senior indebtedness of HEI. At September 30, 1996, HEI (holding company only) had outstanding senior indebtedness aggregating approximately $246 million (exclusive of contingent amounts under guarantees of approximately $17.5 million of subsidiary obligations), which would have ranked senior to HEI's obligations under the Guarantees and the Company Debentures. In addition, HEI's obligations under the S-2 Guarantees and the Company Debentures will be effectively subordinated to all existing and future liabilities of its subsidiaries. See "Risk Factors--Ranking of Subordinate Obligations Under the Guarantees and the Company Debentures." Distributions on the Partnership Preferred Securities will be declared and paid only as determined in the sole discretion of the General Partner of the Partnership. In addition, the General Partner is not obligated to declare distributions on the Partnership Preferred Securities at any time, including upon or following a Partnership Enforcement Event (as defined herein). To the extent that the issuers (including HEI as issuer and guarantor) of the securities in which the Partnership invests defer or fail to make any payments in respect of such securities (or, if applicable, guarantees), the Partnership will not have sufficient funds to pay and will not declare or pay distributions on the Partnership Preferred Securities. In addition, as described under "Risk Factors--Insufficient Income or Assets Available to Partnership," the Partnership may not have sufficient funds to pay current or liquidating distributions on the Partnership Preferred Securities if (i) at any time that the Partnership is receiving current payments in respect of the securities held by the Partnership (including the Debentures), the General Partner, in its sole discretion, does not declare distributions on the Partnership Preferred Securities and the Partnership receives insufficient amounts to pay the additional compounded distributions that will accumulate in respect of the Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds received in respect of the Debentures upon their retirement or at their maturities in Affiliate Investment Instruments (as defined herein) and Eligible Debt Securities that do not generate income in an amount that is sufficient to pay full distributions in respect of the Partnership Preferred Securities or (iii) the Partnership invests in equity or debt securities of Investment Affiliates (as defined herein) that are not guaranteed by HEI and that cannot be liquidated by the Partnership for an amount sufficient to pay such distributions in full. The Debentures will provide that payments of interest may be deferred at any time, and from time to time, by the relevant issuer for a period not exceeding six consecutive quarters. If an issuer were to so defer the payment of interest on any Debenture, interest thereon would continue to accrue and compound at the stated interest rate thereon. If the General Partner does not declare and pay distributions on the Partnership Preferred Securities out of funds legally available for distribution, the Trust will not have sufficient funds to make distributions on the Trust Preferred Securities, in which event the Trust Guarantee will not apply to such distributions until the Trust has sufficient funds available therefor. See "Risk Factors--Distributions Payable Only if Declared by General Partner; Restrictions on Certain Payments; Tax Consequences," "--Insufficient Income or Assets Available to Partnership," "Supplemental Description of the Trust Preferred Securities--Distributions" and "Supplemental Description of the Partnership Preferred Securities-- Distributions." The Partnership may, from time to time and subject to the restrictions described herein, reinvest payments received with respect to the Affiliate Investment Instruments (including the Debentures) and the Eligible Debt Securities in additional Affiliate Investment Instruments and Eligible Debt Securities. As of the date of this Prospectus Supplement, the General Partner does not intend to cause the Partnership to reinvest regularly scheduled periodic payments of interest or dividends received by the Partnership in the manner described herein, although there can be no assurance that the General Partner's intention in respect of such reinvestments will not change in the future. If (i) for any distribution period full distributions on a cumulative basis on any Trust Preferred Securities have not been paid or declared and set apart for payment, (ii) an Investment Event of Default (as defined herein) by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and HEI is in default of its obligations with respect thereto under an applicable Investment Guarantee or (iii) HEI is in default of its obligations under the Trust Guarantee or the Partnership Guarantee, then, during such period, (a) HEI shall not declare or pay dividends on, make distributions or a liquidation payment with respect to, or redeem, purchase or acquire, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, its common stock and exchanges of common stock of one class for common stock of another class and other exceptions set forth in the accompanying Prospectus), (b) HEI shall not make any payment or cause any payment to be made that would result in, and shall take such actions as shall be necessary to prevent, the payment of any dividends on, any distribution or liquidation payment S-3 with respect to, or any redemption, purchase or other acquisition of, any Comparable Equity Interest, and (c) HEI shall not make any guarantee payments with respect to the foregoing other than pursuant to the Trust Guarantee (or any other guarantee by the Company with respect to any Comparable Equity Interest). The Partnership Preferred Securities are redeemable by the Partnership, in whole or in part, from time to time, on or after February , 2002 at a redemption price per Partnership Preferred Security equal to $25 plus accumulated and unpaid distributions thereon to the date fixed for redemption. The Partnership Preferred Securities may also be redeemed, in whole but not in part, at any time upon the occurrence of a Partnership Special Event (as defined herein) at an amount per Partnership Preferred Security equal to $25 plus accumulated and unpaid distributions thereon to the date fixed for redemption. If the Partnership redeems the Partnership Preferred Securities, the Trust must redeem Trust Preferred Securities on a pro rata basis having an aggregate liquidation amount equal to the aggregate liquidation preference of the Partnership Preferred Securities so redeemed at a redemption price corresponding to the redemption price of the Partnership Preferred Securities (which includes all accumulated and unpaid distributions thereon to the date fixed for redemption) (the "Redemption Price"). See "Supplemental Description of the Trust Preferred Securities--Redemption." Neither the Partnership Preferred Securities nor the Trust Preferred Securities have any scheduled maturity or are redeemable at any time at the option of the holders thereof. Upon the occurrence of a Trust Special Event (as defined herein), except in certain limited circumstances, the Trust may be dissolved. Upon dissolution of the Trust, after satisfaction of obligations to creditors of the Trust, if any, the Partnership Preferred Securities will be distributed to the holders of the Trust Preferred Securities, on a pro rata basis, in lieu of any cash distribution, unless the Partnership Preferred Securities are redeemed in the limited circumstances described herein. If the Partnership Preferred Securities are distributed to the holders of the Trust Preferred Securities, HEI will use its best efforts to cause the Partnership Preferred Securities to be listed on the New York Stock Exchange or such other national securities exchange or similar organization as the Trust Preferred Securities are then listed or quoted. See "Supplemental Description of the Trust Preferred Securities--Trust Special Event Redemption or Distribution." In the event of any liquidation, dissolution, winding up or termination of the Trust, after satisfaction of obligations to creditors of the Trust, if any, the holders of the Trust Preferred Securities will be entitled to receive for each Trust Preferred Security a liquidation amount of $25 plus accumulated and unpaid distributions thereon to the date of payment, except to the extent, in connection with such dissolution, Partnership Preferred Securities are distributed to the holders of the Trust Preferred Securities. Upon (i) the occurrence and continuation of an Investment Event of Default by an Investment Affiliate (including HEI) in respect of any Affiliate Investment Instrument and the failure of HEI to perform its obligations under an applicable Investment Guarantee or (ii) default by HEI on any of its obligations under the Trust Guarantee or the Partnership Guarantee, the holders of the Trust Preferred Securities will have a preference over the holder of the Trust Common Securities with respect to payments upon liquidation of the Trust. Under no circumstances will the Affiliate Investment Instruments or the Eligible Debt Securities held by the Partnership be distributed in kind to the holders of the Trust Preferred Securities or Partnership Preferred Securities. See "Supplemental Description of the Trust Preferred Securities--Liquidation Distribution Upon Dissolution." IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-4 PROSPECTUS SUMMARY The following is a summary of certain information contained in this Prospectus Supplement and the accompanying Prospectus. It does not purport to be complete and is qualified in its entirety by the more detailed information contained elsewhere in this Prospectus Supplement and the accompanying Prospectus. Capitalized terms which are not defined in this summary are used as defined elsewhere in this Prospectus Supplement. See "Index of Selected Defined Terms" for a cross reference to the location in this Prospectus Supplement where such terms are defined. THE COMPANY HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with subsidiaries engaged in the electric utility, savings bank, freight transportation, real estate development and other businesses, primarily in the State of Hawaii, and also engaged in the pursuit of independent power projects and energy services projects in Asia and the Pacific. HEI's predecessor, Hawaiian Electric Company, Inc. ("HECO"), was incorporated under the laws of the Kingdom of Hawaii (now the State of Hawaii) on October 13, 1891. As a result of a 1983 corporate reorganization, HECO became an HEI subsidiary, and common shareholders of HECO became common shareholders of HEI. HECO and its subsidiaries, Maui Electric Company, Limited ("MECO") and Hawaii Electric Light Company, Inc. ("HELCO"), are regulated operating public utilities providing the only public utility electric service on the islands of Oahu, Maui, Lanai, Molokai and Hawaii. HEI also owns directly or indirectly the following principal subsidiaries which comprise its diversified companies: HEI Diversified, Inc. ("HEIDI") and its subsidiary, American Savings Bank, F.S.B. ("ASB") and its subsidiaries; Hawaiian Tug & Barge Corp. ("HTB") and its subsidiary, Young Brothers, Limited ("YB"); Malama Pacific Corp. ("MPC") and its subsidiaries; HEI Power Corp. ("HEIPC") and its subsidiaries; and HEI Investment Corp. ("HEIIC"). ASB, acquired in 1988, is the fourth largest financial institution in Hawaii based on total assets and the third largest financial institution based on deposits, in each case as of June 30, 1996, and has 48 retail branches. HTB was acquired in 1986 and provides ship assist and charter towing services and owns YB, a regulated intrastate public carrier of waterborne freight among the Hawaiian Islands. MPC was formed in 1985 and directly or through subsidiaries develops and invests in real estate. HEIIC was formed in 1984 and is a passive investment company which primarily holds investments in leveraged leases and currently plans no new investments. HEIPC was formed in March 1995 to pursue, directly or through its subsidiaries or affiliates, independent power projects and energy services projects in Asia and the Pacific. THE OFFERING The Trust................... Hawaiian Electric Industries Capital Trust I, a Delaware statutory business trust. The sole assets of the Trust will be the Partnership Preferred Securities. The Partnership............. HEI Preferred Funding, LP, a Delaware limited partnership. The sole assets of the Partnership will initially consist of the Debentures and, to a limited extent, certain Eligible Debt Securities. Securities Offered.......... 4,000,000 % Trust Originated Preferred Securities/SM/. Distributions............... Distributions on the Trust Preferred Securities will accumulate from the date of original issuance of the Trust Preferred Securities and will be payable at the annual rate of % of the liquidation S-5 amount of $25 per Trust Preferred Security (equivalent to $ per Trust Preferred Security per annum) if, as, and when the Trust has funds legally available for payment. Distributions will be payable quarterly in arrears on each March 31, June 30, September 30 and December 31, commencing March 31, 1997. Distributions not made on the scheduled payment date will accumulate and compound quarterly at a rate per annum equal to %. The distributions payable on March 31, 1997 will represent distributions accumulated from February , 1997 and will equal $ for each $25 Trust Preferred Security. The ability of the Trust to pay distributions on the Trust Preferred Securities is entirely depen- dent on its receipt of corresponding distribu- tions with respect to the Partnership Preferred Securities. The ability of the Partnership to pay distributions on the Partnership Preferred Secu- rities is, in turn, dependent on its receipt of payments with respect to the Debentures and the Eligible Debt Securities held by the Partnership. The Debentures will provide that payments of in- terest may be deferred at any time, and from time to time, by the relevant issuer for a period not exceeding six consecutive quarters. Distributions on the Partnership Preferred Securities will be declared and paid only as determined in the sole discretion of the General Partner of the Partner- ship. However, in the event full distributions on Trust Preferred Securities have not been paid, the Company will be prohibited from, among other things, making distributions with respect to its capital stock or Comparable Equity Interests as described below. See "Risk Factors--Distributions Payable Only if Declared by General Partner; Re- strictions on Certain Payments; Tax Conse- quences," "Supplemental Description of the Trust Preferred Securities--Distributions" and "Supple- mental Description of the Partnership Preferred Securities--Distributions" and "--Partnership In- vestments." Rights Upon Nonpayment of Distributions and Certain Defaults; Covenants of the Company............... If, at any time, (i) arrearages on distributions on the Trust Preferred Securities shall exist for six consecutive quarterly distribution periods, (ii) an Investment Event of Default occurs and is continuing on any Affiliate Investment Instrument and the Company is in default of its obligations with respect thereto under an applicable Investment Guarantee or (iii) the Company is in default on any of its obligations under the Trust Guarantee or the Partnership Guarantee, then (a) the Property Trustee (as defined herein), as the holder of the Partnership Preferred Securities, will have the right to enforce the terms of the Partnership Preferred Securities, including the right to direct the Special Representative (as defined herein) to enforce (1) to the fullest extent permitted by law, the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees and (2) the rights of the holders of the Partnership Preferred Securities to receive distributions (but only if, as and when declared by the S-6 General Partner) on the Partnership Preferred Securities, and (b) the Trust Guarantee Trustee (as defined herein) or the Special Representative shall have the right to enforce the Trust Guarantee and the Partnership Guarantee, respectively, including the right to enforce the covenant restricting certain distributions by the Company described below. Under no circumstances, however, shall the Special Representative have authority to cause the General Partner to declare distributions on the Partnership Preferred Securities. If the Partnership does not declare and pay distributions on the Partnership Preferred Securities out of funds legally available for distribution, the Trust will not have sufficient funds to make distributions on the Trust Preferred Securities. See "Risk Factors-- Insufficient Income or Assets Available to Partnership," "Supplemental Description of the Trust Preferred Securities--Trust Enforcement Events" and "Supplemental Description of the Partnership Preferred Securities--Partnership Enforcement Events." The Company has agreed that if (a) for any distribution period, full distributions on a cumulative basis on any Trust Preferred Securities have not been paid or declared and set apart for payment, (b) an Investment Event of Default by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and the Company is in default of its obligations with respect thereto under an applicable Investment Guarantee or (c) the Company is in default of its obligations under the Trust Guarantee or the Partnership Guarantee, then, during such period, (i) the Company shall not declare or pay dividends on, make distributions or a liquidation payment with respect to, or redeem, purchase or acquire, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or right to subscribe for or purchase shares of, its common stock and exchanges of common stock of one class for common stock of another class and other exceptions set forth in the accompanying Prospectus), (ii) the Company shall not make any payment or cause any payment to be made that would result in, and shall take such action as shall be necessary to prevent, the payment of dividends on, any distribution or liquidation payment with respect to, or any redemption, purchase or other acquisition of, any Comparable Equity Interest, and (iii) the Company shall not make any guarantee payments with respect to the foregoing other than pursuant to the Trust Guarantee (or any other guarantee by the Company with respect to any Comparable Equity Interest). Guarantees.................. The Company will irrevocably guarantee, on a subordinated basis and to the extent set forth herein, the payment in full of (i) any accumulated and unpaid distributions on the Trust Preferred Securities to the extent of funds of the Trust legally available therefor, (ii) the amount payable upon redemption of the Trust Preferred Securities to the extent of funds of the Trust legally available therefor and (iii) generally, the liquidation amount of the Trust Preferred Securities to the extent of the assets of the Trust S-7 legally available for distribution to holders of Trust Preferred Securities. See "Supplemental Description of the Trust Guarantee." The Company will also irrevocably guarantee, on a subordinated basis and to the extent set forth herein, the payment in full of (i) any accumulated and unpaid distributions on the Partnership Preferred Securities if, as and when declared out of funds legally available therefor, (ii) the amount payable upon redemption of the Partnership Preferred Securities to the extent of funds of the Partnership legally available therefor and (iii) generally, the liquidation preference of the Partnership Preferred Securities to the extent of the assets of the Partnership legally available for distribution to holders of Partnership Preferred Securities. See "Supplemental Description of the Partnership Guarantee." The Company will fully and unconditionally guarantee, on a subordinated basis, payments in respect of the Subsidiary Debentures as described under "Supplemental Description of the Partnership Preferred Securities--Investment Guarantees." The Guarantees, when taken together with the Company Debentures and the Company's obligations to pay all fees and expenses of the Trust and the Partnership, constitute a guarantee to the extent set forth herein by the Company of the distribution, redemption and liquidation amounts payable to the holders of the Trust Preferred Securities. The Guarantees do not apply, however, to current distributions by the General Partner unless and until such distributions are declared by the Partnership out of funds legally available for payment or to liquidating distributions unless there are assets legally available for payment in the Partnership, each as more fully described under "Risk Factors--Insufficient Income or Assets Available to Partnership." The Company's obligations under the Guarantees are subordinate and junior in right of payment to all other liabilities of the Company, and will be effectively subordinated to all existing and future liabilities of its subsidiaries and rank pari passu with the most senior preferred stock (if any) issued from time to time by the Company, with each other and with any guarantee hereafter entered into by the Company in respect of any preferred security of any affiliate of the Company. Liquidation Amount.......... In the event of any liquidation of the Trust, after satisfaction of obligations to creditors of the Trust, if any, holders will be entitled to receive the Trust Liquidation Distribution (as defined herein), such amount being $25 per Trust Preferred Security plus an amount equal to any accumulated and unpaid distributions thereon to the date of payment, unless Partnership Preferred Securities are distributed to such holders in connection with a Trust Special Event. If, upon a liquidation of the Trust in which the Partnership Preferred Securities are not distributed to holders of the Trust Preferred Securities, the Trust Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Trust Liquidation Distribution, then the amounts S-8 payable directly by the Trust on the Trust Preferred Securities shall be paid on a pro rata basis. The holder of the Trust Common Securities will be entitled to receive distributions upon any such liquidation pro rata with the holders of the Trust Preferred Securities, except that upon (i) the occurrence and continuation of an Investment Event of Default by an Investment Affiliate (including the Company) in respect of any Affiliate Investment Instrument where the Company has not performed its obligations under an applicable Investment Guarantee or (ii) default by the Company on any of its obligations under the Trust Guarantee or the Partnership Guarantee, the holders of the Trust Preferred Securities will have a preference over the holder of the Trust Common Securities with respect to payments upon liquidation of the Trust. See "Supplemental Description of the Trust Preferred Securities--Subordination of Trust Common Securities" and "--Liquidation Distribution Upon Dissolution." Optional Redemption......... The Partnership Preferred Securities will be redeemable for cash, at the option of the Partnership, in whole or in part, from time to time, after February , 2002, at a redemption price per Partnership Preferred Security equal to $25 plus accumulated and unpaid distributions thereon to the date fixed for redemption. Upon any redemption of the Partnership Preferred Securities, the Trust Preferred Securities will be redeemed, in whole or in part, as applicable, at the Redemption Price. See "Supplemental Description of the Partnership Preferred Securities--Optional Redemption" and "Supplemental Description of the Trust Preferred Securities--Redemption." Neither the Partnership Preferred Securities nor the Trust Preferred Securities have any scheduled maturity or are redeemable at any time at the option of the holders thereof. Special Event Redemptions or Distributions........... Upon the occurrence of a Trust Tax Event (which event will generally be triggered upon the occurrence of certain adverse tax consequences or the denial of an interest deduction on Affiliate Investment Instruments which are debt instruments held by the Partnership) or a Trust Investment Company Event (which event will generally be triggered if the Trust is considered an "investment company" under the 1940 Act (as defined herein)), except in certain limited circumstances, the Regular Trustees (as defined herein) will have the right to dissolve the Trust and, after satisfaction of obligations to creditors of the Trust, if any, cause Partnership Preferred Securities to be distributed to the holders of the Trust Preferred Securities. In certain circumstances involving a Partnership Tax Event (which event will generally be triggered upon the occurrence of certain adverse tax consequences or the denial of an interest deduction on the Debentures held by the Partnership) or a Partnership Investment Company Event (which event will generally be triggered if the Partnership is considered an "investment company" under the 1940 Act), the Partnership will have the right to redeem the Partnership Preferred Securities, in S-9 whole (but not in part), at $25 per Partnership Preferred Security plus accumulated and unpaid distributions thereon, regardless of the occurrence of any Trust Tax Event or Trust Investment Company Event and in lieu of any distribution of the Partnership Preferred Securities required in connection therewith, in which event the Trust Preferred Securities will be redeemed at the Redemption Price. See "Supplemental Description of the Trust Preferred Securities--Trust Special Event Redemption or Distribution" and "Supplemental Description of the Partnership Preferred Securities--Partnership Special Event Redemption." Voting Rights............... Generally, holders of the Trust Preferred Securities will not have voting rights. The holders of a majority in liquidation amount of the Trust Preferred Securities, however, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or to direct the exercise of any trust or other power conferred upon the Property Trustee under the Trust Agreement (as defined herein), including the right to direct the Property Trustee, as the holder of the Partnership Preferred Securities, (i) to exercise its rights in the manner described above under "Rights Upon Non-Payment of Distributions and Certain Defaults; Covenants of the Company" and (ii) to consent to any amendment, modification or termination of the Agreement of Limited Partnership (as defined herein) or the Partnership Preferred Securities where such consent shall be required. See "Supplemental Description of the Trust Preferred Securities--Voting Rights." Form of Trust Preferred Securities.................. The Trust Preferred Securities will be represented by a global certificate registered in the name of Cede & Co., as nominee for DTC. Beneficial interests in the Trust Preferred Securities will be evidenced by, and transfers thereof will be effected only through, records maintained by the participants in DTC. Except as described herein, Trust Preferred Securities in certificated form will not be issued in exchange for such global certificate. See "Supplemental Description of the Trust Preferred Securities-- Book-Entry Only Issuance--The Depository Trust Company." Use of Proceeds............. All of the proceeds from the sale of the Trust Securities will be invested by the Trust in the Partnership Preferred Securities. The Partnership will use the proceeds from the sale of the Partnership Preferred Securities and the capital contribution from the General Partner to make investments in the Debentures and, to a limited extent, certain Eligible Debt Securities. The Company and any subsidiaries that are issuers of the Debentures will use the proceeds from the sale of such Debentures, after deduction of the Underwriters' Compensation and other expenses of this offering, principally to fund investments in or to extend credit to HEI's subsidiaries, to repay short-term and inter-company debt, and for working capital and other corporate purposes. Proceeds not immediately so applied by the Company and its subsidiaries will be temporarily invested in short-term money market securities. See "Use of Proceeds." S-10 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with HEI's consolidated financial statements and the notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," incorporated herein by reference to other documents (see "Incorporation of Certain Documents by Reference" in the accompanying Prospectus). The consolidated statement of income data for each of the years in the three-year period ended December 31, 1995, are derived from, and are qualified by reference to, the audited consolidated financial statements incorporated herein by reference to other documents. The consolidated income and capitalization data for the nine months ended September 30, 1996 and 1995 are derived from unaudited consolidated financial statements incorporated herein by reference to other documents, which, in the opinion of management, include all material adjustments, consisting only of normal recurring adjustments, unless otherwise noted, necessary for a fair presentation of HEI's consolidated financial position as of September 30, 1996 and results of operations for the nine-month periods ended September 30, 1996 and 1995. The results of operations for the nine months ended September 30, 1996 may not necessarily be indicative of the results to be expected for the full fiscal year. The historical results are not necessarily indicative of the results of operations to be expected in the future.
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ----------------------- ---------------------------------- 1996 1995 1995 1994 1993 ---------- --------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) CONSOLIDATED STATEMENT OF INCOME DATA: Revenue................. $1,041,570 $ 963,052 $1,295,924 $1,188,523 $1,142,170 Operating income (loss) from continuing operations Electric utility...... $ 132,246 $ 124,383 $ 159,043 $ 136,628 $ 119,565 Savings bank.......... 16,143(1) 29,757 40,044 42,525 44,117 Other................. (5,499) (7,086) (11,423) (5,020) (6,044) ---------- --------- ---------- ---------- ---------- $ 142,890 $ 147,054 $ 187,664 $ 174,133 $ 157,638 ========== ========= ========== ========== ========== Net income (loss) Continuing operations. $ 57,604 $ 61,878 $ 77,493 $ 73,030 $ 61,684 Discontinued operations (2)....... -- -- -- -- (13,025) ---------- --------- ---------- ---------- ---------- $ 57,604 $ 61,878 $ 77,493 $ 73,030 $ 48,659 ========== ========= ========== ========== ========== Earnings (loss) per common share Continuing operations. $ 1.91 $ 2.13 $ 2.66 $ 2.60 $ 2.38 Discontinued operations (2)....... -- -- -- -- (0.50) ---------- --------- ---------- ---------- ---------- $ 1.91 $ 2.13 $ 2.66 $ 2.60 $ 1.88 ========== ========= ========== ========== ========== Dividends per common share................... $ 1.80 $ 1.77 $ 2.37 $ 2.33 $ 2.29 Weighted average number of common shares outstanding..... 30,178 29,058 29,187 28,137 25,938
AS OF SEPTEMBER 30, 1996 -------------------------------------- ACTUAL(3) AS ADJUSTED(3)(6) ---------------- -------------------- ($ IN THOUSANDS) CAPITALIZATION DATA: Short-term borrowings.................... $ 170,174 9.2% $ 80,174 4.4% Long-term debt (4)....................... 822,514 44.6 822,514 44.4 Company-obligated trust preferred securities (5).......................... -- -- 100,000 5.4 Preferred stock of electric utility subsidiaries (4)........................ 87,548 4.8 87,548 4.7 Common stock equity...................... 761,947 41.4 761,947 41.2 ---------- ----- ----------- ------ $1,842,183 100.0% $1,852,183 100.0% ========== ===== =========== ======
S-11 - -------- (1) On September 30, 1996, President Clinton signed the omnibus appropriations bill, which authorized a special one-time assessment by the Federal Deposit Insurance Corporation on all deposits insured by the Savings Association Insurance Fund held as of March 31, 1995. ASB's assessment was estimated to be $13.8 million and was accrued in September 1996. (2) Reflects losses from discontinued nonutility wind energy business and insurance business. (3) Excludes ASB's deposit liabilities, securities sold under agreements to repurchase and advances from the Federal Home Loan Bank. (4) Includes amounts of long-term debt due within one year and preferred stock sinking fund requirements. (5) As described herein, the sole assets of the Trust will be the Partnership Preferred Securities with an aggregate stated liquidation preference of approximately $103.1 million, and the sole assets of the Partnership will consist of the Debentures and the Eligible Debt Securities. HEI will own all of the Common Securities of the Trust and Hycap will own all of the general partner interests of the Partnership. See "Accounting Treatment." (6) Adjusted to reflect the consummation of the offering of the Trust Preferred Securities and the application of the estimated net proceeds from the sale of the Trust Preferred Securities. See "Use of Proceeds." S-12 RISK FACTORS Prospective purchasers of the Trust Preferred Securities should consider carefully the risk factors set forth below, as well as all other information contained or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus, in evaluating an investment in the Trust Preferred Securities. To the extent any of the information contained or incorporated by reference in this Prospectus Supplement or the accompanying Prospectus constitutes a "forward-looking statement" as defined in Section 27A(i)(1) of the Securities Act of 1933, as amended (the "Securities Act"), the risk factors set forth below are meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement. DISTRIBUTIONS PAYABLE ONLY IF DECLARED BY GENERAL PARTNER; RESTRICTIONS ON CERTAIN PAYMENTS; TAX CONSEQUENCES Distributions on the Partnership Preferred Securities will be payable only if, as and when declared by the General Partner in its sole discretion. Hycap, a newly-formed, wholly-owned subsidiary of HEI, is the sole General Partner of the Partnership, and the Debentures will constitute obligations of HEI and certain of its subsidiaries. If interest payments on the Debentures are deferred as permitted by their terms, or if such interest payments are not paid to the Partnership according to their terms (and guarantee payments on the Investment Guarantees are not made by the Company), the Partnership will generally lack funds to pay distributions on the Partnership Preferred Securities. If the Partnership does not make current distributions on the Partnership Preferred Securities, either because the General Partner does not declare distributions to be made or because the Partnership lacks sufficient funds, the Trust will not have funds available to make current distributions on the Trust Preferred Securities. As described under "Supplemental Description of the Trust Guarantee--Certain Covenants of the Company," the Company will be restricted (with certain exceptions) from paying dividends or making other distributions with respect to its capital stock or Comparable Equity Interests (as defined herein) if full distributions on the Trust Preferred Securities have not been paid. Should the Partnership fail to pay current distributions on the Partnership Preferred Securities, each holder of Trust Preferred Securities will generally be required to accrue income, for United States federal income tax purposes, in respect of the cumulative deferred distributions (including interest thereon) allocable to its proportionate share of the Partnership Preferred Securities. As a result, each holder of Trust Preferred Securities will recognize income for United States federal income tax purposes in advance of the receipt of cash and will not receive the cash from the Trust related to such income if such holder disposes of its Trust Preferred Securities prior to the record date for the date on which distributions of such amount are made. See "Certain Federal Income Tax Considerations--Income and Deductions." INSUFFICIENT INCOME OR ASSETS AVAILABLE TO PARTNERSHIP The Trust Preferred Securities are subject to the risk of a current or liquidating distribution rate mismatch between the rate paid on the Trust Preferred Securities and the rate paid on the securities held by the Partnership, including the Debentures and any additional securities acquired by the Partnership in the future. Such mismatch could occur if (i) at any time that the Partnership is receiving current payments in respect of the securities held by the Partnership (including the Debentures), the General Partner, in its sole discretion, does not declare distributions on the Partnership Preferred Securities and the Partnership receives insufficient amounts to pay the additional compounded distributions that will accumulate in respect of the Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds received in respect of the Debentures upon their retirement or at their maturities in Affiliate Investment Instruments or Eligible Debt Securities that do not generate income in an amount that is sufficient to pay full distributions in respect of the Partnership Preferred Securities at a rate of % per annum or (iii) the Partnership invests in equity or debt securities of Investment Affiliates that are not guaranteed by the Company and that cannot be liquidated by the Partnership for an amount sufficient to pay such distributions in full. If the reinvestments in the securities of the Investment Affiliates contemplated by the General Partner do not meet the eligibility criteria for Affiliate Investment Instruments described under "Supplemental Description of the Partnership Preferred Securities--Partnership Investments," the Partnership S-13 shall invest funds available for reinvestment in Eligible Debt Securities (subject to restrictions of applicable law, including the 1940 Act). To the extent that the Partnership lacks sufficient funds to make current or liquidating distributions on the Partnership Preferred Securities in full, the Trust will not have sufficient funds available to pay full current or liquidating distributions on the Trust Preferred Securities. DEPENDENCE ON AFFILIATE INVESTMENT INSTRUMENTS Approximately 99% of the proceeds from the issuance of the Partnership Preferred Securities and of the General Partner's capital contribution will be invested initially in the Debentures, which will consist of debt instruments of HEI (i.e., the Company Debentures) and certain subsidiaries of HEI (i.e., the Subsidiary Debentures). See "Supplemental Description of the Partnership Preferred Securities--Partnership Investments." PROPOSED TAX LEGISLATION On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget Proposal, the Treasury Department proposed legislation (the "Proposed Legislation") that would, among other things, deny the borrower an interest deduction with respect to certain types of debt instruments that are payable in stock of the issuer or a related party. The Proposed Legislation also would treat as equity for United States federal income tax purposes instruments with a maximum term of more than 20 years that are not shown as indebtedness on the consolidated balance sheet of the issuer. On March 29, 1996, Senate Finance Committee Chairman William V. Roth and House Ways and Means Committee Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating their intent that certain legislative proposals initiated by the Clinton administration, including the Proposed Legislation, that may be adopted by either of the tax-writing committees of Congress, would have an effective date that is no earlier than the date of "appropriate Congressional action." In addition, subsequent to the publication of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to the Treasury Department officials concurring with the view expressed in the Joint Statement (the "Democrat Letters"). If the principles contained in the Joint Statement and the Democrat Letters were followed and the Proposed Legislation were enacted, such legislation would not apply to the Debentures. There can be no assurances, however, that legislation enacted after the date hereof will not adversely affect the tax treatment of the Debentures, or whether such tax treatment would cause a Partnership Tax Event (as defined herein) or a Trust Tax Event (as defined herein) that may result in the redemption of the Partnership Preferred Securities and, consequently, the Trust Preferred Securities. SPECIAL EVENT REDEMPTION OR DISTRIBUTION Upon the occurrence of a Trust Special Event or a Partnership Special Event (each of which will generally be triggered either upon (i) the occurrence of certain adverse tax consequences to the Trust or the Partnership, as the case may be, or the denial of an interest deduction with respect to the Affiliate Investment Instruments that are debt instruments held by the Partnership or (ii) the Trust or the Partnership, as the case may be, being considered an "investment company" under the 1940 Act) (each, a "Special Event"), the Trust will be dissolved with the result, except in the limited circumstances described below, that the Partnership Preferred Securities will be distributed to the holders of the Trust Preferred Securities in connection with the liquidation of the Trust. In certain circumstances, the Partnership will have the right to redeem the Partnership Preferred Securities, in whole but not in part, in lieu of a distribution of the Partnership Preferred Securities by the Trust, in which event the Trust will redeem the Trust Preferred Securities for cash. See "Supplemental Description of the Trust Preferred Securities--Trust Special Event Redemption or Distribution" and "Supplemental Description of the Partnership Preferred Securities--Partnership Special Event Redemption." Unless the liquidation of the Trust occurs as a result of the Trust being subject to United States federal income tax with respect to income on the Partnership Preferred Securities, under current United States federal income tax law a distribution of the Partnership Preferred Securities upon the dissolution of the Trust will not be a taxable event to holders of the Trust Preferred Securities. If, however, the liquidation of the Trust were to occur because the Trust is subject to United States federal income tax with respect to income accumulated or received S-14 on the Partnership Preferred Securities, the distribution of Partnership Preferred Securities to holders by the Trust would likely be a taxable event to each such holder, and a holder would recognize gain or loss as if the holder had exchanged its Trust Preferred Securities for the Partnership Preferred Securities it received upon the liquidation of the Trust. Similarly, the holders of the Trust Preferred Securities would recognize gain or loss if the Trust were to dissolve upon an occurrence of a Partnership Special Event and the holders of Trust Preferred Securities were to receive cash in exchange for their Trust Preferred Securities. See "Certain Federal Income Tax Considerations--Redemption of Trust Preferred Securities for Cash." There can be no assurance as to the market prices for the Partnership Preferred Securities that may be distributed in exchange for Trust Preferred Securities if a dissolution or liquidation of the Trust were to occur. Accordingly, the Trust Preferred Securities that an investor may purchase, whether pursuant to the offer made hereby or in the secondary market, or the Partnership Preferred Securities that a holder of Trust Preferred Securities may receive upon dissolution and liquidation of the Trust, may trade at a discount to the price that the investor paid to purchase the Trust Preferred Securities offered hereby. Because holders of Trust Preferred Securities may receive Partnership Preferred Securities upon the occurrence of a Special Event, prospective purchasers of Trust Preferred Securities are also making an investment decision with regard to the Partnership Preferred Securities and should carefully review all the information regarding the Partnership Preferred Securities contained herein. See "Supplemental Description of the Partnership Preferred Securities." RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEES AND THE COMPANY DEBENTURES HEI's obligations under the Trust Guarantee, the Partnership Guarantee and the Investment Guarantees are subordinate and junior in right of payment to all liabilities of HEI and will rank pari passu with the most senior preferred stock (if any) issued from time to time by HEI, with each other and with any guarantee hereafter entered into by HEI in respect of any preferred security issued by any affiliate of the Company, and its obligations under the Company Debentures are subordinate and junior in right of payment to all senior indebtedness of the Company. As of September 30, 1996, senior indebtedness of HEI (holding company only) aggregated approximately $246 million (exclusive of contingent amounts under guarantees of approximately $17.5 million of subsidiary obligations). HEI is a non-operating holding company and substantially all of the operating assets of HEI and its consolidated subsidiaries are owned by such subsidiaries. HEI relies primarily on interest and dividends from such subsidiaries to meet its obligations for payment of principal of and interest on its outstanding debt obligations and corporate expenses. Accordingly, HEI's obligations under the Company Debentures, the Trust Guarantee, the Partnership Guarantee and the Investment Guarantees will be subordinated to its senior indebtedness and will be effectively subordinated to all existing and future indebtedness and liabilities of its subsidiaries. Except for certain limitations on additional Affiliate Investment Instruments that may be issued to the Partnership, as described under "Supplemental Description of the Partnership Preferred Securities--Partnership Investments," there are no terms in the Trust Preferred Securities, the Partnership Preferred Securities, the Guarantees or the Debentures that limit the ability of HEI or its subsidiaries to incur additional indebtedness, including indebtedness that ranks senior to the Guarantees and the Debentures. See "Supplemental Description of the Partnership Preferred Securities--Partnership Investments" and "--Investment Guarantees," "Supplemental Description of the Trust Guarantee" and "Supplemental Description of the Partnership Guarantee." ENFORCEMENT OF CERTAIN RIGHTS BY OR ON BEHALF OF HOLDERS OF TRUST PREFERRED SECURITIES If a Trust Enforcement Event (as defined herein) occurs and is continuing, then (a) the holders of Trust Preferred Securities will rely on the enforcement against HEI by the Property Trustee of its rights, as the holder of the Partnership Preferred Securities, including the right to direct the Special Representative (as defined herein) to enforce (i) to the fullest extent permitted by law, the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees, (ii) the rights of the holders of the Partnership Preferred Securities under the Partnership Guarantee, and (iii) the rights of the holders of the Partnership Preferred Securities to receive distributions (only if and to the extent declared by the General Partner out of funds legally available therefor) on the Partnership Preferred Securities, and (b) the Trust Guarantee S-15 Trustee shall have the right to enforce the terms of the Trust Guarantee, including the right to enforce the covenant restricting payments by the Company of dividends and other distributions with respect to any of its capital stock or Comparable Equity Interests. Under no circumstances, however, will the Special Representative have authority to cause the General Partner to declare distributions on the Partnership Preferred Securities. As a result, although the Special Representative may be able to enforce the Partnership's creditors' rights to accelerate and receive payments in respect of the Affiliate Investment Instruments and the Investment Guarantees, the Partnership would be entitled to reinvest such payments in additional Affiliate Investment Instruments (subject to satisfying the reinvestment criteria described under "Supplemental Description of the Partnership Preferred Securities--Partnership Investments") and in Eligible Debt Securities, rather than declaring and making distributions on the Partnership Preferred Securities. See "Supplemental Description of the Trust Preferred Securities--Trust Enforcement Events." LIMITED VOTING RIGHTS Holders of the Trust Preferred Securities will have limited voting rights and will not be entitled to vote to appoint, remove or replace the Regular Trustees, or to increase or decrease the number of, Trustees, which voting rights are vested exclusively in the holder of the Trust Common Securities. See "Supplemental Description of the Trust Preferred Securities--Voting Rights" and "Description of the Trust Preferred Securities" in the accompanying Prospectus. TRADING CHARACTERISTICS OF TRUST PREFERRED SECURITIES The price at which the Trust Preferred Securities may trade may not fully reflect the value of the accumulated but unpaid distributions on the Trust Preferred Securities (which will equal the accumulated but unpaid distributions on the Partnership Preferred Securities). In addition, as a result of the right of the General Partner not to declare current distributions on the Partnership Preferred Securities, the market price of the Trust Preferred Securities (which represent undivided beneficial ownership interests in the Partnership Preferred Securities) may be more volatile than other similar securities where there is no such right to defer current distributions. For United States federal income tax purposes, a holder who disposes of its Trust Preferred Securities will be required to include in income as ordinary income accumulated but unpaid distributions on the Partnership Preferred Securities through the date of disposition (to the extent not previously included in income) and to add such amount to its adjusted tax basis in its pro rata share of the Partnership Preferred Securities deemed disposed of. To the extent the selling price is less than the holder's adjusted tax basis (which will include all accumulated but unpaid distributions), a holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. See "Certain Federal Income Tax Considerations--Income and Deductions" and "--Disposition of Trust Preferred Securities." NO PRIOR MARKET FOR THE TRUST PREFERRED SECURITIES The Trust Preferred Securities constitute a new issue of securities with no established trading market. The Trust Preferred Securities have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. There can be no assurance, however, that an active market for the Trust Preferred Securities will develop or be sustained in the future. Although the Underwriters have indicated to the Company that they intend to make a market in the Trust Preferred Securities, as permitted by applicable laws and regulations, they are not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Trust Preferred Securities. CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION Holders of the Trust Preferred Securities are afforded no protection in the event of a highly leveraged transaction, a change of control or other similar transactions involving HEI that may adversely affect such holders. See "Description of the Junior Subordinated Debt Securities--General" in the accompanying Prospectus. S-16 USE OF PROCEEDS All of the proceeds from the sale of the Trust Securities will be invested by the Trust in the Partnership Preferred Securities. The Partnership will use the proceeds from the sale of the Partnership Preferred Securities and the capital contribution from the General Partner to make investments in the Debentures and, to a limited extent, certain Eligible Debt Securities. The Company and any subsidiaries that are issuers of the Debentures will use the proceeds from the sale of such Debentures to the Partnership, after payment of the Underwriters' Compensation and other expenses of this offering, principally to fund investments in or to extend credit to HEI's subsidiaries, to repay short-term and inter-company debt, and for working capital and other corporate purposes. Proceeds not immediately so applied by HEI and its subsidiaries will be temporarily invested in short-term money market securities. ACCOUNTING TREATMENT The financial statements of the Trust and the Partnership will be consolidated into HEI's consolidated financial statements, with the Trust Preferred Securities treated as minority interest and shown in HEI's consolidated balance sheet as "Company-obligated trust preferred securities." The financial statement footnotes of HEI will describe the terms of the applicable securities and reflect that the sole asset of the Trust will be the Partnership Preferred Securities and that the Partnership's principal assets will consist of the Debentures. It is expected that all future reports filed by HEI under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), will present information regarding the Trust and the Partnership and other similar arrangements (if any) in the manner described above. In addition, if Staff Accounting Bulletin 53 treatment is sought, a footnote to HEI's audited consolidated financial statements will be added to reflect that (i) the Common Securities of the Trust are wholly-owned by HEI; (ii) the sole assets of the Trust are the Partnership Preferred Securities and the sole assets of the Partnership will be the Debentures and certain Eligible Debt Securities, in each case specifying principal amount, interest rate and maturity date of the Debentures held; and (iii) the Guarantees, when taken together with HEI's obligations under its Debentures and its obligations under the Trust Agreement, including its obligations to pay costs, expenses, debts and liabilities of the Trust (other than with respect to the Trust Securities), and the corresponding obligations of HEI under the Partnership Guarantee with respect to the Partnership, effectively provide a full and unconditional guarantee, on a subordinated basis, of amounts due on the Trust Preferred Securities. See "Selected Consolidated Financial Data." DESCRIPTION OF HAWAIIAN ELECTRIC INDUSTRIES, INC. GENERAL HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with subsidiaries engaged in the electric utility, savings bank, freight transportation, real estate development and other businesses, primarily in the State of Hawaii, and also engaged in the pursuit of independent power projects and energy services projects in Asia and the Pacific. HEI's predecessor, Hawaiian Electric Company, Inc. ("HECO"), was incorporated under the laws of the Kingdom of Hawaii (now the State of Hawaii) on October 13, 1891. As a result of a 1983 corporate reorganization, HECO became an HEI subsidiary, and common shareholders of HECO became common shareholders of HEI. HECO and its subsidiaries, Maui Electric Company, Limited ("MECO") and Hawaii Electric Light Company, Inc. ("HELCO"), are regulated operating public utilities providing the only public utility electric service on the islands of Oahu, Maui, Lanai, Molokai and Hawaii. HEI also owns directly or indirectly the following subsidiaries which comprise its principal diversified companies: HEI Diversified, Inc. ("HEIDI") and its subsidiary, American Savings Bank, F.S.B. ("ASB") and its subsidiaries; Hawaiian Tug & Barge Corp. ("HTB") and its subsidiary, Young Brothers, Limited ("YB"); Malama Pacific Corp. ("MPC") and its subsidiaries; HEI Power Corp. ("HEIPC") and its subsidiaries; and HEI Investment Corp. ("HEIIC"). ASB, acquired in 1988, is the fourth largest financial institution in Hawaii based on total assets and the third largest financial institution based on deposits, in each case as of June 30, 1996, and has 48 retail branches. S-17 HTB was acquired in 1986 and provides ship assist and charter towing services and owns YB, a regulated intrastate public carrier of waterborne freight among the Hawaiian Islands. MPC was formed in 1985 and directly or through subsidiaries develops and invests in real estate. HEIIC was formed in 1984 and is a passive investment company which primarily holds investments in leveraged leases and currently plans no new investments. HEIPC was formed in March 1995 to pursue, directly or through its subsidiaries or affiliates, independent power projects and energy services projects in Asia and the Pacific. HEI is a legal entity separate and distinct from its various subsidiaries. As a holding company with no significant operations of its own, the principal sources of its funds are dividends or other distributions from its operating subsidiaries, borrowings and sales of equity. The ability of certain of HEI's direct and indirect subsidiaries to pay dividends or make other distributions to HEI, or to make loans or extend credit to or purchase assets from HEI, is subject to contractual, statutory and regulatory restrictions, including without limitation the provisions of an agreement with the Hawaii Public Utilities Commission and the capital requirements imposed by the Office of Thrift Supervision, as well as restrictions and limitations set forth in debt instruments, preferred stock resolutions and guarantees. However, HEI currently does not expect that these restrictions will affect the ability of HEI to pay its indebtedness or significantly affect the operations of HEI and its subsidiaries as they are now being conducted. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS CONCERNING HEI AND ITS SUBSIDIARIES DOES NOT PURPORT TO BE COMPREHENSIVE. ADDITIONAL INFORMATION CONCERNING THE BUSINESSES AND AFFAIRS OF HEI AND ITS PRINCIPAL SUBSIDIARIES, INCLUDING PENDING LEGAL AND REGULATORY PROCEEDINGS, DESCRIPTIONS OF REGULATIONS TO WHICH THESE COMPANIES ARE SUBJECT AND THEIR CAPITAL REQUIREMENTS AND RESOURCES, IS CONTAINED IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THE ACCOMPANYING PROSPECTUS. SEE "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" IN THE ACCOMPANYING PROSPECTUS. THIRD QUARTER RESULTS Consolidated Information. In its Form 10-Q for the quarterly period ended September 30, 1996, HEI reported consolidated net income of $17.4 million for the third quarter of 1996, a decrease of 31% compared to $25.2 million for the same period in 1995, and reported consolidated earnings per common share of $0.57 for the third quarter of 1996, a decrease of 34% compared to $0.86 per common share for the third quarter of 1995. Consolidated net income for the first nine months of 1996 was reported at $57.6 million, a decrease of 7% compared to $61.9 million for the same period in 1995, and consolidated earnings per common share for the first nine months of 1996 was $1.91, a decrease of 10% compared to $2.13 per common share for the first nine months of 1995. On September 30, 1996, President Clinton signed into law the Deposit Insurance Funds Act of 1996, which authorized a special, one-time deposit- insurance premium assessment (the "FDIC Assesment") by the Federal Deposit Insurance Corporation (the "FDIC"). In October 1996, the FDIC set the FDIC Assessment for Savings Association Insurance Fund ("SAIF") insured deposits held as of March 31, 1995 at 65.7 cents per $100 of deposits. ASB's assessment was estimated to be $8.3 million after-tax and was accrued in September 1996. Additionally, in December 1995, a rate order by the Public Utilities Commission of the State of Hawaii (the "PUC Order") reduced the allowed return on equity for HECO to 11.4% and required a refund to customers retroactive to January 1, 1995. If the adjusted rates had been in effect at the beginning of 1995, net income for the third quarter and nine months ended September 30, 1995 would have been reduced by $1.5 million and $4.1 million, respectively. Adjusted for the effects of the FDIC Assessment and the PUC Order discussed above, HEI's consolidated net income for the third quarter of 1996 was $25.7 million, an increase of 9% compared to $23.7 million for the same period in 1995, and consolidated earnings per common share were $0.84 for the third quarter of 1996 compared to $0.81 per common share for the third quarter of 1995. Also adjusted for the effects of the FDIC Assessment and the PUC Order discussed above, HEI's consolidated net income for the first nine months of 1996 was $65.9 million, an increase of 14% compared to $57.8 million for the same period in 1995, and consolidated earnings per common share for the first nine months of 1996 was $2.18, compared to $1.99 per common share S-18 for the first nine months of 1995. These increases in adjusted consolidated net income were primarily due to higher operating income for all segments, partly offset by higher interest expense due to higher average borrowings and lower allowance for funds used during construction. For the first nine months of 1996, consolidated net cash provided by operating activities was $121 million. Consolidated net cash used in investing activities was $370 million, largely due to ASB's loan originations, net of repayments, and consolidated HECO's capital expenditures. Consolidated net cash provided by financing activities was $212 million, as a result of several factors, including net increases in long-term debt, advances from Federal Home Loan Bank of Seattle and securities sold under agreements to repurchase, partly offset by decreases in deposit liabilities and short-term borrowings and by common stock dividends. HEI's total consolidated assets amounted to $5.9 billion as of September 30, 1996, compared to $5.6 billion as of December 31, 1995. Total consolidated liabilities amounted to $5.1 billion as of September 30, 1996, compared to $4.8 billion as of December 31, 1995. HEI's common stock equity increased from $730 million as of December 31, 1995 to $762 million as of September 30, 1996. Segment Information. Consolidated net income for the electric utilities, adjusted for the effects of the PUC Order, increased 2% from $23.3 million for the third quarter of 1995 to $23.8 million for the third quarter of 1996, and increased 13% from $54.1 million for the first nine months of 1995 to $61.3 million for the first nine months of 1996. The increase in adjusted consolidated net income is primarily attributable to higher revenues from increased sales of kilowatthours of electricity and from higher rates allowed by the PUC, partly offset by higher expenses and higher interest expense due to higher average borrowings and lower allowance for funds used during construction. Average fuel oil price per barrel increased from $21.26 for the third quarter of 1995 to $24.31 for the third quarter of 1996, and from $20.57 for the first nine months of 1995 to $23.35 for the first nine months of 1996. Under energy adjustment clauses in the rate schedules of the electric utilities, changes in fuel oil costs are automatically passed on to customers. Consolidated net income from ASB and its subsidiaries, adjusted to reverse the effects of the FDIC Assessment, increased 1% from $5.6 million for the third quarter of 1995 to $5.7 million for the third quarter of 1996, and increased 1% from $17.3 million for the first nine months of 1995 to $17.4 million for the first nine months of 1996. The increase in adjusted consolidated net income was primarily due to higher net interest income partly offset by higher compensation expense and an increase in allowance for loan losses. The increase in adjusted consolidated net income for ASB was achieved despite a narrowing in ASB's interest rate spread from 2.84% for the third quarter of 1995 to 2.76% for the third quarter of 1996 and from 2.93% for the first nine months of 1995 to 2.80% for the first nine months of 1996. The decrease in ASB's interest rate spread, the difference between the weighted average yield on interest-earning assets and the weighted average rate on interest-bearing liabilities, is due to several factors. One of the primary factors is the flattening of the yield curve that began in 1995. Another factor is the shift from deposit liabilities to more expensive alternatives, such as borrowings from the Federal Home Loan Bank of Seattle or selling securities under agreements to repurchase. Deposits have traditionally been the principal source of ASB's funds for lending, meeting liquidity requirements and making investments. However, deposits have declined in recent years. Deposits at ASB decreased by $83 million and $48 million for the three and nine months ended September 30, 1996, respectively, compared with increases of $14 million and $48 million for the three and nine months ended September 30, 1995, respectively. The freight transportation subsidiaries recorded operating income of $1.1 million and $2.0 million for the third quarter and first nine months of 1996, respectively, compared with $0.9 million and $2.4 million for the same periods of 1995. The increase in operating income for the third quarter of 1996 was primarily due to higher general freight and interstate revenue. However, freight transportation income continues to be negatively impacted by the slow economic activity and slow construction industry on the islands the freight transportation subsidiaries serve in Hawaii. The real estate subsidiaries recorded an operating loss of $0.3 million and operating income of $37,000 for the third quarter and first nine months of 1996, respectively, compared with operating losses of $0.3 million and S-19 $0.9 million for the same periods of 1995. In April 1996, MPC sold land in downtown Honolulu for a pretax gain of $1.1 million. Other real estate development activities continue to be negatively impacted by the slow real estate market in Hawaii, which is not expected to rebound in the near term. MPC is focusing on reducing real estate investments while increasing cash flow by developing and selling existing projects. There are currently no plans to invest in new projects. HEIPC and its subsidiaries continue to pursue independent power and energy services projects in Asia and the Pacific. Consolidated operating losses, including startup costs for the first nine months of 1996, were $1.6 million, compared with $1.0 million for the same period of 1995. In September 1996, an HEIPC subsidiary entered into an energy conversion agreement with the Guam Power Authority to rehabilitate, operate and maintain for approximately 20 years, two 26.5-megawatt (50-megawatt net) units in Guam, with total rehabilitation costs estimated at about $12 million, about $10 million of which is planned to be funded through nonrecourse financing. HEIPC also continues to pursue development of a 22-megawatt hydroelectric plant in the Philippines and other projects in Asia and the Pacific. FINANCING REQUIREMENTS Total HEI consolidated financing requirements for 1997 through 2001, including net capital expenditures (which excludes the allowance for funds used during construction and capital expenditures funded by third-party cash contributions in aid of construction), debt retirements (excluding ASB's repayments of advances from FHLB of Seattle and securities sold under agreements to repurchase) and sinking fund requirements, are currently estimated to total $1.0 billion. Of this amount, approximately $0.8 billion is for net capital expenditures (mostly relating to the electric utilities' net capital expenditures described below). HEI's consolidated internal sources, after the payment of HEI dividends, are expected to provide approximately 66% of the consolidated financing requirements, with debt and equity financing providing the remaining requirements. Over the five-year period 1997 through 2001, HEI estimates that, in addition to retained earnings and the proceeds from the sale of the Trust Preferred Securities offered hereby, it will require approximately $157 million in additional equity, which is expected to be provided by HEI's Dividend Reinvestment and Stock Purchase Plan, the Hawaiian Electric Industries Retirement Saving Plan and other offerings pursuant to the registration statement of which this Prospectus Supplement is a part. The additional equity will be used primarily to reduce HEI's overall borrowing level and to fund the common equity requirements of its subsidiaries, such as the electric utilities' common equity requirements related to their capital expenditure programs. Additional equity in excess of the $157 million described above, and additional debt financing, may be required by reason of activities of the Company's subsidiaries not included in the 1997-2001 forecast, such as the development of additional independent power projects and energy services projects by HEIPC in Asia and the Pacific. HEI's forecasts of financing requirements are reviewed periodically by management and may change significantly as a result of many considerations, including but not limited to changes in the operating results of its subsidiaries and their respective financing requirements. CAPITAL EXPENDITURE PROGRAMS Capital expenditures of HEI's utility subsidiaries include costs of projects which are required to meet expected load growth, to improve reliability, and to replace and upgrade existing equipment. HECO and its subsidiaries' current forecast of net capital expenditures for 1997 through 2001, which excludes the allowance for funds used during construction and capital expenditures funded by third-party contributions in aid of construction, is approximately $711 million. Approximately 65% of forecast gross capital expenditures, including allowance for funds used during construction and third-party contributions in aid of construction, is for transmission and distribution projects, with the remaining 35% primarily for generation projects. S-20 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 alternate energy and purchased power, the availability of generating sites and transmission and distribution corridors, the ability to obtain adequate and timely rate relief, escalations in construction costs, demand-side management programs and requirements of environmental and other regulatory and permitting authorities. DESCRIPTION OF THE TRUST The Trust is a statutory business trust created under the Delaware Business Trust Act, as amended (the "Trust Act"), pursuant to (i) a trust agreement, dated as of December 19, 1996, executed by HEI, as sponsor, and the trustees of the Trust (the "Trustees") and (ii) the filing of a certificate of trust with the Secretary of State of the State of Delaware on December 23, 1996. Such 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 (the "Registration Statement") of which this Prospectus Supplement and the accompanying Prospectus form a part. The Trust Agreement will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Trust Preferred Securities, the purchasers thereof will beneficially own all of the Trust Preferred Securities. See "Supplemental Description of the Trust Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company." HEI will acquire all of the Common Securities of the Trust in an aggregate stated liquidation amount of not less than 3 percent of the total capital of the Trust. The Trust will use all proceeds derived from the issuance of the Trust Common Securities and the Trust Preferred Securities to purchase the Partnership Preferred Securities from the Partnership, and accordingly the assets of the Trust will consist solely of the Partnership Preferred Securities. The Trust exists for the exclusive purposes of (i) issuing the Trust Securities representing undivided beneficial interests in the assets of the Trust, (ii) investing the gross proceeds of the Trust Securities in the Partnership Preferred Securities and (iii) engaging in only those other activities necessary or incidental thereto. Pursuant to the Trust Agreement, there will be five Trustees. Three of the Trustees (the "Regular Trustees") will be persons who are employees or officers of, or who are affiliated with, HEI. Robert F. Clarke, President of HEI, Robert F. Mougeot, Financial Vice President of HEI, and Constance H. Lau, Treasurer of HEI, will be the initial Regular Trustees. The fourth trustee will be a financial institution that is unaffiliated with HEI, which trustee will serve as institutional trustee under the Trust Agreement and as indenture trustee for the purposes of compliance with the provisions of the Trust Indenture Act (the "Property Trustee"). Initially, The Bank of New York will be the Property Trustee until removed or replaced by the holder of the Trust Common Securities. For purposes of compliance with the provisions of the Trust Indenture Act, The Bank of New York will also act as trustee under the Trust Guarantee (the "Trust Guarantee Trustee"), as trustee under the indenture applicable to the Company Debentures (the "Debt Trustee") and as trustee under the Partnership Guarantee and the Investment Guarantees. The fifth trustee will be an entity that maintains its principal place of business in the State of Delaware (the "Delaware Trustee"). Initially, The Bank of New York (Delaware), an affiliate of the initial Property Trustee, will act as Delaware Trustee. The address of The Bank of New York is 101 Barclay Street, 21st Floor, New York, N.Y. 10286--Attn: Corporate Trust Trustee Administration. The address of The Bank of New York (Delaware) is White Clay Center, Route 273, Newark, Delaware 19711--Attn: Corporate Trust Department. See "Description of the Trust Guarantees" in the accompanying Prospectus and "Supplemental Description of the Trust Preferred Securities--Voting Rights," "--Information Concerning the Property Trustee" and "Supplemental Description of the Trust Guarantee" herein. The Property Trustee will hold legal title to the Partnership Preferred Securities for the benefit of the holders of the Trust Securities and will have the power to exercise all rights, powers and privileges with respect to the Partnership Preferred Securities under the agreement of limited partnership (as amended and restated, the "Agreement of Limited Partnership") to be entered into by Hycap, as General Partner, and the Trust as the holder of the limited partner interests consisting of the Partnership Preferred Securities. In addition, the Property S-21 Trustee will maintain exclusive control of a segregated noninterest bearing bank account (the "Property Account") to hold all payments made in respect of the Partnership Preferred Securities for the benefit of the holders of the Trust Securities. The Trust Guarantee Trustee will hold the Trust Guarantee for the benefit of the holders of the Trust Preferred Securities. The Company, as the holder of all the Trust Common Securities, will have the right to appoint, remove or replace any of the Trustees and to increase or decrease the number of trustees; provided, however, that there must be at least one Delaware Trustee, at least one Property Trustee (which may also be the Delaware Trustee) and at least one Regular Trustee. The Company will pay all fees and expenses related to the organization and operations of the Trust (including any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes or taxes or charges imposed by reason of the transfer of the Trust Preferred Securities or beneficial interests therein) imposed by the United States or any other domestic taxing authority upon the Trust) and the offering of the Trust Preferred Securities. The Company will also be responsible for all debts and obligations of the Trust (other than with respect to the Trust Securities). For so long as the Trust Preferred Securities remain outstanding, the Company will covenant (i) to maintain direct ownership of 100% of the Trust Common Securities, (ii) to cause the Trust to remain a statutory business trust and not to voluntarily dissolve, wind-up, liquidate or be terminated, except as permitted by the Trust Agreement, (iii) to use its commercially reasonable efforts to ensure that the Trust will not be an "investment company" for purposes of the 1940 Act and (iv) to take no action which would be reasonably likely to cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. The rights of the holders of the Trust Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Trust Agreement, the Trust Act and the Trust Indenture Act (which is incorporated by reference in the Trust Agreement and the Trust Guarantee). See "Supplemental Description of the Trust Preferred Securities." The location of the principal executive office of the Trust is 101 Barclay Street, 21st Floor, New York, New York 10286, telephone number (212) 815-5084. Information concerning the Trust may also be obtained from Hawaiian Electric Industries, Inc., Honolulu, Hawaii 96813, telephone number (808) 543-5662. DESCRIPTION OF THE PARTNERSHIP The Partnership, HEI Preferred Funding, LP, is a limited partnership formed on December 23, 1996, under the Delaware Revised Uniform Limited Partnership Act, as amended (the "Partnership Act"). Pursuant to the certificate of limited partnership, as amended, and the Agreement of Limited Partnership, Hycap is now the sole General Partner of the Partnership. The Agreement of Limited Partnership will be substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part. Upon the issuance of the Partnership Preferred Securities, which securities represent limited partner interests in the Partnership, the Trust will be the sole limited partner of the Partnership. Contemporaneously with the issuance and sale of the Partnership Preferred Securities, the General Partner will contribute capital to the Partnership in an amount that will establish its initial capital account at a level equal to at least 15% of the total capital of the Partnership. The Partnership will be managed by the General Partner and exists for the sole purpose of (i) issuing its partnership interests, (ii) investing the proceeds thereof in securities of HEI and its subsidiaries (the "Affiliate Investment Instruments," which initially will consist of the Debentures) and certain Eligible Debt Securities, (iii) to receive interest and other payments on the Affiliate Investment Instruments and the Eligible Debt Securities held by the Partnership from time to time, (iv) to make distributions on the Partnership Preferred Securities and distributions on the General Partner's interest in the Partnership if, as and when declared by the General Partner in its sole discretion, (v) subject to the restrictions and conditions contained in the Agreement of Limited Partnership, to make additional investments in Affiliate Investment Instruments and Eligible Debt S-22 Securities and to dispose of any such investments and (vi) except as otherwise limited in the Agreement of Limited Partnership, to enter into, make and perform all contracts and other undertakings, and engage in those activities and transactions as the General Partner may reasonably deem necessary or advisable for carrying out the purposes of the Partnership. The Partnership may not engage in any other activities or operations except as contemplated by the preceding sentence. To the extent that aggregate payments to the Partnership on the Affiliate Investment Instruments and the Eligible Debt Securities exceed distributions payable with respect to the Partnership Preferred Securities, the Partnership may at times have excess funds which will be allocated to and may, in the General Partner's sole discretion, be distributed to the General Partner. For so long as the Partnership Preferred Securities remain outstanding, Hycap will covenant in the Agreement of Limited Partnership (i) to remain the sole general partner of the Partnership and to maintain direct ownership of 100% of the General Partner's interest in the Partnership, which interest will at all times represent at least 1% of the total capital of the Partnership, (ii) to cause the Partnership to remain a limited partnership and not to voluntarily dissolve, liquidate, wind-up or be terminated, except as permitted by the Agreement of Limited Partnership, (iii) to use its commercially reasonable efforts to ensure that the Partnership will not be an "investment company" for purposes of the 1940 Act and (iv) to take no action that would be reasonably likely to cause the Partnership to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. In the Partnership Guarantee, HEI will, among other things, covenant to directly or indirectly maintain ownership of 100% of the ownership of the General Partner's interest in the Partnership. The rights of the holders of the Partnership Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Agreement of Limited Partnership and the Partnership Act. See "Supplemental Description of the Partnership Preferred Securities." The Agreement of Limited Partnership provides that the General Partner will have liability for the fees and expenses of the Partnership (including any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes or taxes or charges imposed by reason of the transfer of the Partnership Preferred Securities) imposed by the United States or any other domestic taxing authority upon the Partnership) and be responsible for all debts and obligations of the Partnership (other than with respect to the Partnership Preferred Securities). These obligations of the General Partner will be guaranteed by HEI in the Partnership Guarantee. Under Delaware law, assuming a limited partner in a Delaware limited partnership such as the Partnership (i.e., a holder of the Partnership Preferred Securities) does not participate in the control of the business of the limited partnership, such limited partner will not be personally liable for the debts, obligations and liabilities of such limited partnership, whether arising in contract, tort or otherwise, solely by reason of being a limited partner of such limited partnership (subject to any obligation such limited partner may have to repay any funds that may have been wrongfully distributed to it). The location of the principal executive offices of the Partnership is c/o Hycap Management, Inc., 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801, telephone number (302) 427-5738. Information concerning the Partnership may also be obtained from Hawaiian Electric Industries, Inc., 900 Richards Street, Honolulu, Hawaii 96813, telephone number (808) 543-5662. SUPPLEMENTAL DESCRIPTION OF THE TRUST PREFERRED SECURITIES The Trust Preferred Securities will be issued pursuant to the terms of the Trust Agreement. The Trust Agreement will be qualified as an indenture under the Trust Indenture Act. The Property Trustee, The Bank of New York, will act as trustee for the Trust Preferred Securities under the Trust Agreement for purposes of compliance with the provisions of the Trust Indenture Act. The terms of the Trust Preferred Securities will include those stated in the Trust Agreement and those made part of the Trust Agreement by the Trust Act and the Trust Indenture Act. The following summary of certain terms and provisions of the Trust Preferred Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Trust Agreement (a copy of S-23 which is filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part), the Trust Act and the Trust Indenture Act. GENERAL The Trust Preferred Securities will be issued in fully registered form without coupons. Trust Preferred Securities will not be issued in bearer form. See "--Book-Entry Only Issuance--The Depository Trust Company." The Trust Agreement authorizes the Regular Trustees of the Trust to cause the Trust to issue the Trust Preferred Securities, which represent undivided beneficial ownership interests in the assets of the Trust. Legal title to the Partnership Preferred Securities to be purchased by the Trust will be held by the Property Trustee for the benefit of the holders of the Trust Securities. The Trust Agreement does not permit the Trust to acquire any assets other than the Partnership Preferred Securities, issue any securities other than the Trust Securities or incur any indebtedness. The payment of distributions out of money held by the Trust and payments out of money held by the Trust upon redemption of the Trust Preferred Securities or liquidation of the Trust are guaranteed by the Company to the extent described under "Supplemental Description of the Trust Guarantee." The Trust Guarantee will be held by The Bank of New York, the Trust Guarantee Trustee, for the benefit of the holders of the Trust Preferred Securities. The Trust Guarantee does not cover payment of distributions when the Trust does not have sufficient funds that are legally available to pay such distributions. In such event, holders of Trust Preferred Securities will have the remedies described below under "--Trust Enforcement Events." DISTRIBUTIONS The distribution rate on Trust Preferred Securities will be fixed at a rate per annum of % of the stated liquidation amount of $25 per Trust Preferred Security and will be payable if, as and when the Trust has funds legally available for payment. Distributions not paid on the scheduled payment date will accumulate and compound quarterly at a rate per annum equal to %. The term "distribution" as used herein includes any such compounded amounts unless otherwise stated or the context otherwise requires. 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 that, if such period is shorter than a full 90-day quarter, distributions will be computed on the basis of the actual number of days elapsed in such 90-day quarter. Distributions on the Trust Preferred Securities will be cumulative, will accumulate from the date of initial issuance and will be payable quarterly in arrears on each March 31, June 30, September 30 and December 31, commencing March 31, 1997, if, as and when the Trust has funds legally available for payment, by the Property Trustee, except as otherwise described below. If distributions are not paid when regularly scheduled, the accumulated distributions shall be paid to the holders of record of Trust Preferred Securities as they appear on the books and records of the Trust on the record date with respect to the actual payment date for the Trust Preferred Securities, which will correspond to the actual payment date fixed by the Partnership with respect to the payment of cumulative distributions on the Partnership Preferred Securities not declared and paid when regularly scheduled. The initial holder of record of the Trust Preferred Securities will be DTC or its nominee. See "--Book-Entry Only Issuance--The Depository Trust Company." Distributions on the Trust Preferred Securities will be made to the extent that the Trust has funds legally available for the payment of such distributions in the Property Account. Amounts available to the Trust for distribution to the holders of the Trust Preferred Securities will be limited to payments received by the Trust from the Partnership with respect to the Partnership Preferred Securities or from the Company under the Partnership Guarantee or the Trust Guarantee. Distributions on the Partnership Preferred Securities will be paid only if, as and when declared in the sole discretion of the General Partner of the Partnership. Pursuant to the Agreement of Limited Partnership, the General Partner is not obligated to declare distributions on the Partnership Preferred Securities at any time, including upon or following a Partnership Enforcement Event. See S-24 "Supplemental Description of Partnership Preferred Securities--Partnership Enforcement Events." If the Property Trustee, as the holder of the Partnership Preferred Securities for the benefit of the holders of the Trust Securities, receives written notice of any determination by the General Partner not to pay distributions on the Partnership Preferred Securities, the Property Trustee shall give notification of such determination to such holders. The assets of the Partnership consist only of Affiliate Investment Instruments (which initially will be the Debentures) and certain Eligible Debt Securities. To the extent that the issuers (and, where applicable, the Company as an issuer and as guarantor) of the securities in which the Partnership invests, defer or fail to make any payment in respect of such securities (or, if applicable, such guarantees), the Partnership may not have sufficient funds legally available to pay and may not declare or pay distributions on the Partnership Preferred Securities. To the extent that the Partnership does not declare and pay distributions on the Partnership Preferred Securities out of funds legally available for distribution, the Trust will not have sufficient funds to make corresponding distributions on the Trust Preferred Securities, in which event the Trust Guarantee will not apply to such distributions until the Trust has sufficient funds legally available therefor. See "Supplemental Description of the Partnership Preferred Securities--Distributions" and "Supplemental Description of the Trust Guarantee." In addition, as described under "Risk Factors--Insufficient Income or Assets Available to Partnership," the Partnership may not have sufficient funds legally available to pay current or liquidating distributions on the Partnership Preferred Securities if (i) at any time that the Partnership is receiving current payments in respect of the securities held by the Partnership (including the Debentures), the General Partner, in its sole discretion, does not declare distributions on the Partnership Preferred Securities and the Partnership receives insufficient amounts to pay the additional compounded distributions that will accumulate in respect of the Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds received in respect of the Debentures upon their retirement or at their maturities in Affiliate Investment Instruments that do not generate income in an amount that is sufficient to pay full distributions in respect of the Partnership Preferred Securities or (iii) the Partnership invests in equity or debt securities of Investment Affiliates that are not guaranteed by the Company and that cannot be liquidated by the Partnership for an amount sufficient to pay such distributions in full. Distributions on the Trust Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which will be one Business Day prior to the relevant payment dates. Such distributions will be paid through the Property Trustee who will hold amounts received in respect of the Partnership Preferred Securities in the Property Account for the benefit of the holders of the Trust Preferred Securities. 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 Only Issuance--The Depository Trust Company" below. In the event that the Trust Preferred Securities do not remain in book-entry only form, the relevant record dates shall be the 15th day of the month of the relevant payment dates. In the event that any date on which distributions are payable on the Trust Preferred Securities is not a Business Day, payment of the distribution payable on such date will be made on the next succeeding day which is a Business Day (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 such date. A "Business Day" shall mean any day other than a day on which banking institutions in the City of New York are authorized or required by law to close. TRUST ENFORCEMENT EVENTS The occurrence, at any time, of (i) arrearages on distributions on the Trust Preferred Securities that shall exist for six consecutive quarterly distribution periods, (ii) a default by the Company in respect of any of its obligations under the Trust Guarantee or (iii) a Partnership Enforcement Event under the Agreement of Limited Partnership will constitute an enforcement event under the Trust Agreement with respect to the Trust Preferred Securities (a "Trust Enforcement Event"); provided, that pursuant to the Trust Agreement, the holder of the Trust Common Securities will be deemed to have waived any Trust Enforcement Event and its consequences with respect to the Trust Common Securities until all Trust Enforcement Events with respect to the Trust S-25 Preferred Securities have been cured, waived or otherwise eliminated. Until such Trust Enforcement Events with respect to the Trust Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Trust Preferred Securities, and only the holders of the Trust Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Trust Agreement and, therefore, the Special Representative with respect to certain matters under the Agreement of Limited Partnership. See "Supplemental Description of the Partnership Preferred Securities--Partnership Enforcement Events" for a description of the events which will trigger the occurrence of a Partnership Enforcement Event. Upon the occurrence of a Trust Enforcement Event, (a) the Property Trustee, as the holder of the Partnership Preferred Securities, shall have the right to enforce the terms of the Partnership Preferred Securities, including the right to direct the Special Representative to enforce (i) to the fullest extent permitted by law, the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees, (ii) the rights of the holders of the Partnership Preferred Securities under the Partnership Guarantee and (iii) the rights of the holders of the Partnership Preferred Securities to receive distributions (only if and to the extent declared by the General Partner in its sole discretion out of funds legally available therefor) on the Partnership Preferred Securities, and (b) the Trust Guarantee Trustee shall have the right to enforce the terms of the Trust Guarantee, including the right to enforce the covenant restricting the payment of dividends and certain other distributions by the Company. If the Property Trustee fails to enforce its rights under the Partnership Preferred Securities after a holder of Trust Preferred Securities has made a written request, such holder of Trust Preferred Securities may, to the fullest extent permitted by law, directly institute a legal proceeding against the General Partner and the Special Representative to enforce the Property Trustee's rights under the Partnership Preferred Securities without first instituting any legal proceeding against the Property Trustee, the Trust or any other person or entity. In addition, for so long as the Trust holds any Partnership Preferred Securities, if the Special Representative fails to enforce its rights on behalf of the Partnership under the Affiliate Investment Instruments or the Investment Guarantees after a holder of record of Trust Preferred Securities has made a written request, such holder of Trust Preferred Securities, to the fullest extent permitted by law, may on behalf of the Partnership directly institute a legal proceeding against the Investment Affiliates to enforce the rights of the Special Representative and the Partnership under the Affiliate Investment Instruments and against the Company under the applicable Investment Guarantee, without first instituting any legal proceeding against the Property Trustee, the Trust, the Special Representative, the Partnership or any other person or entity. In any event, for so long as the Trust is the holder of any Partnership Preferred Securities, if a Trust Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any applicable Affiliate Investment Instrument or the failure of the Company to make any required payment when due on any Investment Guarantee, then a holder of Trust Preferred Securities may, to the fullest extent permitted by law, on behalf of the Partnership directly institute a proceeding against such Investment Affiliate with respect to such Affiliate Investment Instrument or against the Company with respect to any such Investment Guarantee, in each case for enforcement of payment. Under no circumstances, however, shall the Special Representative have authority to cause the General Partner to declare distributions on the Partnership Preferred Securities. As a result, although the Special Representative may be able to enforce the Partnership's creditors' rights to accelerate and receive payments in respect of the Affiliate Investment Instruments and the Investment Guarantees, the Partnership would be entitled to reinvest such payments in additional Affiliate Investment Instruments, subject to satisfying the reinvestment criteria described under "Supplemental Description of the Partnership Preferred Securities--Partnership Investments," and in Eligible Debt Securities, rather than declaring and making distributions on the Partnership Preferred Securities. The Company and the Trust are each required to file annually with the Property Trustee an officer's certificate as to its compliance with all conditions and covenants under the Trust Agreement. S-26 REDEMPTION The Partnership Preferred Securities may be redeemed by the Partnership at the option of the General Partner, in whole or in part, subject to satisfaction of certain conditions, at any time on or after February , 2002, or at any time in certain circumstances, in whole, upon the occurrence of a Partnership Special Event, in either case at an amount per Partnership Preferred Security of $25 plus accumulated and unpaid distributions thereon to the date fixed for redemption. Upon the redemption of the Partnership Preferred Securities (either at the option of the General Partner or pursuant to a Partnership Special Event), the proceeds from such redemption shall simultaneously be applied pro rata to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate liquidation preference of the redeemed Partnership Preferred Securities at the Redemption Price; provided, that holders of the Trust Preferred Securities shall be given not less than 30 nor more than 60 days' notice of such redemption. See "Supplemental Description of the Partnership Preferred Securities--Optional Redemption," "--Partnership Special Event Redemption" and"--Redemption Procedures." Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Company or its subsidiaries may at any time and from time to time purchase outstanding Trust Preferred Securities by tender, in the open market or by private agreement. TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION If, at any time, a Trust Tax Event or a Trust Investment Company Event (each as defined below, and each a "Trust Special Event") shall occur and be continuing, the Regular Trustees shall, unless the Partnership Preferred Securities are redeemed in the limited circumstances described below, within 90 days following the occurrence of such Trust Special Event elect to either (i) dissolve the Trust upon not less than 30 nor more than 60 days' notice with the result that, after satisfaction of creditors of the Trust, if any, Partnership Preferred Securities (which will have an aggregate liquidation preference equal to the aggregate stated liquidation amount of, a distribution rate identical to the distribution rate of, accumulated and unpaid distributions equal to accumulated and unpaid distributions on, and a record date for payment the same as, the Trust Preferred Securities and the Trust Common Securities outstanding at such time) will be distributed on a pro rata basis to the holders of the Trust Preferred Securities and the Trust Common Securities in liquidation of such holders' interests in the Trust; provided, however, that if at the time there is available to the Trust the opportunity to eliminate, within such 90-day period, the Trust Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure which in the sole judgment of the Company has or will cause no adverse effect on the Trust, the Partnership, the Company or the holders of the Trust Preferred Securities and will involve no material cost, the Trust will pursue such measure in lieu of dissolution or (ii) cause the Trust Preferred Securities to remain outstanding, provided that in the case of this clause (ii), the Company shall pay any and all expenses incurred by or payable by the Trust attributable to the Trust Special Event. Furthermore, if in the case of the occurrence of a Trust Tax Event, the Regular Trustees have received an opinion (a "Trust Redemption Tax Opinion") of recognized independent tax counsel (which may be counsel for the Company) experienced in such matters that there has been a Trust Tax Event and, following such Trust Tax Event, there is more than an insubstantial risk that interest payable by one or more of the Investment Affiliates with respect to the Affiliate Investment Instrument that is a debt instrument issued by such Investment Affiliate is not, or will not be, deductible by such Investment Affiliate for United States federal income tax purposes even if the Partnership Preferred Securities were distributed to the holders of the Trust Preferred Securities and Trust Common Securities in liquidation of such holders' interests in the Trust as described above, then the General Partner shall have the right, within 90 days following the occurrence of such Trust Tax Event, to elect to cause the Partnership to redeem the Partnership Preferred Securities in whole (but not in part) for cash upon not less than 30 nor more than 60 days' notice, and promptly following such redemption the Trust Preferred Securities and Trust Common Securities will be redeemed by the Trust at the Redemption Price. "Trust Tax Event" means that the Company shall have requested and received and shall have delivered to the Regular Trustees an opinion of recognized independent tax counsel (which may be counsel to the Company) experienced in such matters (a "Trust Dissolution Tax Opinion") to the effect that there has been (a) an amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the S-27 United States or of any State or the District of Columbia or of any political subdivision or taxing authority thereof or therein, (b) a judicial decision interpreting, applying or clarifying such laws or regulations, (c) an 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 (d) a threatened challenge asserted in connection with an audit of the Company or any of its subsidiaries, the Partnership or the Trust, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Debentures, the Partnership Preferred Securities or the Trust Preferred Securities, that occurs on or after the date of this Prospectus Supplement (collectively a "Tax Action") and that results in there being more than an insubstantial risk that (i) the Trust is or will be subject to United States federal income tax with respect to income accumulated or received on the Partnership Preferred Securities, (ii) the Trust is or will be subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by an Investment Affiliate with respect to the Affiliate Investment Instrument that is a debt instrument issued by such Investment Affiliate is not, or will not be, deductible by such Investment Affiliate for United States federal income tax purposes. "Trust Investment Company Event" means that the Company shall have requested and received and shall have delivered to the Regular Trustees an opinion of recognized independent legal counsel (which may be counsel to the Company) experienced in such matters to the effect that, as a result of the occurrence on or after the date of this Prospectus Supplement of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"). If the Partnership Preferred Securities are distributed to the holders of the Trust Preferred Securities, the Company will use its best efforts to cause the Partnership Preferred Securities to be listed on the New York Stock Exchange or on such other national securities exchange or similar organization as the Trust Preferred Securities are then listed or quoted. On the date fixed for any distribution of Partnership Preferred Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities and the Trust Common Securities will no longer be deemed to be outstanding and (ii) certificates representing Trust Securities will be deemed to represent the Partnership Preferred Securities so distributed having a liquidation preference equal to the stated liquidation amount of, and bearing accumulated and unpaid distributions equal to accumulated and unpaid distributions on, such Trust Securities until such certificates are presented to the Company or its agent for transfer or reissuance. There can be no assurance as to the market price for the Partnership Preferred Securities which may be distributed in exchange for Trust Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Partnership Preferred Securities which an investor may subsequently receive on dissolution and liquidation of the Trust may trade at a discount to the price of the Trust Preferred Securities exchanged. REDEMPTION PROCEDURES 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 date of redemption. If the Trust gives a notice of redemption in respect of Trust Preferred Securities (which notice will be irrevocable), and if the Company has paid to the Property Trustee a sufficient amount of cash in connection with the related redemption of the Partnership Preferred Securities, then, by 12:00 noon, New York time, on the redemption date, the Property Trustee will irrevocably deposit with DTC funds sufficient to pay the amount payable on redemption of all book-entry certificates and will give DTC irrevocable instructions and authority to pay such amount to holders of the Trust Preferred Securities. See "--Book-Entry Only Issuance--The Depository Trust Company." If notice of redemption shall have been given and funds are deposited as required, S-28 then upon the date of such deposit all rights of holders of such Trust Preferred Securities so called for redemption will cease, except the right of the holders of such Trust Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price, and, from and after the date fixed for redemption, such Trust Preferred Securities will not accumulate distributions or bear interest. In the event that any date fixed for redemption of Trust Preferred Securities is not a Business Day, then payment of the amount payable on such date will be made on the next succeeding day which is a Business Day (without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day (without any reduction in interest or other payments in respect of such early payments), in each case with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of Trust Preferred Securities is improperly withheld or refused and not paid either by the Property Trustee or by the Company pursuant to the Trust Guarantee described under "Supplemental Description of the Trust Guarantee," distributions on such Trust Preferred Securities will continue to accumulate at the then applicable rate, from the original redemption date to the date of payment. In the event that fewer than all of the outstanding Trust Preferred Securities are to be redeemed, the Trust Preferred Securities will be redeemed in accordance with the procedures of DTC. See "--Book-Entry Only Issuance--The Depository Trust Company." SUBORDINATION OF TRUST COMMON SECURITIES Payment of amounts upon liquidation of the Trust Securities (as described below) shall be made pro rata based on the liquidation amount of the Trust Securities; provided, however, that if (i) an Investment Event of Default by an Investment Affiliate (including the Company) in respect of any Affiliate Investment Instrument has occurred and is continuing and the Company is in default of its obligations under an applicable Investment Guarantee or (ii) the Company is in default under any of its obligations under the Trust Guarantee or the Partnership Guarantee, then the holders of the Trust Preferred Securities will have a preference over the holders of the Trust Common Securities with respect to distributions and payments upon liquidation of the Trust. In the case of any Trust Enforcement Event, the holder of Trust Common Securities will be deemed to have waived any such Trust Enforcement Event until all such Trust Enforcement Events with respect to the Trust Preferred Securities have been cured, waived or otherwise eliminated. Until all Trust Enforcement Events with respect to the Trust Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the holders of the Trust Preferred Securities and not on behalf of the holder of the Trust Common Securities, and only the holders of the Trust Preferred Securities will have the right to direct the Property Trustee to act on their behalf. LIQUIDATION DISTRIBUTION UPON DISSOLUTION In the event of any voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each a "Trust Liquidation"), the holders of the Trust Preferred Securities on the date of the Trust Liquidation will be entitled to receive out of the assets of the Trust available for distributions to holders of Trust Securities, after satisfaction of obligations to creditors of the Trust, if any, distributions in cash or other immediately available funds in an amount equal to the aggregate of the stated liquidation amount of $25 per Trust Security plus accumulated and unpaid distributions thereon to the date of payment (the "Trust Liquidation Distribution"), unless, in connection with such Trust Liquidation, Partnership Preferred Securities (which will have an aggregate liquidation preference equal to the aggregate stated liquidation amount of, a distribution rate identical to the distribution rate of, and accumulated and unpaid distributions equal to accumulated and unpaid distributions on, the Trust Securities) have been distributed on a pro rata basis to the holders of the Trust Securities in exchange for such Trust Securities. If, upon any such Trust Liquidation, the Trust Liquidation Distribution can be paid only in part because the Trust has insufficient assets legally available to pay in full the aggregate Trust Liquidation Distribution, then the amounts payable directly by the Trust on the Trust Preferred Securities shall be paid on a pro rata basis, and the S-29 holders of the Trust Common Securities will be entitled to receive distributions upon any such liquidation as described above under "-- Subordination of Trust Common Securities." Pursuant to the Trust Agreement, the Trust shall dissolve (i) upon the bankruptcy, insolvency or dissolution of the Company, (ii) upon the filing of a certificate of dissolution or the equivalent with respect to the Company, the filing of a certificate of cancellation with respect to the Trust after having obtained the consent of at least a majority in liquidation amount of the Trust Securities, voting together as a single class, to file such certificate of cancellation, or the revocation of the charter of the Company and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iii) upon the distribution of all of the Partnership Preferred Securities upon the occurrence of a Trust Special Event, (iv) upon the entry of a decree of a judicial dissolution of the Company or the Trust, or (v) upon the redemption of all the Trust Preferred Securities. A merger, amalgamation, conversion or consolidation of the Company with or into another entity will not constitute one of the foregoing events. VOTING RIGHTS Except as described herein and under "Supplemental Description of the Trust Guarantee--Amendments and Assignment," and except as provided in the Trust Act, the Trust Indenture Act or as otherwise required by law or the Trust Agreement, the holders of the Trust Preferred Securities will have no voting rights. Subject to the requirement of the Property Trustee obtaining a tax opinion as set forth in the last sentence of this paragraph, the holders of a majority in liquidation amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or direct the exercise of any trust or power conferred upon the Property Trustee under the Trust Agreement, including the right to direct the Property Trustee, as holder of the Partnership Preferred Securities, to (i) exercise the remedies available to it under the Agreement of Limited Partnership as a holder of the Partnership Preferred Securities, including the right to direct the Special Representative to exercise its rights in the manner described above under "--Trust Enforcement Events" and (ii) consent to any amendment, modification or termination of the Agreement of Limited Partnership or the Partnership Preferred Securities where such consent shall be required; provided, however, that where a consent or action under the Agreement of Limited Partnership would require the consent or act of the holders of more than a majority of the aggregate liquidation preference of Partnership Preferred Securities affected thereby, only the holders of the percentage of the aggregate stated liquidation amount of the Trust Preferred Securities which is at least equal to the percentage required under the Agreement of Limited Partnership may direct the Property Trustee to give such consent or take such action on behalf of the Trust. See "Supplemental Description of the Partnership Preferred Securities--Voting Rights." The Property Trustee shall notify all holders of the Trust Preferred Securities of any notice of any Partnership Enforcement Event received from the General Partner with respect to the Partnership Preferred Securities and the Affiliate Investment Instruments. Such notice shall state that such Partnership Enforcement Event also constitutes a Trust Enforcement Event. Except with respect to directing the time, method, and place of conducting a proceeding for a remedy as described above, the Property Trustee shall be under no obligation to take any of the actions described in clause (i) or (ii) above unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, for United States federal income tax purposes the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation and that after such action each holder of Trust Securities will continue to be treated as owning an undivided beneficial ownership interest in the Partnership Preferred Securities. In the event the consent of the Property Trustee, as the holder of the Partnership Preferred Securities, is required under the Agreement of Limited Partnership with respect to any amendment, modification or termination of the Agreement of Limited Partnership, the Property Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where a consent under the Agreement of Limited Partnership would require the consent of the holders of more than a majority in aggregate liquidation preference S-30 of the Partnership Preferred Securities, the Property Trustee may only give such consent at the direction of the holders of at least the same proportion in aggregate stated liquidation amount of the Trust Securities. The Property Trustee shall not take any such action in accordance with the directions of the holders of the Trust Securities unless the Property Trustee has obtained an opinion of tax counsel to the effect that such action is not inconsistent with the Trust being classified as a grantor trust for United States federal income tax purposes. Subject to certain exceptions, the holders of a majority in liquidation amount of the Trust Preferred Securities may waive any past Trust Enforcement Event in respect of the Trust Preferred Securities. A waiver of a Partnership Enforcement Event with respect to the Partnership Preferred Securities held by the Property Trustee will constitute a waiver of the corresponding Trust Enforcement Event. See "Supplemental Description of the Partnership Preferred Securities--Voting Rights." Any required approval or direction of holders of Trust Preferred Securities may be given at a separate meeting of holders of Trust Preferred Securities convened for such purpose, at a meeting of all of the holders of Trust Preferred Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Trust Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Trust Preferred Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Trust Preferred Securities will be required for the Trust to redeem and cancel Trust Preferred Securities or distribute Partnership Preferred Securities in accordance with the Trust Agreement. Notwithstanding that holders of Trust Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Trust Preferred Securities that are owned beneficially at such time by the Company or any entity directly or indirectly controlled by, or under direct or indirect common control with, the Company, will not be entitled to vote or consent and will, for purposes of such vote or consent, be treated as if such Trust Preferred Securities were not outstanding; provided, however, that persons (other than affiliates of the Company) to whom the Company or any of its subsidiaries have pledged Trust Preferred Securities may vote or consent with respect to such pledged Trust Preferred Securities under any of the circumstances described herein. The procedures by which holders of Trust Preferred Securities represented by global certificates may exercise their voting rights are described below. See "--Book-Entry Only Issuance--The Depository Trust Company." Holders of the Trust Preferred Securities will have no rights to appoint or remove the Regular Trustees, who may be appointed, removed or replaced solely by the Company, as the holder of all of the Trust Common Securities. MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any corporation or other entity, except as described below. The Trust may, with the consent of a majority of the Regular Trustees and without the consent of the holders of the Trust Securities, the Property Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state of the United States; provided, that (i) if the Trust is not the survivor, such successor entity either (x) expressly assumes all of the obligations of the Trust under the Trust Securities or (y) 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 Securities rank with respect to distributions, assets and payments upon liquidation, redemption and otherwise, (ii) the Company expressly acknowledges a trustee of S-31 such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Partnership Preferred Securities, (iii) the Trust Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or with another organization on which the Trust Preferred Securities are then listed or quoted, (iv) such merger, consolidation, amalgamation or replacement 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, amalgamation or replacement 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 identical to that of the Trust, (vii) the Company guarantees the obligations of such successor entity under the Successor Securities to the same extent as provided by the Trust Guarantee and (viii) prior to such merger, consolidation, amalgamation or replacement, the Company has received an opinion of a independent counsel to the Trust (which may be counsel for the Company) experienced in such matters to the effect that: (A) such merger, consolidation, amalgamation or replacement will not adversely affect the rights, preferences and privileges of the holders of the Trust Preferred Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act, (C) following such merger, consolidation, amalgamation or replacement, the Trust (or such successor trust) will not be treated as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes and (D) following such merger, consolidation, amalgamation or replacement, the Partnership will not be treated as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in stated liquidation preference of the Trust Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced, if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. MODIFICATION OF THE TRUST AGREEMENT The Trust Agreement may be modified and amended if approved by a majority of the Regular Trustees (and in certain circumstances the Property Trustee and the Delaware Trustee), provided, that if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the holders of Trust Securities, whether by way of amendment to the Trust Agreement or otherwise or (ii) the dissolution, winding-up or termination of the Trust other than pursuant to the terms of the Trust Agreement, then the holders of the Trust Securities voting together as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the holders of at least a majority in liquidation amount of the Trust Securities affected thereby; provided, further, that if any amendment or proposal referred to in clause (i) above would adversely affect only the Trust Preferred Securities or the Trust Common Securities, then only the affected class of security holders will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a majority in liquidation amount of such class of Trust Securities. The Trust Agreement may be amended without the consent of any holders of the Trust Preferred Securities to (i) cure any ambiguity, (ii) correct or supplement any provision in the Trust Agreement that may be defective or inconsistent with any other provision of the Trust Agreement, (iii) add to the covenants, restrictions or obligations of the Company, (iv) conform to any change in the 1940 Act, the Trust Indenture Act or the rules or regulations promulgated under either such Act and (v) modify, eliminate and add to any provision of the Trust Agreement to such extent as may be necessary or desirable; provided that no such amendment shall have a material adverse effect on the rights, preferences or privileges of the holders of the Trust Preferred Securities. Notwithstanding the foregoing, no amendment or modification may be made to the Trust Agreement if such amendment or modification would (i) cause the Trust to be classified as an association or a publicly traded S-32 partnership taxable as a corporation for United States federal income tax purposes, (ii) cause the Partnership to be classified as an association or a publicly traded partnership taxable as a corporation for such purposes, (iii) reduce or otherwise adversely affect the powers of the Property Trustee in contravention of the Trust Indenture Act or (iv) cause the Trust or the Partnership to be deemed an "investment company" which is required to be registered under the 1940 Act. BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY DTC will act as securities depository (the "Depository") for the Trust Preferred Securities and, to the extent distributed to the holders of Trust Preferred Securities, the Partnership Preferred Securities. The Trust Preferred Securities will be issued only as fully-registered securities registered in the name of Cede & Co. as nominee for DTC. One or more fully-registered global Trust Preferred Securities certificates ("Global Certificates"), representing the total aggregate number of Trust Preferred Securities, will be issued 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. Participants in DTC include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Participants and by the New York Stock Exchange, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission (the "Commission"). Purchases of Trust Preferred Securities within the DTC system must be made by or through Participants, which will receive a credit for the Trust Preferred Securities on DTC's records. The ownership interest of each actual purchaser of Trust Preferred Securities ("Beneficial Owner") is in turn to be recorded on the Participants' 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 Participants or Indirect Participants through which the Beneficial Owners purchased Trust Preferred Securities. Transfers of ownership interests in the Trust Preferred Securities are to be accomplished by entries made on the books of Participants and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Trust Preferred Securities, except in the event that use of the book-entry system for the Trust Preferred Securities is discontinued. DTC has no knowledge of the actual Beneficial Owners of the Trust Preferred Securities; DTC's records reflect only the identity of the Participants to whose accounts such Trust Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. So long as DTC, or its nominee, is the registered owner or holder of a Global Certificate, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Trust Preferred Securities represented thereby for all purposes under the Trust Agreement and the Trust Preferred Securities. No Beneficial Owner of an interest in a Global Certificate will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the Trust Agreement. S-33 DTC has advised the Company that it will take any action permitted to be taken by a holder of Trust Preferred Securities (including the presentation of Trust Preferred Securities for exchange as described below) only at the direction of one or more Participants to whose account the DTC interests in the Global Certificates are credited and only in respect of such portion of the aggregate liquidation amount of Trust Preferred Securities as to which such Participant or Participants has or have given such direction. However, if there is a Trust Enforcement Event under the Trust Preferred Securities, DTC will exchange the Global Certificates for Certificated Securities, which it will distribute to its Participants in accordance with its customary procedures. Conveyance of notices and other communications by DTC to Participants, by Participants to Indirect Participants, and by Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices in respect of the Trust Preferred Securities held in book- entry form will be sent to Cede & Co. If less than all of the Trust Preferred Securities are being redeemed, DTC will determine the amount of the interest of each Participant to be redeemed in accordance with its procedures. Although voting with respect to the Trust Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to Trust Preferred Securities. Under its usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Participants to whose accounts the Trust Preferred Securities are allocated on the record date (identified in a listing attached to the Omnibus Proxy). Distributions on the Trust Preferred Securities held in book-entry form will be made to DTC in immediately available funds. DTC's practice is to credit 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 and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such Participants and Indirect Participants and not of DTC, the Trust or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of any distributions to DTC is the responsibility of the Trust, disbursement of such payments to Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Participants and Indirect Participants. Except as described herein, a Beneficial Owner of an interest in a Global Certificate will not be entitled to receive physical delivery of Trust Preferred Securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under the Trust Preferred Securities. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Certificates among Participants of DTC, DTC is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trust will have any responsibility for the performance by DTC or its Participants or Indirect Participants under the rules and procedures governing DTC. DTC may discontinue providing its services as securities depository with respect to the Trust Preferred Securities at any time by giving notice to the Trust. Under such circumstances, in the event that a successor securities depository is not obtained, Trust Preferred Security certificates are required to be printed and delivered to the Property Trustee. Additionally, the Trust (with the consent of the Company) may decide to discontinue use of the system of book-entry transfers through DTC or any successor depository. In that event, and in the event of certain Trust Enforcement Events, certificates for the Trust Preferred Securities will be printed and delivered to the Property Trustee. In each of the above circumstances, the Company will appoint a paying agent with respect to the Trust Preferred Securities. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in the global Trust Preferred Securities as represented by a Global Certificate. S-34 PAYMENT Payments in respect of the Trust Preferred Securities represented by the Global Certificates shall be made to DTC, which shall credit the relevant accounts at DTC on the scheduled payment dates or, in the case of certificated securities, if any, such payments shall be made by check mailed to the address of the holder entitled thereto as such address shall appear on the register. REGISTRAR, TRANSFER AGENT AND PAYING AGENT The Property Trustee will act as registrar, transfer agent and, if required, paying agent for the Trust Preferred Securities. Registration of transfers of Trust Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Trust or the Company may require) in respect of any tax or other government charges which may be imposed in relation to it. The Trust will not be required to register or cause to be registered the transfer of Trust Preferred Securities after such Trust Preferred Securities have been called for redemption. INFORMATION CONCERNING THE PROPERTY TRUSTEE The Property Trustee, during the period prior to the occurrence of any Trust Enforcement Event and during the period after the curing or waiver of all Trust Enforcement Events that may have occurred, undertakes to perform only such duties as are specifically set forth in the Trust Agreement and, after a Trust Enforcement Event, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, 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 Trust Preferred Securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The holders of Trust Preferred Securities will not be required to offer such indemnity in the event such holders, by exercising their voting rights, direct the Property Trustee to take any action following a Trust Enforcement Event. GOVERNING LAW The Trust Agreement and the Trust Preferred Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. MISCELLANEOUS The Regular Trustees are authorized and directed to conduct the affairs of and to operate the Trust in such a way that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act or characterized as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. In this connection, the Regular Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust or the Trust Agreement that the Regular Trustees determine in their discretion to be necessary or desirable for such purposes as long as such action does not materially adversely affect the interests of the holders of the Trust Preferred Securities. S-35 SUPPLEMENTAL DESCRIPTION OF THE TRUST GUARANTEE Set forth below is a summary of information concerning the Trust Guarantee which will be executed and delivered by the Company for the benefit of the holders from time to time of Trust Preferred Securities. The summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Trust Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part. The Trust Guarantee incorporates by reference the terms of, and will be qualified as an indenture under, the Trust Indenture Act. The Bank of New York, as the Trust Guarantee Trustee, will hold the Trust Guarantee for the benefit of the holders of the Trust Preferred Securities and will act as indenture trustee for the purposes of compliance with the Trust Indenture Act. GENERAL Pursuant to the Trust Guarantee, the Company will irrevocably agree, on a subordinated basis and to the extent set forth therein, to pay in full to the holders of the Trust Preferred Securities (except to the extent paid by the Trust), as and when due, regardless of any defense, right of set off or counterclaim which the Trust may have or assert, the following payments (the "Trust Guarantee Payments"), without duplication: (i) any accumulated and unpaid distributions on the Trust Preferred Securities that are required to be paid on such Trust Preferred Securities to the extent the Trust has funds available therefor, (ii) the Redemption Price with respect to any Trust Preferred Securities called for redemption by the Trust to the extent the Trust has funds available therefor and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Partnership Preferred Securities to the holders of Trust Preferred Securities or the redemption of all of the Trust Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid distributions on the Trust Preferred Securities to the date of payment and (b) the amount of assets of the Trust remaining available after satisfaction of all obligations of creditors of the Trust, if any, for distribution to holders of Trust Preferred Securities in liquidation of the Trust. The Company's obligation to make a Trust Guarantee Payment may be satisfied by direct payment of the required amounts by the Company to the holders of Trust Preferred Securities or by causing the Trust to pay such amounts to such holders. The Trust Guarantee will be a guarantee on a subordinated basis with respect to the Trust Preferred Securities from the time of issuance of such Trust Preferred Securities but will only apply to any payment of distributions or Redemption Price, or to payments upon the dissolution, winding-up or termination of the Trust, to the extent the Trust shall have funds available therefor. If the Partnership fails to declare distributions on Partnership Preferred Securities, the Trust would lack available funds for the payment of distributions or amounts payable on redemption of the Trust Preferred Securities or otherwise, and in such event holders of the Trust Preferred Securities would not be able to rely upon the Trust Guarantee for payment of such amounts. Instead, holders of the Trust Preferred Securities will have the remedies described above under "Supplemental Description of the Trust Preferred Securities--Trust Enforcement Events," including the right to direct the Trust Guarantee Trustee to enforce the covenant restricting certain distributions by the Company. See "--Certain Covenants of the Company." The Trust Guarantee, when taken together with the Company Debentures, the Partnership Guarantee, the Investment Guarantees, and the Company's obligations to pay all fees and expenses of the Trust, constitute a guarantee to the extent described herein by the Company of the distribution, redemption and liquidation payments payable to the holders of the Trust Preferred Securities. The Guarantees do not apply, however, to current distributions by the Partnership unless and until such distributions are declared by the General Partner out of funds legally available for payment or to liquidating distributions unless there are assets available for payment in the Partnership, each as more fully described under "Risk Factors--Insufficient Income or Assets Available to Partnership." S-36 CERTAIN COVENANTS OF THE COMPANY The Company will covenant in the Trust Guarantee that so long as any Trust Preferred Securities are outstanding if, (a) for any distribution period, full distributions on a cumulative basis on any Trust Preferred Securities have not been paid or declared and set apart for payment, (b) an Investment Event of Default by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and the Company is in default under its obligations with respect thereto under an applicable Investment Guarantee or (c) the Company is in default of its obligations under the Trust Guarantee or the Partnership Guarantee, then, during such period, (i) the Company shall not declare or pay dividends on, make distributions or liquidation payments with respect to, or redeem, purchase or acquire, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, its common stock and conversions and exchanges of common stock of one class for common stock of another class and other exceptions set forth in the accompanying Prospectus), (ii) the Company shall not make any payment or cause any payment to be made that would result in, and shall take such actions as shall be necessary to prevent, the payment of any dividends on, any distribution or liquidation payment with respect to, or any redemption, purchase or other acquisition of, any Comparable Equity Interest, and (iii) the Company will not make any guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee or any other guarantee by the Company with respect to any Comparable Equity Interest). "Comparable Equity Interest" means any preferred security issued by any finance subsidiary of the Company, the principal purpose of which is to lend the proceeds of the sale thereof to the Company or to eligible affiliates of the Company. EVENTS OF DEFAULT; ENFORCEMENT OF TRUST GUARANTEE An event of default under the Trust Guarantee will occur upon the failure of the Company to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trust Guarantee Trustee or to direct the exercise of any trust or power conferred upon the Trust Guarantee Trustee under the Trust Guarantee. If the Trust Guarantee Trustee fails to enforce its rights under the Trust Guarantee after a holder of record of Trust Preferred Securities has made a written request, such holder may institute a legal proceeding directly against the Company to enforce the Trust Guarantee Trustee's rights under the Trust Guarantee, without first instituting a legal proceeding against the Trust, the Trust Guarantee Trustee or any other person or entity. In any event, if the Company has failed to make a guarantee payment under the Trust Guarantee, a holder of Trust Preferred Securities may directly institute a proceeding in such holder's own name against the Company for enforcement of the Trust Guarantee for such payment. STATUS OF THE TRUST GUARANTEE; SUBORDINATION The Trust Guarantee will constitute an unsecured obligation of the Company and will rank subordinate and junior to all other existing liabilities of the Company and will rank pari passu with the most senior preferred stock (if any) issued from time to time by the Company, with the Partnership Guarantee and the Investment Guarantees and with any guarantee hereafter entered into by the Company in respect of any preferred security of the Company or any affiliate of the Company. Accordingly, the rights of the holders of Trust Preferred Securities to receive payments under the Trust Guarantee will be subject to the rights of the holders of any obligations of the Company that are senior in priority to the obligations under the Trust Guarantee. Furthermore, the holders of obligations of the Company that are senior to the obligations under the Trust Guarantee (including, but not limited to, obligations constituting senior indebtedness of the Company) will be entitled to the same rights upon payment default or dissolution, liquidation and reorganization in respect of the Trust Guarantee that inure to the holders of senior indebtedness of the Company as against the holders of the Company Debentures. In addition, the Trust Guarantee will be effectively subordinated to all future indebtedness and liabilities of the Company's subsidiaries. See "Risk Factors--Ranking of Subordinate Obligations Under the Guarantees and the Company S-37 Debentures." The terms of the Trust Preferred Securities provide that each holder of Trust Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Trust Guarantee. The Trust Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may directly institute a legal proceeding against the Company to enforce its rights under the Trust Guarantee without instituting a legal proceeding against any other person or entity). AMENDMENTS AND ASSIGNMENT Except with respect to any amendments that may be made without the consent of the holders of Trust Preferred Securities, as described above under "-- Modification of the Trust Agreement," the Trust Guarantee may be amended only with the prior approval of the holders of at least a majority in liquidation amount of all the outstanding Trust Preferred Securities. The manner of obtaining any such approval of holders of the Trust Preferred Securities will be as set forth under "Supplemental Description of the Trust Preferred Securities--Voting Rights." All guarantees and agreements contained in the Trust Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the holders of the Trust Preferred Securities then outstanding. Except in connection with any permitted merger or consolidation of the Company with or into another entity or any permitted sale, transfer or lease of the Company's assets to another entity, the Company may not assign its rights or delegate its obligations under the Trust Guarantee without the prior approval of the holders of at least a majority of the aggregate stated liquidation amount of the Trust Preferred Securities then outstanding. TERMINATION OF THE TRUST GUARANTEE The Trust Guarantee will terminate as to each holder of Trust Preferred Securities upon (i) full payment of the Redemption Price of all Trust Preferred Securities, (ii) distribution of the Partnership Preferred Securities held by the Trust to the holders of the Trust Preferred Securities or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust. The Trust Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Trust Preferred Securities must restore payment of any sum paid under such Trust Preferred Securities or such Trust Guarantee. INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE The Trust Guarantee Trustee, prior to the occurrence of a default with respect to the Trust Guarantee, undertakes to perform only such duties as are specifically set forth in the Trust Guarantee and, after default with respect to the Trust Guarantee, shall exercise the same degree of care as a prudent person would exercise in the conduct of such person's own affairs. Subject to such 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 Trust Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. GOVERNING LAW The Guarantee will be governed by, and construed in accordance with, the internal laws of the State of New York. S-38 SUPPLEMENTAL DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES GENERAL All of the partnership interests in the Partnership other than the Partnership Preferred Securities acquired by the Trust are owned directly by Hycap, the sole General Partner of the Partnership. The Agreement of Limited Partnership authorizes and creates the Partnership Preferred Securities, which represent limited partner interests in the Partnership. The limited partner interests represented by the Partnership Preferred Securities will have a preference with respect to distributions and amounts payable on redemption or liquidation over the General Partner's interest in the Partnership. Except as otherwise described herein or provided in the Agreement of Limited Partnership, the Agreement of Limited Partnership does not permit the issuance of any additional partner interests or the incurrence of any indebtedness by the Partnership. The summary of certain terms and provisions of the Partnership Preferred Securities set forth below does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Agreement of Limited Partnership, which is filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part, and the Partnership Act. DISTRIBUTIONS Holders of Partnership Preferred Securities will be entitled to receive cumulative cash distributions, if, as and when declared by the General Partner in its sole discretion out of assets of the Partnership legally available for payment. The distributions payable on each Partnership Preferred Security will be fixed at a rate per annum of % of the stated liquidation preference of $25 per Partnership Preferred Security. Distributions not paid on the scheduled payment date will accumulate and compound quarterly at the rate per annum equal to %. 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 that, if such period is shorter than a full 90-day quarter, distributions will be calculated on the basis of the actual number of days elapsed in such 90-day quarter. Distributions on the Partnership Preferred Securities will accumulate from the date of original issuance and will be payable quarterly in arrears if, as and when declared by the General Partner on March 31, June 30, September 30 and December 31 of each year, commencing March 31, 1997. If distributions are not declared and paid when regularly scheduled, the accumulated distributions shall be paid to the holders of record of Partnership Preferred Securities as they appear on the books and records of the Partnership on the record date with respect to the actual payment date for such accumulated distributions. The Partnership's funds available for distribution to the holders of the Partnership Preferred Securities will be limited to payments received by the Partnership on the Affiliate Investment Instruments, the Investment Guarantees and the Eligible Debt Securities in which the Partnership has invested from time to time. See "--Partnership Investments." To the extent that the issuers (and, where applicable, the Company as issuer of its Debentures and as guarantor) of the securities in which the Partnership invests fail to make any payment in respect of such securities (or, if applicable, such guarantees), the Partnership will not have sufficient funds to pay and will not declare or pay distributions on the Partnership Preferred Securities, in which event the Partnership Guarantee will not apply to such distributions until the Partnership has sufficient funds available therefor and declares such distributions. See "Supplemental Description of the Partnership Guarantee" herein. In addition, distributions on the Partnership Preferred Securities may be declared and paid only if, as and when determined in the sole discretion of the General Partner of the Partnership. If the General Partner determines that a distribution will not be made on a regularly scheduled payment date, the General Partner shall give notice of such determination to holders of the Partnership Preferred Securities as of the record date for such distribution, and the General Partner may not declare a distribution on its General Partner interest unless all accumulated and unpaid distributions have been paid in full for all previous payment periods. If the Partnership fails to declare and pay distributions on the Partnership Preferred Securities out of funds legally available for distribution, the Trust will not have sufficient funds to make distributions on the Trust S-39 Preferred Securities, in which event the Trust Guarantee will not apply to such distributions until the Trust has sufficient funds legally available therefor. In addition, as described under "Risk Factors--Insufficient Income or Assets Available to Partnership," the Partnership may not have sufficient funds to pay current or liquidating distributions on the Partnership Preferred Securities if (i) at any time that the Partnership is receiving current payments in respect of the securities held by the Partnership (including the Debentures), the General Partner, in its sole discretion, does not declare distributions on the Partnership Preferred Securities and the Partnership receives insufficient amounts to pay the additional compounded distributions that will accumulate in respect of the Partnership Preferred Securities, (ii) the Partnership reinvests the proceeds received in respect of the Debentures upon their retirement or at their maturities in Affiliate Investment Instruments that do not generate income in an amount that is sufficient to pay full distributions in respect of the Partnership Preferred Securities or (iii) the Partnership invests in equity or debt securities of Investment Affiliates that are not guaranteed by the Company and that cannot be liquidated by the Partnership for an amount sufficient to pay such distributions in full. Distributions on the Partnership Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Partnership on the relevant record dates, which, as long as the Trust Preferred Securities remain (or, in the event that the Trust is liquidated in connection with a Trust Special Event and Partnership Preferred Securities are distributed to holders of the Trust Preferred Securities, as long as the Partnership Preferred Securities remain) in book-entry only form, will be one Business Day prior to the relevant payment dates. In the event the Trust Preferred Securities (or in the event that the Trust is liquidated in connection with a Trust Special Event and Partnership Preferred Securities are distributed to holders of the Trust Preferred Securities, the Partnership Preferred Securities) shall not continue to remain in book-entry only form, the relevant record dates shall be the 15th day of the month of the relevant payment dates. In the event that any date on which distributions are payable on the Partnership Preferred Securities is not a Business Day, then payment of the distribution 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 on payments in respect of such early payments), in each case with the same force and effect as if made on such date. PARTNERSHIP ENFORCEMENT EVENTS If one or more of the following events shall occur and be continuing (each a "Partnership Enforcement Event"): (i) arrearages on distributions on the Partnership Preferred Securities shall exist for six consecutive quarterly distribution periods, (ii) the Company is in default on any of its obligations under the Partnership Guarantee or (iii) an Investment Event of Default (as defined below) occurs and is continuing on any Affiliate Investment Instrument and the Company is in default under its obligations with respect thereto under an applicable Investment Guarantee, then holders of the Partnership Preferred Securities, by the vote of a majority in aggregate liquidation preference of such holders (or, for so long as the Partnership Preferred Securities are held by the Property Trustee, the Property Trustee, as the holder of the Partnership Preferred Securities), will have the right (a) under the Agreement of Limited Partnership to enforce the terms of the Partnership Preferred Securities, including the right to appoint and authorize a special representative of the Partnership and the limited partners (a "Special Representative") to enforce (1) to the fullest extent permitted by law, the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees, (2) the rights of the holders of the Partnership Preferred Securities under the Partnership Guarantee and (3) the rights of the holders of the Partnership Preferred Securities to receive distributions (only if and to the extent declared by the General Partner in its sole discretion out of funds legally available therefor) on the Partnership Preferred Securities, and (b) under the Partnership Guarantee to enforce the terms of the Partnership Guarantee, including the right to enforce the covenant restricting the payment of dividends and certain other distributions by the Company. S-40 The Special Representative, in its own name, in the name of the Partnership, in the name of the holders of the Partnership Preferred Securities, or otherwise, may, to the fullest extent permitted by law, institute, or cause to be instituted, an appropriate proceeding to enforce on behalf of the Partnership the Partnership's rights directly against HEI or any other obligor (including the General Partner) in connection with its obligations to the Partnership, and may prosecute such proceeding to judgment or final decree, and enforce the same against HEI or any other obligor in connection with such obligations and collect, out of the property, wherever situated, of HEI or any such other obligor upon such obligations, the monies adjudged or decreed to be payable in the manner provided by law. The General Partner agrees to execute and deliver such documents as may be necessary, appropriate or convenient for the Special Representative to enforce the foregoing rights and obligations on behalf and in the name of the Partnership. If the Special Representative fails to enforce its rights on behalf of the Partnership under the Affiliate Investment Instruments and the Investment Guarantees after a holder of Partnership Preferred Securities has made a written request, such holder of record of Partnership Preferred Securities may, to the fullest extent permitted by law, directly institute a legal proceeding against the applicable Investment Affiliate to enforce the rights of the Special Representative and the Partnership under the Affiliate Investment Instruments and against the Company under any applicable Investment Guarantees without first instituting any legal proceeding against the Special Representative, the Partnership or any other person or entity. In any event, if a Partnership Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any Affiliate Investment Instrument, then a holder of Partnership Preferred Securities may on behalf of the Partnership directly institute a proceeding against such Investment Affiliate with respect to such Affiliate Investment Instrument for enforcement of payment. A holder of Partnership Preferred Securities may also bring a direct action against the Company to enforce such holder's right under the Partnership Guarantee. See "Supplemental Description of the Partnership Guarantee--Events of Default; Enforcement of Partnership Guarantee." Under no circumstances, however, shall the Special Representative, any holder of Partnership Preferred Securities or any holder of the Trust Preferred Securities have authority to cause the General Partner to declare distributions on the Partnership Preferred Securities. As a result, although the Special Representative may be able to enforce the Partnership's creditors' rights to accelerate and receive payments in respect of the Affiliate Investment Instruments and the Investment Guarantees, the Partnership would be entitled to reinvest such payments in additional Affiliate Investment Instruments, subject to satisfying the reinvestment criteria described under "--Partnership Investments," and in Eligible Debt Securities, rather than declaring and making distributions on the Partnership Preferred Securities. The Special Representative shall not, by virtue of acting in such capacity, be admitted as a general or limited partner in the Partnership or otherwise be deemed to be a general or limited partner in the Partnership and shall have no liability for the debts, obligations or liabilities of the Partnership. PARTNERSHIP INVESTMENTS Approximately 99% of the proceeds from the issuance of the Partnership Preferred Securities and Hycap's purchase of the general partner interests in the Partnership (the "Initial Partnership Proceeds") will be used by the Partnership to purchase debt or equity securities of HEI and its subsidiaries ("Affiliate Investment Instruments," which initially will be the Debentures) and the remaining 1% of the Initial Partnership Proceeds will be used to purchase Eligible Debt Securities. The purchase of the initial Affiliate Investment Instruments by the Partnership will occur contemporaneously with the issuance of the Partnership Preferred Securities. The initial Affiliate Investment Instruments purchased by the Partnership will consist of the Debentures. Approximately 85% of the Initial Partnership Proceeds will be used to purchase the Company Debentures, which will be issued pursuant to the Junior Indenture described in the accompanying Prospectus, and approximately 14% of the Initial Partnership Proceeds will be used to purchase the Subsidiary Debentures. Each of the Debentures is expected to have a term of 20 years and to provide for interest accruing from the date of original issuance and payable quarterly in arrears on each March 31, June 30, September 30 and December 31, S-41 commencing March 31, 1997. The Debentures will be general unsecured debt obligations of the relevant issuer and will rank subordinate and junior to all senior indebtedness of the relevant issuer. The payment of interest on each of the Debentures may be deferred at any time, and from time to time, by the relevant issuer for a period not exceeding six consecutive quarters. If an issuer were so to defer the payment of interest, interest would continue to accrue and compound at the stated interest rate on such Debenture. The Debentures will contain covenants appropriate for comparable unsecured debt securities issued by similar borrowers pursuant to a public offering or private placement under Rule 144A under the Securities Act. See "Description of the Junior Subordinated Debt Securities" in the accompanying Prospectus. The Debentures will contain redemption provisions that correspond to the redemption provisions applicable to the Partnership Preferred Securities, including an option to redeem the Debentures by the relevant issuer, in whole or in part, from time to time, on or after February , 2002, and at any time, in whole, following the occurrence of a Partnership Special Event, in each case, in the same manner described under "--Optional Redemption" and "--Partnership Special Event Redemption." Each of the indentures for the Debentures will provide that, in certain specified circumstances, the Debentures may be assumed by another subsidiary of the Company that meets certain criteria. The Debentures, and any other Affiliate Investment Instruments that are debt instruments acquired by the Partnership in the future, will also contain customary events of default (the "Investment Events of Default"), including events of default for defaults in payments on such securities when due (provided that no default shall occur upon a valid deferral of an interest payment by an issuer), defaults in the performance of the relevant issuer's obligations under its Debentures or other Affiliate Investment Instruments, as the case may be, and certain bankruptcy, insolvency or reorganization events (subject to customary exceptions and grace periods). The payment of interest and principal when due and other payment terms of the Subsidiary Debentures will be fully and unconditionally guaranteed by the Company for the benefit of the holders of the Subsidiary Debentures. Debentures (including Company Debentures) that are transferred to and assumed by a subsidiary of the Company will be covered by Investment Guarantees. See "-- Investment Guarantees." Approximately 1% of the Initial Partnership Proceeds will be invested in Eligible Debt Securities. "Eligible Debt Securities" means cash or book-entry securities, negotiable instruments, or other securities of entities not affiliated with the Company represented by instruments in registered form which evidence any of the following: (a) any security issued or guaranteed as to principal or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States, or any certificate of deposit for any of the foregoing; (b) commercial paper issued pursuant to Section 3(a)(3) of the Securities Act and having, at the time of the investment or contractual commitment to invest therein, a rating from each of Standard & Poor's Ratings Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") in the highest investment rating category granted by such rating agency and having a maturity not in excess of nine months; (c) demand deposits, time deposits and certificates of deposit which are fully insured by FDIC; (d) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the Government of the United States of America or any agency or instrumentality thereof, the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company which is an Eligible Institution (as defined below) and the deposits of which are insured by the FDIC; and (e) any other security which is identified as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it is acquired by the Partnership. "Eligible Institution" means a depository institution organized under the laws of the United States or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), (a)(i) which has either (A) a long-term unsecured debt rating of AA or better by S&P and Aa or better by Moody's or (B) a short-term unsecured debt rating or a certificate of deposit rating of A-1+ by S&P and P-1 by Moody's and (ii) whose deposits are insured by the FDIC or (b)(i) the parent of which has a long-term or short-term unsecured debt rating which signifies investment grade and (ii) whose deposits are insured by the FDIC. S-42 The Partnership may, from time to time and subject to the restrictions described below, reinvest payments received with respect to the Affiliate Investment Instruments (including the Debentures) and the Eligible Debt Securities in additional Affiliate Investment Instruments and Eligible Debt Securities. As of the date of this Prospectus Supplement, the General Partner does not intend to cause the Partnership to reinvest regularly scheduled, periodic payments of interest or dividends received by the Partnership in the manner described below, although there can be no assurance that the General Partner's intention in respect of such reinvestments will not change in the future. Certain financial terms of all Affiliate Investment Instruments (including the Debentures) will be reviewed by a nationally recognized investment banking firm designated by the Company that does not (and whose directors, officers, employees and affiliates do not) have a direct or indirect material equity interest in the Company or any of its subsidiaries or another entity which is an investment banking, accounting or financial services firm selected by the Company and approved by the holders of a majority in liquidation preference of the Partnership Preferred Securities (the "Independent Financial Advisor"). Merrill Lynch & Co. will serve as the initial Independent Financial Advisor. The Partnership may reinvest in additional Affiliate Investment Instruments only if certain procedures and criteria are satisfied with respect to such Affiliate Investment Instrument, including the satisfaction of the following conditions: (i) the Partnership did not hold Affiliate Investment Instruments of the requesting Investment Affiliate that will issue the proposed Affiliate Investment Instrument within the three-year period ending on the date of such proposed investment; (ii) there was never a default on any debt obligation of, or arrearages of dividends on preferred stock issued by, the requesting Investment Affiliate that will issue the proposed Affiliate Investment Instrument that was previously owned by the Partnership; (iii) the applicable financial terms with respect to the proposed Affiliate Investment Instrument have been determined by the Independent Financial Advisor to be at least as favorable as terms which could be obtained by the Partnership in a public offering or private placement under Rule 144A under the Securities Act of a comparable security issued by the requesting Investment Affiliate that is supported by a full and unconditional guarantee issued by an entity comparable to HEI; and (iv) the requesting Investment Affiliate shall not be deemed to be an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. The term "Investment Affiliate" means the Company or any corporation, partnership, limited liability company or other entity (other than the Partnership or the Trust) that is controlled by the Company and is not an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. If the Partnership is unable to reinvest payments and proceeds from Affiliate Investment Instruments in additional Affiliate Investment Instruments meeting the above criteria, the Partnership may only invest such funds in Eligible Debt Securities (subject to restrictions of applicable law, including the 1940 Act). INVESTMENT GUARANTEES General. The Company will agree, on a subordinated basis, to execute and deliver an Investment Guarantee for the benefit of the holders of the Debentures issued by each Investment Affiliate (other than the Company Debentures, unless HEI's obligations under the Company Debentures are transferred to and assumed by another Investment Affiliate) to the extent set forth below. The Investment Guarantees shall be enforceable regardless of any defense, right of set-off or counterclaim that the Company may have or assert. The Investment Guarantees will be full and unconditional guarantees on a subordinated basis with respect to the applicable Debentures from the time of issuance (or, in the case of the Company Debentures, from the time of transfer to and assumption by an Investment Affiliate other than the Company). To the extent that, as described above, the Partnership invests in additional Affiliate Investment Instruments, the determination as to whether such Affiliate Investment Instrument will contain an Investment Guarantee will be made at the date of its issuance and will be based, among other things, upon its approval by the Independent Financial Advisor in accordance with the reinvestment criteria described above. The Investment Guarantees will constitute guarantees of payment and not of collection (that is, the guaranteed party may directly institute a legal proceeding against the Company to enforce its rights under the applicable Investment Guarantee without instituting a legal proceeding against any other person or entity). If no S-43 Special Representative has been appointed to enforce any Investment Guarantee, the General Partner has the right to enforce such Investment Guarantee on behalf of the holders of the Partnership Preferred Securities. The holders of not less than a majority in aggregate liquidation preference of the Partnership Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of any Investment Guarantee, including the giving of directions to the General Partner or the Special Representative, as the case may be. If the General Partner or the Special Representative fails to enforce any Investment Guarantee as above provided, any holder of Trust Preferred Securities may institute its own legal proceeding to enforce such Investment Guarantee. No Investment Guarantee will be discharged except by payment in full of all amounts guaranteed by such Investment Guarantee (without duplication of amounts theretofore paid by the relevant Investment Affiliate). Amendments and Assignment. Except with respect to any changes that do not materially adversely affect the rights of holders of the Subsidiary Debentures (in which case no consent will be required), the Investment Guarantees may be amended only with the prior approval of the holders of not less than a majority in liquidation preference of the outstanding Partnership Preferred Securities, provided that for so long as the Property Trustee of the Trust is the holder of the Partnership Preferred Securities, such amendment will not be effective without the prior written approval of a majority in liquidation amount of the outstanding Trust Preferred Securities. All guarantees and agreements contained in the Investment Guarantees shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the holders of Partnership Preferred Securities. In the event of the transfer or assignment of the obligations under an Affiliate Investment Instrument to another Investment Affiliate (other than the Company), and the assumption thereof by such Investment Affiliate, the Investment Guarantee will continue to apply to such Affiliate Investment Instrument. Status of the Investment Guarantees. The Company's obligations under the Investment Guarantees will constitute unsecured obligations of the Company and will rank subordinate and junior to all other existing liabilities of the Company and will rank pari passu with the most senior preferred stock (if any) issued from time to time by the Company, with the Trust Guarantee and the Partnership Guarantee and with any guarantee hereafter entered into by the Company in respect of any preferred security of the Company or any affiliate of the Company. Accordingly, the rights of the Partnership and the holders of the Partnership Preferred Securities to receive payments under the Investment Guarantees will be subject to the rights of the holders of any obligations of the Company that are senior in priority to the obligations under the Investment Guarantees. Furthermore, the holders of obligations of the Company that are senior to the obligations under the Investment Guarantees (including, but not limited to, obligations constituting senior indebtedness of the Company) will be entitled to the same rights upon payment default or dissolution, liquidation and reorganization in respect of the Investment Guarantees that inure to the holders of senior indebtedness of the Company as against the holders of the Company Debentures. In addition, the Investment Guarantees will be effectively subordinated to all future indebtedness and liabilities of the Company's subsidiaries. See "Risk Factors--Ranking of Subordinate Obligations Under the Guarantees and the Company Debentures." The terms of the Debentures provide that each holder of Debentures, by acceptance thereof, agrees to the subordination provisions and other terms of the Investment Guarantees. Governing Law. The Investment Guarantees will be governed by, and construed in accordance with, the internal laws of the State of New York. OPTIONAL REDEMPTION The Partnership Preferred Securities are redeemable, at the option of the General Partner, in whole or in part, from time to time, on or after February , 2002, upon not less than 30 nor more than 60 days' notice, at an amount per Partnership Preferred Security of $25 plus accumulated and unpaid distributions thereon to the date fixed for redemption. If the Partnership redeems Partnership Preferred Securities in accordance with the terms thereof, Trust Preferred Securities will be mandatorily redeemed at the Redemption Price. See "Supplemental Description of the Trust Preferred Securities-- Redemption." If a partial redemption would result in the delisting S-44 of the Trust Preferred Securities (or, if the Partnership Preferred Securities have been distributed in connection with a Trust Special Event, the delisting of the Partnership Preferred Securities), the Partnership may only redeem the Partnership Preferred Securities in whole. PARTNERSHIP SPECIAL EVENT REDEMPTION If, at any time, a Partnership Tax Event or a Partnership Investment Company Event (each as hereinafter defined, and each a "Partnership Special Event") shall occur and be continuing, the General Partner shall, within 90 days following the occurrence of such Partnership Special Event, elect to either (i) redeem the Partnership Preferred Securities in whole (but not in part), upon not less than 30 or more than 60 days' notice at the Redemption Price, provided that, if at the time there is available to the Partnership the opportunity to eliminate, within such 90-day period, the Partnership Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing another reasonable measure that in the sole judgment of the General Partner has or will cause no adverse effect on the Partnership, the General Partner, the Trust or the Company, the General Partner will pursue such measure in lieu of redemption; or (ii) cause the Partnership Preferred Securities to remain outstanding, provided that in the case of this clause (ii), the General Partner shall pay any and all costs and expenses incurred by or payable by the Partnership attributable to the Partnership Special Event. The General Partner may elect to redeem the Partnership Preferred Securities upon the occurrence of any Partnership Special Event (subject to certain conditions), regardless of the occurrence of any Trust Tax Event or Trust Investment Company Event. "Partnership Tax Event" means that the General Partner shall have requested and received an opinion of recognized independent tax counsel (which may be counsel to the Company) experienced in such matters to the effect that there has been a Tax Action that results in there being more than an insubstantial risk that (i) the Partnership is, or will be, subject to United States federal income tax with respect to income accrued or received on the Affiliate Investment Instruments or the Eligible Debt Securities, (ii) the Partnership is, or will be, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by an Investment Affiliate with respect to the Affiliate Investment Instruments that are debt instruments issued by such Investment Affiliate to the Partnership is not, or will not be, deductible for United States federal income tax purposes. "Partnership Investment Company Event" means that the General Partner shall have requested and received an opinion of recognized independent legal counsel experienced in such matters to the effect that, as a result of the occurrence on or after the date of this Prospectus Supplement of a Change in 1940 Act Law, there is more than an insubstantial risk that the Partnership is or will be considered an "investment company" which is required to be registered under the 1940 Act. REDEMPTION PROCEDURES The Partnership may not redeem fewer than all the outstanding Partnership Preferred Securities unless all accumulated and unpaid distributions have been paid on all Partnership Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. If the Partnership gives a notice of redemption in respect of Partnership Preferred Securities (which notice will be irrevocable), then, by 12:00 noon, New York City time, on the redemption date, the General Partner, on behalf of the Partnership, (i) if the Partnership Preferred Securities are in book-entry only form with DTC, will deposit irrevocably with DTC funds sufficient to pay the applicable Redemption Price and will give DTC irrevocable instructions and authority to pay the Redemption Price in respect of the Partnership Preferred Securities held through DTC in global form or (ii) if the Partnership Preferred Securities are held in certificated form, will deposit with the paying agent for the Partnership Preferred Securities funds sufficient to pay such amount in respect of any Partnership Preferred Securities in certificated form and will give such paying agent irrevocable instructions and authority to pay such amounts to the holders of Partnership Preferred Securities upon surrender of their certificates. See "--Book-Entry Only Issuance--The Depository Trust Company." S-45 If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of holders of such Partnership Preferred Securities so called for redemption will cease, except the right of the holders of such Partnership Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price and, from and after the date fixed for redemption, such Partnership Preferred Securities will not accumulate distributions or bear interest. In the event that any date fixed for redemption of Partnership Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, the payment will 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 fixed for redemption. In the event that payment of the Redemption Price in respect of Partnership Preferred Securities is improperly withheld or refused and not paid either by the Partnership or by the Company pursuant to the Partnership Guarantee described under "Supplemental Description of the Partnership Guarantee," distributions on such Partnership Preferred Securities will continue to accumulate at the then applicable rate from the original redemption date to the date of payment. Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Company or any of its subsidiaries may at any time and from time to time purchase outstanding Partnership Preferred Securities by tender offer, in the open market or by private agreement. In the event that the Partnership Preferred Securities have been distributed and fewer than all of the outstanding Partnership Preferred Securities are to be redeemed, the Partnership Preferred Securities will be redeemed in accordance with the procedures of DTC. See "--Book-Entry Only Issuance--The Depository Trust Company." LIQUIDATION DISTRIBUTION UPON DISSOLUTION In the event of any voluntary or involuntary dissolution, winding-up or termination of the Partnership, the holders of the Partnership Preferred Securities at the time will be entitled to receive out of the assets of the Partnership available for distribution to partners after satisfaction of liabilities of creditors as required by the Partnership Act, before any distribution of assets is made to the General Partner, an amount equal to, in the case of holders of Partnership Preferred Securities, the aggregate of the stated liquidation preference of $25 per Partnership Preferred Security plus accumulated and unpaid distributions thereon to the date of payment (such amount being the "Partnership Liquidation Distribution"). The Agreement of Limited Partnership provides that the Partnership shall be dissolved and its affairs shall be wound up: (i) upon the bankruptcy, insolvency or dissolution of the General Partner, (ii) upon the assignment by the General Partner of its entire interest in the Partnership when the assignee is not admitted to the Partnership as a general partner of the Partnership in accordance with the Agreement of Limited Partnership, or the filing of a certificate of dissolution or its equivalent with respect to the General Partner, or the revocation of the General Partner's charter and the expiration of 90 days after the date of notice to the General Partner of revocation without a reinstatement of its charter, or if any other event occurs that causes the General Partner to cease to be a general partner of the Partnership under the Partnership Act, unless the business of the Partnership is continued in accordance with the Partnership Act, (iii) if the Partnership has redeemed or otherwise purchased all of the Partnership Preferred Securities, (iv) upon the entry of a decree of judicial dissolution or (v) upon the written consent of all partners of the Partnership. VOTING RIGHTS Except as provided below and under "Supplemental Description of the Partnership Guarantee--Amendments and Assignment" and as otherwise required by law and the Agreement of Limited Partnership, the holders of the Partnership Preferred Securities will have no voting rights. S-46 Not later than 30 days after any Partnership Enforcement Event occurs, the General Partner will convene a meeting for the purpose of appointing a Special Representative. If the General Partner fails to convene such meeting within such 30-day period, the holders of 10% in liquidation preference of the outstanding Partnership Preferred Securities will be entitled to convene such meeting. The provisions of the Agreement of Limited Partnership relating to the convening and conduct of the meetings of the partners will apply with respect to any such meeting. In the event that, at any such meeting, holders of less than a majority in aggregate liquidation preference of Partnership Preferred Securities entitled to vote for the appointment of a Special Representative vote for such appointment, no Special Representative shall be appointed. Any Special Representative appointed will cease to be a Special Representative of the Partnership and the limited partners if (i) the Partnership (or the Company pursuant to the Partnership Guarantee) shall have paid in full all accumulated and unpaid distributions on the Partnership Preferred Securities, (ii) any Investment Event of Default giving rise to the Partnership Enforcement Event shall have been cured, and (iii) the Company is in compliance with all its obligations under the Partnership Guarantee and the General Partner will continue the activities of the Partnership without dissolution. Notwithstanding the appointment of any such Special Representative, Hycap will continue as General Partner and will retain all rights under the Agreement of Limited Partnership, including the right to declare, in its sole discretion, the payment of distributions on the Partnership Preferred Securities for which the failure of such declaration would not constitute a default under the Agreement of Limited Partnership. If any proposed amendment to the Agreement of Limited Partnership provides for, or the General Partner otherwise proposes to effect, (i) any action that would materially adversely affect the powers, preferences or special rights of the Partnership Preferred Securities, whether by way of amendment to the Agreement of Limited Partnership or otherwise (including, without limitation, the authorization or issuance of any limited partner interests in the Partnership ranking, as to participation in the profits or distributions or in the assets of the Partnership, senior to the Partnership Preferred Securities), or (ii) the dissolution, winding-up or termination of the Partnership, other than (x) in connection with the occurrence of a Partnership Special Event or (y) in certain limited circumstances described under "-- Merger, Consolidation or Amalgamation of the Partnership," then the holders of outstanding Partnership Preferred Securities will be entitled to vote on such amendment or proposal of the General Partner (but not on any other amendment or proposal) as a class, and such amendment or proposal will not be effective except with the approval of the holders of a majority in liquidation preference of such outstanding Partnership Preferred Securities having a right to vote on the matter; provided, however, that if the Property Trustee on behalf of the Trust is the holder of the Partnership Preferred Securities, any such amendment or proposal not excepted by clauses (x) and (y) above will not be effective without the prior or concurrent approval of the holders of a majority in liquidation amount of the outstanding Trust Preferred Securities having a right to vote on such matters and provided, further, that no such approval shall be required if the dissolution, winding-up or termination of the Partnership is proposed or initiated upon or after the initiation of proceedings for the dissolution, winding-up, liquidation or termination of the General Partner or the Company. Subject to certain exceptions, the holders of a majority in liquidation preference of the Partnership Preferred Securities may waive any past Partnership Enforcement Event with respect to the Partnership Preferred Securities. A waiver of an Investment Event of Default by the Special Representative, acting at the direction of the holders of Partnership Preferred Securities, constitutes a waiver of the corresponding Partnership Enforcement Event. Neither the General Partner nor the Special Representative will (i) direct the time, method and place of conducting any proceeding for any remedy available, (ii) waive any Investment Event of Default that is waivable under the Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a declaration that the principal of any Affiliate Investment Instruments which are debt instruments shall be due and payable, (iv) waive the breach of the covenant by the Company in the Partnership Guarantee to restrict certain payments by the Company, or (v) consent to any amendment, modification or termination of any Affiliate Investment Instrument, where such consent shall be required from the holder thereof, without, in each case, obtaining the prior approval of the holders of at least a majority in liquidation preference of the Partnership Preferred Securities; provided, however, that if the Property Trustee on behalf of the Trust is the holder of the Partnership Preferred Securities, S-47 such waiver, consent or amendment or other action shall not be effective without the prior or concurrent approval of at least a majority in liquidation amount of the outstanding Trust Preferred Securities having a right to vote on such matters. The General Partner will not revoke any action previously authorized or approved by a vote of the holders of the Partnership Preferred Securities. The General Partner will notify all holders of the Partnership Preferred Securities of any notice of an Investment Event of Default received with respect to any Affiliate Investment Instrument. Any required approval of holders of Partnership Preferred Securities may be given at a separate meeting of holders of Partnership Preferred Securities convened for such purpose, at a meeting of all of the partners in the Partnership or pursuant to written consent. The General Partner will cause a notice of any meeting at which holders of Partnership Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Partnership Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any matter proposed for adoption at such meeting on which such holders are entitled to vote or of such matters upon which written consent is sought and (iii) instruction for the delivery of proxies or consents. No vote or consent of the holders of Partnership Preferred Securities will be required for the Partnership to redeem and cancel Partnership Preferred Securities in accordance with the Agreement of Limited Partnership. Notwithstanding that holders of Partnership Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Partnership Preferred Securities at such time that are owned by the Company or by any entity more than 50% of which is owned by the Company, directly or indirectly, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding; provided, however, that persons otherwise eligible to vote to whom the Company or any of its subsidiaries have pledged Partnership Preferred Securities may vote or consent with respect to such pledged Partnership Preferred Securities under any of the circumstances described herein. Holders of the Partnership Preferred Securities will have no rights to remove or replace the General Partner. MERGER, CONSOLIDATION OR AMALGAMATION OF THE PARTNERSHIP The Partnership may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any corporation or other entity, except as described below. The Partnership may, without the consent of the holders of the Partnership Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by a limited partnership, limited liability company or trust organized under the laws of any state of the United States of America; provided, that (i) such successor entity either (x) expressly assumes all of the obligations of the Partnership under the Partnership Preferred Securities or (y) substitutes for the Partnership Preferred Securities other securities having substantially the same terms as the Partnership Preferred Securities (the "Partnership Successor Securities"), so long as the Partnership Successor Securities are not junior to any other equity securities of the successor entity with respect to participation in the profits and distributions, and in the assets, of the successor entity, (ii) the Investment Affiliates expressly acknowledge such successor entity as the holder of the Affiliate Investment Instruments, (iii) if the Partnership Preferred Securities are then so listed, the Partnership Preferred Securities continue to be listed, or any Partnership Successor Securities are or will be listed upon notification of issuance, on any national securities exchange or with another organization on which the Partnership Preferred Securities are then listed or quoted, (iv) such merger, consolidation, amalgamation or replacement does not cause the Trust Preferred Securities (or, in the event that the Trust is liquidated in connection with a Trust Special Event, the Partnership Preferred Securities (including any Partnership Successor Securities)) to be downgraded by any nationally recognized statistical securities rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the powers, preferences and other special rights of the holders of the Trust Preferred Securities or Partnership Preferred Securities (including any Partnership Successor Securities) in any material respect (other than, in the case of Partnership Preferred Securities or Partnership Successor Securities, with respect to any dilution of the holders' interest in the new resulting entity), (vi) such successor entity has a purpose substantially S-48 identical to that of the Partnership, (vii) the Company guarantees the obligations of such successor entity under the Partnership Successor Securities to the same extent as provided by the Partnership Guarantee and (viii) prior to such merger, consolidation, amalgamation or replacement, the Company has received an opinion of a nationally recognized independent counsel to the Partnership experienced in such matters to the effect that: (A) such successor entity will be treated as a partnership for United States federal income tax purposes, (B) such merger, consolidation, amalgamation or replacement will not adversely affect the limited liability of the holders of the Partnership Preferred Securities (or the Partnership Successor Securities), (C) following such merger, consolidation, amalgamation or replacement, neither the Company nor such successor entity will be required to register as an investment company under the 1940 Act, and (D) such merger, consolidation, amalgamation or replacement would not cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. BOOK-ENTRY AND SETTLEMENT If the Partnership Preferred Securities are distributed to holders of Trust Preferred Securities in connection with the involuntary or voluntary dissolution, winding-up or liquidation of the Trust as a result of the occurrence of a Trust Special Event, the Partnership Preferred Securities will be issued in the form of one or more global certificates (each a "Global Partnership Security") registered in the name of DTC as the depository or its nominee. For a description of DTC and the specific terms of the Depository arrangements, see "Supplemental Description of the Trust Preferred Securities-- Book-Entry Only Issuance--The Depository Trust Company." As of the date of this Prospectus Supplement, the description therein of DTC's book-entry system and DTC's practices as they relate to purchases, transfers, notices and payments with respect to the Trust Preferred Securities apply in all material respects to any Partnership Preferred Securities represented by one or more Global Partnership Securities. REGISTRAR, TRANSFER AGENT AND PAYING AGENT The General Partner will act as registrar, transfer agent and paying agent for the Partnership Preferred Securities for so long as the Partnership Preferred Securities are held by the Property Trustee or, if the Trust is liquidated in connection with a Trust Special Event, for so long as the Partnership Preferred Securities remain in book-entry only form. In the event the Partnership Preferred Securities are distributed in connection with a Trust Special Event and the book-entry system for the Partnership Preferred Securities is discontinued, it is anticipated that The Bank of New York or one of its affiliates will act as registrar, transfer agent and paying agent for the Partnership Preferred Securities. Registration of transfers of Partnership Preferred Securities will be effected without charge by or on behalf of the Partnership, but upon payment (with the giving of such indemnity as the Partnership or the General Partner may require) in respect of any tax or other governmental charges that may be imposed in relation to it. The Partnership will not be required to register or cause to be registered the transfer of Partnership Preferred Securities after such Partnership Preferred Securities have been called for redemption. GOVERNING LAW The Agreement of Limited Partnership and the Partnership Preferred Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. MISCELLANEOUS The General Partner is authorized and directed to conduct its affairs and to operate the Partnership in such a way that (i) the Partnership will not be deemed to be an "investment company" required to be registered under the 1940 Act, (ii) the Affiliate Investment Instruments that are debt instruments will be treated as indebtedness of the issuer of such debt instruments for United States federal income tax purposes and (iii) the Partnership will S-49 not be treated as an association or a publicly traded partnership (within the meaning of Section 7704 of the Code) taxable as a corporation for federal income tax purposes. In this connection, the General Partner is authorized to take any action, not inconsistent with applicable law, the certificate of limited partnership of the Partnership or the Agreement of Limited Partnership, that the General Partner determines in its discretion to be necessary or desirable for such purposes as long as such action does not materially adversely affect the interests of the holders of the Partnership Preferred Securities. Holders of the Partnership Preferred Securities have no preemptive or similar rights. SUPPLEMENTAL DESCRIPTION OF THE PARTNERSHIP GUARANTEE Set forth below is a summary of certain information concerning the Partnership Guarantee that will be executed and delivered by the Company for the benefit of the holders from time to time of Partnership Preferred Securities. The summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Partnership Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus form a part. The Partnership Guarantee incorporates by reference the terms of, and will be qualified as an indenture under, the Trust Indenture Act. The Bank of New York, as trustee (the "Partnership Guarantee Trustee") will hold the Partnership Guarantee for the benefit of the holders of the Partnership Preferred Securities and will act as indenture trustee for the purpose of compliance with the Trust Indenture Act. GENERAL Pursuant to the Partnership Guarantee, the Company will irrevocably agree, on a subordinated basis to the extent set forth therein, to pay in full to the holders of the Partnership Preferred Securities (without duplication of amounts theretofore paid by the Partnership), as and when due, regardless of any defense, right of set-off or counterclaim that the Partnership may have or assert, the following payments (the "Partnership Guarantee Payments"): (i) any accumulated and unpaid distributions that have theretofore been declared by the General Partner on the Partnership Preferred Securities out of funds legally available therefor, (ii) the Redemption Price with respect to any Partnership Preferred Securities called for redemption by the Partnership out of funds legally available therefor, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Partnership, the lesser of (a) the aggregate of the liquidation preference and all accumulated and unpaid distributions on the Partnership Preferred Securities to the date of payment and (b) the amount of assets of the Partnership remaining available for distribution to holders of Partnership Preferred Securities in liquidation of the Partnership after satisfaction of all liabilities of the Partnership. Pursuant to the Partnership Guarantee, the Company, to the extent not paid by the General Partner, will fully and irrevocably agree to pay in full the obligations of the General Partner under the Agreement of Limited Partnership, including but not limited to the obligations to pay the fees and expenses of the Partnership (including any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes or taxes or charges imposed by reason of the transfer of the Partnership Preferred Securities) imposed by the United States or any other domestic taxing authority upon the Partnership) and to be responsible for all debts and obligations of the Partnership (other than with respect to the Partnership Preferred Securities). The Company's obligation to make a Partnership Guarantee Payment may be satisfied by direct payment of the required amounts by the Company to the holders of Partnership Preferred Securities or by causing the Partnership to pay such amounts to such holders. The Partnership Guarantee will be a guarantee on a subordinated basis with respect to the Partnership Preferred Securities from the time of issuance of such Partnership Preferred Securities but will not apply to any payment of distributions or Redemption Price, or to payments upon the dissolution, winding-up or termination of the Partnership, except to the extent the Partnership shall have funds legally available therefor. If Investment Affiliates (including, where applicable, the Company, as issuer of the Company Debentures and as guarantor) fail to make any payment in respect of the Affiliate Investment Instruments in which the Partnership invests (or, if applicable, payments in respect of an Investment Guarantee), the General Partner may not declare or pay S-50 dividends on the Partnership Preferred Securities. In such event, holders of the Partnership Preferred Securities would not be able to rely upon the Partnership Guarantee for payment of such amounts. Instead, holders of the Partnership Preferred Securities will have the remedies described under "Supplemental Description of the Partnership Preferred Securities--Partnership Enforcement Events," including the right to direct the Partnership Guarantee Trustee or the Special Representative, as the case may be, to enforce the covenant restricting payment of dividends and certain other distributions by the Company. See "--Certain Covenants of the Company." The Partnership Guarantee, when taken together with the Trust Guarantee, the Investment Guarantees, the Company Debentures and the Company's obligations to pay all fees and expenses of the Trust, constitute a guarantee to the extent described herein by the Company of the distribution, redemption and liquidation amounts payable to the holders of the Trust Preferred Securities and the Partnership Preferred Securities. The Guarantees do not apply, however, to current distributions by the Partnership unless and until such distributions are declared by the General Partner out of funds legally available for payment or to liquidating distributions unless there are assets available for payment in the Partnership, each as more fully described under "Risk Factors-- Insufficient Income or Assets Available to Partnership." CERTAIN COVENANTS OF THE COMPANY The Company will covenant in the Partnership Guarantee that so long as any Partnership Preferred Securities are outstanding if, (a) for any distribution period, full distributions on a cumulative basis on any Partnership Preferred Securities have not been paid or declared and set apart for payment, (b) an Investment Event of Default by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and the Company is in default of its obligations with respect thereto under an applicable Investment Guarantee or (c) the Company is in default of its obligations under the Trust Guarantee or the Partnership Guarantee, then, during such period, (i) the Company shall not declare or pay dividends on, make distributions or liquidation payments with respect to, or redeem, purchase or acquire, any of its capital stock (except for 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 other exceptions set forth in the accompanying Prospectus), (ii) the Company shall not make any payment or cause any payment to be made that would result in, and shall take such action as shall be necessary to prevent, the payment of dividends on, any distribution or liquidation payment with respect to, or any redemption, purchase or other acquisition of, any Comparable Equity Interest, and (iii) the Company shall not make any guarantee payments with respect to the foregoing other than pursuant to the Partnership Guarantee or any other guarantee by the Company with respect to any Comparable Equity Interest. EVENTS OF DEFAULT; ENFORCEMENT OF PARTNERSHIP GUARANTEE An event of default under the Partnership Guarantee will occur upon the failure of the Company to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation preference of the Partnership Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Partnership Guarantee Trustee or the Special Representative in respect of the Partnership Guarantee or to direct the exercise of any trust or power conferred under the Partnership Guarantee. If the Partnership Guarantee Trustee or the Special Representative fails to enforce its rights under the Partnership Guarantee, after a holder of record of Partnership Preferred Securities has made a written request, such holder of Partnership Preferred Securities may institute a legal proceeding directly against the Company to enforce the rights under the Partnership Guarantee without first instituting a legal proceeding against the Partnership, the General Partner, the Partnership Guarantee Trustee, the Special Representative or any other person or entity. Notwithstanding the foregoing, if the Company has failed to make a guarantee payment under the Partnership Guarantee, a holder of Partnership Preferred Securities may directly institute a proceeding against the Company for enforcement of the Partnership Guarantee for such payment. S-51 STATUS OF THE PARTNERSHIP GUARANTEE; SUBORDINATION The Partnership Guarantee will constitute an unsecured obligation of the Company and will rank subordinate and junior to all other existing liabilities of the Company and will rank pari passu with the most senior preferred stock (if any) issued from time to time by the Company with the Trust Guarantee and the Investment Guarantees and with any guarantee hereafter entered into by the Company in respect of any preferred security of the Company or any affiliate of the Company. Accordingly, the rights of the holders of Partnership Preferred Securities to receive payments under the Partnership Guarantee will be subject to the rights of the holders of any obligations of the Company that are senior in priority to the obligations under the Partnership Guarantee. Furthermore, the holders of the obligations of the Company that are senior to the obligations under the Partnership Guarantee (including, but not limited to, obligations constituting senior indebtedness of the Company) will be entitled to the same rights upon payment default or dissolution, liquidation and reorganization in respect of the Partnership Guarantee that inure to the holders of senior indebtedness of the Company as against the holders of the Company Debentures. In addition, the Partnership Guarantee will be effectively subordinated to all future indebtedness and liabilities of the Company's subsidiaries. See "Risk Factors--Ranking of Subordinate Obligations Under the Guarantees and the Company Debentures." The Agreement of Limited Partnership provides that each holder of Partnership Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Partnership Guarantee. The Partnership Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may directly institute a legal proceeding against the Company to enforce its rights under the Partnership Guarantee without instituting a legal proceeding against any other person or entity). The Partnership Guarantee will be deposited with the Partnership Guarantee Trustee to be held for the benefit of the holders of the Partnership Preferred Securities. In the event of the appointment of a Special Representative to, among other things, enforce the Partnership Guarantee, the Special Representative may take possession of the Partnership Guarantee for such purpose. If no Special Representative has been appointed to enforce the Partnership Guarantee, the Partnership Guarantee Trustee has the right to enforce the Partnership Guarantee on behalf of the holders of the Partnership Preferred Securities. AMENDMENTS AND ASSIGNMENT Except with respect to any changes that do not materially adversely affect the rights of holders of Partnership Preferred Securities (in which case no consent will be required), the Partnership Guarantee may be amended only with the prior approval of the holders of not less than a majority in liquidation preference of the outstanding Partnership Preferred Securities, provided that for so long as the Property Trustee is the holder of the Partnership Preferred Securities, such amendment will not be effective without the prior written approval of a majority in liquidation amount of the Trust Preferred Securities. All guarantees and agreements contained in the Partnership Guarantee will bind the successors, assigns, receivers, trustees and representatives of the Company and will inure to the benefit of the holders of the Partnership Preferred Securities then outstanding. Except in connection with any permitted merger or consolidation of the Company with or into another entity or any permitted sale, transfer or lease of the Company's assets to another entity as described above under "Supplemental Description of the Partnership Preferred Securities--Merger, Consolidation or Amalgamation of the Partnership," the Company may not assign its rights or delegate its obligations under the Partnership Guarantee without the prior approval of the holders of at least a majority of the aggregate stated liquidation preference of the Partnership Preferred Securities then outstanding. TERMINATION OF THE PARTNERSHIP GUARANTEE The Partnership Guarantee will terminate and be of no further force and effect as to the Partnership Preferred Securities upon (i) full payment of the redemption price of all Partnership Preferred Securities or (ii) payment of the amounts payable in accordance with the Agreement of Limited Partnership upon liquidation of the Partnership. The Partnership Guarantee will continue to be effective or will be reinstated, as the case may S-52 be, if at any time any holder of Partnership Preferred Securities must in accordance with the Partnership Act restore payment of any sums paid under the Partnership Preferred Securities or the Partnership Guarantee. The Partnership Act provides that a limited partner of a limited partnership who wrongfully receives a distribution may be liable to the limited partnership for the amount of such distribution. GOVERNING LAW The Partnership Guarantee will be governed by, and construed in accordance with, the internal laws of the State of New York. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS GENERAL The following is a summary of certain United States federal income tax considerations that may be relevant to the purchase, ownership and disposition of Trust Preferred Securities and represents the opinion of Goodsill Anderson Quinn & Stifel, counsel to the Company, the Trust and the Partnership ("Tax Counsel"), insofar as it relates to matters of law and legal conclusions. Unless otherwise stated, this summary deals only with Trust Preferred Securities held as capital assets by United States Persons (defined below) who purchase the Trust Preferred Securities upon original issuance. As used herein, a "United States Person" means a person that is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust which is not treated as a foreign estate or foreign trust for United States federal tax purposes. The tax treatment of a holder may vary depending on its particular situation. This summary does not address all the tax consequences that may be relevant to holders who may be subject to special tax treatment, such as banks, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors, or foreign investors. This summary does not include any description of any alternative minimum tax consequences or the tax laws of any state or local government or of any foreign government that may be applicable to the Trust Preferred Securities. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. The Trust Preferred Securities are not being marketed to persons that are not United States Persons ("non-United States Persons") and, consequently, the following discussion does not discuss the tax consequences that might be relevant to non-United States Persons. Moreover, in order to protect the Trust and the Partnership from potential adverse consequences, non-United States Persons may be subject to withholding on distributions on the Trust Preferred Securities held by such non-United States Persons at a rate of 30%. In determining a holder's status, the United States entity otherwise required to withhold taxes may rely on an IRS form W-8, an IRS form W-9, or a holder's certification of its non-foreign status signed under penalty of perjury. NON- UNITED STATES PERSONS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF TRUST PREFERRED SECURITIES. Tax Counsel has advised that there is no authority directly on point dealing with securities such as the Trust Preferred Securities or transactions of the type described herein and that the opinions of Tax Counsel are not binding on the Internal Revenue Service ("IRS") or the courts, either of which could take a contrary position. No rulings have been or will be sought from the IRS. Accordingly, there can be no assurance that the IRS will not challenge the opinions expressed herein or that a court would not sustain such a challenge. Nevertheless, Tax Counsel has advised that it is of the view that, if challenged, the opinions expressed herein would be sustained by a court with jurisdiction in a properly presented case. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE S-53 TRUST PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE TRUST PREFERRED SECURITIES OR REDEMPTION OF THE PARTNERSHIP PREFERRED SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS, SEE "SUPPLEMENTAL DESCRIPTION OF THE TRUST PREFERRED SECURITIES--TRUST SPECIAL EVENT REDEMPTION OR DISTRIBUTION" AND "SUPPLEMENTAL DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES--PARTNERSHIP SPECIAL EVENT REDEMPTION," RESPECTIVELY. CLASSIFICATION OF THE TRUST Tax Counsel is of the opinion that, under current law, and based on certain representations, facts and assumptions set forth in such opinion, the Trust will not be classified for United States federal income tax purposes as an association or a publicly traded partnership taxable as a corporation. Accordingly, for United States federal income tax purposes, each holder of Trust Preferred Securities will be required to include in its gross income its distributive share of income attributable to the Partnership, which generally will be equal to such holder's allocable share of amounts accrued on the Partnership Preferred Securities. Unless the Partnership invests in the equity securities of certain Investment Affiliates (for example, after repayment of the Debentures), no amount included in income with respect to the Trust Preferred Securities will be eligible for the corporate dividends-received deduction. CLASSIFICATION OF THE PARTNERSHIP Tax Counsel is of the opinion that, under current law, and based on certain representations, facts and assumptions set forth in such opinion, the Partnership will be classified for United States federal income tax purposes as a partnership and not as an association or a publicly traded partnership taxable as a corporation. Tax Counsel's opinion is based on certain factual assumptions relating to the organization and operation of the Partnership and is conditioned upon certain representations made by the General Partner and the Partnership as to factual matters, such as the organization and operation of the Partnership and the type and frequency of investments made by the Partnership. The General Partner has represented that it intends to operate the Partnership in a manner such that it will continue to constitute a partnership for all future taxable years in which any Partnership Preferred Securities remain outstanding. In particular, pursuant to the Agreement of Limited Partnership, the General Partner is prohibited from taking any action that would cause the Partnership to constitute a "publicly traded partnership" taxable as a corporation under Section 7704(a) of the Code. Accordingly, it is expected that the Partnership will continue to qualify as a partnership, and therefore will not constitute a publicly traded partnership taxable as a corporation, for all taxable years in which the Partnership Preferred Securities remain outstanding. If, however, the Partnership were to constitute a publicly traded partnership taxable as a corporation with respect to a future taxable year, the Partnership's net income would be subject to United States federal income tax at the applicable corporate rates. CLASSIFICATION OF THE DEBENTURES The Partnership, the Company, the relevant Investment Affiliates and the holders of the Trust Securities (by acceptance of a beneficial interest in a Trust Security) will agree to treat the Debentures as indebtedness of the relevant issuer for all United States federal income tax purposes. Tax Counsel will issue its opinion that, under current law, and based on certain representations, facts and assumptions set forth in such opinion, the Debentures will be classified as indebtedness of the relevant issuer for United States federal income tax purposes. S-54 INCOME AND DEDUCTIONS A holder's distributive share of income attributable to the Partnership generally will be substantially equal to the amount of the cash distributions that accumulate with respect to the Trust Preferred Securities. Accordingly, if quarterly distributions on the Trust Preferred Securities are paid currently, the amount of income recognized by a holder during a taxable year generally will be substantially equal to the cash distributions received by the holder with respect to its Trust Preferred Securities. The nature and timing of the income that is allocated to holders of Trust Preferred Securities will, however, depend on the United States federal income tax characterization of the investments held by the Partnership during the period in question. Because the Partnership will be an accrual basis taxpayer for United States federal income tax purposes, income will accrue on the Trust Preferred Securities and will be allocated to holders of Trust Preferred Securities on a daily accrual basis, generally at a rate that is expected to be equal to (and that will not be greater than) the distribution rate on the Trust Preferred Securities, regardless of the holders' method of accounting. Actual cash distributions on the Trust Preferred Securities will not, however, be separately reported as taxable income to the holders at the time they are received. If, however, distributions on the Partnership Preferred Securities are not made currently, the corresponding distributions on the Trust Preferred Securities will not be made currently. Because the Partnership is an accrual basis taxpayer it can be expected that during a period in which interest payments on the Debentures or distributions on the Partnership Preferred Securities are deferred (for whatever reason), holders will generally recognize income in advance of their receipt of any cash distributions with respect to their Trust Preferred Securities. The amount of income that will be allocated to holders of Trust Preferred Securities during any such deferral period will equal their pro rata share of the amount accruing on the Partnership Preferred Securities during such deferral period. The Partnership does not presently intend to make an election under Section 754 of the Code. Accordingly, a subsequent purchaser of Trust Preferred Securities will not be permitted to adjust the tax basis in his allocable share of the Partnership's assets so as to reflect any difference between such purchaser's purchase price for the Trust Preferred Securities and such purchaser's share of the Partnership's underlying tax basis in its assets. As a result, a holder of Trust Preferred Securities may be required to report a larger or smaller amount of income from holding the Trust Preferred Securities than would otherwise be appropriate based upon the holder's purchase price for the Trust Preferred Securities. RECEIPT OF PARTNERSHIP PREFERRED SECURITIES UPON LIQUIDATION OF THE TRUST Under certain circumstances, as described under the caption "Supplemental Description of the Trust Preferred Securities--Trust Special Event Redemption or Distribution," Partnership Preferred Securities may be distributed to holders of Trust Preferred Securities in liquidation of the Trust. Unless the liquidation of the Trust occurs as a result of the Trust's being subject to United States federal income tax with respect to income accrued or received on the Partnership Preferred Securities, such a distribution to holders would be treated as a nontaxable event to each holder, each holder would receive an aggregate tax basis in the Partnership Preferred Securities equal to such holder's aggregate tax basis in its Trust Preferred Securities, and a holder's holding period for the Partnership Preferred Securities so received in liquidation of the Trust would include the period during which the Trust Preferred Securities were held by such holder. If, however, the liquidation of the Trust were to occur because the Trust is subject to United States federal income tax with respect to income accrued or received on the Partnership Preferred Securities, the distribution of Partnership Preferred Securities to holders by the Trust would likely be a taxable event to each holder, and a holder would recognize gain or loss measured by the difference between the holder's tax basis in the Trust Preferred Securities surrendered and the fair market value of the Partnership Preferred Securities received in exchange therefor upon the liquidation of the Trust. S-55 REDEMPTION OF TRUST PREFERRED SECURITIES FOR CASH Under certain circumstances, as described under the caption "Supplemental Description of the Trust Preferred Securities--Redemption," "Supplemental Description of the Trust Preferred Securities--Trust Special Event Redemption or Distribution" and "Supplemental Description of the Partnership Preferred Securities--Partnership Special Event Redemption," the General Partner may cause the Partnership to redeem the Partnership Preferred Securities for cash, in which event the Trust would use the proceeds of such redemption to redeem the Trust Preferred Securities. Under current law, such a redemption would constitute, for United States federal income tax purposes, a taxable disposition, and a holder would recognize gain or loss as if it sold the holder's proportionate interest in the redeemed Partnership Preferred Securities for an amount of cash equal to the proceeds received upon redemption. See "--Disposition of Trust Preferred Securities." DISPOSITION OF TRUST PREFERRED SECURITIES A holder that sells Trust Preferred Securities will recognize gain or loss equal to the difference between the amount realized on the sale of the Trust Preferred Securities and the holder's tax basis in such Trust Preferred Securities. Such gain or loss will be a capital gain or loss and will be a long-term capital gain or loss if the Trust Preferred Securities have been held for more than one year at the time of the sale. A holder will be required to include accrued but unpaid distributions on the Partnership Preferred Securities through the date of disposition in income as ordinary income (to the extent not previously included in income), and to add such amount to the adjusted tax basis of its Trust Preferred Securities. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. A holder's tax basis in its Trust Preferred Securities generally will be equal to (i) the amount paid by such holder for its Trust Preferred Securities, (ii) increased by the amount includible in income by such holder with respect to its Trust Preferred Securities, and (iii) reduced by the amount of cash or other property distributed to such holder with respect to its Trust Preferred Securities. A holder who acquires Trust Preferred Securities at different prices may be required to maintain a single aggregate adjusted tax basis in all of his Trust Preferred Securities and, upon sale or other disposition of some of such Trust Preferred Securities, to allocate a pro rata portion of such aggregate tax basis to the Trust Preferred Securities sold or disposed of (rather than maintaining a separate tax basis in each Trust Preferred Security for purposes of computing gain or loss upon a sale or other disposition of that Trust Preferred Security). OTHER PARTNERSHIP PROVISIONS Section 708. Under Section 708 of the Code, the Partnership will be deemed to terminate for United States federal income tax purposes if 50% or more of the capital and profits interests in the Trust are sold or exchanged within a 12- month period. If such a deemed termination were to occur, the Partnership would be considered to have distributed its assets to the partners who would then be treated as having recontributed those assets to a new partnership. If any such constructive termination occurs, the General Partner may be unable to comply with certain technical requirements that might be applicable for various reasons including the likely lack of relevant data. As a result, the Partnership may be subject to certain tax penalties and may incur additional expenses, which would be the obligation of the General Partner. Proposed Treasury regulations, should they become effective, would mitigate some of the effects of a constructive termination. Section 701. The Department of Treasury has promulgated regulations under Section 701 of the Code that permit it to disregard a partnership or recast a transaction if a partnership is formed or availed of with a principal purpose to reduce substantially the present value of the partners' aggregate tax liability in a manner inconsistent with the intent of the partnership provisions of the Code. Although there is no precedent that applies to the transactions contemplated herein, in as much as The Partnership has been formed for, and will engage in, activities typical for partnerships, Tax Counsel believes that the Partnership is not of the type intended to fall within the scope of these regulations. S-56 INFORMATION REPORTING AND BACKUP WITHHOLDING Income on the Trust Preferred Securities will be reported to holders on an IRS Form 1099, which should be mailed to holders of Trust Preferred Securities by January 31 following each calendar year. Payments made on and proceeds from the sale of Trust Preferred Securities may be subject to a "back-up" withholding tax of 31% unless the holder complies with certain identification requirements. Any withheld amount generally will be allowed as a credit against the holder's United States federal income tax, provided the required information is timely filed with the IRS. PROPOSED LEGISLATION On March 19, 1996, as part of President Clinton's Fiscal 1997 Budget Proposal, the Treasury Department released the Proposed Legislation which would, among other things, deny the borrower an interest deduction with respect to certain types of debt instruments that are payable in stock of the issuer or a related party. The Proposed Legislation also would treat as equity for United States federal income tax purposes instruments with a maximum term of more than 20 years that are not shown as indebtedness on the consolidated balance sheet of the issuer. On March 29, 1996, Senate Finance Committee Chairman William V. Roth and House Ways and Means Committee Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating their intent that certain legislative proposals initiated by the Clinton administration, including the Proposed Legislation, that may be adopted by either of the tax-writing committees of Congress, would have an effective date that is no earlier than the date of "appropriate Congressional action." In addition, subsequent to the publication of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to the Treasury Department officials concurring with the view expressed in the Joint Statement (the "Democrat Letters"). If the principles contained in the Joint Statement and the Democrat Letters were followed and the Proposed Legislation were enacted, such legislation would not apply to the Debentures. There can be no assurances, however, that legislation enacted after the date hereof will not adversely affect the tax treatment of the Debentures, or whether such tax treatment would cause a Partnership Tax Event or a Trust Tax Event that may result in the redemption of the Partnership Preferred Securities and, consequently, the Trust Preferred Securities. S-57 UNDERWRITING Subject to the terms and conditions set forth in a purchase agreement (the "Purchase Agreement"), the Trust has agreed to sell to each of the Underwriters named below, and each of the Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman Sachs & Co., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Legg Mason Wood Walker Incorporated and Robert W. Baird & Co. Incorporated is acting as representatives (the "Representatives"), has severally agreed to purchase, the number of Trust Preferred Securities set forth opposite its name below. In the Purchase Agreement, the several Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all the Trust Preferred Securities offered hereby if any of the Trust Preferred Securities are purchased. In the event of default by an Underwriter, the Purchase Agreement provides that, in certain circumstances, the purchase commitments of the nondefaulting Underwriters may be increased or the Purchase Agreement may be terminated.
NUMBER OF TRUST PREFERRED UNDERWRITER SECURITIES ----------- --------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated..................................... Goldman, Sachs & Co. ........................................ Dean Witter Reynolds Inc. ................................... A.G. Edwards & Sons, Inc. ................................... Legg Mason Wood Walker, Incorporated......................... Robert W. Baird & Co., Incorporated.......................... --------- Total...................................................... 4,000,000 =========
The Underwriters propose to offer the Trust Preferred Securities, in part, directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement, and, in part, to certain securities dealers at such price less a concession of $ per Trust Preferred Security. The Underwriters may allow, and such dealers may re-allow, a concession not in excess of $ per Trust Preferred Security to certain brokers and dealers. After the Trust Preferred Securities are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Representatives. In view of the fact that the proceeds of the sale of the Trust Preferred Securities will ultimately be used to purchase the Debentures of the Company and its subsidiaries, the Purchase Agreement provides that the Company will pay as compensation ("Underwriters' Compensation") to the Underwriters arranging the investment therein of such proceeds, an amount in immediately available funds of $ per Trust Preferred Security (or $ in the aggregate) for the accounts of the several Underwriters; provided that, such compensation for sales of 10,000 or more Trust Preferred Securities to any single purchaser will be $ per Trust Preferred Security. Therefore, to the extent of such sales, the actual amount of Underwriters' Compensation will be less than the aggregate amount specified in the preceding sentence. During a period of 30 days from the date of this Prospectus Supplement, none of the Trust, the Partnership and the Company will, without the prior written consent of the Underwriters, (i) directly or indirectly, sell, offer to sell, grant any option for sale of, or otherwise dispose of, any Trust Preferred Securities, any Partnership Preferred Securities, any preferred stock of the Company or any security convertible into or exchangeable into or exercisable for Trust Preferred Securities or Partnership Preferred Securities or any preferred stock of the Company or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any Trust Preferred Securities, Partnership Preferred Securities, any preferred stock of the Company or any security convertible into or exchangeable into or exercisable for Trust Preferred Securities or Partnership Preferred Securities or any preferred stock of the Company, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery S-58 of Trust Preferred Securities, Partnership Preferred Securities, any preferred stock of the Company or such other securities, in cash or otherwise. The Trust Preferred Securities have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. Trading of the Trust Preferred Securities on the New York Stock Exchange is expected to commence within a 30-day period after the initial delivery of the Trust Preferred Securities. The Representatives have advised the Trust that the Underwriters intend to make a market in the Trust Preferred Securities prior to the commencement of trading on the New York Stock Exchange. The Underwriters will have no obligation to make a market in the Trust Preferred Securities, however, and may cease market making activities, if commenced, at any time. Prior to this offering there has been no public market for the Trust Preferred Securities. In order to meet one of the requirements for listing the Trust Preferred Securities on the New York Stock Exchange, the Underwriters will undertake to sell lots of 100 or more Trust Preferred Securities to a minimum of 400 beneficial holders. The Company, the Trust and the Partnership have agreed to indemnify the Underwriters against, or contribute to payments that the Underwriters may be required to make in respect of, certain liabilities, including liabilities under the Securities Act. The Underwriters and/or their affiliates have provided investment banking and financial advisory services to HEI and its subsidiaries in the past, for which they have received customary compensation and expense reimbursement, and may do so again in the future. ERISA CONSIDERATIONS HEI, the obligor with respect to the Company Debentures held by the Trust, and its affiliates and the Property Trustee may be considered a "party in interest" (within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person" (within the meaning of Section 4975 of the Code) with respect to many employee benefit plans (each a "Plan") that are subject to ERISA. The purchase and/or holding of Trust Preferred Securities by a Plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Section 4975 of the Code (including individual retirement arrangements and other plans described in Section 4975(e)(1) of the Code) and with respect to which HEI, the Property Trustee or any affiliate is a service provider (or otherwise is a party in interest or a disqualified person) may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless such Trust Preferred Securities are acquired pursuant to and in accordance with an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by an independent qualified professional asset manager), PTCE 91-38 (an exemption for certain transactions involving bank collective investment funds), PTCE 90-1 (an exemption for certain transactions involving insurance companies pooled separate accounts) or PTCE 95-60 (an exemption for transactions involving certain insurance company general accounts). Any purchaser proposing to acquire Trust Preferred Securities with assets of any Plan should consult with its ERISA counsel. S-59 INDEX OF SELECTED DEFINED TERMS 1940 Act............................................................. S-28 Affiliate Investment Instruments..................................... S-22 Agreement of Limited Partnership..................................... S-21 ASB.................................................................. S-17 Beneficial Owner..................................................... S-33 Business Day......................................................... S-25 Change in 1940 Act Law............................................... S-28 Code................................................................. S-53 Commission........................................................... S-33 Company.............................................................. S-1 Company Debentures................................................... S-2 Comparable Equity Interest........................................... S-37 Debentures........................................................... S-2 Debt Trustee......................................................... S-21 Delaware Trustee..................................................... S-21 Democrat Letters..................................................... S-14; S-57 Depository........................................................... S-33 DTC.................................................................. S-1 Eligible Debt Securities............................................. S-2; S-42 Eligible Institution................................................. S-42 ERISA................................................................ S-59 Exchange Act......................................................... S-17 FDIC................................................................. S-18 General Partner...................................................... S-2 Global Certificates.................................................. S-33 Global Partnership Security.......................................... S-49 Guarantees........................................................... S-2 HECO................................................................. S-17 HEI.................................................................. S-1; S-17 HEIDI................................................................ S-17 HEIIC................................................................ S-17 HEIPC................................................................ S-17 HELCO................................................................ S-17 HTB.................................................................. S-17 Hycap................................................................ S-2 Independent Financial Advisor........................................ S-43 Indirect Participants................................................ S-33 Initial Partnership Proceeds......................................... S-41 Investment Affiliate................................................. S-41 Investment Events of Default......................................... S-42 Investment Guarantees................................................ S-2 IRS.................................................................. S-53 Joint Statement...................................................... S-14; S-57 MECO................................................................. S-17 MPC.................................................................. S-17 New York Stock Exchange.............................................. S-1 non-United States Persons............................................ S-53 Participants......................................................... S-33 Partnership.......................................................... S-2 Partnership Act...................................................... S-22
S-60 Partnership Enforcement Event......................................... S-40 Partnership Guarantee................................................. S-2 Partnership Guarantee Payments........................................ S-50 Partnership Guarantee Trustee......................................... S-50 Partnership Investment Company Event.................................. S-45 Partnership Liquidation Distribution.................................. S-46 Partnership Preferred Securities...................................... S-2 Partnership Special Event............................................. S-45 Partnership Successor Securities...................................... S-48 Partnership Tax Event................................................. S-45 Property Account...................................................... S-22 Property Trustee...................................................... S-21 Proposed Legislation.................................................. S-14 PUC Order............................................................. S-18 Purchase Agreement.................................................... S-58 Redemption Price...................................................... S-4 Registration Statement................................................ S-21 Regular Trustees...................................................... S-21 Representatives....................................................... S-58 SAIF.................................................................. S-18 Securities Act........................................................ S-13 Special Event......................................................... S-14 Special Representative................................................ S-40 Subsidiary Debentures................................................. S-2 Successor Securities.................................................. S-31 Tax Action............................................................ S-28 Tax Counsel........................................................... S-53 TOPrSSM............................................................... S-1 Trust................................................................. S-1 Trust Act............................................................. S-21 Trust Agreement....................................................... S-21 Trust Common Securities............................................... S-1 Trust Dissolution Tax Opinion......................................... S-27 Trust Enforcement Event............................................... S-25 Trust Guarantee....................................................... S-2 Trust Guarantee Payments.............................................. S-36 Trust Guarantee Trustee............................................... S-21 Trust Indenture Act................................................... S-21 Trust Investment Company Event........................................ S-28 Trust Liquidation..................................................... S-29 Trust Liquidation Distribution........................................ S-29 Trust Preferred Securities............................................ S-1 Trust Redemption Tax Opinion.......................................... S-27 Trust Securities...................................................... S-1 Trust Special Event................................................... S-27 Trust Tax Event....................................................... S-27 Trustees.............................................................. S-21 Underwriters' Compensation............................................ S-1; S-58 United States Person.................................................. S-53 YB.................................................................... S-17
S-61 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ + + +INFORMATION CONTAINED IN THIS PROSPECTUS IS SUBJECT TO COMPLETION OR + +AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN + +FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT + +BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION + +STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO + +SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF + +THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR + +SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE + +SECURITIES LAWS OF ANY SUCH JURISDICTION. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JANUARY 24, 1997 PROSPECTUS - ---------- HAWAIIAN ELECTRIC INDUSTRIES, INC. SENIOR DEBT SECURITIES SENIOR SUBORDINATED DEBT SECURITIES JUNIOR SUBORDINATED DEBT SECURITIES PREFERRED STOCK COMMON STOCK ----------- HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III TRUST PREFERRED SECURITIES GUARANTEED TO THE EXTENT SET FORTH HEREIN BY HAWAIIAN ELECTRIC INDUSTRIES, INC. Hawaiian Electric Industries, Inc. ("HEI" or the "Company"), a Hawaii corporation, may from time to time offer (i) its unsecured senior debt securities ("Senior Debt Securities"), unsecured senior subordinated debt securities ("Senior Subordinated Debt Securities") or unsecured junior subordinated debt securities ("Junior Subordinated Debt Securities"), consisting of debentures, notes or other evidences of indebtedness, each in one or more series (collectively, "Debt Securities"), (ii) shares of its preferred stock, without par value, in one or more series (the "Preferred Stock"), and (iii) shares of its common stock, without par value (the "Common Stock"). Such securities may be offered in one or more separate classes or series, in such amounts, in such numbers of securities, at such prices and on such terms to be determined by market conditions at the time of sale and to be set forth in a supplement or supplements to this Prospectus (each, a "Prospectus Supplement"). Such securities may be sold for U.S. dollars, foreign denominated currency or currency units; amounts payable with respect to any such securities may likewise be payable in U.S. dollars, foreign denominated currency or currency units--in each case as the Company specifically designates. The Company's obligations under the Senior Subordinated Debt Securities and Junior Subordinated Debt Securities will be subordinate and junior in right of payment to Senior Debt Securities (if any) and to certain other indebtedness of HEI and its subsidiaries, as described herein and as may be described in an accompanying Prospectus Supplement. Each of Hawaiian Electric Industries Capital Trust I, Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III (severally, a "Trust" and, collectively, the "Trusts") is a statutory business trust created under the laws of the State of Delaware, which may offer, from time to time, preferred securities representing undivided beneficial interests in the assets of the respective Trust ("Trust Preferred Securities"). HEI will own all the common securities (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities") representing undivided beneficial ownership interests in the assets of the Trust. The Trust exists for the sole purpose of issuing the Trust Securities and investing the proceeds as described below and engaging in activities incident thereto. The payment of periodic cash distributions ("distributions") with respect to the Trust Preferred Securities of each of the Trusts out of moneys held by each of the Trusts, and payments on liquidation, redemption or otherwise with respect to such Trust Preferred Securities, will be guaranteed by HEI to the extent described herein (each a "Trust Guarantee"). See "Description of the Trust Guarantees." (continued on next page) ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The date of this Prospectus is January , 1997 (Continued from previous page) The proceeds from the sale of the Trust Securities will be used by the relevant Trust to purchase either Junior Subordinated Debt Securities from HEI (the "Company Debentures") or to purchase partnership preferred securities ("Partnership Preferred Securities"), representing the limited partner interests in HEI Preferred Funding, LP, a Delaware limited partnership (the "Partnership"). All of the partner interests in the Partnership other than the limited partner interests represented by the Partnership Preferred Securities will be owned by Hycap Management, Inc. ("Hycap"), a wholly-owned subsidiary of HEI and the sole general partner of the Partnership (the "General Partner"). If the relevant Trust uses the proceeds from the sale of Trust Preferred Securities to purchase Partnership Preferred Securities, substantially all of the proceeds from the sale of the Partnership Preferred Securities and the capital contribution from the General Partner will be used by the Partnership to purchase Company Debentures and debt securities of certain of HEI's subsidiaries ("Subsidiary Debentures"). The payment of distributions by the Partnership (if, as and when declared by the General Partner) and payments on liquidation of the Partnership or the redemption of Partnership Preferred Securities and the performance of the payment and certain other obligations of the General Partner, will be guaranteed by HEI (the "Partnership Guarantee"). See "Description of the Partnership Guarantee." In addition, payments in respect of the Subsidiary Debentures may also be fully and unconditionally guaranteed, on a subordinated basis, by HEI (the "Investment Guarantees") for the benefit of the holders of the Partnership Preferred Securities. The Trust Guarantees, the Partnership Guarantee and the Investment Guarantees (collectively, the "Guarantees") will be subordinate and junior in right of payment to all other liabilities of HEI and rank pari passu with the most senior preferred stock (if any) issued from time to time by HEI, with each other and with any guarantee hereafter entered into by HEI in respect of any preferred security of any affiliate of HEI. The Company Debentures in one or more series may be issued and sold from time to time to a Trust in connection with the investment of the proceeds from the offering of Trust Securities of such Trust. The Company Debentures purchased by a Trust may subsequently be distributed pro rata to holders of Trust Securities in connection with the dissolution of such Trust upon the occurrence of certain events to be described in an accompanying Prospectus Supplement. Specific terms of the particular Senior Debt Securities, Senior Subordinated Debt Securities, Junior Subordinated Debt Securities, Trust Preferred Securities, Partnership Preferred Securities, Guarantees, Preferred Stock and Common Stock, in respect of which this Prospectus is being delivered (the "Offered Securities"), will be set forth in an accompanying Prospectus Supplement or Supplements, which will describe the terms of the offering of the Offered Securities, the initial price thereof and the net proceeds from the sale thereof. The Prospectus Supplement will set forth with regard to the particular Offered Securities, certain terms thereof, including, where applicable, (i) in the case of Senior Debt Securities, Senior Subordinated Debt Securities and Junior Subordinated Debt Securities, the ranking as senior, senior subordinated or junior subordinated Debt Securities, the specific designation, aggregate principal amount, purchase price, denomination, currency or currency unit for which the Debt Securities may be purchased, currency or currency unit in which the principal of and any interest on the Debt Securities is payable, maturity, the right of HEI, if any, to extend or shorten the maturity after issuance, any premium that may be payable, any exchange, conversion or redemption provisions, the interest rate (which may be fixed or variable), if any, the time and method of calculating interest payments, if any, dates on which premium, if any, and interest, if any, will be payable, the right of HEI, if any, to defer payment of interest on the Debt Securities and the maximum length of such deferral period, the initial public offering price, subordination terms, and any listing on a securities exchange and other specific terms of the offering; (ii) in the case of Preferred Stock, the specific designation of the offering, number of shares, purchase price and the rights, preferences and privileges thereof and any qualifications or restrictions thereon (including dividends, liquidation value, voting rights, terms for the redemption, conversion or exchange thereof and any other specific terms of the Preferred Stock), and any listing on a securities exchange and whether the Company has elected to offer the Preferred Stock in the form of depositary shares; (iii) in the case of Common Stock, the number of shares offered, the initial offering price, the market price and dividend information; and (iv) in the case of Trust Preferred Securities of a Trust, the designation, number of securities, liquidation preference per security, initial public offering price, any listing on a securities exchange, distribution rate (or method of 2 calculation thereof), dates on which distributions shall be payable and dates from which distributions shall accrue, any voting rights, terms for any conversion or exchange into other securities, any redemption, exchange or sinking fund provisions, any other rights, preferences, privileges, limitations or restrictions relating to the Trust Preferred Securities and the terms upon which the proceeds of the sale of the Trust Preferred Securities shall be used to purchase Company Debentures or Partnership Preferred Securities. The Offered Securities may be offered in one or more series and in amounts, at prices and on terms to be determined at the time of offering; provided, however, that the aggregate initial public offering price to the public of the Offered Securities will be limited to $300,000,000. The Prospectus Supplement relating to any Offered Securities will contain information concerning certain United States federal income tax considerations, if applicable to the Offered Securities. ---------------- HEI and/or each of the Hawaiian Electric Industries Capital Trusts may sell the Offered Securities directly, through agents designated from time to time, or through underwriters or dealers. See "Plan of Distribution" below. If any agents of HEI and/or any Hawaiian Electric Industries Capital Trust or any underwriters or dealers are involved in the sale of the Offered Securities, the names of such agents, underwriters or dealers and any applicable commissions and discounts will be set forth in any related Prospectus Supplement. This Prospectus may not be used to consummate sales of securities unless accompanied by a Prospectus Supplement. 3 AVAILABLE INFORMATION This Prospectus constitutes a part of a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") filed by HEI, the Partnership and the Trusts with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Offered Securities. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission, although it does include a summary of certain terms of the Debt Securities and the indentures pursuant to which such Debt Securities will be issued; the Trust Securities and the Trust Agreements creating the Trusts; the Partnership and the Agreement of Limited Partnership pursuant to which the Partnership is created; the Partnership Preferred Securities; and the Guarantees. Reference is made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company, the Trusts, the Partnership and the Offered Securities. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and, in each instance, reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. HEI is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith, files reports, proxy statements and other information with the Commission. Reports, proxy statements and other information concerning HEI can be inspected and copied at prescribed rates at the Commission's Public Reference Room, Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, as well as the following Regional Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained by mail from the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. If available, such reports and other information may also be accessed through the Commission's electronic data gathering, analysis and retrieval system ("EDGAR") via electronic means, including the Commission's Web site on the Internet (http://www.sec.gov). Such reports, proxy statements and other information may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104, on which exchanges HEI's common stock is listed. No separate financial statements of any of the Trusts or the Partnership have been included herein. HEI does not believe that such financial statements would be material to holders of the Trust Preferred Securities because (i) all of the voting securities of each of the Trusts will be owned by, and the sole General Partner of the Partnership will be a wholly-owned subsidiary of, HEI, a reporting company under the Exchange Act, (ii) none of the Trusts nor the Partnership has independent operations but exists for the sole purpose of issuing securities representing undivided beneficial interests in the assets of such Trust and the Partnership, respectively, and investing the proceeds thereof in Company Debentures and, in the case of the Partnership, also in the Subsidiary Debentures and other qualified investments, and (iii) HEI's obligations described herein and in any accompanying Prospectus Supplement to provide certain indemnities in respect of, and be responsible for, certain costs, expenses, debts and liabilities of each of the Trusts under any indenture and any supplemental indenture thereto and pursuant to the trust agreements for each Trust, the Trust Guarantee issued with respect to Trust Preferred Securities issued by that Trust, the Company Debentures purchased by that Trust and the related indenture, or, in the case of the Partnership, the Partnership Preferred Securities purchased by such Trust, the Company Debentures and Subsidiary Debentures purchased by the Partnership and the Guarantees, in either case taken together, effectively constitute a full and unconditional guarantee, on a subordinated basis, of payments due on the Trust Preferred Securities. See "Description of the Junior Subordinated Debt Securities," "Description of the Trust Guarantees," and "Description of the Investment Guarantees." 4 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission (File No. 1-8503) by HEI pursuant to Section 13 of the Exchange Act are incorporated by reference in this Prospectus: (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995, as amended by HEI's Annual Report on Form 10-K/A dated April 30, 1996 for the fiscal year ended December 31, 1995; (b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996, and September 30, 1996; and (c) Current Reports on Form 8-K dated February 21, 1996, April 30, 1996 and January 3, 1997. All documents filed by HEI pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Offered Securities shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein or in any Prospectus Supplement (each an "Incorporated Document") shall be deemed to be modified or superseded for purposes of this Prospectus and any Prospectus Supplement to the extent that a statement contained herein or therein (or in any subsequently filed Incorporated Document) modifies or supersedes such statement. Such incorporation by reference shall not be deemed to specifically incorporate by reference the information referred to in Item 402(a)(8) of Regulation S-K. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or any Prospectus Supplement. Certain information contained in this Prospectus and in any Prospectus Supplement summarizes, is based upon or refers to information and financial statements contained in one or more of the Incorporated Documents; accordingly, such information contained herein or in any Prospectus Supplement is qualified in its entirety by reference to such Incorporated Documents and should be read in conjunction therewith. HEI WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO TREASURER, HAWAIIAN ELECTRIC INDUSTRIES, INC., P.O. BOX 730, HONOLULU, HAWAII 96808-0730, TELEPHONE: (808) 543-7383. 5 HAWAIIAN ELECTRIC INDUSTRIES, INC. HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with subsidiaries engaged in the electric utility, savings bank, freight transportation, real estate development and other businesses, primarily in the State of Hawaii, and also engaged in the pursuit of independent power projects and energy services projects in Asia and the Pacific. HEI's predecessor, Hawaiian Electric Company, Inc. ("HECO"), was incorporated under the laws of the Kingdom of Hawaii (now the State of Hawaii) on October 13, 1891. As a result of a 1983 corporate reorganization, HECO became an HEI subsidiary, and common shareholders of HECO became common shareholders of HEI. The principal office of HEI is located at 900 Richards Street, Honolulu, Hawaii 96813 and its telephone number is (808) 543-5662. HECO and its subsidiaries, Maui Electric Company, Limited ("MECO") and Hawaii Electric Light Company, Inc. ("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, Molokai and Hawaii. These five islands had a combined population estimated at 1,130,000 as of July 1, 1995, or approximately 95 percent of the State's total population, and a service area of approximately 5,766 square miles. HECO and its subsidiaries provide the only electric public utility service on these islands. HEI also owns directly or indirectly the following operating subsidiaries which comprise its diversified companies: HEI Diversified, Inc. ("HEIDI") and its subsidiary, American Savings Bank, F.S.B. ("ASB") and its subsidiaries; Hawaiian Tug & Barge Corp. ("HTB") and its subsidiary, Young Brothers, Limited ("YB"); Malama Pacific Corp. ("MPC") and its subsidiaries; HEI Power Corp. ("HEIPC") and its subsidiaries; and HEI Investment Corp. ("HEIIC"). ASB, acquired in 1988, is the fourth largest financial institution in Hawaii based on total assets and the third largest financial institution in Hawaii based on deposits, in each case as of June 30, 1996, and has 48 retail branches. HTB was acquired in 1986 and provides ship assist and charter towing services and owns YB, a regulated intrastate public carrier of waterborne freight among the Hawaiian Islands. MPC was formed in 1985 and directly or through subsidiaries develops and invests in real estate. HEIIC was formed in 1984 and is a passive investment company which primarily holds investments in leveraged leases and currently plans no new investments. HEIPC was formed in March 1995 to pursue, directly or through its subsidiaries or affiliates, independent power projects and energy services projects in Asia and the Pacific. HEI is a legal entity separate and distinct from its various subsidiaries. As a holding company with no significant operations of its own, the principal sources of its funds are dividends or other distributions from its operating subsidiaries, borrowings and sales of equity. The ability of certain of HEI's direct and indirect subsidiaries to pay dividends or make other distributions to HEI, or to make loans or extend credit to or purchase assets from HEI, is subject to contractual, statutory and regulatory restrictions, including without limitation the provisions of an agreement with the Hawaii Public Utilities Commission (pertaining to the electric public utility subsidiaries) and the capital requirements imposed on ASB by the Office of Thrift Supervision, as well as restrictions and limitations set forth in debt instruments, preferred stock resolutions and guarantees. THE INFORMATION IN THIS PROSPECTUS CONCERNING HEI AND ITS SUBSIDIARIES DOES NOT PURPORT TO BE COMPREHENSIVE. ADDITIONAL INFORMATION CONCERNING THE BUSINESSES AND AFFAIRS OF HEI AND ITS SUBSIDIARIES, INCLUDING WITHOUT LIMITATION PENDING LEGAL AND REGULATORY PROCEEDINGS, DESCRIPTIONS OF REGULATIONS TO WHICH THESE COMPANIES ARE SUBJECT AND THEIR CAPITAL REQUIREMENTS AND RESOURCES, IS CONTAINED IN THE INCORPORATED DOCUMENTS. SEE "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." 6 THE HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUSTS Each of the Trusts is a statutory business trust created under Delaware law pursuant to (a) a separate trust agreement (each, a "Trust Agreement") executed by HEI, as sponsor for such trust (the "Sponsor"), and the Trustees (as defined herein) for such trust and (b) the filing of a certificate of trust with the Delaware Secretary of State. Each Trust exists for the exclusive purposes of (i) issuing the Trust Securities, (ii) investing the gross proceeds of the Trust Securities in Company Debentures or in Partnership Preferred Securities, and (iii) engaging in only those other activities necessary or incidental thereto. All of the Trust Common Securities will be owned by HEI. The Trust Common Securities of each Trust will rank pari passu, and payments will be made thereon pro rata, with the Trust Preferred Securities of such Trust except that upon an event of default under the Trust Agreement with respect thereto, the rights of the holders of the Trust Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights of the holders of the Trust Preferred Securities. HEI will acquire Trust Common Securities of each Trust in an aggregate liquidation preference amount equal to not less than 3 percent of the total capital of each Trust. Each Trust Agreement may be modified and amended if approved by the Regular Trustees (and in certain circumstances the Property Trustee) (as defined herein), provided that, if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would materially adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to such Trust Agreement or otherwise or (ii) the dissolution, winding-up or termination of the related Trust other than pursuant to the terms of such Trust Agreement, then the holders of record of the Trust Securities voting together as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least a majority in liquidation amount of the Trust Securities affected thereby; provided, that, if any amendment or proposal referred to in clause (i) above would materially adversely affect only the Trust Preferred Securities or the Trust Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a majority in liquidation amount of such class of Trust Securities. Each Trust shall be subject to termination as provided in the applicable Trust Agreement. Each Trust's business and affairs will be conducted by the trustees (the "Trustees") appointed by HEI, as the holder of record of all the Trust Common Securities. The holder of record of the Trust Common Securities will be entitled to appoint, remove or replace any of, or increase or reduce the number of, the Trustees of a Trust. The duties and obligations of the Trustees shall be governed by the Trust Agreement of their respective Trust. One or more of the Trustees for each Trust will be persons who are employees or officers of or affiliated with HEI (the "Regular Trustees"). One Trustee of each Trust will be a financial institution which will be unaffiliated with HEI and which shall act as institutional trustee under the Trust Agreement and as indenture trustee for purposes of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement (the "Property Trustee"). In addition, unless the Property Trustee maintains a principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law, one Trustee of each Trust will have its principal place of business or reside in the State of Delaware (the "Delaware Trustee"). HEI will pay all fees and expenses related to each of the Trusts and the offering of Trust Securities. The initial Property Trustee and the initial Delaware Trustee for each Trust will be The Bank of New York and The Bank of New York (Delaware). The principal office of the Property Trustee is 101 Barclay St., 21st Floor, New York, N.Y. 10286. The office of the Delaware Trustee for each Trust in the State of Delaware, and its principal place of business is, White Clay Center, Route 273, Newark, Delaware 19711. The principal place of business of each Trust is 101 Barclay St., 21st Floor, New York, N.Y. 10286. 7 THE PARTNERSHIP The following description sets forth certain general information concerning the Partnership. In the event Partnership Preferred Securities are to be purchased by a Trust with the proceeds from the sale of its Trust Securities, the Prospectus Supplement relating to such offering will contain additional information concerning the Partnership. The information set forth below and in any Prospectus Supplement relating to the Partnership does not purport to be complete and is subject to and qualified in its entirety by reference to the Agreement of Limited Partnership relating to the Partnership which, as amended and restated, is in substantially the form filed as an exhibit to the Registration Statement of which this Prospectus is a part. HEI Preferred Funding, LP is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act, as amended (the "Partnership Act"). Pursuant to the certificate of limited partnership and the Agreement of Limited Partnership for the Partnership, Hycap is the sole General Partner of the Partnership. Upon the issuance of the Partnership Preferred Securities to a Trust, which securities represent limited partner interests in the Partnership, the Trust will be the sole limited partner of the Partnership. Contemporaneously with the issuance of the Partnership Preferred Securities, the General Partner will contribute capital to the Partnership in an amount that will establish its initial capital account at a level equal to at least 15% of the total capital of the Partnership. The Partnership will be managed by the General Partner and exists for the sole purpose of (i) issuing the Partnership Preferred Securities, (ii) investing the proceeds thereof in securities of HEI and its subsidiaries (the "Affiliate Investment Instruments," including the Company Debentures and the Subsidiary Debentures) and certain U.S. government obligations and commercial paper of entities not affiliated with HEI (the "Eligible Debt Securities") and (iii) engaging in only those other activities necessary or incidental thereto. The rights of the holders of the Partnership Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Agreement of Limited Partnership and the Partnership Act. See "Description of the Partnership Preferred Securities." The location of the principal executive offices of the Partnership is Hycap Management, Inc., 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801 (302) 427-5738. CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES The following tables set forth the ratios of earnings to fixed charges for HEI and its subsidiaries for the periods indicated:
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ----------- ------------------------ 1996 1995 1995 1994 1993 1992 1991 ----- ----- ---- ---- ---- ---- ---- Ratio of earnings to fixed charges (excluding interest on ASB deposits)...... 1.90 2.03 1.94 2.22 2.25 2.08 1.99 Ratio of earnings to fixed charges (including interest on ASB deposits)...... 1.54 1.62 1.57 1.69 1.65 1.50 1.46
For purposes of calculating the ratio of HEI's consolidated earnings to fixed charges, "earnings" represent the sum of (a) pretax income from continuing operations (excluding undistributed net income or net loss from less than fifty-percent-owned persons) and (b) fixed charges (as hereinafter defined, but excluding capitalized interest). "Fixed charges" are calculated both excluding and including interest on ASB's deposits during the applicable periods and represent the sum of (i) interest, whether capitalized or expensed, incurred by HEI and its subsidiaries plus their proportionate share of interest on debt to outsiders incurred by fifty-percent-owned persons, but excluding interest on nonrecourse debt from leveraged leases which is not included in interest 8 expense in HEI's consolidated statements of income, (ii) amortization of debt expense and discount or premium related to any indebtedness, whether capitalized or expensed, (iii) the interest factor in rental expense and (iv) the preferred stock dividend requirements of HEI's subsidiaries, increased to an amount representing the pretax earnings required to cover such dividend requirements. HEI has not issued Preferred Stock and consequently pays no preferred stock dividends. The following table sets forth the ratio of earnings to fixed charges for HECO and its subsidiaries for the periods indicated:
NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31, ------------- ------------------------ 1996 1995 1995 1994 1993 1992 1991 ------ ------ ---- ---- ---- ---- ---- Ratio of earnings to fixed charges....... 3.67 3.66 3.46 3.47 3.25 3.03 2.82
For purposes of calculating the ratio of HECO's consolidated earnings to fixed charges, "earnings" represent the sum of (a) pretax income before preferred stock dividends of HECO and (b) fixed charges (as hereinafter defined, reduced by the allowance for borrowed funds used during construction). "Fixed charges" represent the sum of (i) interest, whether capitalized or expensed, incurred by HECO and its subsidiaries, (ii) amortization of debt expense and discount or premium related to any indebtedness, whether capitalized or expensed, (iii) the estimated interest component in rental expense and (iv) the preferred stock dividend requirements of HELCO and MECO, increased to an amount representing the pretax earnings required to cover such dividend requirements. USE OF PROCEEDS Each Trust will use all proceeds from the sale of the Trust Securities to purchase Company Debentures or Partnership Preferred Securities. The Partnership will use all proceeds received from HEI's capital contribution and the sale of Partnership Preferred Securities to purchase Company Debentures, Subsidiary Debentures and Eligible Debt Securities. Unless otherwise indicated in the applicable Prospectus Supplement, HEI intends to use the net proceeds received by it from the sale of the Offered Securities principally to fund investments in, or extend credit, to its subsidiaries, for repayment of outstanding indebtedness and for general corporate purposes. The precise amounts and timing of investments in, and extensions of credit to, HEI's subsidiaries will depend upon the subsidiaries' funding requirements and the availability of other funds. Accordingly, the net proceeds to HEI from the sale of Offered Securities may be temporarily invested in marketable securities or applied to the reduction of HEI's short-term indebtedness. Based upon the historic and anticipated future growth of HEI and the financial needs of its subsidiaries, HEI may engage in additional financings of a character and amount to be determined as the need arises. DESCRIPTION OF SENIOR DEBT SECURITIES AND SENIOR SUBORDINATED DEBT SECURITIES HEI may issue unsecured Senior Debt Securities and Senior Subordinated Debt Securities (collectively, for purposes of this Section only, the "Debt Securities"), consisting of notes, debentures or other evidences of indebtedness issued from time to time in one or more series. Prior to issuing any Senior Debt Securities or Senior Subordinated Debt Securities, HEI will enter into a senior debt indenture (the "Senior Indenture"), in the case of Senior Debt Securities, and a senior subordinated debt indenture (the "Senior Subordinated Indenture"), in the case of Senior Subordinated Debt Securities. For purposes of this Section only, the Senior Indenture and the Senior Subordinated Indenture are sometimes hereinafter referred to individually as an "Indenture" and collectively as the "Indentures." HEI will select the trustee under each of the Indentures (each, a "Debt Trustee"). The forms of the contemplated Indentures are included as exhibits to the Registration Statement of 9 which this Prospectus is a part and are described below. The terms of the Debt Securities will include those stated in the applicable Indenture and any supplemental indenture thereto, and those made part of the Indenture by reference to the Trust Indenture Act. The following summary of certain of the terms of the Indentures and the Debt Securities does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the applicable Indenture, an initial form of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act. Numerical references in parentheses below are to sections in the applicable Indenture. Wherever particular sections or defined terms of the applicable Indenture are referred to, such sections or defined terms are incorporated herein by reference. The Indentures are substantially identical except for provisions relating to subordination and those relating to HEI's covenants. Any Debt Securities offered by this Prospectus will be accompanied by a Prospectus Supplement which will indicate that the securities being offered thereby are Senior Debt Securities or Senior Subordinated Debt Securities and will set forth the designation and describe the specific terms and provisions thereof, which description will supplement and, when inconsistent, supersede the description in this Section. GENERAL Neither of the Indentures will limit the amount of additional indebtedness HEI or any of its subsidiaries may incur. The Debt Securities will be unsecured senior or senior subordinated obligations of HEI. Since HEI is a holding company, the Debt Securities effectively will be subordinate to all obligations of HEI's subsidiaries, and HEI's rights and the rights of its creditors, including the holders of Debt Securities, to participate in the assets of any subsidiary upon such subsidiary's liquidation or recapitalization will be subject to the prior claims of such subsidiary's creditors, except to the extent that HEI may itself be a creditor with recognized claims against such subsidiary. Claims on HEI's subsidiaries by creditors other than HEI include obligations arising out of short and long- term indebtedness, as well as other liabilities incurred in the ordinary course of business. In addition, since HEI's principal subsidiaries are subject to state or federal regulatory control, the ability of such subsidiaries to pay dividends or to make distributions, loans or advances to HEI without prior regulatory approval is limited by applicable laws, regulations and agreements with regulatory agencies. The Indentures do not limit the aggregate principal amount of indebtedness that may be issued thereunder and provide that Debt Securities may be issued from time to time in one or more series and may be denominated and payable in foreign currencies or units based on or related to foreign currencies, including European Currency Units. Special United States federal income tax considerations applicable to any Debt Securities so denominated will be described in the relevant Prospectus Supplement. Reference is made to the applicable Prospectus Supplement which will accompany this Prospectus for the following terms of and information relating to the Senior Debt and Senior Subordinated Debt Securities offered thereby (to the extent such terms are applicable to such Debt Securities): (i) classification as Senior or Senior Subordinated Debt Securities, and the specific designation, aggregate principal amount, purchase price and denominations; (ii) if other than U.S. Dollars, the currency or units based on or relating to currencies in which the Debt Securities are denominated and/or in which principal, premium, if any, and/or any interest will or may be payable; (iii) any date of maturity; (iv) interest rate or rates (or the method by which such rate or rates will be determined), if any; (v) the dates on which any such interest will be payable and from which such interest will accrue; (vi) the place or places where the principal of and premium, if any, and interest, if any, on the Debt Securities will be payable; (vii) any redemption, repayment or sinking fund provisions; (viii) whether, in the case of Senior Subordinated Debt Securities, such Debt Securities are convertible into Common Stock of HEI; (ix) whether the Debt Securities will be issuable in registered form ("Registered Debt Securities") or bearer form ("Bearer Debt Securities") or both and, if Bearer Debt Securities are issuable, any restrictions applicable to the place of payment of any principal of and premium, if any, and interest on such Bearer Debt Securities, to the exchange of one form for another and to the offer, sale and delivery of such Bearer Debt Securities (including the requirement that under current United States federal income tax law, Registered Debt Securities will not be exchangeable into Bearer Debt Securities); (x) any applicable United States federal income tax consequences, 10 including whether and under what circumstances HEI will pay additional amounts on Debt Securities held by a person who is not a U.S. person (as hereinafter defined) in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether HEI will have the option to redeem such Debt Securities rather than pay such additional amounts; (xi) the proposed listing, if any, of the Debt Securities on any securities exchange; and (xii) any other specific terms of the Debt Securities, including any modifications of or additions to the events of default or covenants provided for with respect to such Debt Securities, and any terms which may be required by or advisable under applicable laws or regulations not inconsistent with the applicable Indenture. Debt Securities may be presented for exchange and Registered Debt Securities may be presented for transfer in the manner, at the places and subject to the restrictions set forth in the Debt Securities and the applicable Prospectus Supplement. Such services will be provided without charge, other than any tax or other governmental charge payable in connection therewith, but subject to the limitations provided in the applicable Indenture. Bearer Debt Securities and the coupons, if any, appertaining thereto will be transferable by delivery. Debt Securities will bear interest at a fixed rate or a floating rate. Debt Securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate will be sold at a discount below their stated principal amount. Special United States federal income tax considerations applicable to any such discounted Debt Securities or to certain Debt Securities issued at par which are treated as having been issued at a discount for United States federal income tax purposes will be described in the relevant Prospectus Supplement. Debt Securities may be issued, from time to time, with the principal amount payable on any principal payment date, or the amount of interest payable on any interest payment date, to be determined by reference to one or more currency exchange rates, commodity prices, equity indices or other factors. Holders of such Debt Securities may receive a principal amount on any principal payment date, or a payment of interest on any interest payment date, that is greater than or less than the amount of principal or interest otherwise payable on such dates, depending upon the value on such dates of the applicable currency, commodity, equity index or other factors. Information as to the methods for determining the amount of principal or interest payable on any date, the currencies, commodities, equity indices or other factors to which the amount payable on such date is linked and certain additional tax considerations will be set forth in the applicable Prospectus Supplement. GLOBAL DEBT SECURITIES The registered Debt Securities of a series may be issued in the form of one or more global securities ("Global Securities") that will be deposited with, or on behalf of, a depositary (the "Global Depositary"), or its nominee, identified in the Prospectus Supplement relating to such series. In such a case, one or more Global Securities will be issued in a denomination or aggregate denomination equal to the aggregate principal amount of outstanding Debt Securities of the series to be represented by such Global Security or Securities. Unless and until it is exchanged in whole or in part for Debt Securities in definitive registered form, a Global Security may not be transferred or exchanged except as a whole by the Global Depositary for such Global Security to a nominee for such Global Depositary and except in the circumstances described in the applicable Prospectus Supplement. The specific terms of the depositary arrangement with respect to any portion of a series of Debt Securities to be represented by a Global Security and a description of the Global Depositary will be provided in the applicable Prospectus Supplement. SENIOR DEBT SECURITIES Payment of the principal of and premium, if any, and interest on Senior Debt Securities issued under the Senior Indenture will rank pari passu with all other unsecured and unsubordinated debt of HEI. The Senior Debt Securities effectively will be subordinate to all obligations of HEI's subsidiaries. See discussion above under "--General." If this Prospectus is being delivered in connection with the offer and sale of a series of Senior 11 Debt Securities, the accompanying Prospectus Supplement will set forth the approximate amount of HEI (holding company only) secured debt and unsubordinated debt, if any, outstanding as of the end of the most recent quarter. SENIOR SUBORDINATED DEBT SECURITIES Subordination. Payment of the principal of and premium, if any, and interest on Senior Subordinated Debt Securities issued under the Senior Subordinated Indenture will be subordinate and junior in right of payment, to the extent and in the manner set forth in the Senior Subordinated Indenture, to all "Senior Indebtedness" of HEI. The Senior Subordinated Indenture defines "Senior Indebtedness" as the principal of and premium, if any, and interest on (a) all indebtedness of HEI, whether outstanding on the date of the Senior Subordinated Indenture or thereafter created, (i) for money borrowed by HEI, (ii) for money borrowed by, or obligations of, others and either assumed or guaranteed, directly or indirectly, by HEI, (iii) in respect of letters of credit and acceptances issued or made by banks, or (iv) constituting purchase money indebtedness, or indebtedness secured by property included in the property, plant and equipment accounts of HEI at the time of the acquisition of such property by HEI, for the payment of which HEI is directly liable, and (b) all deferrals, renewals, extensions and refundings of, and amendments, modifications and supplements to, any such indebtedness. As used in the preceding sentence the term "purchase money indebtedness" means indebtedness evidenced by a note, debenture, bond or other instrument (whether or not secured by any lien or other security interest) issued or assumed as all or a part of the consideration for the acquisition of property, whether by purchase, merger, consolidation or otherwise, unless by its terms such indebtedness is subordinate to other indebtedness of HEI. Notwithstanding anything to the contrary in the Senior Subordinated Indenture or the Senior Subordinated Debt Securities, Senior Indebtedness shall not include, (i) any indebtedness of HEI which, by its terms or the terms of the instrument creating or evidencing it, is subordinate in right of payment to or pari passu with the Senior Subordinated Debt Securities or (ii) any indebtedness of HEI to a subsidiary of HEI. (Senior Subordinated Indenture, Section 1.1) The Senior Subordinated Debt Securities effectively will also be subordinate to all obligations of HEI's subsidiaries. See discussion above under "--General." The Senior Subordinated Indenture does not contain any limitation on the amount of Senior Indebtedness that can be incurred by HEI. Junior Subordinated Debt Securities issued by HEI pursuant to the Junior Indenture (as defined in "Description of the Junior Subordinated Debt Securities" below) will be subordinate in right of payment to the Senior Subordinated Debt Securities. In the event (a) of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings in respect of HEI or its property, or (b) that Senior Subordinated Debt Securities of any series are declared due and payable before their expressed maturity because of the occurrence of an Event of Default pursuant to Section 5.1 of the Senior Subordinated Indenture (under circumstances other than as set forth in clause (a) above), then the holders of all Senior Indebtedness shall first be entitled to receive payment of the full amount due thereon in money or money's worth, before the holders of any of such Senior Subordinated Debt Securities or coupons appertaining thereto are entitled to receive a payment on account of the principal of or premium, if any, or interest on the indebtedness evidenced by such Senior Subordinated Debt Securities or of such coupons appertaining thereto. In the event and during the continuation of any default in payment of any Senior Indebtedness or if any Event of Default shall exist under any Senior Indebtedness, as "Event of Default" is defined therein or in the agreement under which the same is outstanding, no payment of the principal of or interest on the Senior Subordinated Debt Securities or coupons shall be made. (Senior Subordinated Indenture, Article 13) If this Prospectus is being delivered in connection with the offer and sale of a series of Senior Subordinated Debt Securities, the accompanying Prospectus Supplement will set forth the approximate amount of Senior Indebtedness (holding company only) and Senior Subordinated Debt Securities outstanding as of the end of the most recent fiscal quarter. Conversion Rights. The terms and conditions, if any, on which Senior Subordinated Debt Securities are convertible into Common Stock of HEI will be set forth in the Prospectus Supplement relating thereto. Such terms will include the conversion price, the conversion period, provisions as to whether conversion will be at the option of the holder or HEI, the events requiring an adjustment of the conversion price and provisions affecting conversion in the event of the redemption of the convertible Senior Subordinated Debt Securities; and such terms 12 may include provisions under which the number of shares of Common Stock to be received by the holders of the Senior Subordinated Debt Securities would be calculated according to the market price of the Common Stock as of a time stated in the Prospectus Supplement. CERTAIN COVENANTS OF HEI Restriction on Liens. The Senior Indenture provides that, so long as any Senior Debt is issued and outstanding thereunder, and except as otherwise provided in any applicable supplemental indenture as described in the relevent Prospectus Supplement, HEI will not create, incur, issue or assume any Indebtedness (as defined below) secured after the date of the Senior Indenture by any security interest on any property of HEI (holding company only) (including, without limitation, property of HEI consisting of any share or shares of capital stock of or any indebtedness owed to HEI by any subsidiary of HEI), whether such property, shares or indebtedness are owned by HEI at the date of the Indenture or thereafter acquired, without effectively providing concurrently therewith that the Senior Debt (together, at the option of HEI, with any other indebtedness ranking equally with the Senior Debt and then existing or thereafter created) shall be secured equally and ratably with (or prior to) the Indebtedness so created, incurred, issued or assumed; provided, however, that the foregoing does not apply to: (1) security interests on any property acquired, constructed or improved by HEI or on any shares of capital stock or indebtedness of any subsidiary acquired by HEI after the date of the Indenture which security interests are created or assumed at the time of or within 270 days after the acquisition of, or the expenditure of the costs of construction or improvements of, and which secure the payment of all or any part of the purchase price of, such property, shares of capital stock or indebtedness, or which secure payment of all or any part of the cost of any such construction or improvements, provided that, in the case of any such acquisition, construction or improvement, such security interest does not apply to any property or shares of capital stock or indebtedness owned theretofore by HEI other than, in the case of any such construction or improvement, any real property on which the property is so constructed or the improvement is located; (2) security interests on any property, shares of capital stock or indebtedness, which security interests exist at the time of acquisition of such property, shares or indebtedness by HEI; (3) security interests on any property of a corporation or other Person, which interests exist at the time such corporation is merged with or into or consolidated with HEI or which interests exist at the time of a sale or transfer of the properties of such corporation or other Person as an entirety or substantially as an entirety to HEI; (4) security interests in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or political subdivision, (A) to secure partial progress, advance or other payments pursuant to any contract or statute, (B) to secure any indebtedness incurred or guaranteed for the purpose of financing or refinancing all or any part of the purchase price of the property, shares of capital stock or indebtedness subject to such security interests, or (C) to secure the cost of constructing or improving the property subject to such security interests (including, without limitation, security interests incurred in connection with pollution control, industrial revenue or similar financings); (5) security interests on any property arising in connection with any defeasance, covenant defeasance or in substance defeasance of any Indebtedness pursuant to express contractual provision or generally accepted accounting principles; (6) security interests on any capital stock of any corporation which is registered in the name of HEI or otherwise owned by or held for the benefit of HEI which may constitute "margin stock" as such term is defined in Section 207.2(i) of Title 12 of the Code of Federal Regulations (or any successor provisions); and 13 (7) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any security interest referred to above in clauses (1)-(6), inclusive; provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the original principal amount of Indebtedness and that such extension, renewal or replacement shall be limited to all or a part of the property (plus improvements and construction on such property), shares of capital stock or indebtedness which was subject to the security interest so extended, renewed or replaced. Notwithstanding the foregoing, under the Senior Indenture as supplemented, HEI may, without equally and ratably securing the Senior Debt Securities, create, incur, issue, and assume Indebtedness secured by any security interest not excepted by the foregoing clauses (1) through (7), inclusive, if the aggregate amount of such Indebtedness, together with all other Indebtedness of HEI (holding company only) existing at such time and secured by security interests not so excepted, does not exceed 10% of HEI's Consolidated Net Assets. (Senior Indenture, Section 3.9) "Indebtedness" means (i) any indebtedness, whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed, (ii) all deferred indebtedness (including, without limitation, capitalized leases) for the payment of the purchase price of property or assets purchased, and (iii) all guaranties, endorsements, assumptions or other contingent obligations in respect of, or to purchase or otherwise to acquire, indebtedness of the types described in clauses (i) and (ii) above. "Consolidated Net Assets" means the total amount of assets appearing on the consolidated balance sheet of HEI and its subsidiaries less, without duplication: (a) all current liabilities (excluding current liabilities of ASB and any current liabilities which are by their terms extendable or renewable at the sole option of the obligor thereon without requiring the consent of the obligee to a date more than 12 months after the date of determination); (b) all reserves for depreciation and other asset valuation reserves but excluding any reserves for deferred Federal income taxes arising from accelerated amortization or otherwise; and (c) all appropriate adjustments on account of minority interests of other persons holding common stock in any subsidiary and TOPrSSM. Consolidated Net Assets are determined in accordance with generally accepted accounting principles and as of a date not more than 90 days prior to the happening of the event for which such determination is being made. Restrictions on Dispositions of HECO Shares. HEI currently holds 100% of the outstanding common stock of HECO. The Senior Indenture provides that, so long as any Senior Debt Security is issued and outstanding under the Senior Indenture, HEI will not sell, transfer or otherwise dispose of, and will not permit HECO to issue, sell, transfer or otherwise dispose of, any shares of capital stock of any class or classes of HECO ordinarily having voting power for the election of HECO's board of directors. This covenant will not restrict the issuance, sale, transfer or other disposition of HECO's voting shares to HEI or to any of HEI's direct or indirect wholly-owned subsidiaries. The covenant also will not restrict (i) sales, transfers or other dispositions by HECO of any securities, including the capital stock of its subsidiaries, (ii) consolidations of HECO or mergers of HECO with or into HEI or any of its direct or indirect wholly-owned subsidiaries, or (iii) consolidations or mergers of HECO with or into any other corporation if the corporation formed by such consolidation or merger is a direct or indirect wholly-owned subsidiary of HEI. (Senior Indenture, Section 9.3) Consolidation, Merger, Conveyance, Transfer or Lease. Each Indenture provides that, so long as any Debt Security is issued and outstanding thereunder, HEI will not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person or permit any Person to consolidate with or merge into HEI or convey, transfer or lease its properties and assets substantially as an entirety to HEI unless certain conditions are met, including the conditions that (a) the corporation formed by such consolidation or into which HEI is merged or the Person which acquires by conveyance or transfer, or which leases, the property and assets of HEI substantially as an entirety is a Person organized and existing in corporate form under the laws of the United States of America, any State thereof or the District of Columbia, and such Person expressly assumes, by supplemental indenture, the due and punctual payment of the principal of (and premium, if any) and interest (if any) on all the Debt Securities and the performance of all of the covenants of HEI under the Indenture, (b) immediately after giving effect to such transaction no Event of Default by HEI, 14 and no event which after notice and lapse of time would become an Event of Default by HEI, has occurred and is continuing, and (c) HEI has delivered to the Debt Trustee an Officers' Certificate and an Opinion of Counsel as provided in the Indentures. (Senior and Senior Subordinated Indenture, Section 9.1) ABSENCE OF RESTRICTIONS ON CERTAIN TRANSACTIONS Other than the restrictions on liens and disposition of HECO shares, as set forth in the Senior Indenture, and restrictions on mergers, consolidations, conveyances, transfers and leases set forth in each Indenture as described above, neither the Senior Indenture nor the Senior Subordinated Indenture contains any covenants or other provisions designed to afford holders of Senior Debt Securities or Senior Subordinated Debt Securities protection in the event of a highly leveraged transaction involving HEI, or in the event of a recapitalization, merger or other transaction (leveraged or otherwise) involving HEI, its affiliates or its management, or in the event of a change in control of HEI. EVENTS OF DEFAULT An Event of Default is defined under each Indenture with respect to Debt Securities of any series issued under such Indenture as being: (a) default in payment of all or any part of the principal of the Debt Securities of such series when due, whether at maturity (or upon any redemption), by declaration or otherwise; (b) default for 30 days in payment of any interest on any Debt Securities of such series; (c) default in payment of any sinking fund installment when due; (d) default for 60 days after written notice, as provided in such Indenture, in the observance or performance of any other covenant or agreement in the Debt Securities of such series or such Indenture other than a covenant included in such Indenture solely for the benefit of a series of Debt Securities other than such series; (e) certain events of bankruptcy, insolvency or reorganization with respect to HEI; or (f) an Event of Default with respect to any other indebtedness for borrowed money (other than nonrecourse obligations) of HEI in an aggregate principal amount exceeding $10,000,000, if such Event of Default shall result in the acceleration of such other indebtedness under the terms of the instrument under which such indebtedness is issued or secured, so long as such acceleration is not cured, waived, rescinded or annulled, or such indebtedness is not discharged, within 20 days after written notice thereof as provided in such Indenture; provided that if any such acceleration shall cease or be cured, waived, rescinded or annulled, then the Event of Default by reason thereof shall be deemed likewise to have been thereupon cured. (Senior and Senior Subordinated Indentures, Section 5.1) Each Indenture provides that (a) if an Event of Default due to the default in payment of principal of or premium, if any, or interest on, any series of Debt Securities issued under such Indenture or due to the default in the performance or breach of any other covenant or agreement of HEI applicable to the Debt Securities of such series but not applicable to all outstanding Debt Securities issued under such Indenture shall have occurred and be continuing, either the Debt Trustee or the holders of not less than 25% in principal amount of the Debt Securities of each affected series (treated as one class) issued under such Indenture and then outstanding may then declare the principal of all Debt Securities of each such affected series and interest accrued thereon to be due and payable immediately; and (b) if any Event of Default due to a default in the performance of any other of the covenants or agreements in such Indenture applicable to all outstanding Debt Securities issued thereunder and then outstanding or due to certain events of bankruptcy, insolvency and reorganization of HEI shall have occurred and be continuing, either the Debt Trustee or the holders of record of not less than 25% in principal amount of all Debt Securities issued under such Indenture and then outstanding (treated as one class) may declare the principal of all such Debt Securities and interest accrued thereon to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults may be waived (except a continuing default in payment of principal of (or premium, if any) or interest on such Debt Securities) by the holders of record of a majority in principal amount of the Debt Securities of all such affected series then outstanding but no such annulment or waiver will apply to subsequent defaults. (Senior and Senior Subordinated Indentures, Sections 5.1 and 5.10) 15 Each Indenture contains a provision entitling the Debt Trustee, subject to the duty of the Debt Trustee during a default to act with the required standard of care, to be indemnified by the holders of record of Debt Securities issued under such Indenture requesting the Debt Trustee to exercise any right or power under such Indenture before proceeding to exercise any such right or power at the request of such holders. (Senior and Senior Subordinated Indentures, Sections 6.1 and 6.2) Subject to such provisions in each Indenture for the indemnification of the Debt Trustee and certain other limitations, the holders of record of a majority in principal amount of the outstanding Debt Securities of each affected series (treated as one class) issued under such Indenture may direct the time, method and place of conducting any proceedings for any remedy available to the Debt Trustee, or exercising any trust or power conferred on the Debt Trustee. (Senior and Senior Subordinated Indentures, Section 5.9) Each Indenture provides that no holder of Debt Securities issued under such Indenture may institute any action against HEI under such Indenture (except actions for payment of overdue principal, premium, if any, or interest) unless such holder previously shall have given to the Debt Trustee written notice of default and continuance thereof and unless the holders of not less than 25% in principal amount of the Debt Securities of each affected series (treated as one class) issued under such Indenture and then outstanding shall have requested the Debt Trustee to institute such action and shall have offered the Debt Trustee reasonable indemnity, the Debt Trustee shall not have instituted such action within 60 days of such request and the Debt Trustee shall not have received direction inconsistent with such written request by the holders of a majority in principal amount of the Debt Securities of each affected series (treated as one class) issued under such Indenture and then outstanding. (Senior and Senior Subordinated Indentures, Sections 5.6, 5.7 and 5.9) Each Indenture contains a covenant that HEI will file annually with the Debt Trustee a certificate of no default or a certificate stating that a default exists. (Senior and Senior Subordinated Indentures, Section 3.5) DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE HEI can discharge or defease its obligations under each Indenture, including its obligations under the covenants set forth therein, as set forth below. (Senior and Senior Subordinated Indentures, Section 10.1) Upon satisfying certain conditions, HEI may discharge certain obligations to holders of any series of Debt Securities issued under such Indentures which have not already been delivered to the Debt Trustee for cancellation and which have either become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by irrevocably depositing with the Debt Trustee cash or, in the case of Debt Securities payable only in U.S. dollars, U.S. Government Obligations (as defined in such Indenture), as trust funds in an amount certified to be sufficient to pay when due, whether at maturity, upon redemption or otherwise, the principal of and premium, if any, and interest on such Debt Securities and sinking fund payments. HEI may also discharge any and all of its obligations to holders of any series of Debt Securities issued under an Indenture at any time ("defeasance"), but may not thereby avoid its duty to register the transfer or exchange of such series of Debt Securities, to replace any temporary, mutilated, destroyed, lost or stolen series of Debt Securities or to maintain an office or agency in respect of such series of Debt Securities or certain other obligations. Upon satisfying certain conditions, HEI may instead be released with respect to any outstanding series of Debt Securities issued under the relevant Indenture from the obligations imposed by certain provisions of such Indenture including Sections 3.6, 3.7, 3.8, 3.9, 3.10, 9.1 and 9.3, in the case of the Senior Indenture, and Sections 3.6, 3.7, 3.8 and 9.1, in the case of the Senior Subordinated Indenture (which contain, among other things, the covenants described above limiting liens, consolidations, mergers, transfers and leases and certain dispositions) and omit to comply with such Sections without creating an Event of Default ("covenant defeasance"). Defeasance or covenant defeasance may be effected only if, among other things: (i) HEI irrevocably deposits with the Debt Trustee cash or, in the case of Debt Securities payable only in U.S. dollars, U.S. Government Obligations, as trust funds in an amount certified to be sufficient to pay at maturity (or upon redemption) the principal of and premium, if any, and interest on and any sinking fund for all outstanding Debt 16 Securities of such series issued under such Indenture; (ii) HEI delivers to the Debt Trustee an opinion of counsel to the effect that the holders of such series of Debt Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance or covenant defeasance and that such defeasance or covenant defeasance will not otherwise alter such holders' United States federal income tax treatment of principal, premium and interest payments on such series of Debt Securities (in the case of a defeasance, such opinion must be based on a ruling of the Internal Revenue Service or a change in United States federal income tax law occurring after the date of such Indenture, since such a result would not occur under current tax law); and (iii) in the case of the Senior Subordinated Indenture no event or condition shall exist that, pursuant to certain provisions described under "-- Senior Subordinated Debt Securities" above, would prevent HEI from making payments of principal of and premium, if any, and interest on the Senior Subordinated Debt Securities at the date of the irrevocable deposit referred to above or at any time during the period ending on the 91st day after the date of such deposit. MODIFICATION OF THE INDENTURES Each Indenture provides that HEI and the Debt Trustee may enter into supplemental indentures without the consent of the holders of Debt Securities to, among other things: (a) secure any Debt Securities, (b) evidence the assumption by a successor corporation of the obligations of HEI, (c) add covenants for the protection of the holders of Debt Securities, (d) cure any ambiguity or correct any inconsistency in such Indenture, provided that such cure or correction does not adversely affect the holders of such Debt Securities, (e) establish the forms or terms of Debt Securities of any series and (f) evidence the acceptance of appointment by a successor trustee or facilitate any administration by more than one trustee. (Senior and Senior Subordinated Indentures, Section 8.1) Each Indenture also contains provisions permitting HEI and the Debt Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of Debt Securities of all series issued under such Indenture then outstanding and affected (voting as one class), to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Debt Securities of each series so affected; provided that HEI and the Debt Trustee may not, without the consent of the holder of each outstanding Debt Security affected thereby, (a) extend the stated maturity of the principal of any Debt Security, or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (including any amount in respect of original issue discount), premium, if any, or interest thereon is payable or reduce the amount of any original issue discount Debt Security that is payable upon acceleration or provable in bankruptcy or alter certain provisions of such Indenture relating to the Debt Securities issued thereunder not denominated in U.S. dollars or impair the right to institute suit for the enforcement of any payment on any Debt Security when due or (b) reduce the aforesaid percentage in principal amount of Debt Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. (Senior and Senior Subordinated Indentures, Section 8.2) The Senior Subordinated Indenture may not be amended to alter the subordination of any outstanding Senior Subordinated Debt Securities without the consent of each holder of Senior Indebtedness then outstanding that would be adversely affected thereby. (Senior Subordinated Indenture, Section 8.6) CONCERNING THE DEBT TRUSTEE HEI and its subsidiaries maintain ordinary banking and trust relationships with a number of banks that could serve as trustee under the Indentures. DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES HEI may issue unsecured notes, debentures or other evidences of indebtedness from time to time in one or more series (the "Junior Subordinated Debt Securities"). Prior to issuing any Junior Subordinated Debt Securites, HEI will enter into a Junior Indenture (the "Junior Indenture"). HEI will select the trustee under the 17 Junior Indenture (the "Junior Debt Trustee"). The form of the contemplated Junior Indenture is included as an exhibit to the Registration Statement of which this Prospectus is a part and is described below. The terms of the Junior Subordinated Debt Securities will include those stated in the Junior Indenture, those stated in any supplemental indenture supplementing the Junior Indenture and those made part of the Junior Indenture by reference to the Trust Indenture Act. Junior Subordinated Debt Securities which are issued to a Trust or the Partnership in connection with a sale of Trust Preferred Securities are referred to in this Prospectus as "Company Debentures." The following summary of the terms of the Junior Indenture does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Junior Indenture, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act. Whenever particular provisions or defined terms in the Junior Indenture are referred to herein, such provisions or defined terms are incorporated by reference herein. Section and Article references used herein are references to provisions of the Junior Indenture unless otherwise noted. Any Junior Subordinated Debt Securities offered by this Prospectus will be accompanied by a Prospectus Supplement which will set forth the designation and describe the specific terms and provisions thereof, which description will supplement and, when inconsistent, supersede the description in this Section. GENERAL The Junior Indenture will not limit the amount of additional indebtedness HEI or any of its subsidiaries may incur, nor does the Junior Indenture limit the aggregate principal amount of Junior Subordinated Debt Securities which may be issued thereunder. The Junior Subordinated Debt Securities will be unsecured, fully subordinated obligations of HEI. Since HEI is a holding company, the Junior Subordinated Debt Securities effectively will be subordinate to all obligations of HEI's subsidiaries, HEI's rights and the rights of its creditors, including the holders of Junior Subordinated Debt Securities, to participate in the assets of any subsidiary upon such subsidiary's liquidation or recapitalization will be subject to the prior claims of such subsidiary's creditors, except to the extent that HEI may itself be a creditor with recognized claims against such subsidiary. Claims on HEI's subsidiaries by creditors other than HEI include obligations arising out of short and long-term indebtedness, as well as other liabilities incurred in the ordinary course of business. In addition, since HEI's principal subsidiaries are subject to state or federal regulatory control, the ability of such subsidiaries to pay dividends or to make distributions, loans or advances to HEI without prior regulatory approval is limited by applicable laws, regulations and agreements with regulatory agencies. The Junior Subordinated Debt Securities will also be subordinate to Senior Indebtedness, including the Senior Debt Securities, and to the Senior Subordinated Debt Securities. In the event Junior Subordinated Debt Securities (i.e., Company Debentures) are purchased by a Trust or a trustee of such Trust with the proceeds of the issuance of Trust Securities by such Trust, the Company Debentures may be subsequently distributed pro rata to the holders of such Trust Securities if the Trust dissolves. Such dissolution may occur upon the occurrence of certain events which will be described in the Prospectus Supplement relating to such Trust Securities. Only one series of Company Debentures will be issued to a Trust or a trustee of such trust in connection with the issuance of Trust Securities by that Trust. Reference is made to the Prospectus Supplement relating to the particular Junior Subordinated Debt Securities being offered thereby for the following terms: (1) the designation of such Junior Subordinated Debt Securities; (2) the aggregate principal amount and denomination (if other than multiples of $25) of such Junior Subordinated Debt Securities; (3) the percentage of the principal amount at which such Junior Subordinated Debt Securities will be issued; (4) the date or dates on which such Junior Subordinated Debt Securities will mature and HEI's right, if any, to shorten or extend such date or dates; (5) the rate or rates, if any, per annum, at which such Junior Subordinated Debt Securities will bear interest, or the method of determination of such rate or rates; (6) the date or dates from which such interest shall accrue, the interest payment dates on which such interest will be payable or the manner of determination of such interest payment dates and the record dates for the determination of holders to whom interest is payable on any such interest payment dates; (7) the right, if any, to 18 extend the interest payment periods and the duration of such extension; (8) provisions, if any, for a sinking, purchase or other analogous fund; (9) the period or periods, if any, within which, the price or prices at which, and the terms and conditions upon which such Junior Subordinated Debt Securities may be redeemed, in whole or in part, at the option of HEI or the holder; (10) the form of such Junior Subordinated Debt Securities; and (11) any other specific terms of the Junior Subordinated Debt Securities. If a Prospectus Supplement specifies that a series of Junior Subordinated Debt Securities is denominated in a currency or currency unit other than United States dollars, such Prospectus Supplement shall also specify the denomination in which such Junior Subordinated Debt Securities will be issued and the coin or currency in which the principal, premium, if any, and interest, if any, on such Junior Subordinated Debt Securities will be payable, which may be United States dollars based upon the exchange rate for such other currency or currency unit existing on or about the time a payment is due. The Junior Indenture does not contain any covenants or other provisions designed to afford holders of Junior Subordinated Debt Securities protection in the event of a highly leveraged transaction involving HEI, or in the event of a recapitalization, merger or other transaction (leveraged or otherwise) involving HEI, its affiliates or its management or in the event of a change in control. ADDITIONAL INTEREST If, at any time while the Property Trustee is the holder of any Junior Subordinated Debt Securities issued to the related Trust, or the Property Trustee is a holder of Partnership Preferred Securities in the Partnership which is in turn a holder of any Junior Subordinated Debt Securities, such Trust, the Property Trustee or the Partnership shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes or taxes or charges imposed by reason of the transfer of the Trust Preferred Securities or beneficial interests therein) imposed by the United States, or any other taxing authority, then, in any such case, HEI will pay as additional interest ("Additional Interest") on the Junior Subordinated Debt Securities held by the Property Trustee or the Partnership, such additional amounts as shall be required so that the net amounts received and retained by such Trust and by the Property Trustee or by the Partnership after paying any such taxes, duties, assessments or other governmental charges will be equal to the amounts such Trust and the Property Trustee or the Partnership would have received had no such taxes, duties, assessments or other governmental charges been imposed. (Section 4.05) FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT Unless otherwise specified in the applicable Prospectus Supplement, the Junior Subordinated Debt Securities will be issued in fully registered form without coupons and in denominations of $25 and multiples of $25. (Section 2.03) No service charge will be made for any transfer or exchange of the Junior Subordinated Debt Securities, but the Company or the Junior Debt Trustee may require payment of a sum sufficient to cover any tax or other government charge payable in connection therewith. (Section 2.07) Unless otherwise provided in the applicable Prospectus Supplement, principal, premium, if any, and interest, will be payable and the Junior Subordinated Debt Securities may be surrendered for payment or transferred at an office or agency maintained for that purpose or the corporate trust office of the Junior Debt Trustee as paying and authenticating agent in New York, New York, provided that payment of interest, if any, on registered Junior Subordinated Debt Securities that are not issued to a Trust or the Partnership may be made at the option of HEI by check mailed to the address of the person entitled thereto as it appears in the Security Register or by wire transfer to an account appropriately designated by the person entitled thereto. (Section 2.03 and 4.02) BOOK-ENTRY JUNIOR SUBORDINATED DEBT SECURITIES The Junior Subordinated Debt Securities of a series may be issued in whole in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (the "Global Depositary"), or its nominee, identified in the Prospectus Supplement relating to such series. In such a case, one or more Global Securities will be issued in a denomination or aggregate denomination equal to the aggregate principal amount 19 of outstanding Junior Subordinated Debt Securities of the series to be represented by such Global Security or Securities. Unless and until it is exchanged in whole or in part for Junior Subordinated Debt Securities in definitive registered form, a Global Security may not be registered for transfer or exchange except as a whole by the Global Depositary for such Global Security to a nominee for such Global Depositary and except in the circumstances described in the applicable Prospectus Supplement. (Section 2.11) The specific terms of the depositary arrangement with respect to any portion of a series of Junior Subordinated Debt Securities to be represented by a Global Security and a description of the Global Depositary will be provided in the applicable Prospectus Supplement. SUBORDINATION The Junior Subordinated Debt Securities will be subordinate and junior in right of payment to Senior Debt Securities, Senior Indebtedness, Senior Subordinated Debt Securities and to certain other indebtedness of HEI to the extent set forth in the applicable Prospectus Supplement. The Junior Subordinated Debt Securities effectively will also be subordinate to all debts and other obligations of HEI's subsidiaries. See "--General" and "Description of Senior Debt Securities and Senior Subordinated Debt Securities--Senior Subordinated Debt Securities--Subordination." The Junior Indenture does not contain any limitation on the amount of Senior Debt Securities, Senior Indebtedness and Senior Subordinated Debt Securities that can be issued by HEI. CERTAIN COVENANTS OF HEI If (i) there shall have occurred any event that would constitute a Junior Indenture Event of Default (as defined herein) or (ii) HEI shall be in default with respect to its payment of any obligations under a related Trust or Partnership Guarantee or (iii) HEI shall have given notice of its election to defer payments of interest on any series of such Junior Subordinated Debt Securities by extending the interest payment period as provided in and permitted by a supplemental indenture to the Junior Indenture or appropriate officer's certificate pursuant thereto, and such period, or any extension thereof, shall be continuing, then (a) HEI shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, its common stock and other than (x) purchases or acquisitions of shares of HEI Common Stock in connection with the satisfaction by HEI of its obligations under any employee benefit plans or any other contractual obligation of HEI (other than a contractual obligation ranking pari passu with or junior to the Junior Subordinated Debt Securities), (y) as a result of a reclassification of HEI capital stock or the exchange or conversion of one class or series of HEI capital stock for another class or series of HEI capital stock or (z) the purchase of fractional interests in shares of HEI capital stock pursuant to the conversion or exchange provisions of such HEI capital stock or the security being converted or exchanged), (b) HEI shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by HEI which rank pari passu with or junior to such Junior Subordinated Debt Securities, provided that, if only the event referred to in clause (iii) above (and not the events referred to in clause (i) and (ii)) has occurred, this restriction shall apply only to other series of Junior Subordinated Debt Securities or debt securities with equivalent deferral options, and (c) HEI shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee or Partnership Guarantee or any other guarantee by HEI with respect to comparable securities). (Section 6.09) In the event Junior Subordinated Debt Securities are issued to a Trust or a trustee of such trust, or to the Partnership, in connection with the issuance of Trust Securities of a Trust, for so long as such Trust Securities remain outstanding, HEI will covenant (i) to directly or indirectly maintain 100 percent ownership of the Trust Common Securities of such Trust; provided, however, that any permitted successor of HEI under the Junior Indenture may succeed to HEI's ownership of such Trust Common Securities, (ii) to use its reasonable efforts to cause such Trust (a) to remain a statutory business trust, except in connection with the distribution of Junior Subordinated Debt Securities to the holders of Trust Securities in liquidation of such Trust, the redemption of all of the Trust Securities of such Trust, or certain mergers, consolidations or amalgamations, each as permitted by 20 the Trust Agreement of such Trust, and (b) to otherwise continue not to be treated as an association taxable as a corporation or a partnership for United States federal income tax purposes and (iii) to use its reasonable efforts to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Junior Subordinated Debt Securities. (Section 4.06) LIMITATION ON MERGERS AND SALES OF ASSETS HEI shall not consolidate with, or merge into, any corporation or convey or transfer its properties and assets substantially as an entirety to any entity unless (a) the successor entity shall be a legal entity organized under the laws of any domestic jurisdiction and shall expressly assume the obligations of HEI under the Junior Indenture and (b) after giving effect thereto, no Default, and no event which after notice or a lapse of time or both would become a Default, shall have occurred and be continuing under the Junior Indenture. (Section 10.01) EVENTS OF DEFAULT, WAIVER AND NOTICE The Junior Indenture provides that any one or more of the following described events which has occurred and is continuing constitutes a "Junior Indenture Event of Default" with respect to each series of Junior Subordinated Debt Securities: (a) default for 30 days in payment of any interest on the Junior Subordinated Debt Securities of that series, including any Additional Interest in respect thereof, when due; provided, however, that a valid extension of the interest payment period by HEI shall not constitute a default in the payment of interest for this purpose; or (b) default in payment of principal of or premium, if any, on the Junior Subordinated Debt Securities of that series when due whether at maturity, upon redemption, by declaration or otherwise; provided, however, that a valid extension of the maturity of such Junior Subordinated Debt Securities shall not constitute a default for this purpose; or (c) default by the Company in the performance of any other of the covenants or agreements in the Junior Indenture (other than a covenant or agreement expressly included solely for the benefit of one or more other series than such series) which shall not have been remedied for a period of 90 days after notice; or (d) certain events of bankruptcy, insolvency or reorganization of HEI; or (e) in the event Junior Subordinated Debt Securities are issued to a Trust or a trustee of such trust, or to the Partnership, in connection with the issuance of Trust Securities by such Trust, the voluntary or involuntary dissolution, winding-up or termination of such Trust, except in connection with the distribution of Junior Subordinated Debt Securities to the holders of Trust Securities in liquidation of such Trust, the redemption of all of the Trust Securities of such Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement of such Trust. The Junior Indenture provides that, if a Junior Indenture Event of Default on any series of Junior Subordinated Debt Securities shall have occurred and be continuing, either the Junior Debt Trustee or the holders of record of not less than 25 percent in aggregate principal amount of the Junior Subordinated Debt Securities of such series then outstanding by proper notice may declare the principal of all such Junior Subordinated Debt Securities of such series to be due and payable immediately. The holders of a majority in aggregate outstanding principal amount of such series of Junior Subordinated Debt Securities may annul such declaration and waive the default if the default (other than the non-payment of the principal of such series of Junior Subordinated Debt Securities which has become due solely by reason of such acceleration) has been cured and a sum sufficient to pay all matured installments of interest and principal and premium, if any due otherwise than by acceleration has been deposited with the Junior Debt Trustee. (Section 6.01) 21 The holders of record of a majority in principal amount of the Junior Subordinated Debt Securities of any series affected and then outstanding and, in the case of Junior Subordinated Debt Securities issued to a Trust or the Partnership, the holders of a majority in aggregate liquidation amount of the related Trust Preferred Securities, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Junior Debt Trustee under the Junior Indenture with respect to such series, provided that such direction shall not be in conflict with any rule of law or the Junior Indenture or unduly prejudicial to the rights of holders of any other series of the Junior Subordinated Debt Securities and subject to the right of the Junior Debt Trustee to require reasonable indemnity against expenses and liabilities. Notwithstanding the foregoing, subject to the subordination provisions set forth in a Prospectus Supplement, the right of any holder of Junior Subordinated Debt Securities to receive payment of the principal of and premium (if any) and interest on such Junior Subordinated Debt Securities on or after the due dates therefor, as the same may be extended in accordance with the terms of such Junior Subordinated Debt Securities, or to institute suit for the enforcement of any such payment provisions, shall not be impaired or affected without the consent of such holder. (Sections 6.04, 6.06 and 7.02) The Junior Indenture requires the annual filing by HEI with the Junior Debt Trustee of a certificate as to compliance by HEI with certain conditions and covenants under the Junior Indenture. (Section 5.03) The Junior Indenture provides that the Junior Debt Trustee may withhold notice of a Junior Indenture Event of Default from the holders of a series of Junior Subordinated Debt Securities (except a Junior Indenture Event of Default in payment of principal of or premium (if any) or interest on the Junior Subordinated Debt Securities) if the Trustee considers it in the interest of such holders to do so. (Section 6.07) MODIFICATION OF THE INDENTURE The Junior Indenture contains provisions permitting the Company and the Junior Debt Trustee, with the consent of the holders of not less than a majority in principal amount of the Junior Subordinated Debt Securities of all series affected by such modification at the time outstanding, and, in the case of Junior Subordinated Debt Securities issued to a Trust or the Partnership, the holders of a majority in aggregate liquidation preference amount of the related Trust Preferred Securities, to modify the Junior Indenture or any supplemental indenture or the rights of the holders of the Junior Subordinated Debt Securities of such series; provided that no such modification shall, without the consent of the holders of each Junior Subordinated Debt Security (and each Trust Preferred Security, if applicable) affected thereby, (i) extend the fixed maturity of any Junior Subordinated Debt Security, or reduce the principal amount thereof (including in the case of a discounted Junior Subordinated Debt Security the amount payable thereon in the event of acceleration or the amount provable in bankruptcy) or any premium thereon, or reduce any amount payable on redemption thereof, or reduce the rate or extend the time of payment of interest thereon, or make the principal of or interest or premium, if any, on the Junior Subordinated Debt Securities payable in any coin or currency other than that provided in the Junior Subordinated Debt Securities, or impair or affect the right of any holder of Junior Subordinated Debt Securities to institute suit for the payment thereof or the right of prepayment, if any, at the option of the holder, (ii) reduce the aforesaid percentage of Junior Subordinated Debt Securities the consent of the holders of which is required for any such modification or (iii) otherwise adversely affect the interest of the holders of any series of Junior Subordinated Debt Securities. (Section 9.02) DEFEASANCE AND DISCHARGE HEI may discharge certain obligations to holders of any series of Junior Debt Securities which have not already been delivered to the Junior Debt Trustee for cancellation and which either become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by irrevocably depositing with the Junior Debt Trustee or Defeasance Agent Governmental Obligations (as defined in the Junior Indenture) as trust funds in an amount certified to be sufficient to pay when due, whether at maturity, upon redemption or otherwise, the principal of, premium on, if any, and interest on such Junior Subordinated Debt Securities. The Indenture provides that HEI, at HEI's option: (a) will be discharged from any and all obligations in respect of the Junior Subordinated Debt Securities of a series (except for certain obligations to register the transfer or exchange of Junior Subordinated Debt Securities, replace stolen, lost or mutilated Junior Subordinated 22 Debt Securities, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with certain restrictive covenants of the Indenture (including those described herein under "--Certain Covenants of HEI"), in each case if HEI deposits, in trust with the Junior Debt Trustee or the Defeasance Agent, money or U.S. Government Obligations which, through the payment of interest thereon and principal thereof in accordance with their terms, will provide money in an amount certified to be sufficient to pay all the principal (including any mandatory sinking fund payments) and premium, if any, of and interest on, the Junior Subordinated Debt Securities of such series on the dates such payments are due in accordance with the terms of such Junior Subordinated Debt Securities. To exercise any such option, among other things, HEI is required to deliver to the Junior Debt Trustee and the Defeasance Agent, if any, an opinion of counsel to the effect that (i) the deposit and related defeasance would not cause the holders of the Junior Subordinated Debt Securities of such series to recognize income, gain or loss for U.S. federal income tax purposes and, in the case of any such discharge pursuant to clause (a), such opinion must be accompanied by a ruling to that effect received by HEI from the United States Internal Revenue Service, or a ruling pertaining to a comparable form of transaction to that effect published by the United States Internal Revenue Service, or must otherwise be based on a change in United States federal income tax law, since such a result would not occur under current tax law and (ii) if listed on any national securities exchange, such Junior Subordinated Debt Securities would not be delisted from such exchange as a result of the exercise of such option. (Section 11.01) PROPOSED TAX LEGISLATION On March 19, 1996, President Clinton proposed certain tax law changes that would, among other things, generally deny corporate issuers a deduction for interest in respect of certain debt obligations, such as the Junior Subordinated Debt Securities, issued on or after December 7, 1995 (the "Proposed Legislation") if such debt obligations have a maximum term in excess of forty years or a maximum term in excess of twenty years and are not shown as indebtedness on the issuer's applicable consolidated balance sheet. On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating their intent that the Proposed Legislation, if adopted by either of the tax-writing committees of Congress, would have an effective date that is no earlier than the date of "appropriate Congressional action." In addition, subsequent to the publication of the Joint Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury Department officials concurring with the view expressed in the Joint Statement (the "Democrat Letters"). If the principles contained in the Joint Statement and the Democrat Letters were followed and if the Proposed Legislation were enacted, such legislation would not apply to the Junior Subordinated Debt Securities. There can be no assurance, however, that the effective date guidance contained in the Joint Statement will be incorporated into the Proposed Legislation, if enacted, or that other legislation enacted after the date hereof will not otherwise adversely affect the ability of HEI to deduct the interest payable on the Junior Subordinated Debt Securities or the treatment of the Hawaiian Electric Industries Capital Trusts as grantor trusts not subject to federal income tax with respect to income received or accrued on the Junior Subordinated Debt Securities. GOVERNING LAW The Junior Indenture and the Junior Subordinated Debt Securities will be governed by, and construed in accordance with, the internal laws of the State of New York. (Section 13.05) THE JUNIOR DEBT TRUSTEE The Bank of New York shall be the initial Junior Debt Trustee. HEI or its affiliates maintain certain accounts and other banking relationships with the Junior Debt Trustee and its affiliates in the ordinary course of business. 23 DESCRIPTION OF THE TRUST PREFERRED SECURITIES Each Trust may issue, from time to time, a series of Trust Preferred Securities having terms described in the Prospectus Supplement relating thereto. The Trust Agreement of each Trust authorizes the Regular Trustees of such Trust to issue on behalf of the Trust only one series of Trust Preferred Securities. Each Trust Agreement will be qualified as an indenture under the Trust Indenture Act. Unless otherwise specified in the applicable Prospectus Supplement, The Bank of New York will act as Property Trustee for purposes of the Trust Indenture Act. The Trust Preferred Securities will have such terms, including distribution, redemption, voting, and liquidation rights and such other preferred, deferral or other special rights, and such restrictions, as shall be set forth in the Trust Agreement or made part of the Trust Agreement by the Trust Indenture Act. Reference is made to the Prospectus Supplement for the specific terms of the Trust Preferred Securities of each Trust, including (i) the distinctive designation of such Trust Preferred Securities; (ii) the number of Trust Preferred Securities issuable by such Trust; (iii) the annual distribution rate (or method of determining such rate) for Trust Preferred Securities issued by the Trust and the date or dates upon which such distributions shall be payable; (iv) whether distributions on Trust Preferred Securities issued by such Trust shall be cumulative, and, in the case of Trust Preferred Securities having such cumulative distribution rights, the date or dates or method of determining the date or dates from which distributions on Trust Preferred Securities issued by such Trust shall be cumulative; (v) the amount or amounts which shall be paid out of the assets of such Trust to the holders of Trust Preferred Securities of such Trust upon voluntary or involuntary dissolution, winding-up or termination of the Trust; (vi) the obligation, if any, of such Trust to purchase or redeem Trust Preferred Securities issued by the Trust and the price or prices at which, the period or periods within which, and the terms and conditions upon which, Trust Preferred Securities issued by such Trust shall be purchased or redeemed, in whole or in part, pursuant to such obligation; (vii) the voting rights and the rights to direct action by the Property Trustee, if any, of holders of Trust Preferred Securities issued by the Trust, in addition to those required by law, including the number of votes per Preferred Security and any requirement for the approval by the holders of Trust Preferred Securities as a condition to specified action or amendments to the Trust Agreement of such Trust; (viii) the terms and conditions, if any, upon which the Junior Subordinated Debt Securities or the Partnership Preferred Securities, as the case may be, owned by such Trust may be distributed to holders of Trust Preferred Securities of such Trust; (ix) if applicable, any securities exchange upon which the Trust Preferred Securities shall be listed; (x) the manner in which holders of the Trust Preferred Securities may enforce their rights through the Property Trustee, through the Partnership and directly; and (xi) any other relevant rights, preferences, privileges, limitations or restrictions of the Trust Preferred Securities issued by such Trust not inconsistent with the Trust Agreement of such Trust or with applicable law. The rights of Trust Preferred Securities to receive certain distributions will be guaranteed by HEI to the extent set forth below under "Description of the Trust Guarantees." Certain United States federal income tax considerations applicable to any offering of Trust Preferred Securities will be described in the Prospectus Supplement relating thereto. Holders of the Trust Preferred Securities will have no rights to appoint or remove the Regular Trustees, who may be appointed, removed or replaced solely by HEI as the holder of all of the Trust Common Securities. The Trust Agreement of each Trust authorizes the Regular Trustees of such trust to issue on behalf of such Trust one series of Trust Common Securities having such terms including distribution, redemption, voting, and liquidation rights or such restrictions as shall be set forth therein. Except for voting rights, the terms of the Trust Common Securities issued by a Trust will be substantially identical to the terms of the Trust Preferred Securities issued by such Trust and the Trust Common Securities will rank pari passu, and payments will be made thereon pro rata, with the Trust Preferred Securities except that, upon an event of default under the Trust Agreement, the rights of the holders of the Trust Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights of the holders of the Trust Preferred Securities. Except in certain limited circumstances, the Trust Common Securities of a Trust will also carry the right to vote to appoint, remove or replace any of the Trustees of such Trust. 24 DESCRIPTION OF THE TRUST GUARANTEES Set forth below is a summary of certain information concerning the Trust Guarantees which will be executed and delivered by HEI for the benefit of the holders from time to time of Trust Preferred Securities. Each Trust Guarantee will be qualified as an indenture under the Trust Indenture Act. Unless otherwise specified in the applicable Prospectus Supplement, The Bank of New York will act as indenture trustee under each Trust Guarantee for purposes of the Trust Indenture Act (the "Trust Guarantee Trustee"). The terms of each Trust Guarantee will be those set forth in such Trust Guarantee and those made part of such Trust Guarantee by the Trust Indenture Act. The following summary of the Trust Guarantees does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the form of Trust Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act, and this summary of the terms of the Trust Guarantee is subject to supplementation and modification in any Prospectus Supplement relating to the particular Trust Preferred Securities being offered thereby. Each Trust Guarantee will be held by the Property Trustee for the benefit of the holders of the Trust Preferred Securities of the applicable Trust. GENERAL Pursuant to each Trust Guarantee, HEI will agree, to the extent set forth therein, to pay in full, to the holders of the Trust Preferred Securities issued by a Trust, the Trust Guarantee Payments (as defined herein) (except to the extent paid by such Trust), as and when due, regardless of any defense, right of set-off or counterclaim which such Trust may have or assert. The following payments with respect to Trust Preferred Securities issued by a Trust, to the extent not paid by such Trust (the "Guarantee Payments"), will be subject to the Trust Guarantee thereon (without duplication): (i) any accrued and unpaid distributions which are required to be paid on such Trust Preferred Securities, to the extent such Trust shall have funds legally available therefor; (ii) the redemption price, including all accrued and unpaid distributions to the date of payment (the "Redemption Price"), to the extent such Trust has funds legally available therefor with respect to any Trust Preferred Securities called for redemption by the Trust; and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Junior Subordinated Debt Securities to the holders of Trust Preferred Securities or the redemption of all of the Trust Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on such Trust Preferred Securities to the date of payment, to the extent the Trust has funds legally available therefor and (b) the amount of assets of the Trust remaining legally available for distribution to holders of such Trust Preferred Securities in liquidation of such Trust. The redemption price and liquidation amount will be fixed at the time the Trust Preferred Securities are issued. HEI's obligation to make a Trust Guarantee Payment may be satisfied by direct payment of the required amounts by HEI to the holders of Trust Preferred Securities or by causing the applicable Trust to pay such amounts to such holders. The Trust Guarantees will not apply to any payment of distributions except to the extent a Trust shall have funds available therefor. If HEI does not make interest payments on the Junior Subordinated Debt Securities purchased by a Trust, or if HEI or its subsidiaries do not make payments on the Company Debentures or on the Subsidiary Debentures issued to the Partnership, respectively, and as a result the Partnership does not make distributions on Partnership Preferred Securities purchased by the Trust, the Trust will not pay distributions on the Trust Preferred Securities issued by such Trust and will not have sufficient funds legally available therefor. HEI has also agreed separately irrevocably and unconditionally to guarantee the obligations of each Trust with respect to the Trust Common Securities (the "Trust Common Securities Guarantees") to the same extent as the Trust Guarantees, except that upon an event of default under the Indenture, holders of Trust Preferred Securities shall have priority over holders of Trust Common Securities with respect to distributions and payments on liquidation, redemption or otherwise. 25 CERTAIN COVENANTS OF HEI In each Trust Guarantee, HEI will covenant that, so long as any Trust Preferred Securities issued by the applicable Trust remain outstanding, if there shall have occurred any event that would constitute an event of default under such Trust Guarantee or the Trust Agreement of such Trust, or if HEI has exercised its option to defer interest payments on the Junior Subordinated Debt Securities by extending the interest payment period and such period or extension thereof shall be continuing, then (a) HEI shall not declare or pay any dividend (other than a stock dividend) on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, its common stock) and other than (i) purchases or acquisitions of shares of HEI Common Stock in connection with the satisfaction by HEI of its obligations under any employee benefit plans or any other contractual obligation of HEI (other than a contractual obligation ranking pari passu with or junior to the Junior Subordinated Debt Securities), (ii) as a result of a reclassification of HEI capital stock or the exchange or conversion of one class or series of HEI capital stock for another class or series of HEI capital stock or (iii) the purchase of fractional interests in shares of HEI capital stock pursuant to the conversion or exchange provisions of such HEI capital stock or the security being converted or exchanged), (b) HEI shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by HEI which rank pari passu with or junior to such Junior Subordinated Debt Securities, and (c) HEI shall not make any guarantee payments with respect to the foregoing (other than pursuant to such Trust Guarantee or any other guarantee by HEI with respect to comparable securities). MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT Except with respect to any changes which do not materially adversely affect the rights of holders of Trust Preferred Securities (in which case no vote will be required), each Trust Guarantee may be amended only with the prior approval of the holders of at least a majority in liquidation amount of the outstanding Trust Preferred Securities issued by the applicable Trust. The manner of obtaining any such approval of holders of such Trust Preferred Securities will be as set forth in an accompanying Prospectus Supplement. All guarantees and agreements contained in a Trust Guarantee shall bind the successors, assigns, receivers, trustees and representatives of HEI and shall inure to the benefit of the holders of the Trust Preferred Securities of the applicable Trust then outstanding. Except in connection with any merger or consolidation of HEI with or into another entity or any sale, transfer or lease of HEI's assets to another entity, each as permitted by the Junior Indenture, HEI may not assign its rights or delegate its obligations under such Trust Guarantee without the prior approval of the holders of at least a majority in liquidation preference amount of the outstanding Trust Preferred Securities issued by the applicable Trust. TERMINATION Each Trust Guarantee will terminate as to the Trust Preferred Securities issued by the applicable Trust (a) upon full payment of the Redemption Price of all Trust Preferred Securities of such Trust, (b) upon distribution of the Junior Subordinated Debt Securities or Partnership Preferred Securities, as the case may be, held by such Trust to the holders of the Trust Securities of such Trust or (c) upon full payment of the amounts payable in accordance with the Trust Agreement of such Trust upon liquidation of Trust. Notwithstanding the foregoing, each Trust Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Trust Preferred Securities issued by the applicable Trust must restore payment of any sums paid under such Trust Preferred Securities or such Trust Guarantee. EVENTS OF DEFAULT An event of default under a Trust Guarantee will occur upon the failure of HEI to perform any of its payment obligations thereunder. 26 The holders of a majority in liquidation amount of the Trust Preferred Securities relating to such Trust Guarantee 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 such Trust Guarantee. Any holder of record of Trust Preferred Securities relating to such Trust Guarantee may institute a legal proceeding directly against HEI to enforce the Trust Guarantee Trustee's rights and the obligations of HEI under such Trust Guarantee, without first instituting a legal proceeding against the relevant Trust, the Trust Guarantee Trustee or any other person or entity. STATUS OF THE TRUST GUARANTEES The Trust Guarantees will constitute unsecured obligations of HEI and will rank (i) subordinate and junior in right of payment to all other liabilities of HEI, except those made pari passu or subordinate by their terms, (ii) pari passu with the most senior preferred or preference stock now or hereafter issued by HEI, with the Partnership Guarantee and the Investment Guarantees and with any guarantee hereafter entered into by HEI in respect of any preferred or preference stock of any affiliate of HEI, and (iii) senior to HEI Common Stock. The terms of the Trust Preferred Securities provide that each holder of Trust Preferred Securities issued by the applicable Trust, by acceptance thereof, agrees to the subordination provisions and other terms of the Trust Guarantee relating thereto. The Trust Guarantees will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against the guarantor to enforce its rights under the Trust Guarantee without instituting a legal proceeding against any other person or entity). INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE The Trust Guarantee Trustee, prior to the occurrence of a default with respect to a Trust Guarantee, undertakes to perform only such duties as are specifically set forth in such Trust Guarantee and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Trust Guarantee Trustee is under no obligation to exercise any of the powers vested in it by a Trust Guarantee at the request of any holder of Trust Preferred Securities, unless offered reasonable indemnity against the costs, expenses and liabilities which might be incurred thereby. HEI or its affiliates maintain certain accounts and other banking relationships with The Bank of New York, which shall be the initial Trust Guarantee Trustee, and its affiliates in the ordinary course of business. GOVERNING LAW The Trust Guarantees will be governed by, and construed in accordance with, the internal laws of the State of New York. DESCRIPTION OF THE PARTNERSHIP PREFERRED SECURITIES The summary of certain of the terms and provisions of the Partnership Preferred Securities set forth below and in any Prospectus Supplement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Agreement of Limited Partnership, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Partnership Act. The Partnership may issue to a Trust, a series of Partnership Preferred Securities having terms to be described in the Prospectus Supplement relating thereto. All of the partnership interests in the Partnership, other than the Partnership Preferred Securities acquired by the Trust, will be owned by Hycap, as the sole General Partner of the Partnership. The Agreement of Limited Partnership will authorize and create the Partnership 27 Preferred Securities, which represent limited partner interests in the Partnership. The limited partner interests represented by the Partnership Preferred Securities will have a preference with respect to distributions and amounts payable on redemption or liquidation over the General Partner's interest in the Partnership. Except as otherwise described herein or in any Prospectus Supplement, the Agreement of Limited Partnership does not permit the issuance of any additional partnership interests or the incurrence of any indebtedness by the Partnership. Reference is made to the Prospectus Supplement relating to the Partnership Preferred Securities for specific terms, including, if applicable, provisions concerning (i) distributions to holders of Partnership Preferred Securities, (ii) liquidation preferences of holders of Partnership Preferred Securities, (iii) enforcement of the Agreement of Limited Partnership, (iv) investments by the Partnership in Company Debentures, Subsidiary Debentures and Eligible Debt Securities, (v) Investment Guarantees, (vi) redemption rights and procedures relating to the Partnership Preferred Securities, (vii) liquidation and dissolution of the Partnership, (viii) voting rights of holders of Partnership Preferred Securities, and (ix) any other relevant rights, preferences, privileges, limitations or restrictions relating to the Partnership Preferred Securities issued by the Partnership. DESCRIPTION OF THE PARTNERSHIP GUARANTEE Set forth below is a summary of certain information concerning the Partnership Guarantee that will be executed and delivered by HEI for the benefit of the holders from time to time of Partnership Preferred Securities. The summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Partnership Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. Pursuant to the Partnership Guarantee, HEI will irrevocably agree, on a subordinated basis to the extent set forth therein, to pay in full to the holders of the Partnership Preferred Securities (without duplication of amounts theretofore paid by the Partnership), as and when due, regardless of any defense, right of set-off or counterclaim that the Partnership may have or assert, certain payments, including certain distribution, redemption, liquidation preference, and other payments, all as will be described in more detail in the Prospectus Supplement relating to the Partnership Guarantee. The Partnership Guarantee will be a guarantee on a subordinated basis with respect to the Partnership Preferred Securities from the time of issuance of such Partnership Preferred Securities but will not apply to any payment of distributions or redemption price, or to payments upon the dissolution, winding-up or termination of the Trust, except to the extent the Partnership shall have funds legally available therefor. Reference is made in an applicable Prospectus Supplement for the specific terms of the Partnership Guarantee, including, if applicable, provisions concerning (i) certain covenants of HEI, (ii) events of default under and enforcement of the Partnership Guarantee, (iii) status of the Partnership Guarantee and subordination provisions, (iv) termination of the Partnership Guarantee, and (v) any other relevant provisions relating to the Partnership Guarantee. DESCRIPTION OF THE INVESTMENT GUARANTEES The Company will guarantee, on a subordinated basis, payments in respect of each Debenture issued by an Investment Affiliate (other than the Company, unless HEI's obligation under the Company Debentures are transferred to and assumed by another Investment Affiliate) to the extent set forth below and in any accompanying Prospectus Supplement (the "Investment Guarantees"). The Investment Guarantees will be enforceable regardless of any defense, right of set-off or counterclaim that the Company may have or assert. The Investment Guarantees will be full and unconditional guarantees with respect to the applicable Subsidiary Debentures from the time of issuance. To the extent that the Partnership invests in additional Affiliate Investment Instruments as described in an accompanying Prospectus Supplement, the determination as to whether such Affiliate Investment Instrument will contain an Investment Guarantee will be made at the date of its issuance or upon its transfer to an Investment Affiliate (other than the Company). 28 The Company's obligations under the Investment Guarantees will constitute unsecured obligations of the Company and will rank subordinate and junior to all other existing liabilities of the Company and will rank pari passu with the most senior preferred stock (if any) issued from time to time by the Company and with any guarantee now or hereafter entered into by the Company in respect of any preferred security of any affiliate of the Company. Accordingly, the rights of the holders of the Subsidiary Debentures to receive payments under the Investment Guarantees will be subject to the rights of the holders of any obligations that are senior in priority to the obligations under the Investment Guarantees. Furthermore, the holders of obligations of the Company that are senior to the obligations under the Investment Guarantees (including, but not limited to, obligations constituting senior indebtedness of the Company) will be entitled to the same rights upon payment default or dissolution, liquidation and reorganization in respect of the Investment Guarantees that inure to the holders of senior indebtedness of the Company as against the holders of the Company Debentures. The terms of the Debentures provide that each holder of Debentures, by acceptance thereof, agrees to the subordination provisions and other terms of the Investment Guarantees. DESCRIPTION OF THE PREFERRED STOCK The following description of the terms of the Preferred Stock sets forth certain general terms and provisions of the Preferred Stock to which any Prospectus Supplement may relate. Certain other terms of any series of the Preferred Stock offered by any Prospectus Supplement will be described in such Prospectus Supplement. The description of certain provisions of the Preferred Stock set forth below and in any Prospectus Supplement does not purport to be complete and is subject to and qualified in its entirety by reference to HEI's Restated Articles of Incorporation, as amended (the "Articles"), and the rights, preferences and privileges of the particular series of the Preferred Stock which will be set forth in a board resolution or articles of amendment to be filed with the Hawaii Department of Commerce and Consumer Affairs and incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of issuance of such series of Preferred Stock. Under the Articles, HEI is authorized to issue 10,000,000 shares of Preferred Stock without par value ("Preferred Stock"). Preferred Stock may be issued by the Board of Directors in one or more series, without action by stockholders and with such preferences, voting powers, restrictions and qualifications as may be fixed by resolution of the Board of Directors authorizing the issuance of such shares. Under current Hawaii law, the terms and provisions of all shares of Preferred Stock must be identical except with respect to dividend rates, redemption and redemption prices, amounts payable in liquidation, sinking fund provisions, conversion privileges, if any, and voting rights, if any. If and when authorized by the Board of Directors, any such Preferred Stock may be preferred as to dividends or in liquidation, or both, over the Common Stock. For example, the terms of the Preferred Stock, if and when authorized, could prohibit dividends on shares of Common Stock until all dividends and any mandatory redemptions have been paid with respect to shares of Preferred Stock. In addition, the Board of Directors may, without stockholder approval, issue Preferred Stock with voting and conversion rights which could adversely affect the voting power or economic rights of the holders of Common Stock. Issuance of Preferred Stock by HEI could thus have the effect of delaying, deferring or preventing a change of control of HEI. DESCRIPTION OF THE COMMON STOCK GENERAL Under the Articles, HEI is authorized to issue 100,000,000 shares of Common Stock without par value ("Common Stock"). 29 The outstanding shares of HEI's Common Stock are fully paid and nonassessable. Additional shares of Common Stock, when issued, will be fully paid and nonassessable when the consideration for which HEI's board of directors authorizes their issuance has been received. The holders of Common Stock have no preemptive rights and there are no conversion, redemption or sinking fund provisions applicable thereto. Unless otherwise specified in the applicable Prospectus Supplement, HEI's Common Stock is transferable at the Stock Transfer Division of the Company, Transfer Agent, P.O. Box 730, Honolulu, Hawaii 96808-0730, and at the office of First Chicago Trust Company of New York, Co-Transfer Agent and Registrar, 30 West Broadway, New York, New York 10007. DIVIDENDS Stock and cash dividends may be issued and paid to the holders of Common Stock as and when declared by the Board of Directors, provided that, after giving effect to the payment of cash dividends, HEI is able to pay its debts as they become due in the usual course of its business and HEI's total assets are not less than the sum of its total liabilities plus the maximum amount that then would be payable in any liquidation in respect of all outstanding shares having preferential rights in liquidation. All shares of Common Stock will participate equally with respect to dividends. HEI's ability to pay dividends is limited by the restrictions and limitations set forth in debt instruments. LIQUIDATION RIGHTS In the event of any liquidation, dissolution, receivership, bankruptcy, disincorporation or winding-up of the affairs of the Company, voluntarily or involuntarily, holders of HEI's Common Stock are entitled to any assets of HEI available for distribution to HEI's stockholders after the payment in full of any preferential amounts to which holders of any Preferred Stock may be entitled. All shares of Common Stock will rank equally in the event of liquidation. VOTING RIGHTS Holders of Common Stock are entitled to one vote per share, subject to such limitation or loss of right as may be provided in resolutions which may be adopted from time to time creating issues of Preferred Stock or otherwise. At annual and special meetings of stockholders, a majority of the outstanding shares of Common Stock constitute a quorum and the affirmative vote of a majority of such quorum so present is sufficient to approve of any action except as otherwise required by law and except with respect to the amendment of certain provisions of HEI's By-laws. Under HEI's current By-laws, one-third (as nearly as possible) of the total number of directors is elected at each annual meeting of stockholders and no holder of Common Stock is entitled to cumulate votes in an election of directors so long as HEI shall have a class of equity securities registered pursuant to the Exchange Act which are listed on a national securities exchange or traded over-the-counter on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System. Directors may be removed from office only for cause. An amendment to the provisions in the By-laws relating to (1) matters which may be brought before an annual meeting, (2) matters which may be brought before a special meeting, (3) cumulative voting, (4) the number and staggered terms of members of the Board of Directors, (5) removal of directors and (6) amendment of the By-laws must in each case be approved either (a) by the affirmative vote of 80% of the shares entitled to vote generally with respect to election of directors voting together as a single class, or (b) by the affirmative vote of a majority of the entire Board of Directors plus a concurring vote of a majority of the "continuing directors" (as that term is defined in Article XVIII of the By-laws) voting separately and as a subclass of directors. The provisions of HEI's By-laws referred to in the foregoing two paragraphs, and the statutory provisions referred to below, may have the effect of delaying, deferring or preventing a change in control of HEI. 30 RESTRICTION ON PURCHASE OF SHARES AND CONSEQUENCES OF SUBSTANTIAL HOLDINGS UNDER CERTAIN HAWAII AND FEDERAL LAWS The Hawaii Control Share Acquisition Act places restrictions on the acquisition of ranges of voting power (starting at 10% and at 10% intervals up to a majority) for the election of directors of HEI unless the acquiring person obtains approval of the acquisition by the affirmative vote of the holders of a majority of the voting power of all shares entitled to vote exclusive of the shares beneficially owned by the acquiring person and consummates the proposed control share acquisition within 180 days after shareholder approval. If such approval is not obtained, the statute provides that the shares acquired may not be voted for a period of one year from the date of acquisition, the shares will be nontransferable on HEI's books for one year after acquisition and HEI, during the one-year period, shall have the right to call the shares for redemption either at the prices at which the shares were acquired or at book value per share as of the last day of the fiscal quarter ended prior to the date of the call for redemption. Under the Hawaii Public Utilities Commission ("PUC") statute, not more than 25% of the issued and outstanding voting stock of certain public utility corporations, including HECO and its wholly-owned electric utility subsidiaries, may be held, directly or indirectly, by any single foreign corporation or any single nonresident alien, or held by any person, without the prior approval of the PUC. The acquisition of more than 25% of the issued and outstanding voting stock of HEI in one or more transactions might be deemed to result in the holding of more than 25% of the voting stock of its electric utility subsidiaries. In addition, HEI is subject to an agreement (the "PUC Agreement") entered into with the PUC when HECO became a wholly-owned subsidiary of HEI. The PUC Agreement provides that the acquisition of HEI by a third party, whether by purchase, merger, consolidation or otherwise, requires the prior written approval of the PUC. Under the Hawaii Environmental Disclosure Law, a person and that person's affiliates who in the aggregate beneficially own 10% or more but less than 50% of securities entitled to vote for the election of directors of HEI may not acquire more than 5% of such securities during any 12-month period without first filing an environmental disclosure statement with the Hawaii Office of Environmental Quality Control. The Savings and Loan Holding Company Act, the Financial Institutions Reform, Recovery and Enforcement Act, the Change in Bank Control Act and the Office of Thrift Supervision ("OTS") regulations place restrictions on certain types of acquisitions of control of a savings bank and its holding company. Generally, no company, or any director or officer of a savings and loan holding company, or person who owns, or controls or holds with power to vote more than 25% of the voting stock of such holding company, may acquire control of a savings bank insured by the Federal Deposit Insurance Corporation or its holding company, without the prior written approval of the OTS. In addition, no person (with certain exceptions) may acquire control of a savings bank or savings and loan holding company, unless the OTS has been given 60 days' prior written notice of the acquisition and has not objected to it. As a result of HEI's ownership of ASB, the acquisition of control of HEI, HEIDI or ASB may be subject to the requirement of prior written OTS approval or 60 days' prior written notice to the OTS, unless such transaction would be exempt from such requirements under federal law or regulation. "Control" in this context means the acquisition of, control of, or holding proxies representing, more than 25% of the voting shares of HEI, HEIDI or ASB, or the power to control in any manner the election of a majority of the directors thereof. However, under OTS regulations, one would be determined, subject to rebuttal, to have acquired control if one acquires more than 10% of the voting shares of HEI, HEIDI or ASB and is subject to one of certain specified "control factors." Anyone acquiring more than 10%, or additional stock above 10%, of any class of shares of HEI, HEIDI or ASB may be required to file a certification with the OTS. Under the Jones Act, it is unlawful to transport merchandise between points in the U.S. except in vessels owned by U.S. citizens. For corporations to demonstrate U.S. citizenship, a majority of the officers and directors must be citizens, 75% of its voting stock must be owned by U.S. citizens and certain additional requirements must be met. If less than 75% of the Common Stock of HEI (which is the only class of voting stock presently outstanding) is owned by U.S. citizens, the vessels of HTB and YB would not be permitted to engage in transport between points in Hawaii. 31 Under the Public Utility Holding Company Act of 1935 (the "1935 Act"), any company (as defined in the 1935 Act) which directly or indirectly owns, controls or holds with power to vote 10% or more of the outstanding voting securities of HEI may be a public utility holding company, subject to regulation under the 1935 Act, unless an exemption is available under the 1935 Act or the Securities and Exchange Commission, upon application, declares such a company not to be a holding company. In addition, under the 1935 Act, unless an exemption is available, no person who directly or indirectly owns, controls or holds 5% or more of the Common Stock or other voting securities of HEI may, without approval of the Commission, become the owner of 5% or more of the outstanding voting securities of any other public utility or public utility holding company. In addition, no person who directly or indirectly owns, controls, or holds 5% or more of the outstanding voting securities of any public utility holding company may, without the approval of the Commission, become the owner of 5% or more of HEI's Common Stock, unless there is an applicable exemption. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The holders of record of Common Stock of HEI and of Preferred Stock of HEI's electric utility subsidiaries (HECO, MECO or HELCO) and any residents of Hawaii who are of legal age are eligible to participate in the HEI Dividend Reinvestment and Stock Purchase Plan (the "Plan"). Stockholders participating in the Plan automatically reinvest their dividends to purchase Common Stock at market price (as defined in the Plan). Stockholders and residents of Hawaii are also eligible to purchase shares of Common Stock at market price (as defined in the Plan) by making cash contributions. Participants do not pay brokerage commissions or service charges in connection with such purchases. HEI reserves the right to suspend, modify or terminate the Plan at any time. PLAN OF DISTRIBUTION HEI may sell the Debt Securities, Preferred Stock or Common Stock and any Trust may sell Trust Preferred Securities in any of, or any combination of, the following ways: (i) directly to purchasers, (ii) through agents, (iii) to or through underwriters or (iv) through dealers. Such underwriters, dealers or agents may be affiliates of HEI, and offers or sales of such securities may include secondary market transactions by affiliates of HEI. Offers to purchase Offered Securities may be solicited directly by HEI and/or any Trust, as the case may be, or by agents designated by HEI and/or a Trust, as the case may be, from time to time. Any such agent, who may be deemed to be an underwriter as that term is defined in the Securities Act, involved in the offer or sale of the Offered Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by HEI to such agent will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in the related Prospectus Supplement, any such agency will be acting on a best efforts basis for the period of its appointment. If an underwriter or underwriters are utilized in the sale of Offered Securities in respect of which this Prospectus is delivered, such Offered Securities will be acquired by such underwriter or underwriters for its own account or their own accounts and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The underwriter or underwriters with respect to a particular underwritten offering of such Offered Securities will be named in, and if an underwriting syndicate is used the managing underwriter or underwriters will be set forth on the cover page of, the applicable Prospectus Supplement. In connection with the sale of such Offered Securities, underwriters may receive compensation from HEI in the form of underwriting discounts or commissions and may also receive commissions from purchasers of any such Offered Securities for whom they may act as agent. Unless otherwise set forth in such Prospectus Supplement, the obligations of such underwriter or underwriters will be subject to certain conditions precedent, and such underwriters will be obligated to purchase all such Offered Securities if any are purchased. 32 If a dealer is utilized in the sale of the Offered Securities in respect of which this Prospectus is delivered, HEI and/or any Trust, as the case may be, will sell such Offered Securities to the dealer, as principal. The dealer may then resell such Offered Securities to the public at varying prices to be determined by such dealer at the time of resale. The name of the dealer involved in the offer or sale of such Offered Securities will be named, and any discounts or commissions allowed or reallowed or paid to the dealer will be set forth, in the Prospectus Supplement. Agents, underwriters, and dealers may be entitled under the relevant agreements to indemnification by HEI and/or any Trust, as the case may be, against certain liabilities, including liabilities under the Securities Act, or to contribution payments in respect thereof. Certain of the underwriters, agents and their controlling persons may engage in transactions with or perform services for HEI or its affiliates in the ordinary course of business. LEGAL MATTERS The validity of the Debt Securities, the Guarantees, the Preferred Stock and the Common Stock offered by this Prospectus and any applicable Prospectus Supplement, and certain matters relating thereto, will be passed upon for HEI, and certain United States federal income taxation matters will be passed upon for HEI, the Trusts and the Partnership, by Goodsill Anderson Quinn & Stifel, 1800 Alii Place, 1099 Alakea Street, Honolulu, Hawaii 96801. Certain matters of Delaware law relating to the validity of the Trust Preferred Securities and the Partnership Preferred Securities will be passed upon on behalf of each of the Trusts by Richards, Layton & Finger, special Delaware counsel to the Trusts, the Partnership and HEI. Certain legal matters will be passed upon for the Underwriters by Winthrop, Stimson, Putnam & Roberts, New York, New York. EXPERTS The consolidated financial statements and schedules of HEI and its subsidiaries as of December 31, 1995 and 1994, and for each of the years in the three-year period ended December 31, 1995, which financial statements and schedules have been incorporated by reference and included, respectively, in HEI's most recent Annual Report on Form 10-K, for its fiscal year ended December 31, 1995, as amended by Form 10-K/A dated April 30, 1996, which is incorporated by reference herein (and elsewhere in the Registration Statement), have been incorporated by reference herein (and elsewhere in the Registration Statement) in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, also incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 33 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HAWAIIAN ELECTRIC INDUSTRIES, INC., THE TRUSTS, THE PARTNERSHIP OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HAWAIIAN ELECTRIC INDUSTRIES, INC., THE TRUSTS OR THE PARTNERSHIP SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. --------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Prospectus Summary........................................................ S-5 Selected Consolidated Financial Data...................................... S-11 Risk Factors.............................................................. S-13 Use of Proceeds........................................................... S-17 Accounting Treatment...................................................... S-17 Description of Hawaiian Electric Industries, Inc. ........................ S-17 Description of the Trust.................................................. S-21 Description of the Partnership............................................ S-22 Supplemental Description of the Trust Preferred Securities................ S-23 Supplemental Description of the Trust Guarantee........................... S-36 Supplemental Description of the Partnership Preferred Securities.......... S-39 Supplemental Description of the Partnership Guarantee..................... S-50 Certain Federal Income Tax Considerations................................. S-53 Underwriting ............................................................. S-58 ERISA Considerations...................................................... S-59 Index of Selected Defined Terms........................................... S-60 PROSPECTUS Available Information..................................................... 4 Incorporation of Certain Documents by Reference........................... 5 Hawaiian Electric Industries, Inc. ....................................... 6 The Hawaiian Electric Industries Capital Trusts........................... 7 The Partnership........................................................... 8 Consolidated Ratios of Earnings to Fixed Charges.......................... 8 Use of Proceeds........................................................... 9 Description of Senior Debt Securities and Senior Subordinated Debt Securities............................................................... 9 Description of the Junior Subordinated Debt Securities.................... 17 Description of the Trust Preferred Securities............................. 24 Description of the Trust Guarantees....................................... 25 Description of the Partnership Preferred Securities....................... 27 Description of the Partnership Guarantee.................................. 28 Description of the Investment Guarantees.................................. 28 Description of the Preferred Stock........................................ 29 Description of the Common Stock........................................... 29 Plan of Distribution...................................................... 32 Legal Matters............................................................. 33 Experts................................................................... 33
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 4,000,000 TRUST PREFERRED SECURITIES HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I % TRUST ORIGINATED PREFERRED SECURITIES/SM/ ("TOPrS/SM/") GUARANTEED TO THE EXTENT SET FORTH HEREIN BY HAWAIIAN ELECTRIC INDUSTRIES, INC. --------------------- PROSPECTUS SUPPLEMENT --------------------- MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. DEAN WITTER REYNOLDS INC. A.G. EDWARDS & SONS, INC. LEGG MASON WOOD WALKER INCORPORATED ROBERT W. BAIRD & CO. INCORPORATED JANUARY , 1997 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 underwriting compensation, are: Filing Fee for Registration Statement.............................. $ 90,910 Legal Fees and Expenses*........................................... 100,000 Accounting Fees and Expenses*...................................... 50,000 Blue Sky Fees and Expenses*........................................ 5,000 Printing and Engraving Fees*....................................... 50,000 Fees and Expenses of Registrars, Transfer Agents, Paying Agents and Trustees*......................................................... 15,000 Fees of Rating Agencies*........................................... 130,000 Listing Fees*...................................................... 45,000 Miscellaneous*..................................................... 14,090 -------- Total*........................................................... $500,000 ========
- -------- * Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Restated Articles of Incorporation of HEI provide that HEI will indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit or proceeding to which such person is a party or is threatened to be made a party by reason of being or having been a director, officer, employee or agent of HEI, provided that such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of HEI, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. With respect to an action brought by or in the right of HEI in which such person is adjudged to be liable for negligence or misconduct in performance of that person's duty to HEI, indemnification may be made under the Restated Articles of Incorporation 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 having jurisdiction. The indemnification provisions in the Restated Articles of Incorporation were authorized at the time of their adoption by the applicable provisions of the Hawaii Revised Statutes, and substantially similar authorizing provisions are currently set forth in Section 415-5 of the Hawaii Revised Statutes. At HEI's annual meeting of stockholders held on April 18, 1989, the stockholders adopted a proposal authorizing HEI to enter into written indemnity agreements with its officers and directors. Pursuant to such authority, HEI has entered into agreements of indemnity with certain of its officers and directors. The agreements provide for mandatory indemnification of officers and directors to the fullest extent authorized or permitted by law, which could among other things protect officers and directors from certain liabilities under the Securities Act of 1933. Indemnification under the agreements may be provided without a prior determination that an officer or director acted in good faith or in the best interests of HEI, and without prior court approval of indemnification of an officer or director adjudicated liable in a shareholder's derivative action. The agreements provide for indemnification against expenses (including attorneys' fees), judgments, fines and settlement amounts in connection with any action by or in the right of HEI. Under a directors' and officers' liability insurance policy, directors and officers are insured against certain liabilities, including certain liabilities under the Securities Act of 1933. The Trust Agreement of each 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 II-1 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 of 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 Institutional 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, HEI 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 such 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 Institutional 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 by or 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. The Limited Partnership Agreement provides that no General Partner, Special Representative (if any), affiliate of the General Partner or any Special Representative, or any officers, directors, shareholders, members, partners, employees, representatives or agents of any of the foregoing of the Partnership or its affiliates (each an "Indemnified Person") shall be liable, responsible or accountable in damages or otherwise to the Partnership or any employee or agent of the Partnership 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 Partnership and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by the Limited Partnership 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 willful misconduct with respect to such acts or omissions. The Limited Partnership Agreement also provides that to the fullest extent permitted by applicable law, the Partnership 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 Partnership and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by such Limited Partnership 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 with respect to such acts of omissions. The Limited Partnership 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 Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by or 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 Limited Partnership Agreement. II-2 ITEM 16. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION ---------- ----------- 1 Form of Purchase Agreement for offering of Preferred Securities 4(a)(i) Certificate of Trust of Hawaiian Electric Industries Capital Trust I.* 4(a)(ii) Certificate of Trust of Hawaiian Electric Industries Capital Trust II.* 4(a)(iii) Certificate of Trust of Hawaiian Electric Industries Capital Trust III.* 4(b)(i) Trust Agreement for Hawaiian Electric Industries Capital Trust I.* 4(b)(ii) Trust Agreement for Hawaiian Electric Industries Capital Trust II.* 4(b)(iii) Trust Agreement for Hawaiian Electric Industries Capital Trust III.* 4(c) Amended and Restated Certificate of Limited Partnership for HEI Preferred Funding, LP. 4(d)(i) Agreement of Limited Partnership for HEI Preferred Funding, LP.* 4(d)(ii) Assignment of General Partner Interest and Amendment of Agreement of Limited Partnership. 4(e) Form of Amended and Restated Agreement of Limited Partnership of HEI Preferred Funding, LP. 4(f) Form of Amended and Restated Trust Agreement to be used in connection with the issuance of the Preferred Securities by Hawaiian Electric Industries Capital Trusts I, II and III. 4(g) Form of Senior Indenture to be used in connection with issuance of Senior Debt Securities by HEI. 4(h) Form of Senior Subordinated Indenture to be used in connection with issuance of Subordinated Debt Securities by HEI. 4(i) Form of Junior Indenture between HEI and The Bank of New York, as Trustee, to be used in connection with issuance of Junior Subordinated Debentures by HEI. 4(j) Form of Officer's Certificate to be used in connection with the issuance by HEI of Senior Debt Securities. 4(k) Form of Officer's Certificate to be used in connection with the issuance by HEI of Subordinated Debt Securities. 4(l) Form of Officers' Certificate to be used in connection with the issuance by HEI of Junior Subordinated Debentures. 4(m) Form of Preferred Security for issuance by Hawaiian Electric Industries Capital Trusts I, II and III (included in Exhibit 4(f)). 4(n) Form of Junior Subordinated Debenture for issuance by HEI (included in Exhibit 4(l)). 4(o) Form of Trust Preferred Securities Guarantee Agreement for issuance by HEI. 4(p) Form of Partnership Guarantee Agreement. 4(q) Form of Affiliate Investment Instruments Guarantee Agreement. 5(a) Opinion of Goodsill Anderson Quinn & Stifel 5(b) Opinion of Richards, Layton & Finger 8 Tax Opinion of Goodsill Anderson Quinn & Stifel 12(a) Computation of Ratio of Earnings to Fixed Charges. (1) 12(b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. (1) 23(a) Consent of KPMG Peat Marwick LLP. 23(b) Consent of Goodsill Anderson Quinn & Stifel as to opinion (included in Exhibit 5(a)). 23(c) Consent of Richards, Layton & Finger as to opinion (included in Exhibit 5(b)). 23(d) Consent of Goodsill Anderson Quinn & Stifel as to opinion re tax matters (included in Exhibit 8). 24(a) Power of Attorney for HEI officers and directors.* 24(b) Power of Attorney for Hawaiian Electric Industries Capital Trust I (included in Exhibit 4(b)(i)). 24(c) Power of Attorney for Hawaiian Electric Industries Capital Trust II (included in Exhibit 4(b)(ii)). 24(d) Power of Attorney for Hawaiian Electric Industries Capital Trust III (included in Exhibit 4(b)(iii)). 25(a) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust I. 25(b) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust II.
II-3
EXHIBIT NUMBER DESCRIPTION --------- ----------- 25(c) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust III. 25(d) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust I. 25(e) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust II. 25(f) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust III. 25(g) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Junior Indenture. 25(h) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Partnership Guarantee with respect to HEI Preferred Funding, LP. 25(i) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Bank of New York, as Trustee with respect to the Partnership Preferred Securities of HEI Preferred Funding, LP.
- -------- * Previously filed with this Registration Statement. (1) Incorporated by reference to Exhibit 12 of HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. HEI has no preferred stock outstanding. ITEM 17. UNDERTAKINGS. Each of the undersigned registrants hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933, unless the information required to be included in such post-effective amendment is contained in a periodic report filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 and incorporated by reference in this Registration Statement; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement, unless the information required to be included in such post-effective amendment is contained in a periodic report filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 and incorporated by reference in this Registration Statement; provided, however that any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement; II-4 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of HEI's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (6) 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. HEI hereby undertakes to file an application for the purpose of determining the eligibility of the trustee under the Indenture relating to the Senior Debt Securities and the Indenture relating to the Senior Subordinated Debt Securities to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Hawaiian Electric Industries, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to 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 24th day of January, 1997. HAWAIIAN ELECTRIC INDUSTRIES, INC. By /s/ Robert F. Mougeot _____________________________________ Robert F. Mougeot Financial Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE ---------- ----- ---- /s/ Robert F. Clarke* President and Director January 24, 1997 ____________________________________ (Chief Executive Officer) Robert F. Clarke /s/ Robert F. Mougeot* Financial Vice President January 24, 1997 ____________________________________ and Chief Financial Robert F. Mougeot Officer (Principal Financial Officer) /s/ Curtis Y. Harada* Controller (Principal January 24, 1997 ____________________________________ Accounting Officer) Curtis Y. Harada /s/ Don E. Carroll* Director January 24, 1997 ____________________________________ Don E. Carroll /s/ Edwin L. Carter* Director January 24, 1997 ____________________________________ Edwin L. Carter /s/ John D. Field* Director January 24, 1997 ____________________________________ John D. Field
II-6
SIGNATURES TITLE DATE ---------- ----- ---- /s/ Richard Henderson* Director January 24, 1997 ____________________________________ Richard Henderson /s/ Victor Hao Li* Director January 24, 1997 ____________________________________ Victor Hao Li /s/ T. Michael May* Director January 24, 1997 ____________________________________ T. Michael May /s/ Bill D. Mills* Director January 24, 1997 ____________________________________ Bill D. Mills /s/ Director ____________________________________ A. Maurice Myers /s/ Ruth M. Ono* Director January 24, 1997 ____________________________________ Ruth M. Ono /s/ Diane J. Plotts* Director January 24, 1997 ____________________________________ Diane J. Plotts /s/ James K. Scott* Director January 24, 1997 ____________________________________ James K. Scott /s/ Director ____________________________________ Oswald K. Stender /s/ Kelvin H. Taketa* Director January 24, 1997 ____________________________________ Kelvin H. Taketa /s/ Jeffrey N. Watanabe* Director January 24, 1997 ____________________________________ Jeffrey N. Watanabe *By /s/ Robert F. Mougeot ____________________________________ Robert F. Mougeot 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, each of Hawaiian Electric Industries Capital Trust I, Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III has duly caused this Amendment No. 1 to 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 January 24, 1997. HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III By Hawaiian Electric Industries, Inc., as Depositor By: /s/ Robert F. Mougeot Robert F. Mougeot Financial Vice President and Chief Financial Officer By: /s/ Constance H. Lau Constance H. Lau Treasurer SIGNATURES Pursuant to the requirements of the Securities Act of 1933, HEI Preferred Funding, LP certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to this Registration Statement or amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Honolulu and State of Hawaii, on the 24th day of January, 1997. HEI PREFERRED FUNDING, LP By Hycap Management, Inc. General Partner By: /s/ Robert F. Clarke Robert F. Clarke President By: /s/ Betty Ann M. Splinter Betty Ann M. Splinter Secretary II-8 EXHIBIT INDEX
SEQUENTIAL EXHIBIT PAGE NUMBER DESCRIPTION NUMBER ----------- ----------- ---------- 1 Form of Purchase Agreement for offering of Preferred Securities 4(a)(i) Certificate of Trust of Hawaiian Electric Industries Capital Trust I.* 4(a)(ii) Certificate of Trust of Hawaiian Electric Industries Capital Trust II.* 4(a)(iii) Certificate of Trust of Hawaiian Electric Industries Capital Trust III.* 4(b)(i) Trust Agreement for Hawaiian Electric Industries Capital Trust I.* 4(b)(ii) Trust Agreement for Hawaiian Electric Industries Capital Trust II.* 4(b)(iii) Trust Agreement for Hawaiian Electric Industries Capital Trust III.* 4(c) Amended and Restated Certificate of Limited Partnership for HEI Preferred Funding, LP. 4(d)(i) Agreement of Limited Partnership for HEI Preferred Funding, LP.* 4(d)(ii) Assignment of General Partner Interest and Amendment of Agreement of Limited Partnership. 4(e) Form of Amended and Restated Agreement of Limited Partnership of HEI Preferred Funding, LP. 4(f) Form of Amended and Restated Trust Agreement to be used in connection with the issuance of the Preferred Securities by Hawaiian Electric Industries Capital Trusts I, II and III. 4(g) Form of Senior Indenture to be used in connection with issuance of Senior Debt Securities by HEI. 4(h) Form of Senior Subordinated Indenture to be used in connection with issuance of Subordinated Debt Securities by HEI. 4(i) Form of Junior Indenture between HEI and The Bank of New York, as Trustee, to be used in connection with issuance of Junior Subordinated Debentures by HEI. 4(j) Form of Officer's Certificate to be used in connection with the issuance by HEI of Senior Debt Securities. 4(k) Form of Officer's Certificate to be used in connection with the issuance by HEI of Subordinated Debt Securities. 4(l) Form of Officers' Certificate to be used in connection with the issuance by HEI of Junior Subordinated Debentures. 4(m) Form of Preferred Security for issuance by Hawaiian Electric Industries Capital Trusts I, II and III (included in Exhibit 4(f)). 4(n) Form of Junior Subordinated Debenture for issuance by HEI (included in Exhibit 4(l)). 4(o) Form of Trust Preferred Securities Guarantee Agreement for issuance by HEI. 4(p) Form of Partnership Guarantee Agreement. 4(q) Form of Affiliate Investment Instruments Guarantee Agreement. 5(a) Opinion of Goodsill Anderson Quinn & Stifel 5(b) Opinion of Richards, Layton & Finger 8 Tax Opinion of Goodsill Anderson Quinn & Stifel 12(a) Computation of Ratio of Earnings to Fixed Charges. (1) 12(b) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. (1) 23(a) Consent of KPMG Peat Marwick LLP. 23(b) Consent of Goodsill Anderson Quinn & Stifel as to opinion (included in Exhibit 5(a)). 23(c) Consent of Richards, Layton & Finger as to opinion (included in Exhibit 5(b)). 23(d) Consent of Goodsill Anderson Quinn & Stifel as to opinion re tax matters (included in Exhibit 8). 24(a) Power of Attorney for HEI officers and directors.*
EXHIBIT INDEX--(CONTINUED)
SEQUENTIAL EXHIBIT PAGE NUMBER DESCRIPTION NUMBER ----------- ----------- ---------- 24(b) Power of Attorney for Hawaiian Electric Industries Capital Trust I (included in Exhibit 4(b)(i)). 24(c) Power of Attorney for Hawaiian Electric Industries Capital Trust II (included in Exhibit 4(b)(ii)). 24(d) Power of Attorney for Hawaiian Electric Industries Capital Trust III (included in Exhibit 4(b)(iii)). 25(a) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust I. 25(b) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust II. 25(c) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Preferred Securities Guarantee with respect to Hawaiian Electric Industries Capital Trust III. 25(d) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust I. 25(e) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust II. 25(f) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee with respect to the Trust Preferred Securities of Hawaiian Electric Industries Capital Trust III. 25(g) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Junior Indenture. 25(h) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Partnership Guarantee with respect to HEI Preferred Funding, LP. 25(i) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Bank of New York, as Trustee with respect to the Partnership Preferred Securities of HEI Preferred Funding, LP.
- -------- * Previously filed with this Registration Statement. (1) Incorporated by reference to Exhibit 12 of HEI's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. HEI has no preferred stock outstanding. EX-1 2 FORM OF UNDERWRITING AGREEMENT WSP&R DRAFT 1/23/97 Exhibit 1 4,000,000 Trust Preferred Securities HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I ____% Trust Originated Preferred Securities/SM/ ("TOPrS/SM/")/*/ (Liquidation Amount $25 per Trust Preferred Security) guaranteed to the extent set forth herein by HAWAIIAN ELECTRIC INDUSTRIES, INC. PURCHASE AGREEMENT ------------------ January __, 1997 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Goldman, Sachs & Co. Dean Witter Reynolds Inc. A.G. Edwards & Sons, Inc. Legg Mason Wood Walker Incorporated Robert W. Baird & Co. Incorporated c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281 Ladies and Gentlemen: Hawaiian Electric Industries Capital Trust I (the "Trust"), a statutory business trust organized under the Business Trust Act (the "Delaware Trust Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections 3801 et seq.), HEI Preferred - ------------------------------- /*/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co., Inc. Funding, LP (the "Partnership"), a limited partnership organized under the Revised Uniform Limited Partnership Act (the "Delaware Partnership Act") of the State of Delaware (Chapter 17, Title 6, of the Delaware Code, 6 Del. C. Sections 17101 et seq.), and Hawaiian Electric Industries, Inc. (the "Company" and, together with the Trust and the Partnership, the "Offerors"), a Hawaii corporation, confirm their agreement (this "Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch, Goldman, Sachs & Co., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Legg Mason Wood Walker Incorporated and Robert W. Baird & Co. Incorporated are acting as representatives (in such capacity, they shall hereinafter be referred to as the "Representatives"), with respect to the issue and sale by the Trust and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of ___% Trust Originated Preferred Securities (Liquidation Amount $25 per Trust Preferred Security) representing preferred undivided beneficial ownership interests in the assets of the Trust ("TOPrS" or the "Trust Preferred Securities") set forth in said Schedule A. The Company will own all the common securities representing undivided beneficial ownership interests in the assets of the Trust (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities"). The Trust Securities will be issued pursuant to an Amended and Restated Trust Agreement dated as of January __, 1997 among the Company, as Sponsor, Robert F. Clarke, Robert F. Mougeot and Constance H. Lau, as regular trustees (the "Regular Trustees"), The Bank of New York, a national banking association, as initial institutional trustee (the "Property Trustee"), and The Bank of New York (Delaware), a Delaware corporation, as Delaware trustee (the "Delaware Trustee" and, together with the Regular Trustees and the Property Trustee, the "Issuer Trustees"), and the holders from time to time of undivided beneficial interests in the assets of the Trust (the "Trust Agreement"). The Trust Preferred Securities will be guaranteed by the Company, to the extent set forth in the applicable Prospectus Supplement (as defined herein), with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to, and to the extent set forth in, the Trust Preferred Securities Guarantee Agreement dated as of January __, 1997 between The Bank of New York, as trustee (the "Trust Guarantee Trustee"), and the Company (the "Trust Guarantee"). The proceeds from the sale of the Trust Securities will be used by the Trust to purchase partnership preferred securities representing all of the limited partner interests of the Partnership (the "Partnership Preferred Securities"). All of the general partner interests of the Partnership will be owned by Hycap Management, Inc. (the "General Partner"), a Delaware corporation and wholly owned subsidiary of the Company. The Partnership Preferred Securities will be issued pursuant to an Amended and Restated Agreement of Limited Partnership dated as of January __, 1997 among the General Partner, the Trust, as initial limited partner, and such other persons who become limited partners thereto (the "Partnership Agreement"), and will be guaranteed by the Company, to the extent set forth in the applicable Prospectus Supplement, with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to, and to the extent set forth in, the Partnership Guarantee Agreement dated as of January __, 1997 between The Bank of New York, as trustee, and the Company (the "Partnership Guarantee" and, together with the Trust Guarantee, the "Guarantees"). The Trust Preferred Securities and the -2- Trust Guarantee, together with the Partnership Preferred Securities and the Partnership Guarantee, are referred to herein as the "Offered Securities." The Partnership will use the proceeds from the sale of the Partnership Preferred Securities and the capital contribution of the General Partner to initially acquire (i) debt instruments of the Company (the "Company Debentures"), (ii) debt instruments of a subsidiary of the Company (such subsidiary, the "Investment Subsidiary" and, together with the Company, the "Investment Affiliates"; such debt instruments of the Investment Subsidiary, the "Subsidiary Debentures" and, together with the Company Debentures, the "Affiliate Debentures") and (iii) certain U.S. government obligations and commercial paper of entities not affiliated with the Company. The Subsidiary Debentures are to be fully and unconditionally guaranteed, on a subordinated basis, by the Company pursuant to, and to the extent set forth in, the Affiliate Investment Instruments Guarantee Agreement dated as of January __, 1997 between The Bank of New York, as trustee (the "Investment Guarantee Trustee"), and the Company (the "Investment Guarantee"). Each of the Affiliate Debentures shall be issued pursuant to an Indenture dated as of January __, 1997 among The Bank of New York, as trustee (the "Debt Trustee"), and the applicable Investment Affiliate (each, an "Indenture"). The Offerors understand that the Underwriters propose to make a public offering of the Offered Securities as soon as the Representatives deem advisable after this Agreement has been executed and delivered. The Offerors have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (File Nos. 333-18809, 333-18809-01, 333-18809-02, 333-18809-03 and 333-18809-04) covering the registration under the Securities Act of 1933, as amended (the "1933 Act"), of, among other securities, (a) the Trust Preferred Securities, (b) the Trust Guarantee, (c) the Partnership Preferred Securities, (d) the Partnership Guarantee and (e) the Investment Guarantee. The prospectus forming a part of such registration statement, at the time such registration statement (or the most recent amendment thereto filed prior to the time of effectiveness of this Agreement) became effective under the 1933 Act, including all documents incorporated by reference therein at that time pursuant to Item 12 of Form S-3 under the 1933 Act, is hereinafter referred to as the "Basic Prospectus." In the event that (i) the Basic Prospectus shall have been amended, revised or supplemented (but excluding any amendments, revisions or supplements to the Basic Prospectus relating solely to securities other than the Offered Securities) prior to the time of effectiveness of this Agreement, including without limitation by any preliminary prospectus supplement relating to the Offered Securities, or (ii) the Company shall have filed documents pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), after the time such registration statement became effective under the 1933 Act and prior to the time of effectiveness of this Agreement (but excluding documents incorporated therein by reference relating solely to securities other than the Offered Securities), which documents are deemed to be incorporated by reference in the Basic Prospectus pursuant to Item 12 of Form S- 3 under the 1933 Act, the term "Basic Prospectus" as used herein shall also mean such prospectus as so amended, revised or supplemented and reflecting such incorporation by reference. Such registration statement in the form in which it became effective under the 1933 Act and as it may have been amended by all amendments thereto as of the time -3- of effectiveness of this Agreement (including, for these purposes, as an amendment any document incorporated by reference in the Basic Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act), and the Basic Prospectus as it shall be supplemented to reflect the terms of the offering and sale of the Offered Securities by a prospectus supplement (a "Prospectus Supplement") to be filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) under the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"), are hereinafter referred to as the "Registration Statement" and the "Prospectus," respectively. For purposes of this Agreement, all references to the Registration Statement or the Prospectus or any amendment or supplement thereto shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). The Trust Agreement, the Trust Guarantee, the Indenture relating to the Company Debentures, the Partnership Guarantee and the Investment Guarantee has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). All references in this Agreement to financial statements and schedules and other information that is "contained," "included" or "stated" in the Registration Statement or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that is incorporated or deemed to be incorporated by reference in the Registration Statement or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include the filing of any document under the 1934 Act that is incorporated by reference in the Registration Statement or the Prospectus, as the case may be. SECTION 1. Representations and Warranties. ------------------------------ (a) Representations and Warranties by Company. The Company represents ----------------------------------------- and warrants to each Underwriter as of the date hereof, and as of the Closing Time referred to in Section 2(b) hereof, as follows: (i) Compliance with Registration Requirements. The Offerors meet ----------------------------------------- the requirements for use of Form S-3 under the 1933 Act. The Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. The Registration Statement at the Effective Date (as defined herein) complied in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations"), and 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 the Prospectus is delivered to the Underwriters for their use in making confirmations of sales of the Trust Preferred Securities and at the Closing Time, the Prospectus and any -4- amendments or supplements thereto will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations 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 representations and warranties in this paragraph (i) shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through Merrill Lynch expressly for use in the Registration Statement or the Prospectus. The Prospectus delivered to the Underwriters for use in making confirmations of sales of Trust Preferred Securities will be identical to the electronically transmitted copy thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. As used in this Agreement, the term "Effective Date" shall mean the later of (i) the date the Registration Statement, or any post-effective amendment thereto, was declared effective by the Commission under the 1933 Act and (ii) the date that the Company's most recent Annual Report on Form 10-K was filed with the Commission under the 1934 Act. (ii) Incorporated Documents. The documents incorporated or ---------------------- deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), and, when read together with the other information in the Prospectus, at the Effective Date, at the time the Prospectus was delivered to the Underwriters for their use in making confirmations of sales of Trust Preferred Securities and at the Closing Time, did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iii) Independent Accountants. The accountants who have ----------------------- certified the consolidated financial statements of the Company and Subsidiaries (as defined herein) that are incorporated by reference in the Registration Statement and the Prospectus are independent certified public accountants as required by the 1933 Act and the 1933 Act Regulations. (iv) No Material Adverse Change in Business. Otherwise than as -------------------------------------- set forth or contemplated in the Registration Statement and the Prospectus, neither the Company nor any Subsidiaries has sustained since the date of the most recent audited financial statements incorporated by reference in the Registration Statement and the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which loss or interference would have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, -5- there has not been any change in the capital stock of the Company or any Significant Subsidiary (as defined herein) (except for (i) issuances of capital stock of the Company pursuant to dividend reinvestment, stock purchase, director or employee benefit plans, (ii) issuances of capital stock by Hawaiian Electric Company, Inc. ("HECO") or its subsidiaries that have been approved by the Public Utilities Commission of the State of Hawaii or by any other Significant Subsidiary as disclosed in writing to the Underwriters and (iii) redemptions by HECO, Hawaii Electric Light Company, Inc. ("HELCO") and Maui Electric Company, Limited ("MECO") of their respective preferred stock in accordance with the terms thereof) or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus. (v) Good Standing of Company and Subsidiaries. The Company has ----------------------------------------- been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Hawaii, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus; the Company does not itself conduct any business or own or lease any property in any jurisdiction outside the State of Hawaii that would require it to qualify to do business as a foreign corporation and where the failure to be so qualified would subject the Company to any material liability or disability; the General Partner has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus. Each Subsidiary of the Company, other than American Savings Bank, F.S.B. ("ASB"), the General Partner, the Trust and the Partnership, has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. As used in this Agreement, the term "Subsidiary" means each corporation, at least a majority of the outstanding voting stock of which is owned by the Company, by one or more Subsidiaries or by the Company and one or more Subsidiaries. (vi) Good Standing of ASB. ASB has been duly formed and is -------------------- validly existing as a federal savings bank duly chartered and in good standing under the laws of the United States; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there have not been any increases in total non-accruing loans or the provision for loan losses of ASB and its subsidiaries, which increase or increases, individually or in the aggregate, would have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole. (vii) Capitalization. The Company has an authorized -------------- capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized -6- and issued and are fully paid and nonassessable; all of the issued shares of capital stock of each Subsidiary has been duly and validly authorized and issued and is fully paid and nonassessable; and all of such shares of Subsidiaries, other than shares of preferred stock, including the existing preferred stock of HECO and its subsidiaries, is owned directly or indirectly by the Company, free and clear of any liens, encumbrances or security interests (other than the pledge by HECO of the shares of common stock of HELCO and MECO under the indenture securing HECO's first mortgage bonds), except as described in the Registration Statement and the Prospectus. The General Partner is the sole owner of general partner interests of the Partnership. (viii) Indentures and Affiliate Debentures. Each Indenture has been ----------------------------------- duly authorized, and at the Closing Time, will have been duly executed and delivered by the applicable Investment Affiliate and, when duly executed and delivered by the Debt Trustee, will constitute a valid and binding agreement of such Investment Affiliate enforceable against such Investment Affiliate in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and by general principles of equity (whether considered in a proceeding in equity or at law) (the "Exceptions"). The Indenture relating to the Company Debentures has been duly qualified under the 1939 Act. The Affiliate Debentures have been duly authorized for issuance and sale pursuant to this Agreement and, at the Closing Time, will have been duly executed by the applicable Investment Affiliate and, when authenticated, issued and delivered in the manner provided for in the applicable Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and legally binding obligations of such Investment Affiliate enforceable against such Investment Affiliate in accordance with their terms, except as may be limited by the Exceptions. (ix) Trust Guarantee. The Trust Guarantee has been duly --------------- authorized and, at the Closing Time, will have been duly executed and delivered by the Company and, when duly executed and delivered by the Trust Guarantee Trustee, will constitute a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by the Exceptions. The Trust Guarantee has been duly qualified under the 1939 Act. (x) Partnership Guarantee. The Partnership Guarantee has been --------------------- duly authorized and, at the Closing Time, will have been duly executed and delivered by the Company and, when duly executed and delivered by the Partnership Guarantee Trustee, will constitute a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by the Exceptions. The Partnership Guarantee has been duly qualified under the 1939 Act. (xi) Investment Guarantee. The Investment Guarantee has been -------------------- duly authorized and, at the Closing Time, will have been duly executed and delivered by the Company and, when duly executed and delivered by the Investment Guarantee Trustee, will constitute a valid and binding obligation of the Company enforceable against the -7- Company in accordance with its terms, except as may be limited by the Exceptions. The Investment Guarantee has been duly qualified under the 1939 Act. (xii) Prospectus Descriptions. The Offered Securities, the ----------------------- Trust Agreement, the Partnership Agreement, the Indentures and the Investment Guarantee will conform in all material respects to the respective statements relating thereto contained in the Prospectus. (xiii) Absence of Defaults and Conflicts. The execution, --------------------------------- delivery and performance of the Trust Agreement, the Partnership Agreement, the Guarantees and the Investment Guarantee by the Company, the Affiliate Debentures and the Indentures by the applicable Investment Affiliate, the Partnership Agreement by the General Partner and any other agreement or instrument entered into or issued or to be entered into or issued by the Company, the Investment Subsidiary or the General Partner in connection with the transactions contemplated hereby or thereby or in the Registration Statement and the Prospectus (including the issuance and sale of the Offered Securities and the use of the proceeds from the sale of the Offered Securities as described in the Prospectus under the caption "Use of Proceeds") and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus and compliance by each of the Company, the Investment Subsidiary or the General Partner with its obligations hereunder and thereunder do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the imposition of a lien or security interest under, any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of the property or assets used in the conduct of its business is subject, nor will such action result in any violation of the provisions of its charter or by-laws or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any Subsidiary or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the performance by each of the Company, the Investment Subsidiary and the General Partner of its obligations under this Agreement or in connection with the transactions contemplated under this Agreement, except such as have been obtained or as may be required under the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the 1939 Act, the 1939 Act Regulations or otherwise and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or blue sky laws, as the case may be. (xiv) Legal Proceedings. Other than as set forth or ----------------- contemplated in the Registration Statement and the Prospectus, there are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any Subsidiary is a party or to which any property of the Company or any Subsidiary is the subject that is reasonably expected to have a material adverse effect on the Company and Subsidiary taken as a whole. -8- (xv) Licenses, Franchises, Trademarks, Easements, etc. The ------------------------------------------------- Company and each of HECO, HELCO, MECO, HEI Diversified, Inc., ASB, Hawaiian Tug & Barge Corp., Young Brothers, Limited, Malama Pacific Corp., HEI Power Corp. and HEI Investment Corp. (each, a "Significant Subsidiary") have all requisite power and authority, and possess all necessary authorizations, approvals, orders, licenses, franchises, certificates and permits of and from, and to the extent required by law are duly registered with, all governmental and regulatory officials, commissions, departments and bodies in, and are in compliance with all applicable laws, rules and regulations of or under, each jurisdiction in which any of them owns properties or assets or conducts any business as described in the Registration Statement and the Prospectus, where the failure to possess such authorization, approval, order, license, franchise, certificate or permit, or where the failure so to register or so to comply, would have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole. Each such authorization, approval, order, license, franchise, certificate and permit is valid and in full force and effect, and there is no proceeding pending or, to the Company's knowledge, threatened that may lead to the revocation, termination, suspension or non-renewal of any such authorization, approval, order, license, franchise, certificate or permit; the Company and Significant Subsidiaries have taken appropriate actions to maintain in effect or renew each such authorization, approval, order, license, franchise, certificate or permit; the Company and Significant Subsidiaries own, or possess adequate rights to use, all patents, trademarks, service marks and rights necessary for or material to the conduct of their respective business as described in the Registration Statement and the Prospectus; and the Company and Significant Subsidiaries possess adequate easements, rights-of-way and other rights to use of land not owned by the Company and Significant Subsidiaries, with such exceptions and defects as are described in the Registration Statement and the Prospectus or as do not materially interfere with the use made of such land by the Company and Significant Subsidiaries or as do not have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole. (xvi) Public Utility Holding Company Act. The Company and HECO ---------------------------------- are holding companies within the meaning of the Public Utility Holding Company Act of 1935, as amended; however, by virtue of having filed an appropriate application under the provisions of Section 3(a) of such Act, the Company and HECO are exempt from all of the provisions of such Act, except Section 9(a)(2) thereof, and will remain so exempt, subject to future timely filing of annual exemption statements, unless and except insofar as the Commission shall find such exception detrimental to the public interest or interest of investors or consumers. (xvii) 1940 Act. Neither the Company or HEI Investment Corp. -------- ("HEIIC") is nor, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, will be an "investment company" or "controlled" by an "investment company," in each case within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). -9- (b) Officers' Certificates. Any certificate signed by any officer of ---------------------- any of the Offerors or the Investment Subsidiary and delivered to any Underwriter or to counsel for the Underwriters in connection with the offering of the Offered Securities shall be deemed a representation and warranty by such Offeror or the Investment Subsidiary to each Underwriter as to the matters covered thereby on the date of such certificate. (c) Representations and Warranties by Offerors. The Offerors, jointly ------------------------------------------ and severally, represent and warrant to each Underwriter as of the date hereof, and as of the Closing Time, as follows: (i) Good Standing of Trust. The Trust has been duly created and ---------------------- is validly existing in good standing as a business trust under the Delaware Trust Act with the power and authority to own property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement, the Trust Securities and the Trust Agreement; the Trust is duly qualified to transact business as a foreign business trust and is in good standing in any other jurisdiction in which such qualification is necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on the Trust; the Trust is not a party to or otherwise bound by any agreement other than those described in the Registration Statement and the Prospectus; and the Trust is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles. (ii) Trust Agreement. The Trust Agreement has been duly --------------- authorized by the Company and, at the Closing Time, will have been duly executed and delivered by the Company, as Sponsor, and, when executed and delivered by the Property Trustee, the Delaware Trustee and the Regular Trustees, will be a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by the Exceptions and by the effect of applicable public policy on the enforceability of provisions relating to contribution or indemnification, and will conform in all material respects to the statements relating thereto in the Prospectus. The Trust Agreement has been duly qualified under the 1939 Act. (iii) Trust Common Securities. The Trust Common Securities have ----------------------- been duly authorized by the Trust Agreement and, when issued and delivered by the Trust to the Company against payment therefor as described in the Registration Statement and Prospectus, will be validly issued undivided beneficial interests in the assets of the Trust and will conform in all material respects to the statements relating thereto contained in the Prospectus; the issuance of the Trust Common Securities is not subject to preemptive or other similar rights; and at the Closing Time; all of the issued and outstanding Trust Common Securities will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. -10- (iv) Trust Preferred Securities. The Trust Preferred Securities -------------------------- have been duly authorized by the Trust Agreement and, when issued and delivered against payment of the consideration set forth in this Agreement, will be validly issued and (subject to the terms of the Trust Agreement) fully paid and nonassessable undivided beneficial interests in the Trust, will be entitled to the benefits of the Trust Agreement and will conform in all material respects to the statements relating thereto contained in the Prospectus; the issuance of the Trust Preferred Securities is not subject to preemptive or other similar rights; and (subject to the terms of the Trust Agreement) holders of Trust Preferred Securities will be entitled to the same limitation of personal liability under Delaware law as extended to stockholders of private corporations for profit. (v) Regular Trustees. Each of the Regular Trustees of the Trust ---------------- is an officer of the Company; at the Closing Time, the Trust Agreement will have been duly executed and delivered by the Regular Trustees and, when executed and delivered by the Company, the Property Trustee and the Delaware Trustee, will be a valid and binding obligation of each Regular Trustee enforceable against such Regular Trustee in accordance with its terms, except as may be limited by the Exceptions. (vi) Good Standing of Partnership. The Partnership has been duly ---------------------------- formed and is validly existing in good standing as a limited partnership under the Delaware Partnership Act with the power and authority to own property and to conduct its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement, the Partnership Preferred Securities and the Partnership Agreement; the Partnership is duly qualified to transact business as a foreign limited partnership and is in good standing in any other jurisdiction in which such qualification is necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on the Partnership; the Partnership is not a party to or otherwise bound by any agreement other than those described in the Registration Statement and the Prospectus; and the Partnership is and will be treated as a consolidated subsidiary of the Company pursuant to generally accepted accounting principles. (vii) Partnership Agreement. The Partnership Agreement has been --------------------- duly authorized by the General Partner and, on the Closing Time, will have been duly executed and delivered by the General Partner and will be a valid and legally binding obligation of the General Partner enforceable against the General Partner in accordance with its terms, except as may be limited by the Exceptions and by the effect of applicable public policy on the enforceability of provisions relating to contribution or indemnification, and will conform in all material respects to the statements relating thereto in the Prospectus. (viii) Partnership Preferred Securities. The Partnership -------------------------------- Preferred Securities have been duly authorized by the Partnership Agreement and, when issued and delivered pursuant to the Partnership Agreement against payment of the consideration set forth therein, will be duly issued and fully paid and not subject to assessment for additional capital contributions, will be entitled to the benefits of the Partnership -11- Agreement and will conform in all material respects to the statements relating thereto in the Prospectus; the issuance of the Partnership Preferred Securities is not subject to preemptive or other similar rights; assuming that the holders of Partnership Preferred Securities in their capacities as such do not participate in the control of the business of the Company, the holders of the Partnership Preferred Securities, in their capacities as such, will have no liability in excess of their obligations to make payments provided for in the Partnership Agreement (subject to the obligation of a holder of Partnership Preferred Securities to repay any funds distributed to it). (ix) 1940 Act. Neither the Trust or the Partnership is nor, -------- after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, will be an "investment company" or "controlled" by an "investment company," in each case within the meaning of the 1940 Act. (x) Absence of Conflicts. The Trust is not in violation of the -------------------- Trust Agreement or its certificate of trust filed with the State of Delaware, dated as of December 19, 1996 (the "Certificate of Trust"); the Partnership is not in violation of the Partnership Agreement or its amended and restated certificate of limited partnership, dated as of January __, 1997 (the "Certificate of Partnership"); and the execution, delivery and performance of this Agreement, the Trust Securities and the Partnership Preferred Securities by the Partnership and the Trust and the consummation of the transactions contemplated herein and therein and compliance by the Partnership and the Trust with their respective obligations hereunder and thereunder have been duly authorized by all necessary action on the part of the Partnership and the Trust and do not and will not result in any violation of the Trust Agreement or Certificate of Trust or the Partnership Agreement or the Certificate of Partnership and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Trust or the Partnership under any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, or any regulatory body or administrative agency or other governmental body having jurisdiction over the Trust or the Partnership of their respective properties. (xi) Absence of Further Requirements. No authorization, ------------------------------- approval, consent or order of any court or governmental authority or agency is necessary in connection with the issuance, offer and sale of the Trust Securities and the Partnership Preferred Securities, the consummation of the transactions contemplated by this Agreement by the Partnership or the Trust, or the execution, delivery and performance by the Partnership or the Trust of this Agreement, the Trust Securities and the Partnership Preferred Securities, except such as may be required under the 1933 Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or state securities laws and the qualification of the Trust Agreement and the Trust Guarantee under the 1939 Act and the 1939 Act Regulations. -12- (xii) Absence of Proceedings. Except as disclosed in the ---------------------- Registration Statement and the Prospectus, there is no action, suit or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the knowledge of the Trust or the Partnership, threatened against or affecting the Trust or the Partnership that is required to be disclosed in the Registration Statement and the Prospectus or that would result in any material adverse change in the condition (financial or otherwise), earnings or business affairs of the Trust, the Partnership or the Company and Subsidiaries taken as a whole, or that would materially and adversely affect the properties or assets of the Trust or the Partnership, or that could adversely affect the consummation of the transactions contemplated in this Agreement. (xiii) Agreement. This Agreement has been duly authorized, --------- executed and delivered by each of the Offerors. SECTION 2. Sale and Delivery to Underwriters; Closing. ------------------------------------------ (a) Securities. On the basis of the representations and warranties ---------- herein contained and subject to the terms and conditions herein set forth, the Trust agrees to sell to each Underwriter named in Schedule A hereto, severally and not jointly, and each Underwriter agrees, severally and not jointly, to purchase from the Trust, at the initial public offering price set forth in Schedule B hereto, the number of Trust Preferred Securities set forth in Schedule A hereto opposite the name of such Underwriter, plus any additional number of Trust Preferred Securities that such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof. (b) Payment. Payment of the purchase price for, and delivery of the ------- Trust Preferred Securities shall be made through the facilities of The Depository Trust Company ("DTC") at the offices of (i) [________________], or at such other place as shall be agreed upon by the Representatives and the Company, at 9:00 A.M. (Eastern time) on the third (unless the pricing occurs after 4:30 P.M. (Eastern time) on any given day, in which case on the fourth) business day after the date hereof (unless postponed in accordance with the provisions of Section 10 hereof), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Company (such time and date of payment and delivery being herein called the "Closing Time"). For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange, Inc. (the "NYSE") is open for bidding. Payment shall be made to the Trust by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to such persons designated by the Representatives for the respective accounts of the Underwriters of a certificate in global form for the Trust Preferred Securities to be purchased by them. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Trust Preferred Securities that it has agreed to purchase. Merrill Lynch, individually and not as a representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Trust Preferred Securities to be -13- purchased by any Underwriter whose funds have not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder. The purchase price per Trust Preferred Security to be paid by the several Underwriters for the Trust Preferred Securities shall be an amount equal to the initial public offering price as set forth in Schedule B hereto. The initial public offering price per Trust Preferred Security shall be a fixed price to be determined by agreement between the Representatives and the Offerors. The initial public offering price and the purchase price per Trust Preferred Security, when so determined, shall be set forth in Schedule B hereto. As compensation to the Underwriters for their commitments hereunder and in view of the fact that the proceeds of the sale of the Trust Preferred Securities will ultimately be used to purchase the Affiliate Debentures, the Company hereby agrees to pay, or cause to be paid, at Closing Time to the Representatives, for the accounts of the several Underwriters, a commission per Trust Preferred Security set forth on Schedule B hereto by wire transfer of immediately available funds to a bank account designated by Merrill Lynch. (c) Denominations; Registration. The certificates for the Trust --------------------------- Preferred Securities shall be registered in the name of "Cede & Co.," as nominee of DTC, and delivered to DTC in such denominations as the Representatives may reasonably request in writing at least two full business days prior to the Closing Time or, to the extent not so requested, in such authorized denominations as the Trust shall determine. For the purpose of expediting the checking of the certificates for the Trust Preferred Securities by the Representatives on behalf of the Underwriters, the Trust agrees to make such certificates available to the Representatives for such purpose at the offices of DTC in New York, New York, not later than 2:00 P.M., New York City time, on the business day prior to the Closing Time or at such other time and place as may be agreed upon by the Trust and the Representatives. SECTION 3. Covenants of Offerors. The Offerors covenant with each --------------------- Underwriter as follows: (a) Compliance with Securities Regulations and Commission Requests. -------------------------------------------------------------- The Offerors, subject to Section 3(b) hereof, will cause the Prospectus to be filed with, or transmitted for filing to, the Commission pursuant to and in compliance with Rule 424(b) of the 1933 Act Regulations, and will notify the Representatives immediately, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, under the 1933 Act, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the 1933 Act or of any order preventing or suspending the use of any preliminary prospectus supplement, or of the suspension of the qualification of the Offered Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Company will -14- make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Filing of Amendments. During any period when a prospectus is -------------------- required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities, the Offerors will give the Representatives notice of their intention to file or prepare any amendment to the Registration Statement or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective under the 1933 Act or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object. (c) Delivery of Registration Statements. The Offerors have furnished ----------------------------------- or will deliver to the Representatives and counsel for the Underwriters, without charge, conformed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and conformed copies of all consents and certificates of experts, and will also deliver to the Representatives, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) Delivery of Prospectuses. The Offerors have delivered to each ------------------------ Underwriter, without charge, as many copies of each preliminary prospectus supplement as such Underwriter reasonably requested, and the Offerors hereby consent to the use of such copies for purposes permitted by the 1933 Act. The Offerors will furnish to each Underwriter, without charge, during any period when a prospectus is required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) Continued Compliance with Securities Laws. The Offerors will ----------------------------------------- comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the 1939 Act Regulations with respect to the offer of the Offered Securities so as to permit the completion of the distribution of the Trust Preferred Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters and for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the -15- statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b) hereof, such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. (f) Blue Sky Qualifications. The Company will take such action as the ----------------------- Underwriters may reasonably request to cooperate with the Underwriters to qualify the Offered Securities for offering and sale under the applicable securities laws of such states and other jurisdictions as the Representatives may designate so that such qualifications are in effect for a period of not less than one year from the effective date of the Registration Statement under the 1933 Act and during any period when a prospectus is required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Offered Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction so that such qualification is in effect for a period of not less than one year from the effective date of the Registration Statement under the 1933 Act and during any period when a prospectus is required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities. (g) Rule 158. The Company will, on behalf of the Trust, timely file -------- such reports pursuant to the 1934 Act as are necessary in order to make generally available to the Trust's securityholders as soon as practicable an earning statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act and Rule 158 under the 1933 Act Regulations. (h) Use of Proceeds. The Company will use or cause to be used the net --------------- proceeds received by and from the sale of the Offered Securities in the manner specified in the Prospectus under "Use of Proceeds." (i) Listing. The Offerors will use their best efforts to cause the ------- Trust Preferred Securities to be duly authorized for listing on the NYSE, subject to notice of issuance, and to be registered under the 1934 Act; if the Trust Preferred Securities are exchanged for Partnership Preferred Securities, the Company will use its best efforts to have the Partnership Preferred Securities listed on the exchange or other organization on which the Trust Preferred Securities were then listed, and to have the Partnership Preferred Securities registered under the 1934 Act. (j) Prohibition on Sales. During a period of 30 days from the date of -------------------- the Prospectus, none of the Offerors will, without the prior written consent of the Underwriters, (i) -16- directly or indirectly, sell, offer to sell, grant any option for sale of, or otherwise dispose of, any Trust Preferred Securities, Partnership Preferred Securities, any preferred stock of the Company or any security convertible into or exchangeable into or exercisable for Trust Preferred Securities or Partnership Preferred Securities or any preferred stock of the Company or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any Trust Preferred Securities, Partnership Preferred Securities, any preferred stock of the Company or any security convertible into or exchangeable into or exercisable for Trust Preferred Securities or Partnership Preferred Securities or any preferred stock of the Company, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Trust Preferred Securities, Partnership Preferred Securities, any preferred stock of the Company or such other securities, in cash or otherwise. (k) Reporting Requirements. The Company, during any period when a ---------------------- prospectus is required to be delivered under the 1933 Act or the 1934 Act in connection with sales of any of the Offered Securities, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. Payment of Expenses. ------------------- (a) Expenses. The Company will pay all expenses incident to the -------- performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Agreement, the Trust Agreement, the Partnership Agreement, and the Indentures and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Offered Securities, (iii) the preparation, issuance and delivery of the certificates for the Trust Preferred Securities to the Underwriters, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors, (v) the qualification of the Offered Securities under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees (but not in excess of $15,000) and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the blue sky survey and any supplement thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus supplement, and of the Prospectus and any amendments or supplements thereto, (vii) the preparation, printing and delivery to the Underwriters of copies of the blue sky survey and any supplement thereto, (viii) the fees and expenses of the Issuer Trustees, the Debt Trustee, the Partnership Guarantee Trustee, the Trust Guarantee Trustee and the Investment Guarantee Trustee, including the fees and disbursements of counsel for the Issuer Trustees, the Debt Trustee, the Partnership Guarantee Trustee, the Trust Guarantee Trustee and the Investment Guarantee Trustee in connection with the Indentures and the Affiliate Debentures, the Partnership Guarantee, the Trust Guarantee and the Investment Guarantee, (ix) any fees payable in connection with the rating of the Trust Preferred Securities and (x) the fees and expenses incurred in connection with the listing of the Offered Securities on the NYSE and the registration thereof under the 1934 Act in accordance with Section 3(i) hereof; provided, however, -17- that the Underwriters shall reimburse the Company for certain expenses incurred in connection with the transactions contemplated by this Agreement as may be agreed upon in writing. (b) Termination of Agreement. If this Agreement is terminated by the ------------------------ Representatives in accordance with the provisions of Section 5 or 9(a) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. SECTION 5. Conditions of Underwriters' Obligations. The obligations --------------------------------------- of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Offerors contained in Section 1 hereof or in certificates of any officer of the Offerors or any Investment Subsidiary delivered pursuant to the provisions hereof, to the performance by the Offerors of their covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Registration --------------------------------------- Statement has become effective and at the Closing Time no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. The Prospectus shall have been filed with, or transmitted for filing to, the Commission in accordance with Rule 424(b). (b) Opinion of Counsel for Offerors. At the Closing Time, the ------------------------------- Representatives shall have received an opinion of Goodsill Anderson Quinn & Stifel, counsel for the Offerors, dated the Closing Time, to the effect that: (i) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Hawaii, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; (ii) the Company has an authorized capitalization as set forth in the Prospectus and all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable; (iii) to the best of such counsel's knowledge, the Company does not itself conduct any business or own or lease any property in any jurisdiction outside the State of Hawaii that would require it to qualify to do business as a foreign corporation and where the failure to be so qualified would subject the Company to any material liability or disability; -18- power and authority to own its properties and conduct its business as described in the Prospectus; (iv) each Significant Subsidiary, other than ASB, has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; ASB has been duly formed and is duly chartered as a federal savings bank under the laws of the United States; all of the issued and outstanding shares of capital stock of each Significant Subsidiary has been duly and validly authorized and issued and is fully paid and nonassessable; and, to the best of such counsel's knowledge, all of such shares, other than shares of preferred stock of HECO and its subsidiaries, is owned directly or indirectly by the Company, free and clear of any perfected encumbrance or security interest or any other encumbrance, claim or equity, other than the pledge by HECO of the shares of common stock of HELCO and MECO under the indenture securing HECO's first mortgage bonds, and with such exceptions as are described in the Prospectus or as are otherwise disclosed to the Underwriters; (v) the Company and HECO are holding companies within the meaning of the Public Utility Holding Company Act of 1935, as amended; however, by virtue of having filed an appropriate application under the provisions of Section 3(a) of such Act, the Company and HECO are exempt from all of the provisions of such Act except Section 9(a)(2) thereof, and will remain so exempt, subject to the future timely filings of annual exemption statements, unless and except insofar as the Commission shall find such exemption detrimental to the public interest or the interest of investors or consumers; (vi) except as indicated in the Prospectus, to the best of such counsel's knowledge, (A) neither the Company nor any Significant Subsidiary is engaged in, or threatened with, any litigation and (B) there are no proceedings, or any proceedings threatened, with respect to the Company or any Significant Subsidiary or their property that, in the case of either clause (A) or (B) above, such counsel (or other counsel as to litigation or proceedings that are not principally handled by their firm) has concluded is reasonably expected to have a material adverse effect on the Company and Subsidiaries taken as a whole; (vii) neither any of the Offerors, the General Partner or HEIIC is nor, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Prospectus, will be an "investment company" or "controlled" by an "investment company," in each case within the meaning of the 1940 Act; (viii) the Registration Statement, at the Effective Date, and the Prospectus, at the time it was filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, complied as to form in all material respects with the 1933 Act, the 1933 Act Regulations and the 1939 Act and the 1939 Act Regulations; each document incorporated by reference in the Prospectus as originally filed pursuant to the 1934 Act complied as to form when so filed in all material respects with the 1934 Act and -19- the 1934 Act Regulations; and, to the best of such counsel's knowledge, the Registration Statement has been declared, and on the Closing Time is, effective under the 1933 Act and no proceedings for a stop order with respect thereto are threatened or pending under Section 8 of the 1933 Act; (ix) nothing has come to the attention of such counsel to cause them to believe that the Registration Statement, at the Effective Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, at the time it was filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations or on the Closing Time, included or includes any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (x) the statements summarizing certain provisions of the Offered Securities and the Affiliate Debentures (other than any such statements describing DTC's book-entry system), the Indentures, the Trust Agreement, the Partnership Agreement, and the Investment Guarantee, and the statements relating to the Company 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 Agreement has been duly authorized by all necessary corporate action of and duly executed and delivered by the Company; this Agreement has been duly executed and delivered, on behalf of the Trust, by the Regular Trustees and, on behalf of the Partnership, by the General Partner; and the Trust Preferred Securities have been duly executed and delivered by the Regular Trustees; (xii) the Partnership Agreement has been duly authorized by all necessary corporate action of the General Partner and duly executed and delivered by the General Partner; (xiii) the Trust Agreement has been duly qualified under the 1939 Act and has been duly authorized by all necessary corporate action of the Company and duly executed and delivered by the Company and the Regular Trustees; (xiv) the Trust Guarantee has been duly qualified under the 1939 Act, has been duly authorized by all necessary corporate action of and duly executed and delivered by the Company and constitutes a valid and binding instrument of the Company enforceable against the Company in accordance with its terms; (xv) the Partnership Guarantee has been duly qualified under the 1939 Act, has been duly authorized by all necessary corporate action of and duly executed and delivered by the Company and constitutes a valid and binding instrument of the Company enforceable against the Company in accordance with its terms; -20- (xvi) the Investment Guarantee has been duly qualified under the 1939 Act, has been duly authorized by all necessary corporate action of and duly executed and delivered by the Company and constitutes a valid and binding instrument of the Company enforceable against the Company in accordance with its terms; (xvii) each Indenture has been duly authorized by all necessary corporate action of and duly executed and delivered by the applicable Investment Affiliate and constitutes a valid and binding agreement of such Investment Affiliate enforceable against such Investment Affiliate in accordance with its terms; the Indenture relating to the Company Debentures has been duly qualified under the 1939 Act; the Affiliate Debentures have been duly authorized by all necessary corporate action of and duly executed and delivered by the applicable Investment Affiliate and constitute valid and binding obligations of such Investment Affiliate enforceable against such Investment Affiliate in accordance with their terms; (xviii) the execution, delivery and performance of the Trust Agreement, the Partnership Agreement, the Guarantees and the Investment Guarantee by the Company, the Affiliate Debentures and the Indentures by the applicable Investment Affiliate and any other agreement or instrument entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Registration Statement and the Prospectus (including the issuance and sale of the Offered Securities and the use of proceeds from the sale of the Offered Securities as described in the Prospectus under the caption "Use of Proceeds") and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus and compliance by the Company with its obligations hereunder and thereunder do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary is bound or to which any of the material property or assets of the Company or any Significant Subsidiary is subject, nor will such action result in any violation of the provisions of the Restated Articles of Incorporation of the Company or the By-Laws of the Company or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its properties, except that such counsel need not express an opinion with respect to compliance with state securities or blue sky law; (xix) no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the performance by the Company of its obligation under this Agreement or in connection with the transactions contemplated by this Agreement, except such as have been obtained or made under the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the 1939 Act, the 1939 Act Regulations or otherwise and such consents, approvals, authorizations, registrations, or qualifications as may be required under state securities or blue sky laws; -21- (xx) such counsel shall confirm (A) its opinion set forth under "Certain Federal Income Tax Considerations" in the Prospectus and (B) that, subject to the qualifications set forth therein, the description of such opinion therein is an accurate summary of the United States federal income tax matters described therein; and (xxi) all of the issued and outstanding Trust Common Securities are directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the General Partner is the sole owner of general partner interests of the Partnership. In rendering such opinion, (A) such counsel may state that it is expressing an opinion only as to the federal laws of the United States and the laws of the State of Hawaii, (B) such counsel may rely, as to matters involving the application of laws of the State of Delaware, upon the opinion of special Delaware counsel for the offerors rendered pursuant to Section 5(c) hereof and, 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 5(d) hereof, (C) such counsel may rely, as to matters of good standing and valid existence and as to matters of fact (to the extent deemed proper), upon certificates of government officials (provided that copies of such certificates will be furnished to counsel for the Underwriters), (D) such counsel may rely, as to matters of fact (to the extent deemed proper), upon certificates and representations of officers and employees of the Offerors (provided that copies of such certificates will be furnished to counsel for the Underwriters upon its reasonable request), (E) such counsel may rely, with respect to matters involving litigation or proceedings not principally handled by such counsel's firm, upon opinions and information upon which such counsel has been permitted to rely by other counsel representing the Offerors in such litigation or proceedings (provided that copies of such opinions are furnished to counsel for the Underwriters), (F) for purposes of the opinion expressed in paragraph (vii) above, "material" shall mean $15,000,000, (G) such counsel may state that it has not been requested to, and does not, express any opinion with respect to the financial statements and notes thereto and the schedules and other financial and statistical data and information included or incorporated by reference in the Registration Statement and the Prospectus, (H) such counsel may state, with respect to the matters set forth in paragraph (x) above, that they have not independently verified and assume no responsibility for the accuracy, completeness or fairness of the statements in the Prospectus or in any document incorporated by reference therein, except insofar as such statements relate to such counsel or as set forth in paragraphs (xi) and (xxi) above), (I) such counsel may limit the matters set forth in paragraphs (xv) through (xviii) above by the effect of the Exceptions and, in the case of paragraph (xvi) above, by the effect of applicable public policy on the enforceability of provisions relating to contribution or indemnification, (J) such counsel may state that, whenever such opinion is qualified by the phrases "known to such counsel," "to the best of our knowledge," "to our knowledge" or "nothing has come to our attention," or other phrases of similar import, such phrases are intended to mean the actual knowledge of information by the lawyers in such counsel's firm after due inquiry who have been principally involved in drafting the Prospectus and supervising the issuance, sale and delivery of the Trust Preferred Securities and preparing the pertinent documents and the lawyers having supervisory responsibility for the client relationship with the Offerors and general transaction representation, but does not include other information -22- 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 (vii) above, such review of internal litigation files or inquiries of other counsel as such counsel deems necessary), and (K) such counsel may include therein such other customary qualifications reasonably acceptable to the Representatives and counsel for the Underwriters. References to the Registration Statement and the Prospectus in this Section 5(b) shall include any amendments or supplements thereto at the Closing Time. (c) Opinion of Special Counsel for the Offerors. At the Closing Time, ------------------------------------------- the Representatives shall have received an opinion of Richards, Layton & Finger, P.A., special Delaware counsel for the Offerors, dated the Closing Time, to the effect that: (i) the Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Trust Act; and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made; (ii) under the Trust Agreement and the Delaware Trust Act, the Trust has the trust power and authority (A) to own property and to conduct its business, all as described in the Prospectus, (B) to issue and sell the Trust Securities in accordance with the Trust Agreement, and as described in the Prospectus, and to perform its other obligations under the Trust Agreement, this Agreement and the Trust Securities, (C) to execute and deliver this Agreement and (D) to consummate the transactions contemplated by this 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 the Company and the Regular Trustees, and is enforceable against the Company and the Regular Trustees, in accordance with its terms; (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 nonassessable 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 -23- of replacement certificates for Trust Preferred Securities and (B) security or indemnity in connection with requests of or directions to the Trust Property Trustee to exercise its rights and powers under the Trust Agreement); (vii) under the Trust Agreement and the Delaware Trust Act, the issuance of the Trust Securities is not subject to preemptive rights; (viii) the Partnership has been duly formed and is validly existing in good standing as a limited partnership under the Delaware Partnership Act; and all filings required under the laws of the State of Delaware with respect to the formation and valid existence of the Partnership as a limited partnership have been made; (ix) the General Partner has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; (x) under the Partnership Agreement and the Delaware Partnership Act, the Partnership has the partnership power and authority (A) to own property and to conduct its business, all as described in the Prospectus, (B) to issue and sell the Partnership Preferred Securities in accordance with the Partnership Agreement, and as described in the Prospectus, and to perform its other obligations under the Partnership Agreement, this Agreement and the Partnership Preferred Securities, (C) to execute and deliver this Agreement and (D) to consummate the transactions contemplated by this Agreement; (xi) assuming that the Partnership Agreement has been duly authorized, executed and delivered by the parties thereto, the Partnership Agreement constitutes a valid and binding obligation of the General Partner and is enforceable against the General Partner in accordance with its terms; (xii) the Partnership Preferred Securities have been duly authorized by the Partnership Agreement and represent valid and, subject to qualifications set forth in paragraph (xii) below, fully paid and nonassessable limited partner interests in the Partnership; (xiii) assuming that, the holders of Partnership Preferred Securities, in their capacities as such, do not participate in the control of the business of the Company, the holders of the Partnership Preferred Securities, in their capacities as such, will have no liability in excess of their obligations to make payments provided for in the Partnership Agreement and their share of the Partnership's assets and undistributed profits (subject to the obligation of a holder of Partnership Preferred Securities to repay any funds wrongfully distributed to it); (xiv) under the Partnership Agreement and the Delaware Partnership Act, the issuance of the Partnership Preferred Securities is not subject to preemptive rights; (xv) the issuance and sale by the Trust of the Trust Securities, the execution, delivery and performance by the Trust of this Agreement, and the consummation of the transactions contemplated by this Agreement, do not violate (A) the Certificate of Trust or the Trust Agreement or (B) any applicable Delaware law, rule or regulation; -24- (xvi) under the Trust Agreement and the Delaware Trust Act, the issuance and sale by the Trust of the Trust Securities and the execution and delivery by the Trust of this 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 Agreement by the Company as Sponsor under the Trust Agreement and the certificates for the Trust Preferred Securities by the Regular Trustees on behalf of the Trust, and if executed by the facsimile signatures of the Regular Trustees, the due authentication of the Trust Preferred Securities by an authorized officer of the Property Trustee in accordance with the Trust Agreement, this Agreement and the Trust Preferred Securities will have been duly executed and delivered by the Trust; (xvii) the issuance and sale by the Partnership of the Partnership Preferred Securities, the execution, delivery and performance by the Partnership of this Agreement, and the consummation of the transactions contemplated by this Agreement, do not violate (A) the Certificate of Limited Partnership or the Partnership Agreement or (B) any applicable Delaware law, rule or regulation; and (xviii) under the Partnership Agreement and the Delaware Partnership Act, the issuance and sale by the Partnership of the Partnership Preferred Securities and the execution and delivery by the Partnership of this Agreement, and the performance by the Partnership of its obligations hereunder, have been duly authorized by all necessary partnership action on the part of the Partnership, and, upon the due execution and delivery of this Agreement by the General Partner under the Partnership Agreement and the certificates for the Partnership Preferred Securities by the General Partner, this Agreement and the Partnership Preferred Securities will have been duly executed and delivered by the Partnership. In rendering such opinion, (A) such counsel may rely, as to matters of good standing and valid existence and as to matters of fact (to the extent deemed proper), upon certificates of government officials (provided that copies of such certificates will be furnished to counsel for the Underwriters), (B) such counsel may rely, as to matters of fact (to the extent deemed proper), upon certificates and representations of the Trust and the Partnership (provided that copies of such certificates will be furnished to counsel for the Underwriters upon its reasonable request), (C) such counsel may state that it is expressing an opinion only as to the laws of the State of Delaware, (D) such counsel may limit the matters set forth in paragraphs (iii) and (x) above by the effect of the Exceptions and the effect of applicable public policy on the enforceability of provisions relating to contribution or indemnification and (E) 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 5(c) shall include any amendments or supplements thereto at the Closing Time. (d) Opinion of Counsel for Underwriters. At the Closing Time, the ----------------------------------- Representatives shall have received the favorable opinion, dated as of the Closing Time, of Winthrop, Stimson, Putnam & Roberts, New York, New York, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters in form and substance satisfactory to the Underwriters. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representatives. Such counsel may -25- also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and Subsidiaries and certificates of public officials. (e) Opinion of Counsel for the Property Trustee. At the Closing Time, ------------------------------------------- the Representatives shall have received the favorable opinion, dated as of the Closing Time, of Emmet, Marvin & Martin, counsel for the Property Trustee in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letters for each of the other Underwriters. (f) Company Officers' Certificate. At the Closing Time, since the ----------------------------- date hereof or since the respective dates as of which information is given in the Registration Statement and the Prospectus except as stated therein, neither the Company nor any Subsidiary shall have sustained 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 and there shall not have been any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole, and the Representatives shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of the Closing Time, to the effect that (i) there has been no such loss or interference or change, (ii) the representations and warranties in Sections 1(a) and 1(c) (to the extent they relate to the Company) hereof are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to such officers' knowledge, are pending or are contemplated by the Commission. (g) Trust Officer's Certificate. At the Closing Time, there shall not --------------------------- have been, since the date hereof or since the respective dates as of which information is given in the Registration Statement and the Prospectus except as stated therein, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Trust, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of an authorized representative of the Trust, dated as of the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(c) hereof (to the extent they relate to the Trust) are true and correct with the same force and effect as though expressly made at and as of the Closing Time and (iii) the Trust has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. (h) Partnership Officer's Certificate. At the Closing Time, there --------------------------------- shall not have been, since the date hereof or since the respective dates as of which information is given in the Registration Statement and the Prospectus except as stated therein, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects -26- of the Partnership, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of an authorized representative of the Partnership, dated as of the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(c) hereof (to the extent they relate to the Partnership) are true and correct with the same force and effect as though expressly made at and as of the Closing Time and (iii) the Partnership has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. (i) Comfort Letter. At the time of the execution of this Agreement, -------------- the Representatives shall have received from KPMG Peat Marwick LLP, a letter dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus, based upon certain procedures carried out through a date not more than five business days prior to the date of such letter, in a form acceptable to the Representatives. (j) Bring-Down Comfort Letter. At the Closing Time, the ------------------------- Representatives shall have received from KPMG Peat Marwick LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to Section 5(i) hereof, except that the specified date referred to therein shall be a date not more than three business days prior to the Closing Time. (k) Maintenance of Rating. At the Closing Time, the Trust Preferred --------------------- Securities shall be rated at least "Baa3" by Moody's Investors Service, Inc. and "BBB-" by Standard & Poor's, and the Company shall have delivered to the Representatives a letter dated on or prior to the Closing Time, from each such rating agency, or other evidence satisfactory to the Representatives, confirming that the Trust Preferred Securities have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Trust Preferred Securities or any of the Company's debt securities by any "nationally recognized statistical rating agency," as that term is defined by the Commission for purposes of Rule 436(g)(2) of the 1933 Act Regulations, and no such organization shall have publicly announced that it has under surveillance or review its rating of the Trust Preferred Securities or any of the Company's debt securities. (l) Approval of Listing. At the Closing Time, (i) the Trust Preferred ------------------- Securities shall have been approved for listing on the NYSE, subject only to official notice of issuance and (ii) the Company's registration statement on Form 8-A relating to the Trust Preferred Securities shall have become effective under the 1934 Act. (m) Guarantee of Company's Performance. At the Closing Time, the ---------------------------------- Representatives shall have received a letter from the Investment Subsidiary, dated the Closing Time, to the effect that it agrees to guarantee the timely performance by the Offerors of the indemnity and contribution obligations contained in Sections 6 and 7 hereof and certain other obligations of the Offerors under this Agreement. -27- (n) No Special Events. At the Closing Time, neither a Partnership ----------------- Special Event (as defined in the Partnership Agreement) nor a Trust Special Event (as defined in the Trust Agreement) shall have occurred and be continuing. (o) Additional Documents. At the Closing Time, counsel for the -------------------- Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Offered Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Offerors in connection with the issuance and sale of the Offered Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representatives and counsel for the Underwriters. (p) Termination of Agreement. If any condition specified in this ------------------------ Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Company at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 hereof and except that Sections 1, 6, 7 and 8 hereof shall survive any such termination and remain in full force and effect. SECTION 6. Indemnification. --------------- (a) Indemnification of Underwriters. The Offerors will jointly and ------------------------------- severally indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act and Section 20 of the 1934 Act against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such person may become subject, under the 1933 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, the Basic Prospectus (if used prior to the date the Prospectus is filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations), the Prospectus, the Prospectus as amended or supplemented or any other prospectus relating to the Offered Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, provided that (subject to Section 6(d) hereof) any such settlement is effected with the written consent of the Company, and will reimburse such Underwriter or such person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Offerors shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, -28- the Basic Prospectus (if used prior to the date the Prospectus is filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations), the Prospectus, the Prospectus as amended or supplemented or any other prospectus relating to the Offered Securities, or any such amendment or supplement, in reliance upon and in conformity with written information furnished to the Offerors by any Underwriters through Merrill Lynch expressly for use therein; provided further, however, that the Offerors shall not be required to reimburse any Underwriter or such person for fees and expenses of counsel other than one counsel for all Underwriters and one counsel for all Underwriters in each jurisdiction in which proceedings are or are threatened to be brought or of which matters of law are or may be at issue, unless and to the extent that there are actual or potential conflicts of interest between or among Underwriters or defenses available to one or more Underwriters that are not available to other Underwriters. (b) Indemnification of Offerors, Directors and Officers. Each --------------------------------------------------- Underwriter severally agrees to indemnify and hold harmless the Offerors, each of the directors of the Company, each of the officers of the Offerors who signed the Registration Statement, and each person, if any, who controls any of the Offerors within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any losses, claims, damages or liabilities to which the Offerors, such directors, such officers or such persons may become subject, under the 1933 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, the Basic Prospectus (if used prior to the date the Prospectus is filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations), the Prospectus, the Prospectus as amended or supplemented or any other prospectus relating to the Offered Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Basic Prospectus (if used prior to the date the Prospectus is filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) of the 1933 Act Regulations), the Prospectus, the Prospectus as amended or supplemented or any other prospectus relating to the Offered Securities, or any such amendment or supplement, in reliance upon and in conformity with written information furnished to the Offerors by any Underwriter through Merrill Lynch expressly for use therein; and will reimburse the Offerors, such directors, such officers or such persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Actions Against Parties; Notification. Promptly after receipt by ------------------------------------- an indemnified party under Section 6(a) or (b) hereof of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under Section 6(a) or (b) hereof, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party unless and only to the extent that such indemnifying party is prejudiced by such omission nor relieve it from any liability that it may have to any indemnified party otherwise than under Section 6(a) or (b) hereof. In case any such action -29- shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under Section 6(a) or (b) hereof for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement Without Consent If Failure To Reimburse. If at any -------------------------------------------------- time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a) hereof effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 7. Contribution. If the indemnification provided for in ------------ Section 6 hereof is unavailable to or insufficient to hold harmless an indemnified party thereunder in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Offerors on the one hand and the Underwriters on the other from the offering of the Trust Preferred Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party omitted to give the notice required under Section 6(c) hereof and such indemnifying party was prejudiced by such omission, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Offerors 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 Offerors on -30- 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 sale of the Trust Preferred Securities (before deducting expenses) received by the Offerors bear to the total commissions or discounts received by the Underwriters in respect thereof. The relative fault shall be determined by reference to, among other things, whether the untrue statement of a material fact or the omission or alleged omission to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading relates to information supplied by the Offerors on the one hand or by 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 Offerors and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by per capita allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to above in this Section 7. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total public offering price at which the Trust Preferred Securities purchased by or through it were sold exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of each of the Underwriters under this Section 7 to contribute are several in proportion to the respective purchases made by or through it to which such loss, claim, damage or liability (or action in respect thereof) relates and are not joint. The obligations of the Offerors under this Section 7 shall be in addition to any liability that the Offerors may otherwise have. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Offerors who signed the Registration Statement, and each person, if any, who controls any of the Offerors within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. SECTION 8. Representations, Warranties and Agreements to Survive ----------------------------------------------------- Delivery. All representations, warranties and agreements contained in this - -------- Agreement or in certificates of officers of the Offerors or any Subsidiary submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Offerors, and shall survive delivery of the Trust Preferred Securities to the Underwriters. SECTION 9. Termination of Agreement. ------------------------ -31- (a) Termination; General. The Representatives may terminate this -------------------- Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Registration Statement or the Prospectus any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and Subsidiaries taken as a whole, or (ii) if there has occurred any material adverse change in the financial markets in the United States, any outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case, such as to make it, in the judgment of the Representatives, impracticable to market the Trust Preferred Securities or to enforce contracts for the sale of the Trust Preferred Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission, the NYSE or the Pacific Stock Exchange, or if there has been a suspension or material limitation in trading in securities generally on the NYSE, or (iv) if a general moratorium on commercial banking activities in New York or Hawaii has been declared by either Federal or New York or Hawaii State authorities. (b) Liabilities. If this Agreement is terminated pursuant to this ----------- Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 hereof shall survive such termination and remain in full force and effect. SECTION 10. Default by one or more Underwriters. If one or more of ----------------------------------- the Underwriters shall fail at the Closing Time to purchase the Trust Preferred Securities that it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then: (a) if the number of Defaulted Securities does not exceed 10% of the aggregate number of the Trust Preferred Securities to be purchased hereunder, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the number of Defaulted Securities exceeds 10% of the aggregate number of the Trust Preferred Securities to be purchased hereunder, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default. -32- In the event of any such default that does not result in a termination of this Agreement, either the Representatives or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 10. SECTION 11. Notices. All notices and other communications hereunder ------- shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to Merrill Lynch at North Tower, World Financial Center, New York, New York 10281, attention of James McBurney, Director; and notice to the Offerors shall be directed to Hawaiian Electric Industries, Inc. at 900 Richards Street, Honolulu, Hawaii 96813, attention of the Treasurer. SECTION 12. Parties. This Agreement shall inure to the benefit of ------- and be binding upon the Underwriters and the Offerors and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Offerors and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Offerors and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Trust Preferred Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. Governing Law and Time. This Agreement shall be governed ---------------------- by and construed in accordance with the laws of the State of New York. Except as otherwise set forth herein, specified times of day refer to New York City time. SECTION 14. Effect of Headings. The Article and Section headings ------------------ herein and the Table of Contents are for convenience only and shall not affect the construction hereof. -33- If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and the Offerors in accordance with its terms. Very truly yours, Hawaiian Electric Industries, Inc. By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: HEI Preferred Funding, LP By: Hycap Management, Inc., as General Partner By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: Hawaiian Electric Industries Capital Trust I By: Hawaiian Electric Industries, Inc. By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: -34- CONFIRMED AND ACCEPTED, as of the date first above written: Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Goldman, Sachs & Co. Dean Witter Reynolds Inc. A.G. Edwards & Sons, Inc. Legg Mason Wood Walker Incorporated Robert W. Baird & Co. Incorporated By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By:______________________________________ Authorized Signatory For themselves and as Representatives of the other Underwriters named in Schedule A hereto. SCHEDULE A Number of Trust Preferred Name of Underwriter Securities - ------------------- --------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated Goldman, Sachs & Co. Dean Witter Reynolds Inc. A.G. Edwards & Sons, Inc. Legg Mason Wood Walker Incorporated Robert W. Baird & Co. Incorporated Total.............................................. 4,000,000 ========= SCHEDULE A-1 SCHEDULE B 1. The initial public offering price per security for the Trust Preferred Securities, determined as provided in Section 2 of this Agreement, shall be $25.00. 2. The purchase price per security for the Trust Preferred Securities to be paid by the several Underwriters shall be $25.00, being an amount equal to the initial public offering price set forth above. 3. The compensation per Trust Preferred Security to be paid by the Company to the several Underwriters in respect of their commitments hereunder shall be $.[____]; provided, however, that the compensation per Trust Preferred Security for sales of 10,000 or more Trust Preferred Securities to a single purchaser shall be $.[___]. SCHEDULE B-1 EX-4.(C) 3 AMENDED AND RESTATED CERTIFICATE Exhibit 4(c) ------------ AMENDED AND RESTATED CERTIFICATE OF LIMITED PARTNERSHIP OF HEI PREFERRED FUNDING, LP THIS Amended and Restated Certificate of Limited Partnership of HEI Preferred Funding, LP (the "Partnership"), dated as of January 23, 1997, has been duly executed and is being filed by the undersigned in accordance with the provisions of 6 Del. C. (S)17-210, to amend and restate the original Certificate of Limited Partnership of the Partnership, which was filed on December 23, 1996, with the Secretary of the State of Delaware (the "Certificate"), to form a limited partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. (S)17-101, et seq.). The Certificate is hereby amended and restated in its entirety to read as follows: 1. Name. The name of the limited partnership formed and continued hereby is HEI Preferred Funding, LP. 2. Registered Office. The address of the registered office of the Partnership in the State of Delaware is c/o PNC Bank, Delaware, 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801. 3. Registered Agent. The name and address of the registered agent for service of process on the Partnership in the State of Delaware are PNC Bank, Delaware, 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19801. 4. General Partner. The name and the mailing address of the sole general partner of the Partnership are: Hycap Management, Inc. 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19801 IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Certificate of Limited Partnership as of the date first-above written. HYCAP MANAGEMENT, INC. By: /s/ Robert F. Mougeot --------------------------------- Name: Robert F. Mougeot Title: Vice President By: /s/ Constance H. Lau --------------------------------- Name: Constance H. Lau Title: Treasurer EX-4.(D).(II) 4 ASSIGNMENT OF GENERAL PARTNER INTEREST Exhibit 4(d)(ii) ---------------- ASSIGNMENT OF GENERAL PARTNER INTEREST AND AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF HEI PREFERRED FUNDING, LP THIS Assignment of General Partner Interest and Amendment to Agreement of Limited Partnership of HEI Preferred Funding, LP dated as of January 23, 1997 (this "Assignment and Amendment Agreement"), is entered into by and among Hawaiian Electric Industries, Inc., a Hawaii corporation ("HEI"), Hawaiian Electric Industries Capital Trust I, a statutory business trust created under Delaware law (the "Trust") and Hycap Management, Inc., a Delaware corporation ("HYCAP"). WITNESSETH: WHEREAS, HEI Preferred Funding, LP (the "Partnership") has been formed as a limited partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. (S) 17-101, et seq.) (the "Act") pursuant to a Certificate of Limited Partnership of the Partnership, as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on December 23, 1996 (the "Certificate"), and an Agreement of Limited Partnership of the Partnership, dated as of December 23, 1996 (the "Agreement"); WHEREAS, HEI is the sole general partner of the Partnership and the Trust is the sole limited partner of the Partnership; WHEREAS, HEI desires to assign, transfer and convey all of its interest in the Partnership as a general partner of the Partnership (the "General Partner Interest") to HYCAP, and HEI desires to withdraw from the Partnership as a general partner of the Partnership; WHEREAS, HYCAP desires to purchase the General Partner Interest presently held by HEI, and HYCAP desires to be admitted to the Partnership as a successor general partner of the Partnership; and WHEREAS, the undersigned, being all of the partners of the Partnership, to accomplish the foregoing, desire to amend the Agreement in the manner set forth herein. NOW, THEREFORE, the undersigned, in consideration of the premises, covenants and agreements contained herein, do hereby agree as follows: 1. Assignment. Notwithstanding any provision in the Agreement to the contrary, for value received, the receipt and sufficiency of which are hereby acknowledged, upon the execution of this Assignment and Amendment Agreement by the parties hereto, HEI does hereby assign, transfer and convey the General Partner Interest to HYCAP. 2. Admission. Notwithstanding any provision in the Agreement to the contrary, HYCAP is hereby admitted to the Partnership as a general partner of the Partnership. The admission shall be effective upon the filing of an amendment to the Certificate in the office of the Secretary of State which reflects the fact that HYCAP is a general partner of the Partnership, and shall occur, and for all purposes shall be deemed to have occurred, immediately prior to the withdrawal of HEI from the Partnership as a general partner of the Partnership. 3. Withdrawal. Notwithstanding any provision in the Agreement to the contrary, HEI hereby withdraws from the Partnership as a general partner of the Partnership. The withdrawal shall be effective upon the filing of an amendment to the Certificate in the office of the Secretary of State which reflects the fact that HEI is not a general partner of the Partnership. 4. Continuation. The parties hereto agree that following the withdrawal of HEI from the Partnership as a general partner of the Partnership, HYCAP is authorized to and hereby agrees to continue the business of the Partnership without dissolution. 5. Books and Records. The general partner of the Partnership shall take all actions necessary under the Act and the Agreement, including causing the amendment of the Agreement, to evidence the withdrawal of HEI from the Partnership as a general partner of the Partnership and the admission of HYCAP to the Partnership as a general partner of the Partnership. 6. Future Cooperation. Each of the parties hereto agrees to cooperate at all times from and after the date hereof with respect to all of the matters described herein, and to execute such further assignments, releases, assumptions, amendments of the Agreement, notifications and other documents as may be reasonably requested for the purpose of giving effect to, or evidencing or giving notice of, the transactions contemplated by this Assignment and Amendment Agreement. 7. Payment. HYCAP has paid $25.00 and other good and valuable consideration to HEI for the General Partner Interest. 8. Binding Effect. This Assignment and Amendment Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. 9. Execution in Counterparts. This Assignment and Amendment Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 10. Agreement in Effect. Except as hereby amended, the Agreement shall remain in full force and effect. 11. Governing Law. This Assignment and Amendment Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Delaware, all rights and remedies being governed by such laws. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Amendment Agreement to be duly executed, as of the day and year first-above written. HYCAP MANAGEMENT, INC., as General Partner By: /s/ Robert F. Clarke --------------------------------- Name: Robert F. Clarke Title: President By: /s/ Betty Ann M. Splinter --------------------------------- Name: Betty Ann M. Splinter Title: Secretary HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, as Limited Partner By HAWAIIAN ELECTRIC INDUSTRIES, INC., as Depositor By: /s/ Robert F. Mougeot --------------------------------- Name: Robert F. Mougeot Title: Financial Vice President & Chief Financial Officer By: /s/ Constance H. Lau --------------------------------- Name: Constance H. Lau Title: Treasurer HAWAIIAN ELECTRIC INDUSTRIES, INC., as Withdrawing General Partner By: /s/ Robert F. Mougeot --------------------------------- Name: Robert F. Mougeot Title: Financial Vice President & Chief Financial Officer By: /s/ Constance H. Lau --------------------------------- Name: Constance H. Lau Title: Treasurer EX-4.(E) 5 FORM OF AMENDED & RESTATED AGMT OF LTD. PART. Exhibit 4(e) AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HEI PREFERRED FUNDING, LP TABLE OF CONTENTS
PAGE ---- ARTICLE I--DEFINED TERMS 1.1 DEFINITIONS.................................. 2 ARTICLE II--CONTINUATION OF THE PARTNERSHIP; ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS 2.1 CONTINUATION OF THE PARTNERSHIP.............. 13 2.2 NAME......................................... 13 2.3 PURPOSES OF THE PARTNERSHIP.................. 13 2.4 TERM......................................... 14 2.5 REGISTERED AGENT AND OFFICE.................. 14 2.6 PRINCIPAL PLACE OF ACTIVITY.................. 14 2.7 NAME AND ADDRESS OF GENERAL PARTNER.......... 14 2.8 QUALIFICATION TO CONDUCT ACTIVITIES.......... 14 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED SECURITIES......................... 15 ARTICLE III--CAPITAL CONTRIBUTIONS; REPRESENTATION OF PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS 3.1 CAPITAL CONTRIBUTIONS........................ 15 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES............. 16 3.3 CAPITAL ACCOUNTS............................. 16 3.4 INTEREST ON CAPITAL CONTRIBUTIONS............ 17 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS................................ 17
ARTICLE IV--ALLOCATIONS 4.1 PROFITS AND LOSSES......................... 17 4.2 SPECIAL ALLOCATION......................... 19 4.3 WITHHOLDING................................ 20 ARTICLE V--DISTRIBUTIONS 5.1 DISTRIBUTIONS.............................. 20 5.2 LIMITATIONS ON DISTRIBUTIONS............... 22 ARTICLE VI--ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED SECURITIES........... 22 6.2 PARTNERSHIP PREFERRED SECURITIES........... 23 ARTICLE VII--PARTNERSHIP INVESTMENTS 7.1 AFFILIATE INVESTMENT INSTRUMENTS; ELIGIBLE DEBT SECURITIES................... 36 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP......................... 37 7.3 ASSUMPTION OF OBLIGATIONS AND RELEASE OF INVESTMENT AFFILIATE............ 38 ARTICLE VIII--BOOKS OF ACCOUNT, RECORDS AND REPORTS 8.1 BOOKS AND RECORDS.......................... 39 8.2 ACCOUNTING METHOD.......................... 40 ARTICLE IX--PAYMENT OF EXPENSES 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES.......................... 40 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES...... 41 ARTICLE X--POWERS, RIGHTS AND DUTIES OF THE LIMITED PARTNERS 10.1 LIMITATIONS................................ 41
10.2 LIABILITY.................................. 42 10.3 PRIORITY................................... 42 ARTICLE XI--POWERS, RIGHTS, DUTIES AND COVENANTS OF THE GENERAL PARTNER 11.1 AUTHORITY.................................. 42 11.2 POWERS AND DUTIES OF GENERAL PARTNER....... 43 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY AND COVENANTS OF THE GENERAL PARTNER........... 45 11.4 LIABILITY.................................. 46 11.5 OUTSIDE ACTIVITIES......................... 46 11.6 LIMITS ON GENERAL PARTNER'S POWERS......... 46 11.7 EXCULPATION................................ 48 11.8 FIDUCIARY DUTY............................. 48 11.9 INDEMNIFICATION............................ 49 11.10 TAX MATTERS................................ 50 11.11 CONSOLIDATION, AMALGAMATION, MERGER, CONVERSION OR SALE OF ASSETS............... 51 ARTICLE XII--TRANSFERS OF INTERESTS BY PARTNERS 12.1 TRANSFER OF INTERESTS...................... 52 12.2 TRANSFER OF L.P. CERTIFICATES.............. 54 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED PARTNERSHIP PREFERRED SECURITY HOLDERS................. 54 12.4 BOOK-ENTRY PROVISIONS...................... 55 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT............................... 58 ARTICLE XIII--WITHDRAWAL, DISSOLUTION; LIQUIDATION AND DISTRIBUTION OF ASSETS 13.1 WITHDRAWAL OF PARTNERS..................... 59 13.2 DISSOLUTION OF THE PARTNERSHIP............. 59 13.3 LIQUIDATION................................ 60 13.4 DISTRIBUTION IN LIQUIDATION................ 61 13.5 RIGHTS OF LIMITED PARTNERS................. 62 13.6 TERMINATION................................ 62
ARTICLE XIV--AMENDMENTS AND MEETINGS 14.1 AMENDMENTS................................. 62 14.2 AMENDMENT OF CERTIFICATE................... 63 14.3 MEETINGS OF PARTNERS....................... 63 ARTICLE XV--MISCELLANEOUS 15.1 NOTICES.................................... 65 15.2 POWER OF ATTORNEY.......................... 66 15.3 ENTIRE AGREEMENT........................... 66 15.4 GOVERNING LAW.............................. 67 15.5 EFFECT..................................... 67 15.6 PRONOUNS AND NUMBER........................ 67 15.7 CAPTIONS................................... 67 15.8 PARTIAL ENFORCEABILITY..................... 67 15.9 COUNTERPARTS............................... 67 15.10 WAIVER OF PARTITION........................ 67 15.11 REMEDIES................................... 68 SCHEDULE 1 LIST OF PARTNERS ANNEX A FORM OF L.P. CERTIFICATE
Exhibit 4(e) AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HEI PREFERRED FUNDING, LP AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HEI PREFERRED FUNDING, LP, a Delaware limited partnership (the "PARTNERSHIP"), dated as of _____________, 1997, among HYCAP MANAGEMENT, INC., a Delaware corporation (the "COMPANY"), as the general partner, HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, a Delaware statutory business trust, as the initial limited partner (the "INITIAL LIMITED PARTNER"), and such other Persons (as defined herein) who become Limited Partners (as defined herein) as provided herein. WHEREAS, HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation ("HEI"), and the Initial Limited Partner entered into an Agreement of Limited Partnership, dated as of December 23, 1996 (the "ORIGINAL PARTNERSHIP AGREEMENT"); WHEREAS, the Certificate of Limited Partnership of the Partnership was filed with the Office of the Secretary of State of the State of Delaware on December 23, 1996; WHEREAS, pursuant to that certain Assignment of General Partner Interest and Amendment of Agreement of Limited Partnership dated as of January 23, 1997 (the "Amendment"), HEI assigned its general partner interest in the Partnership to the Company, which is a wholly-owned subsidiary of HEI; WHEREAS, the Partners (as defined herein) desire to continue the Partnership under the Act (as defined herein) and to amend and restate the Original Partnership Agreement, as amended by the Amendment, in its entirety; NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and 1 valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend and restate the Original Partnership Agreement, as amended by the Amendments, in its entirety as follows: ARTICLE I DEFINED TERMS SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the meanings herein specified. Terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the Trust Agreement. "ACT" means the Delaware Revised Uniform Limited Partnership Act, Del. Code Ann. tit. 6, Section 17-101 et seq., as amended from time to time, and any successor statute thereto. "AFFILIATE" has the meaning set forth in Section 1.1 of the Trust Agreement. "AFFILIATE INVESTMENT INSTRUMENTS" has the meaning set forth in Section 7.1 of this Agreement. "AGREEMENT" means this Amended and Restated Agreement of Limited Partnership, as it may be amended or supplemented from time to time. "ASSUMING INVESTMENT AFFILIATE" has the meaning set forth in Section 7.3 of this Agreement. "BENEFICIARIES" has the meaning set forth in Section 11.3 of this Agreement. "BOOK-ENTRY INTEREST" means a beneficial interest in the L.P. Certificates, ownership and transfers of which shall be maintained and made through book-entries of a Depository as set forth in Section 12.4 of this Agreement. 2 "BUSINESS DAY" means a day other than a day on which banking institutions in The City of New York are authorized or required by law to close. "CAPITAL ACCOUNT" has the meaning set forth in Section 3.3(a) of this Agreement. "CERTIFICATE" means the Certificate of Limited Partnership of the Partnership filed with the Secretary of State of the State of Delaware on December 23, 1996, as it may be amended and/or restated from time to time. "CHANGE IN 1940 ACT LAW" has the meaning set forth in Section 1.1 of the Trust Agreement. "CLOSING DATE" has the meaning set forth in Section 1.1 of the Trust Agreement. "CODE" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. "COMPANY" means HYCAP MANAGEMENT, INC., a Delaware corporation. "COMPOUNDED DISTRIBUTIONS" has the meaning set forth in Section 6.2(b) of this Agreement. "DEFINITIVE L.P. CERTIFICATES" has the meaning set forth in Section 12.4(a) of this Agreement. "DELAWARE TRUSTEE" has the meaning set forth in Section 6.2 of the Trust Agreement. "DEPOSITORY" means the DTC, another clearing agency, or any successor registered as a clearing agency under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation. "DISTRIBUTION PAYMENT DATE" has the meaning set forth in Section 6.2(b) of this Agreement. "DISTRIBUTIONS" means the right to receive the amount of the cumulative cash distributions payable by the Partnership with respect to the Interests represented by the Partnership Preferred Securities, which amounts will accrue on the $25 stated liquidation preference of each Partnership Preferred 3 Security from the Closing Date and are payable quarterly in arrears in accordance with Sections 5.1 and 6.2(b) of this Agreement. "DTC" means The Depository Trust Company, the initial Depository. "ELIGIBLE DEBT SECURITIES" means cash or book-entry securities, negotiable instruments, or other securities of entities not affiliated with HEI or the Company represented by instruments in registered form which evidence any of the following: (a) any security issued or guaranteed as to principal or interest by the United States, or by a Person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States, or any certificate of deposit for any of the foregoing; (b) commercial paper issued pursuant to Section 3(a)(3) of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and having, at the time of the investment or contractual commitment to invest therein, a rating from each of S&P and Moody's in the highest rating category granted by such rating agency and having a maturity not in excess of nine months; (c) demand deposits, time deposits and certificates of deposit which are fully insured by the FDIC; (d) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the Government of the United States of America or any agency or instrumentality thereof, the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company which is an Eligible Institution and the deposits of which are insured by the FDIC; and (e) any other security which is identified as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under the 1940 Act at the time it is acquired by the Partnership. "ELIGIBLE INSTITUTION" means a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), (1)(i) which has either (A) a long-term unsecured debt rating of AA or better by S&P and Aa or better by Moody's or (B) a short-term unsecured debt rating 4 or a certificate of deposit rating of A-1+ or better by S&P and P-1 or better by Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of which has a long-term or short-term unsecured debt rating which signifies investment grade and (ii) whose deposits are insured by the FDIC. "FDIC" means the Federal Deposit Insurance Corporation or any successor thereto. "FISCAL PERIOD" means each calendar quarter. "FISCAL YEAR" means (i) the period commencing upon the formation of the Partnership and ending on December 31, 1996 and (ii) any subsequent calendar year. "GENERAL PARTNER" means the Company in its capacity as the general partner of the Partnership, its permitted successors, or any successor general partner in the Partnership admitted as such pursuant to the terms of this Agreement. "GENERAL PARTNER CAPITAL CONTRIBUTION" means the contribution by the General Partner to the Partnership made contemporaneously with the issuance of the Partnership Preferred Securities in an amount that will establish its initial capital account at a level equal to at least 15% of the total capital of the Partnership. "GENERAL PARTNER INTEREST" means the Interest of the General Partner in the Partnership. "HOLDER" or "PARTNERSHIP PREFERRED SECURITY HOLDER" means a Limited Partner in whose name an L.P. Certificate representing Partnership Preferred Securities is registered. "INDENTURES" means those certain Indentures between HEI or certain of its subsidiaries, as the case may be, and The Bank of New York, as Indenture Trustee, each dated as of ____________, 1997. "INDEPENDENT FINANCIAL ADVISER" shall mean (i) Merrill Lynch, Pierce, Fenner & Smith Incorporated or (ii) such 5 other nationally recognized investment banking firm which shall be designated by the Company and which firm does not (and whose directors, officers, employees and affiliates do not) have a direct or indirect material equity interest in the Company or any of its subsidiaries or (iii) another entity which is an investment banking, accounting or financial services firm selected by the Company and approved by the Holders of a Majority in Liquidation Preference of Partnership Preferred Securities. "INITIAL AFFILIATE DEBENTURES" has the meaning set forth in Section 7.1(b) of this Agreement. "INITIAL HEI DEBENTURES" has the meaning set forth in Section 7.1(b) of this Agreement. "INITIAL DEBENTURES" means collectively, the Initial HEI Debentures and the Initial Affiliate Debentures. "INITIAL LIMITED PARTNER" means HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, a Delaware statutory business trust, in its capacity as a limited partner of the Partnership. "INITIAL PARTNERSHIP PROCEEDS" means the aggregate proceeds received by the Partnership from the sale of the Partnership Preferred Securities and the General Partner Capital Contribution. "INTEREST" means the entire ownership interest of a Partner in the Partnership at any particular time, including, without limitation, its interest in the capital, profits, and losses of, and distributions from, the Partnership. "INVESTMENT AFFILIATE" means HEI or any corporation, partnership, limited liability company or other entity (other than the Partnership or the Trust) that is controlled by HEI and is not an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. "INVESTMENT EVENT OF DEFAULT" means an event of default under any Affiliate Investment Instrument that is a debt instrument or the breach by an Investment Affiliate of its 6 obligations under any Affiliate Investment Instrument that is an equity instrument. "INVESTMENT GUARANTEE" has the meaning specified in Section 1.1 of the Trust Agreement. "INVESTMENT OFFER" has the meaning specified in Section 7.2(b) of this Agreement. "LIMITED PARTNER" means any Person who is admitted to the Partnership as a limited partner pursuant to the terms of this Agreement, in such Person's capacity as a limited partner of the Partnership. "LIQUIDATOR" has the meaning specified in Section 13.3 of this Agreement. "L.P. CERTIFICATE" means a certificate substantially in the form attached hereto as Annex A, evidencing the Partnership Preferred Securities held by a Limited Partner. "MAJORITY IN LIQUIDATION PREFERENCE" means Holders of the Partnership Preferred Securities, voting as a single class, representing more than 50% of the aggregate liquidation preference (including for this purpose 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 Partnership Preferred Securities then outstanding. "MOODY'S" means Moody's Investors Service, Inc. or any successor thereto. "NET INCOME" and "NET LOSS", respectively, for any Fiscal Period mean the income and loss, respectively, of the Partnership for such Fiscal Period as determined in accordance with the method of accounting followed by the Partnership for United States federal income tax purposes, including, for all purposes, the net income, if any, from the Affiliate Investment Instruments, Eligible Debt Securities and any income exempt from tax and any noncapital, nondeductible expenditures of the Partnership which are described in the Code. 7 "1940 ACT" has the meaning set forth in Section 1.1 of the Trust Agreement. "ORIGINAL PARTNERSHIP AGREEMENT" has the meaning set forth in the recitals to this Agreement. "PARTNERS" means the General Partner and the Limited Partners, collectively, where no distinction is required by the context in which the term is used. "PARTNERSHIP COVERED PERSON" means any Partner, any Affiliate of a Partner or any officers, directors, shareholders, partners, members, employees, representatives or agents of a Partner or its respective Affiliates, or any employee or agent of the Partnership or its Affiliates or any Special Representative. "PARTNERSHIP ENFORCEMENT EVENT" has the meaning set forth in Section 6.2(h) of this Agreement. "PARTNERSHIP GUARANTEE" means the Partnership Guarantee Agreement between HEI and the Bank of New York, as trustee, dated as of ______________, 1997 by HEI in favor of the Partnership Preferred Security Holders with respect to the Partnership Preferred Securities, as amended or supplemented from time to time. "PARTNERSHIP INDEMNIFIED PERSON" means the General Partner, any Special Representative, any Affiliate of the General Partner or any Special Representative or any officers, directors, shareholders, members, partners, employees, representatives or agents of the General Partner or any Special Representative, or any of their respective Affiliates, or any employee or agent of the Partnership or its Affiliates. "PARTNERSHIP INVESTMENT COMPANY EVENT" means that the General Partner shall have requested and received an opinion of independent legal counsel experienced in such matters to the effect that, as a result of the occurrence on or after the date of the prospectus supplement relating to the Trust Preferred Securities of a Change in 1940 Act Law, there is more than an 8 insubstantial risk that the Partnership is or will be considered an "investment company" which is required to be registered under the 1940 Act. "PARTNERSHIP LIQUIDATION DISTRIBUTION" has the meaning set forth in Section 6.2(g) of this Agreement. "PARTNERSHIP PREFERRED SECURITIES" represent the Interests of Limited Partners and have the stated liquidation preference and designation set forth in Section 6.2(a) of this Agreement. "PARTNERSHIP PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book- Entry Interest as reflected on the books of DTC, or on the books of a Person maintaining an account with DTC (directly as a participant or as an indirect participant, in each case in accordance with the rules of DTC or such participant). "PARTNERSHIP SPECIAL EVENT" means either a Partnership Tax Event or a Partnership Investment Company Event. "PARTNERSHIP SUCCESSOR SECURITIES" has the meaning set forth in Section 11.11 of this Agreement. "PARTNERSHIP TAX EVENT" means that the General Partner shall have requested and received an opinion of independent tax counsel experienced in such matters to the effect that there has been a Tax Action that results in there being more than an insubstantial risk that (i) the Partnership is, or will be, subject to United States federal income tax with respect to income accrued or received on the Affiliate Investment Instruments or the Eligible Debt Securities, (ii) the Partnership is, or will be, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by an Investment Affiliate with respect to any Affiliate Investment Instrument that is a debt security issued by such Investment Affiliate to the Partnership is not, or will not be, deductible for United States federal income tax purposes. 9 "PAYING AGENT" shall have the meaning set forth in Section 12.5 of this Agreement. "PERSON" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "POWER OF ATTORNEY" means the Power of Attorney granted pursuant to Section 15.2 of this Agreement. "PROPERTY TRUSTEE" has the meaning set forth in Section 1.1 of the Trust Agreement. "RECORD DATE" means (i) as long as the Trust Preferred Securities remain (or, in the event that the Trust is liquidated in connection with a Trust Special Event and Partnership Preferred Securities are distributed to holders of the Trust Preferred Securities, as long as the Partnership Preferred Securities remain) in book-entry only form, one Business Day prior to the relevant payment dates and (ii) in the event that the Trust Preferred Securities (or in the event that the Trust is liquidated in connection with a Trust Special Event and Partnership Preferred Securities are distributed to holders of the Trust Preferred Securities, the Partnership Preferred Securities) shall not continue to remain in book-entry only form, the 15th day of the month of the relevant payment date. 10 "REDEMPTION NOTICE" has the meaning set forth in Section 6.2(e) of this Agreement. "REDEMPTION PRICE" has the meaning set forth in Section 6.2(c) of this Agreement. "REGISTRAR" has the meaning set forth in Section 12.5 of this Agreement. "REGULAR TRUSTEES" has the meaning set forth in Section 6.1 of the Trust Agreement. "REINVESTMENT CRITERIA" has the meaning specified in Section 7.2(d) of this Agreement. "RELEASED INVESTMENT AFFILIATE" has the meaning set forth in Section 7.3 of this Agreement. "S&P" means Standard & Poor's or any successor thereof. "66-2/3% IN LIQUIDATION PREFERENCE" means Holders of the Partnership Preferred Securities, voting together as a single class, representing 66-2/3% or more of the aggregate liquidation preference (including for this purpose 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 Partnership Preferred Securities then outstanding. "SPECIAL REPRESENTATIVE" has the meaning set forth in Section 6.2(h) of this Agreement. "TAX ACTION" has the meaning set forth in Section 1.1 of the Trust Agreement. "TAX MATTERS PARTNER" means the General Partner designated as such in Section 11.10 of this Agreement. "10% IN LIQUIDATION PREFERENCE" means Holders of the Partnership Preferred Securities, voting together as a single class, representing 10% or more of the aggregate liquidation 11 preference (including for this purpose 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 Partnership Preferred Securities then outstanding. "TREASURY REGULATIONS" has the meaning set forth in Section 1.1 of the Trust Agreement. "TRUST" means HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, a Delaware business trust, created and continued under the Trust Agreement. "TRUST AGREEMENT" means the Amended and Restated Trust Agreement by and among HEI, as Sponsor, the Delaware Trustee, the Property Trustee, the Regular Trustees and the holders, from time to time, of undivided beneficial interests in the assets of the Trust dated as of _____________, 1997 as it may be amended or supplemented from time to time. "TRUST COMMON SECURITIES" has the meaning specified in Section 8.1 of the Trust Agreement. "TRUST COMMON SECURITIES GUARANTEE" means the Trust Common Securities Guarantee Agreement dated as of ____________, 1997, entered into by HEI, as Guarantor, for the benefit of the holders of the Trust Common Securities, as it may be amended or supplemented from time to time. "TRUST PREFERRED SECURITIES" has the meaning specified in Section 8.1 of the Trust Agreement. "TRUST PREFERRED SECURITIES GUARANTEE" means the Trust Preferred Securities Guarantee Agreement dated as of _____________, 1997, entered into by HEI, as Guarantor, with The Bank of New York, as trustee, for the benefit of the holders of the Trust Preferred Securities, as it may be amended or supplemented from time to time. "UNDERWRITING AGREEMENT" means the Underwriting Agreement dated _____________, 1997 among HEI, the Trust, the Partnership and Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Legg Mason Wood Walker Incorporated and Robert W. Baird & Co. Incorporated, as representatives of the other underwriters named in Schedule A thereto. 12 ARTICLE II CONTINUATION OF THE PARTNERSHIP; ADMISSION OF PARTNERSHIP PREFERRED SECURITIES HOLDERS SECTION 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto agree to continue the Partnership in accordance with the terms of this Agreement. The General Partner, for itself and as agent for the Limited Partners, shall make every reasonable effort to assure that all certificates and documents are properly executed and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all the requirements for the continuation of the Partnership as a limited partnership under the Act and under all other laws of the State of Delaware or such other jurisdictions in which the General Partner determines that the Partnership may conduct activities. The rights and duties of the Partners shall be as provided herein and, subject to the terms hereof, under the Act. SECTION 2.2 NAME. The name of the Partnership is "HEI PREFERRED FUNDING, LP", as such name may be modified from time to time by the General Partner following written notice to the Limited Partners. SECTION 2.3 PURPOSES OF THE PARTNERSHIP. The Partnership will be managed by the General Partner and the sole purposes of the Partnership are (a) to issue limited partner interests in the Partnership in the form of Partnership Preferred Securities, (b) to receive the General Partner Capital Contribution, (c) to use substantially all of the Initial Partnership Proceeds to purchase, as an investment, the Initial Debentures, (d) to invest, at all times, an amount equal to at least 1% of the Initial Partnership Proceeds in Eligible Debt Securities, (e) to receive interest and other payments on the Affiliate Investment Instruments and the Eligible Debt Securities held by the Partnership from time to time, (f) to make Distributions on the Partnership Preferred Securities and distributions on the General Partner Interest if, as and when declared by the General Partner in its sole discretion, (g) subject to the restrictions and conditions contained in this Agreement, to make additional investments in 13 Affiliate Investment Instruments and Eligible Debt Securities and to dispose of any such investments and (h) except as otherwise limited herein, to enter into, make and perform all contracts and other undertakings, and engage in those activities and transactions as the General Partner may reasonably deem necessary or advisable for the carrying out of the foregoing purposes of the Partnership. The Partnership may not engage in any other activities or operations except as contemplated by the preceding sentence. SECTION 2.4 TERM. The term of the Partnership commenced upon the filing of the Certificate in the Office of the Secretary of State of the State of Delaware and shall continue until the Partnership is dissolved in accordance with the provisions of this Agreement. SECTION 2.5 REGISTERED AGENT AND OFFICE. The Partnership's registered agent and office in Delaware shall be c/o RL&F Service Corp., One Rodney Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle County, Delaware 19801. At any time, the General Partner may designate another registered agent and/or registered office. SECTION 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of activity of the Partnership shall be 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19806. Upon ten days' written notice to the Partners, the General Partner may change the location of the Partnership's principal place of activity, provided that such change has no material adverse effect upon any Partner. SECTION 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and address of the General Partner are as follows: HYCAP MANAGEMENT, INC. 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19806 The General Partner may change its name or address from time to time, in which event the General Partner shall promptly notify the Limited Partners of any such change. SECTION 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner shall cause the Partnership to become 14 qualified, formed or registered under the applicable qualification, fictitious name or similar laws of any jurisdiction in which the Partnership conducts activities. SECTION 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED SECURITIES. (a) Without execution of this Agreement, upon the receipt of an L.P. Certificate by a Person, whether by purchase, gift, devise or other valid transfer, which receipt shall be deemed to constitute a request by such Person that the books and records of the Partnership reflect such Person's admission as a Limited Partner, such Person shall be admitted to the Partnership as a Limited Partner and shall become bound by this Agreement. (b) The name and mailing address of each Partner and the amount contributed by such Partner to the capital of the Partnership shall be listed on the books and records of the Partnership. The General Partner shall be required to update the books and records from time to time as necessary to accurately reflect such information. ARTICLE III CAPITAL CONTRIBUTIONS; REPRESENTATION OF PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS SECTION 3.1 CAPITAL CONTRIBUTIONS. (a) Contemporaneous with the issuance of the Partnership Preferred Securities, the General Partner shall make the General Partner Capital Contribution. The General Partner shall, from time to time, make such additional capital contributions as are necessary to maintain at all times a positive Capital Account balance equal to at least one percent (1%) of the aggregate positive Capital Account balances of all Partners at the end of such period. 15 (b) On the Closing Date, the Trust shall, in exchange for a definitive L.P. Certificate, contribute to the capital of the Partnership on behalf of the Trust an amount in cash equal to the gross proceeds from the sale of the Trust Preferred Securities and the Trust Common Securities (such amount being a capital contribution to the Partnership). On such date, the Trust shall continue to be the sole Limited Partner. (c) No Limited Partner shall at any time be required to make any additional capital contributions to the Partnership, except as may be required by law. SECTION 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred Security Holder's Interest shall be represented by the Partnership Preferred Securities held by or on behalf of such Partner. Each Partnership Preferred Security Holder's respective ownership of Partnership Preferred Securities shall be set forth on the books and records of the Partnership. Each Partner hereby agrees that its Interest in the Partnership shall for all purposes be personal property. No Partner shall have an interest in specific Partnership property. SECTION 3.3 CAPITAL ACCOUNTS. (a) ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS. The Partnership shall establish and maintain a separate account (the "CAPITAL ACCOUNT") for each Partner. The initial balance of the Capital Account for each Partner shall be the amount as set out opposite the name of each of the Partners on Schedule 1 attached hereto. The Capital Account of each Partner shall be increased by (i) the dollar amount of any additional contributions made by such Partner and (ii) allocations to such Partner of income and gain (including income exempt from tax). The Capital Account of each Partner shall be decreased by (i) the dollar amount of any distributions made to such Partner, and (ii) allocations to such Partner of loss and deduction (including noncapital, nondeductible expenditures not deductible in computing the 16 Partnership's income or loss for United States federal income tax purposes). (b) COMPLIANCE WITH REGULATIONS. Notwithstanding any other provision of this Agreement to the contrary, the provisions of Section 3.3(a) hereof regarding the maintenance of Capital Accounts shall be construed so as to comply with the Treasury Regulations promulgated under section 704 of the Code. The General Partner, in its sole discretion, is authorized to modify such provisions to the minimum extent necessary to comply with such Treasury Regulations. SECTION 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided herein, no Partner shall be entitled to interest on, or with respect to, any capital contribution to the Partnership. SECTION 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to withdraw any part of such Partner's capital contribution to the Partnership. No Partner shall be entitled to receive any distributions from the Partnership, except as provided in this Agreement. ARTICLE IV ALLOCATIONS SECTION 4.1 PROFITS AND LOSSES. After giving effect to the special allocation provisions set forth in Section 4.2, which special allocations shall take precedence over any allocations made pursuant to this Section 4.1: (a) the Partnership's Net Income for each Fiscal Period of the Partnership shall be allocated as follows: (i) First, to each Holder of a Partnership Preferred Security in an amount equal to the excess, if any, of (x) all Net Losses, if any, allocated to each such Holder from the date of issuance of the Partnership Preferred Security through and including the close of such Fiscal Period pursuant to Section 4.1(b)(ii) below over (y) the amount of Net Income, 17 if any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in all prior Fiscal Periods. (ii) Second, to the Holders of the Partnership Preferred Securities, an amount of Net Income equal to the excess, if any, of (x) the Distributions accrued on the Partnership Preferred Securities from the date of their issuance through and including the last day of such Fiscal Period, including any Compounded Distributions payable with respect thereto, over (y) the amount of Net Income allocated to the Holders of the Partnership Preferred Securities pursuant to this Section 4.1(a)(ii) in all prior Fiscal Periods. Amounts allocated to all Partnership Preferred Security Holders shall be allocated among such Holders in proportion to the number of Partnership Preferred Securities held by such Holders. (iii) Any remaining Net Income shall be allocated to the General Partner. (b) The Partnership's Net Loss for any Fiscal Period shall be allocated as follows: (i) First, to the General Partner until the balance of the General Partner's Capital Account is reduced to zero, provided, however, that the aggregate amount of Net Losses allocated to the General Partner pursuant to this Section 4.1(b)(i) shall not exceed the sum of 14% of the total capital contributions of all Partners plus the aggregate Net Income allocated to the General Partner pursuant to this Section 4.1. (ii) Second, among the Holders in proportion to their respective aggregate Capital Account balances, until the Capital Account balances of such Holders are reduced to zero. (iii) Any remaining Net Loss shall be allocated to the General Partner. (c) DAILY DETERMINATION. For purposes of determining the profits, losses or any other items allocable to any period, profits, losses and any such other items shall be determined on a daily basis, unless the General Partner 18 determines that another method is permissible under Section 704 of the Code and the Treasury Regulations promulgated thereunder. Unless otherwise specified, such profits, losses or other items shall be determined for each Fiscal Period. SECTION 4.2 SPECIAL ALLOCATION. (a) All expenditures that are (i) incurred by, or on behalf of, the Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out of its own funds (or by HEI pursuant to the Partnership Guarantee) shall be allocated entirely to the General Partner. (b) In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's Net Income shall be specially allocated to such Partner in a manner sufficient to eliminate the deficit, if any, in the balance of the Capital Account of such Partner as quickly as possible. The foregoing is intended to be a "QUALIFIED INCOME OFFSET" provision as described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in accordance with such Treasury Regulation. (c) SECTION 704 COMPLIANCE. While this Agreement does not specifically provide for certain provisions required by Treasury Regulation Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions that are not expected to occur as regards the Partnership, the Partners intend that the allocations under Section 4.1 conform to Treasury Regulations Sections 1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain chargeback, chargeback of partner nonrecourse debt minimum gain and partner nonrecourse debt provisions of such Treasury Regulations), and, to the extent necessary due to the occurrence of unexpected events, the General Partner shall make such changes in the allocations under Section 4.1 as it believes are reasonably necessary to meet the requirements of such Treasury Regulations. (d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in this Article IV are adjusted by the Internal 19 Revenue Service and the Tax Matters Partner agrees to such adjustments, such allocations shall be amended to the minimum extent necessary to conform with such adjustments. (e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon the final dissolution and termination of the Partnership and after taking into account all allocations of Net Income and Net Losses (and other tax items) under this Article IV, the distributions to be made in accordance with the positive Capital Account balances would result in a distribution that would be different from a distribution under Article XIII, then gross items of income and gain (and other tax items) for the taxable year of the final dissolution and termination (and, to the extent permitted under section 761(c) of the Code, gross items of income and gain, and other tax items, for the immediately preceding taxable year) shall be allocated to the Partners to increase or decrease their respective Capital Account balances so that the final distribution will occur to the fullest extent possible in the same manner as a distribution under Section 13.4. (f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of this Agreement to the contrary, the interest of the General Partner in each item of Partnership income, gain, loss, deduction, or credit shall, at all times during the existence of the Partnership, be equal to at least (A) at any time that the aggregate capital contributions to the Partnership are equal to or less than $50,000,000, one percent (1%) of each such item and (B) at any time that the aggregate capital contributions to the Partnership are greater than $50,000,000, at least a percentage equal to the product of (i) one percent (1%) and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of which is $50,000,000 and the denominator of which is the lesser of (x) the aggregate Capital Account balances of the Capital Accounts of all Partners at such time and (y) the aggregate capital contributions to the Partnership of all Partners at such time. SECTION 4.3 WITHHOLDING. The Partnership shall comply with withholding requirements under federal, state and local law and shall remit amounts withheld to and file required forms with applicable jurisdictions. To the extent that the 20 Partnership is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Partner, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Partner. In the event of any claimed over-withholding, Partners shall be limited to an action against the applicable jurisdiction. If the amount withheld was not withheld from actual distributions, the Partnership may reduce subsequent distributions by the amount of such withholding. Each Partner agrees to furnish the Partnership with any representations and forms as shall reasonably be requested by the Partnership to assist it in determining the extent of, and in fulfilling, its withholding obligations. ARTICLE V DISTRIBUTIONS SECTION 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic Distributions and Compounded Distributions, if any, redemption payments and liquidation distributions in accordance with the terms of the Partnership Preferred Securities set forth in Article VI. The General Partner shall in its sole discretion determine whether and when Distributions shall be payable; provided, however, that if the General Partner shall determine a Distribution will not be paid on a scheduled Distribution Payment Date, the General Partner shall give notice of its determination not to pay such Distribution to Limited Partners of record as of the Record Date for the payment of such Distribution; provided, further, however, that the General Partner shall not declare distributions, and no distributions shall be payable by the Partnership to the General Partner in respect of its General Partner Interest, unless all accumulated and unpaid Distributions, including any Compounded Distributions, have been paid in full for all prior Fiscal Periods. Subject to the immediately preceding sentence, to the extent that the aggregate payments of interest (or dividends) received by the Partnership in respect of Affiliate Investment Instruments and Eligible Debt Securities for each Fiscal Period exceed the amount of Distributions, including any Compounded Distributions, paid on the Partnership Preferred 21 Securities for such Fiscal Period, the General Partner, in its sole discretion, may declare and distribute such excess funds to the General Partner in respect of its General Partner Interest. SECTION 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not make a Distribution to any Partner on account of such Partner's Interest if such Distribution would violate Section 17-607 of the Act or other applicable law. ARTICLE VI ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES SECTION 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED SECURITIES. (a) There is hereby authorized for issuance and sale Partnership Preferred Securities having an aggregate liquidation preference not greater than $103,093,000 and having the designation, annual distribution rate, liquidation preference, redemption terms, and other powers, preferences and special rights and limitations set forth in this Article VI. (b) The payment of Distributions (including payments of distributions by the Partnership in liquidation or in redemption in respect of Partnership Preferred Securities) shall be guaranteed by HEI pursuant to and to the extent set forth in the Partnership Guarantee. The Partnership Preferred Security Holders hereby authorize the General Partner to hold the Guarantee on behalf of the Partnership Preferred Security Holders. In the event of an appointment of a Special Representative pursuant to Section 6.2(h)(i), among other things, to enforce the Partnership Guarantee, the Special Representative may take possession of the Partnership Guarantee for such purpose. If no Special Representative has been appointed to enforce the Partnership Guarantee, the General Partner has the right to enforce the Partnership Guarantee on behalf of the Partnership Preferred Security Holders. The Partnership Preferred Security Holders, by acceptance of such Partnership Preferred Securities, acknowledge and agree to the 22 subordination provisions in, and other terms of, the Partnership Guarantee. (c) The Partnership may not issue any interests in the Partnership other than the Partnership Preferred Securities and the General Partner Interest, provided that the Partnership may accept consideration for additional capital contributions from the General Partner with respect to the General Partner Interest. All Partnership Preferred Securities shall rank senior to all other Interests in the Partnership in respect of the right to receive Distributions. All Partnership Preferred Securities redeemed, purchased or otherwise acquired by the Partnership shall be canceled. The Partnership Preferred Securities will be issued in registered form only. (d) No Holder shall be entitled as a matter of right to subscribe for or purchase, or have any preemptive or similar right with respect to, any part of any new or additional limited partner interests, or of securities convertible into any Partnership Preferred Securities or other limited partner interests, whether now or hereafter authorized and whether issued for cash or other consideration or by way of a distribution. SECTION 6.2 PARTNERSHIP PREFERRED SECURITIES. (a) DESIGNATION. A total of 4,123,720 Partnership Preferred Securities, stated liquidation preference $25 per Partnership Preferred Security, are hereby designated as "____% PARTNERSHIP PREFERRED SECURITIES". (b) DISTRIBUTIONS. (i) Partnership Preferred Security Holders shall be entitled to receive cumulative Distributions and Compounded Distributions (as defined below) (if any), if, as and when declared by the General Partner, in its sole discretion, out of the assets of the Partnership legally available therefor, at a rate per annum of ____% of the stated liquidation preference of $25 per Partnership Preferred Security, calculated on the basis of a 360-day year consisting of twelve 30-day months. For any period shorter than a full 23 90-day quarter, Distributions will be computed on the basis of the actual number of days elapsed in such 90-day quarter. Such Distributions shall, from the date of original issue, accumulate and be cumulative and shall be payable quarterly, when, if, and as declared by the General Partner on the dates specified in Section 6.2(b)(ii) below. Distributions and Compounded Distributions (as defined below) (if any) on the Partnership Preferred Securities shall be cumulative from the Closing Date. Distributions not paid on the scheduled Distribution Payment Date will accumulate and compound quarterly at the rate of ____% per annum ("COMPOUNDED DISTRIBUTIONS"). In the event that any date on which Distributions are payable on the Partnership Preferred Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day which 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 amounts in respect of such early payment), in each case with the same force and effect as if made on such date. (ii) Distributions on the Partnership Preferred Securities will be payable quarterly in arrears if, as and when, declared by the General Partner on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 1997 (each a "DISTRIBUTION PAYMENT DATE"). Distributions will be payable to the Holders as they appear on the books and records of the Partnership on the relevant Record Date. If the Trust or the Property Trustee is the Holder of the Partnership Preferred Securities, all Distributions shall be made by wire transfer of same day funds to such Holder by 10:00 a.m., New York City time, on the applicable Distribution Payment Date. Distributions payable on any Partnership Preferred Securities that are not punctually paid on any Distribution Payment Date will cease to be payable to the Person in whose name such Partnership Preferred Securities are registered on the relevant record date, and such Distribution 24 will instead be payable to the Person in whose name such Partnership Preferred Securities are registered on the record date for payment of such defaulted or accumulated Distribution. (c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be redeemable at the option of the General Partner, in whole or in part, from time to time, on or after January ____, 2002, upon not less than 30 nor more than 60 days' notice, at an amount per Partnership Preferred Security equal to $25 plus accrued and unpaid Distributions thereon, including any Compounded Distributions, by the date fixed for redemption (the "REDEMPTION PRICE"). The Partnership may not redeem the Partnership Preferred Securities in part unless all accumulated and unpaid Distributions, including any Compounded Distributions, have been paid in full on all Partnership Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. If a partial redemption of the Partnership Preferred Securities would result in the delisting of the Trust Preferred Securities (or, if the Trust is liquidated in connection with a Trust Special Event, the delisting of the Partnership Preferred Securities), the Partnership may only redeem the Partnership Preferred Securities in whole but not in part. (d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership Special Event shall occur and be continuing, the General Partner shall, within 90 days following the occurrence of such Partnership Special Event, elect to either (i) redeem the Partnership Preferred Securities in whole (but not in part), upon not less than 30 or more than 60 days' notice at the Redemption Price, provided that if at the time there is available to the Partnership the opportunity to eliminate, within such 90-day period, such Partnership Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that in the sole judgment of the General Partner has or will cause no adverse effect on the Partnership, the Trust, HEI or the Company, the General Partner will pursue such measure in lieu of redemption; or (ii) cause the Partnership Preferred Securities to remain outstanding, provided that in the case of this clause (ii), the General Partner shall pay any and all 25 costs and expenses incurred by or payable by the Partnership which are attributable to such Partnership Special Event. (e) REDEMPTION PROCEDURES. (i) Notice of any redemption of Partnership Preferred Securities (a "REDEMPTION NOTICE") will be given by the General Partner on behalf of the Partnership by mail to each Holder of Partnership Preferred Securities to be redeemed not fewer than 30 nor more than 60 days before the date fixed for redemption. For purposes of the calculation of the date of redemption and the dates on which notices are given pursuant to this Section 6.2(e)(i), a Redemption Notice shall be deemed to be given on the day such notice is first mailed, by first-class mail, postage prepaid, to Holders of Partnership Preferred Securities. Each Redemption Notice shall be addressed to the Holders of Partnership Preferred Securities at the address of each such Holder appearing in the books and records of the Partnership. No defect in the Redemption Notice or in the mailing thereof with respect to any Holder shall affect the validity of the redemption proceedings with respect to any other Holder. (ii) In the event that fewer than all the outstanding Partnership Preferred Securities are to be redeemed, the Partnership Preferred Securities to be redeemed shall be redeemed pro rata, provided, however, that in the event Partnership Preferred Securities are registered in the name of and held of record by DTC or its nominee (or any successor Depository or its nominee), DTC will reduce, in accordance with DTC's customary procedures, the amount of the interest of each Depository Participant in the Partnership Preferred Securities to be redeemed. (iii) If the Partnership gives a Redemption Notice (which notice will be irrevocable), then by 12:00 noon, New York City time, on the redemption date, the General Partner on behalf of the Partnership (A) if the Partnership Preferred Securities are in book-entry only form with DTC, will deposit irrevocably with DTC funds sufficient to pay the applicable Redemption Price and will give DTC irrevocable instructions and authority to pay the Redemption Price in respect of the 26 Partnership Preferred Securities held through DTC in book-entry only form or (B) if the Partnership Preferred Securities are held in certificated form, will deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price of the amount of any such Partnership Preferred Securities and will give to the Paying Agent irrevocable instructions and authority to pay such amounts to the Holders of Partnership Preferred Securities, upon surrender of their certificates, by check, mailed to the address of the relevant Holder appearing on the books and records of the Partnership on the redemption date; provided, however, that for so long as the Trust or the Property Trustee shall hold the Partnership Preferred Securities, payment of cash shall be made by wire in same day funds to the Holder by 12:00 Noon, New York City time, on the redemption date. For these purposes, the applicable Redemption Price shall not include Distributions which are being paid to Holders who were Holders on a relevant record date. Upon satisfaction of the foregoing conditions, then immediately prior to the close of business on the date of such deposit or payment, all rights of Holders of such Partnership Preferred Securities so called for redemption will cease, except the right of the Holders to receive the Redemption Price, but without interest on such Redemption Price, and from and after the date fixed for redemption, such Partnership Preferred Securities will not accrue Distributions or bear interest. In the event that any date fixed for redemption of Partnership Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (and without any interest in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day (without any reduction in interest on other amounts in respect of any such early payment), in each case with the same force and effect as if made on the date fixed for redemption. In the event that payment of the Redemption Price is improperly withheld or refused and not paid by either the Partnership or HEI pursuant to the Partnership Guarantee, Distributions on the Partnership Preferred Securities called for redemption will continue to accumulate, to the extent that payment of such Distributions is 27 legally permissible, at the then applicable rate from the original redemption date until the Redemption Price is actually paid, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. The Partnership shall not be required to register or cause to be registered the transfer of any Partnership Preferred Securities which have been called for redemption. (f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2 and applicable law (including, without limitation, Federal securities laws), if Partnership Preferred Securities have been distributed to the Holders (as defined in the Trust Agreement) of Trust Preferred Securities, HEI or any of its subsidiaries, including the Company, may at any time and from time to time purchase outstanding Partnership Preferred Securities by tender, in the open market, or by private agreement. (g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any voluntary or involuntary liquidation, dissolution, winding-up or termination of the Partnership, the Holders of Partnership Preferred Securities at the time outstanding will be entitled to receive out of the assets of the Partnership such amount as is determined in accordance with Section 13.4 (the "PARTNERSHIP LIQUIDATION DISTRIBUTION") payable in cash. (h) VOTING RIGHTS. (i) SPECIAL REPRESENTATIVE. (1) If one or more of the following events shall occur and be continuing (each a "PARTNERSHIP ENFORCEMENT EVENT"): (i) arrearages on distributions on the Partnership Preferred Securities shall exist for six consecutive quarterly distribution periods, (ii) HEI is in default on any of its obligations under the Partnership Guarantee or (iii) an Investment Event of Default on any Affiliate Investment Instrument and an HEI default on any of its obligations with respect thereto under any applicable Investment Guarantee, the Holders of the Partnership Preferred Securities, upon the affirmative vote of at least a Majority in Liquidation Preference of the Partnership Preferred Securities (or, for so 28 long as the Partnership Preferred Securities are held by the Property Trustee, the Property Trustee as the Holder of the Partnership Preferred Securities), shall have the right, to the exclusion of the General Partner, (a) to enforce the terms of the Partnership Preferred Securities, including the right to appoint and authorize a special representative of the Partnership and the Limited Partners (a "SPECIAL REPRESENTATIVE") to enforce (1) to the fullest extent permitted by applicable law, the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees, (2) the rights of the Holders of the Partnership Preferred Securities under the Partnership Guarantee, and (3) the rights of the Holders of the Partnership Preferred Securities to receive Distributions (only if, and to the extent, declared by the General Partner, in its sole discretion, out of funds legally available therefor) on the Partnership Preferred Securities, and (b) under the Partnership Guarantee to enforce the terms of the Partnership Guarantee, including the right to enforce the covenant restricting certain payments and distributions by HEI. Under no circumstances, however, shall the Special Representative have authority to cause the General Partner to declare Distributions on the Partnership Preferred Securities or have any authority concerning the selection of Partnership Investments. When the Special Representative acts to enforce the Partnership's creditors' rights and other rights with respect to the Affiliate Investment Instruments and the Investment Guarantees, the Special Representative acts as an agent of the Partnership. When the Special Representative acts to enforce the rights of the Holders of the Partnership Preferred Securities under the Partnership Guarantee or their rights to receive Distributions on the Partnership Preferred Securities, the Special Representative acts as an agent of the Holders of the Partnership Preferred Securities. In addition, the Special Representative shall not, by virtue of acting in such capacity, be admitted as a general or limited partner in the Partnership or otherwise be deemed to be a general or limited partner in the Partnership and shall have no liability for the debts, obligations, or liabilities of the Partnership. (2) In furtherance of the foregoing, and without limiting the powers of any Special Representative so 29 appointed and to avoid any doubt concerning the powers of the Special Representative, any Special Representative, in its own name, in the name of the Partnership, in the name of the Limited Partners, or otherwise, may, to the fullest extent permitted by law, institute, or cause to be instituted, a proceeding, including, without limitation, any suit in equity, an action at law or other judicial or administrative proceeding, to enforce on behalf of the Partnership the Partnership's rights directly against HEI or any other obligor (including the General Partner) in connection with its obligations to the Partnership, and may prosecute such proceeding to judgment or final decree, and enforce the same against HEI or any other obligor in connection with such obligations and collect, out of the property, wherever situated, of HEI or any such other obligor upon such obligations, the monies adjudged or decreed to be payable in the manner provided by law. The General Partner agrees to execute and deliver such documents as may be necessary, appropriate or convenient for the Special Representative to enforce the foregoing rights and obligations on behalf and in the name of the Partnership. (3) If the Special Representative fails to enforce its rights on behalf of the Partnership under any Affiliate Investment Instrument after a holder of Partnership Preferred Securities has made a written request, such holder of record of Partnership Preferred Securities may, to the fullest extent permitted by law directly institute a legal proceeding against the applicable Investment Affiliate to enforce the rights of the Special Representative and the Partnership under Affiliate Investment Instruments without first instituting any legal proceeding against the Special Representative, the Partnership or any other Person. In any event, if a Partnership Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any Affiliate Investment Instrument, then a holder of Partnership Preferred Securities may, to the fullest extent permitted by law on behalf of the Partnership directly, institute a proceeding against such Investment Affiliate with respect to such Affiliate Investment Instrument for enforcement of payment. In addition, the Partnership acknowledges that, for 30 so long as the Trust holds any Partnership Preferred Securities, if the Special Representative fails to enforce its rights on behalf of the Partnership under the Affiliate Investment Instruments after a holder of record of Trust Securities has made a written request, such holder of Trust Securities may, to the fullest extent permitted by law, on behalf of the Partnership, directly institute a legal proceeding against the Investment Affiliates to enforce the rights of the Special Representative and the Partnership under the Affiliate Investment Instruments, without first instituting any legal proceeding against the Property Trustee, the Trust, the Special Representative, the Partnership or any other Person. In any event, for so long as the Trust is the holder of any Partnership Preferred Securities, if a Trust Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any Affiliate Investment Instrument or the failure of HEI to make any required payment when due on any Investment Guarantee, then the Partnership acknowledges that a holder of Trust Securities may, to the fullest extent permitted by law on behalf of the Partnership, directly institute a proceeding against such Investment Affiliate with respect to such Affiliate Investment Instrument or against HEI with respect to any such Investment Guarantee, in each case for enforcement of payment. Under no circumstances shall the Special Representative, any holder of Partnership Preferred Securities or any holder of Trust Preferred Securities have authority to cause the General Partner to declare distributions on the Partnership Preferred Securities. (4) For purposes of determining whether the Partnership has deferred payment of Distributions for six consecutive quarters, Distributions shall be deemed to remain in arrears, notwithstanding any payments in respect thereof, until full cumulative Distributions, including Compounded Distributions, have been or contemporaneously are paid with respect to all quarterly Distribution periods terminating on or prior to the date of payment of such full cumulative Distributions. Not later than 30 days after such right to appoint a Special Representative arises, the General Partner will convene a meeting for election of a Special Representative. If the General Partner fails to convene such 31 meeting within such 30-day period, the Holders of not less than 10% in Liquidation Preference of the Outstanding Partnership Preferred Securities will be entitled to convene such meeting. The provisions of Section 14.3 relating to the convening and conduct of meetings of the Partners will apply with respect to any such meeting. In the event that, at any such meeting, Holders of less than a Majority in Liquidation Preference of Partnership Preferred Securities entitled to vote for the appointment of a Special Representative vote for such appointment, no Special Representative shall be appointed. Any Special Representative appointed shall cease to be a Special Representative of the Partnership and/or the Limited Partners if (x) the Partnership (or HEI pursuant to the Partnership Guarantee) shall have paid in full all accumulated and unpaid Distributions on the Partnership Preferred Securities, (y) the relevant Investment Event of Default giving rise to the Partnership Enforcement Event shall have been cured, and (z) HEI is in compliance with all its obligations under the Partnership Guarantee, and the Company, in its capacity as the General Partner, shall continue the activities of the Partnership without dissolution. Notwithstanding the appointment of any such Special Representative, the Company shall continue as General Partner and shall retain all rights under this Agreement, including the right to determine whether to declare, in its sole discretion, the payment of Distributions on the Partnership Preferred Securities for which the failure of such declaration will not constitute a default hereunder. (ii) Certain Amendments; Waiver. (1) If any proposed amendment of this Agreement provides for, or the General Partner otherwise proposes to effect, (x) any action that would adversely affect the powers, preferences or special rights of the Holders of the Partnership Preferred Securities, whether by way of amendment of this Agreement or otherwise (including, without limitation, the authorization or issuance of any limited partner interests in the Partnership ranking, as to participation in profits or distributions, or in the assets of the Partnership, senior to the Partnership Preferred Securities); or (y) the dissolution, winding-up or termination of the Partnership, other than (1) in connection with the occurrence of a Partnership Special Event or (2) as described 32 under Sections 11.11 and 13.2 of this Agreement, then the Holders of outstanding Partnership Preferred Securities will be entitled to vote on such amendment or proposal of the General Partner (but not on any other amendment or proposal) as a class and such amendment or proposal shall not be effective except with the approval of Holders of a Majority in Liquidation Preference of such outstanding Partnership Preferred Securities having a right to vote on the matter; provided, however, that if the Property Trustee on behalf of the Trust is the Holder of the Partnership Preferred Securities, any such amendment or proposal not excepted by clause (1) or (2) above shall not be effective without the prior or concurrent approval of the Holders of a majority in liquidation amount of the outstanding Trust Preferred Securities having a right to vote on such matters; provided, further that no such approval shall be required if the dissolution, winding-up or termination of the Partnership is proposed or initiated upon the initiation of proceedings, or after proceedings have been initiated, for the dissolution, winding-up, liquidation or termination of the Company. (2) The Holders of a Majority in Liquidation Preference of Partnership Preferred Securities may, by vote, on behalf of the Holders of all of the Partnership Preferred Securities, waive any past Partnership Enforcement Event with respect to the Partnership Preferred Securities and its consequences; provided that, if the underlying Investment Event of Default: (A) is not waivable under the related Affiliate Investment Instrument, such Partnership Enforcement Event shall also not be waivable; or (B) requires the consent or vote of the Holders of greater than a majority in principal amount or liquidation preference of the Affiliate Investment Instruments (a "SUPER MAJORITY") to be waived under the related Affiliate Investment Instrument, the Partnership Enforcement Event may only be waived by the vote of the Holders of the relevant Super Majority in liquidation amount of the Partnership Preferred Securities. 33 Upon such waiver, any such Partnership Enforcement Event shall cease to exist, and shall be deemed to have been cured, for every purpose of this Agreement, but no such waiver shall extend to any subsequent or other Partnership Enforcement Event or impair any right consequent thereon. (3) A waiver of an Investment Event of Default by the Special Representative, acting at the direction of the Holders of the Partnership Preferred Securities, constitutes a waiver of the corresponding Partnership Enforcement Event. (iii) GENERAL VOTING. (1) Neither the General Partner nor the Special Representative shall (i) direct the time, method and place of conducting any proceeding for any remedy available, (ii) waive any Investment Event of Default that is waivable under the Affiliate Investment Instruments, (iii) exercise any right to rescind or annul a declaration that the principal of any Affiliate Investment Instruments that are debt instruments shall be due and payable, (iv) waive the breach of the covenant by HEI in the Partnership Guarantee to restrict certain payments, or (v) consent to any amendment, modification or termination of any Affiliate Investment Instrument, where such consent shall be required from the holder thereof, without, in each case, obtaining the prior approval of the Holders of at least a Majority in Liquidation Preference of the Partnership Preferred Securities; provided, however, that if the Property Trustee on behalf of the Trust is the Holder of the Partnership Preferred Securities, such waiver, consent or amendment or other action shall not be effective without the prior or concurrent approval of at least a majority in liquidation amount of the outstanding Trust Preferred Securities having a right to vote on such matters. The General Partner shall not revoke any action previously authorized or approved by a vote of the Holders of the Partnership Preferred Securities. The General Partner shall notify all Holders of the Partnership Preferred Securities of any notice of an Investment Event of Default received with respect to any Affiliate Investment Instrument. 34 (2) Any required approval of Holders of Partnership Preferred Securities may be given at a separate meeting of such Holders convened for such purpose, at a meeting of all Partners, or pursuant to written consent. The General Partner will cause a notice of any meeting at which Holders of Partnership Preferred Securities are entitled to vote, or of any matter upon which the action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Partnership Preferred Securities. Each such notice will include a statement setting forth (x) the date of such meeting or the date by which such action is to be taken, (y) a description of any matter proposed for adoption at such meeting on which such Holders are entitled to vote or of such matters upon which written consent is sought and (z) instructions for the delivery of proxies or consents. No vote or consent of the Holders of Partnership Preferred Securities will be required for the Partnership to redeem and cancel Partnership Preferred Securities in accordance with this Agreement. (3) Notwithstanding that Holders of Partnership Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Partnership Preferred Securities at such time that are owned by HEI or by any entity more than 50% of which is owned by HEI, either directly or indirectly, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding; provided, however, that Persons otherwise eligible to vote to whom HEI or any of its subsidiaries have pledged Partnership Preferred Securities may vote or consent with respect to such pledged Partnership Preferred Securities under any of the circumstances described herein. (4) Holders of the Partnership Preferred Securities shall have no rights to remove or replace the General Partner. (5) Holders of Partnership Preferred Securities shall have no preemptive or similar rights. 35 ARTICLE VII PARTNERSHIP INVESTMENTS SECTION 7.1 AFFILIATE INVESTMENT INSTRUMENTS; ELIGIBLE DEBT SECURITIES. (a) All Partnership funds will be invested in the securities of Investment Affiliates (the "AFFILIATE INVESTMENT INSTRUMENTS") and Eligible Debt Securities. No more than 99% of the Initial Partnership Proceeds will be used by the Partnership to purchase the Initial Debentures meeting the criteria set forth in this Section 7.1. The remaining funds from the Initial Partnership Proceeds will be used to purchase Eligible Debt Securities in accordance with the terms of this Agreement. (b) The Partnership shall apply approximately 99% of the Initial Partnership Proceeds to purchase (1) junior subordinated debentures of HEI (the "INITIAL HEI DEBENTURES") in the aggregate principal amount of $___________ and (2) junior subordinated debentures of one or more United States subsidiaries of HEI in an aggregate principal amount of $___________ (such debentures referred to as the "INITIAL AFFILIATE DEBENTURES"). The Initial HEI Debentures and the Initial Affiliate Debentures are collectively referred to as the "INITIAL DEBENTURES". The Partnership may purchase the Initial Debentures only upon receipt of an opinion of the Independent Financial Advisor to the effect that (i) each Investment Affiliate will have the wherewithal to make the scheduled payments of principal of and interest on the Initial Debentures as they come due, (ii) each Investment Affiliate which is issuing the Initial Affiliate Debentures would have been capable of issuing and selling debt instruments with the same terms and conditions as the applicable Initial Debentures to unrelated third party investors, (iii) the terms and conditions of the Initial Debentures taken as a whole are 36 not more favorable to the relevant Investment Affiliate than could have been obtained by such Investment Affiliate from unrelated third party investors pursuant to a contemporaneous public offering or private placement pursuant to Rule 144A under the Securities Act of such Initial Debentures. On the Closing Date, the Partnership shall invest at least 1% of such Initial Partnership Proceeds in Eligible Debt Securities. The terms of the Initial Debentures will be as set forth in the Indentures. SECTION 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP. (a) The Partnership must at all times invest an amount equal to at least 1% of the Initial Partnership Proceeds in Eligible Debt Securities. (b) The Partnership may reinvest any payments it receives in respect of its investments in (i) Eligible Debt Securities without limitation or (ii) additional Affiliate Investment Instruments but only upon (A) the acceptance of a written offer setting forth the terms and conditions on which an Investment Affiliate would be willing to issue an Affiliate Investment Instrument to the Partnership (an "INVESTMENT OFFER") and (B) the receipt of an opinion of the Independent Financial Advisor that the terms of such Affiliate Investment Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria (as defined below). (c) If the Independent Financial Advisor determines that the terms of an Affiliate Investment Instrument (as set forth in the Investment Offer) do not satisfy the Reinvestment Criteria, the Partnership shall be prohibited from making any investment in such Affiliate Investment Instrument. (d) Each Affiliate Investment Instrument shall satisfy the following criteria (the "REINVESTMENT CRITERIA"): (i) the applicable terms and conditions of each Affiliate Investment Instrument taken as a whole shall be no more favorable to the relevant Investment Affiliate than could otherwise be obtainable through a contemporaneous public offering or private placement under Rule 144A of the Securities Act to unrelated third party investors; 37 (ii) the Partnership shall not have held any Affiliate Investment Instruments of the Investment Affiliate submitting the Investment Offer within the three-year period ending on the date of the Investment Offer; (iii) there shall not have been a default on any debt obligation of the Investment Affiliate submitting the Investment Offer that was previously owned by the Partnership; (iv) no dividend arrearages shall have existed on any equity security of the Investment Affiliate submitting the Investment Offer that was previously owned by the Partnership; and (v) the Investment Affiliate submitting the Investment Offer shall not be deemed to be an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. (e) Any payments received by the Partnership in respect of its investments that are not invested in additional Affiliate Investment Instruments, may be reinvested only in Eligible Debt Securities (subject to restrictions of applicable law, including the 1940 Act). SECTION 7.3 ASSUMPTION OF OBLIGATIONS AND RELEASE OF INVESTMENT AFFILIATE. The General Partner, on behalf of the Partnership, may without the approval of the Holders of Partnership Preferred Securities, release any Investment Affiliate other than HEI (a "RELEASED INVESTMENT AFFILIATE") from its obligations under an Affiliate Investment Instrument but only upon (A) the receipt of a written instrument of assumption evidencing the assumption by another Investment Affiliate (an "ASSUMING INVESTMENT AFFILIATE") of all obligations of the Released Investment Affiliate under such Affiliate Investment Instrument, (B) the receipt of a written instrument of HEI evidencing its agreement that its Investment Guarantee will continue to be applicable to such Affiliate Investment Instrument following the assumption and release and (C) the receipt of an opinion of the Independent Financial Advisor that the terms of such Affiliate Investment Instrument would satisfy the Reinvestment Criteria if such Affiliate 38 Investment Instrument were entered into de novo by the Assuming Investment Affiliate on the date of such assumption. ARTICLE VIII BOOKS OF ACCOUNT, RECORDS AND REPORTS SECTION 8.1 BOOKS AND RECORDS. (a) Proper and complete records and books of account of the Partnership shall be kept by the General Partner, in which shall be entered fully and accurately all transactions and other matters relative to the Partnership's investments. The books and records of the Partnership, together with a certified copy of this Agreement and of the Certificate, shall at all times be maintained at the principal office of the General Partner and shall be open to the inspection and examination of the Partners or their duly authorized representatives for any proper purpose reasonably related to its Interest during reasonable business hours. (b) Notwithstanding any other provision of this Agreement to the contrary, the General Partner may, to the maximum extent permitted by applicable law, keep confidential from the Partners any information with respect to the Partnership, the disclosure of which the General Partner reasonably believes is not in the best interests of the Partnership, or is adverse to the interests of the Partnership, or which the Partnership or the General Partner is required by law or by an agreement with any Person to keep confidential. (c) (i) For so long as the Partnership Preferred Securities are held by the Property Trustee on behalf of the Trust, within one month after the close of each Fiscal Year, the General Partner shall transmit (or cause to be transmitted) to each Partner a statement indicating such Partner's share of each item of Partnership income, gain, loss, deduction or credit, for United States federal income tax purposes, for such Fiscal Year. 39 (ii) In the event that the Partnership Preferred Securities are no longer held by the Property Trustee on behalf of the Trust, as soon as reasonably possible after the close of the Fiscal Year, the General Partner shall transmit to each Partner the statement referred to in Section 8.1(c)(i) hereof. SECTION 8.2 ACCOUNTING METHOD. For both financial and tax reporting purposes, the books and records of the Partnership shall be kept on the accrual method of accounting applied on a consistent basis and shall reflect all Partnership transactions. ARTICLE IX PAYMENT OF EXPENSES SECTION 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since the Trust is being formed solely to facilitate a direct investment in the Partnership Preferred Securities, the General Partner on behalf of the Partnership hereby agrees, at any time while the Property Trustee is the Holder of any Partnership Preferred Securities, to pay all the expenses of the Trust, including, but not limited to, any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed on the Trust by the United States, or any other taxing authority, so that the net amounts received and retained by the Trust and the Property Trustee after paying such expenses will be equal to the amounts the Trust and the Property Trustee would have received had no such costs or expenses been incurred by or imposed on the Trust. The General Partner shall be liable for and shall pay all such expenses on behalf of the Partnership solely out of its own funds. In addition, if the Partnership is required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than federal, state and local withholding taxes and taxes or charges imposed by reason of the transfer of the Partnership Preferred Securities) imposed by the United States, or any other taxing authority, then, in any case, the General Partner will pay such taxes, duties, assessments or other governmental charges on behalf of the Partnership out of its own funds. 40 SECTION 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection with the offering, sale and issuance of the Partnership Preferred Securities by the Partnership, the General Partner shall: (a) pay all costs and expenses of the Partnership (including, but not limited to, costs and expenses relating to the organization of the Partnership, the offering, sale and issuance of the Partnership Preferred Securities (including commissions to the underwriters in connection therewith)), the fees and expenses of the Special Representatives (if any), and the costs and expenses relating to the operation of the Partnership, including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses; and (b) be primarily and fully liable for any indemnification obligations arising with respect to this Agreement. ARTICLE X POWERS, RIGHTS AND DUTIES OF THE LIMITED PARTNERS SECTION 10.1 LIMITATIONS. The Limited Partners shall not participate in the management or control of the Partnership's investment activity, property or other assets, nor shall the Limited Partners engage in any activities for the Partnership, nor shall the Limited Partners have the power to act for or bind the Partnership, such powers being vested solely and exclusively in the General Partner (and, upon appointment, and to the extent set forth herein, the Special Representative). The Limited Partners shall have such rights as are set forth herein and in the Partnership Guarantee. The Limited Partners shall have no interest in the properties or assets of the General Partner, or any equity therein, or in any proceeds of any sales thereof (which sales shall not be 41 restricted in any respect), by virtue of acquiring or owning an Interest in the Partnership. SECTION 10.2 LIABILITY. Subject to the provisions of the Act, no Limited Partner shall be liable for the repayment, satisfaction or discharge of any debts or other obligations of the Partnership in excess of the Capital Account balance of such Limited Partner. SECTION 10.3 PRIORITY. No Limited Partner shall have priority over any other Limited Partner as to Partnership allocations or distributions. ARTICLE XI POWERS, RIGHTS, DUTIES AND COVENANTS OF THE GENERAL PARTNER SECTION 11.1 AUTHORITY. Subject to the provisions of Section 6.2(h)(i) with respect to the Special Representative, the General Partner shall have exclusive and complete authority and discretion to manage the operations and affairs of the Partnership and to make all decisions regarding the investment activity of the Partnership. Any action taken by the General Partner shall constitute the act of and serve to bind the Partnership. In dealing with the General Partner acting on behalf of the Partnership no Person shall be required to inquire into the authority of the General Partner to bind the Partnership. Persons dealing with the Partnership are entitled to rely conclusively on the power and authority of the General Partner as set forth in this Agreement. SECTION 11.2 POWERS AND DUTIES OF GENERAL PARTNER. Subject to the provisions of Section 6.2(h)(i) with respect to the Special Representative, the General Partner shall have all rights and powers of a general partner under the Act, and shall have all authority, rights and powers in the management of the Partnership's investment activity to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of this Agreement, including by way of illustration but not by way of limitation, the following: 42 (a) to secure the necessary goods and services required in performing the General Partner's duties for the Partnership; (b) to exercise all powers of the Partnership, on behalf of the Partnership, in connection with enforcing the Partnership's rights under the Affiliate Investment Instruments and the Partnership Guarantee; (c) to issue Partnership Preferred Securities and to admit Limited Partners in connection therewith in accordance with this Agreement; (d) to act as registrar and transfer agent for the Partnership Preferred Securities or designate an entity to act as registrar and transfer agent; (e) to establish a record date with respect to all actions to be taken hereunder that require a record date to be established, including with respect to Distributions and voting rights and to make determinations as to the payment of Distributions, and make or cause to be made all other required payments to Holders of the Partnership Preferred Securities and to the General Partner; (f) to open, maintain and close bank accounts and to draw checks and other orders for the payment of money; (g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Partnership; (h) to deposit, withdraw, invest, pay, retain and distribute the Partnership's funds in a manner consistent with the provisions of this Agreement; (i) to take all action that may be necessary or appropriate for the preservation and the continuation of the Partnership's valid existence, rights, franchises and privileges as a limited partnership under the laws of the State of Delaware and of each other jurisdiction in which such 43 existence is necessary to protect the limited liability of the Limited Partners or to enable the Partnership to invest in the Affiliate Investment Instruments and Eligible Debt Securities; (j) to take all action not inconsistent with applicable law, the Certificate or this Agreement, that the General Partner or, upon appointment pursuant to Section 6.2(h)(i), the Special Representative, determines in its sole discretion to be necessary or desirable, as long as such action does not materially adversely affect the interests of the Partnership Preferred Security Holders, to ensure or cause (i) the Partnership not to be deemed to be an "investment company" required to be registered under the 1940 Act, (ii) any Initial Debentures (or any subsequent Affiliate Investment Instrument that is intended to be classified as debt) to be treated as indebtedness for United States federal income tax purposes, or (iii) the Partnership not to be treated as an association or as a publicly traded partnership taxable as a corporation; (k) to cause the Partnership to enter into and perform the Purchase Agreement and to purchase Eligible Debt Securities and Affiliate Investment Instruments, as the case may be, without any further act, vote or approval of any Partner; and (l) to execute and deliver any and all documents or instruments, perform all duties and powers and do all things for and on behalf of the Partnership in all matters necessary or desirable or incidental to the foregoing. 44 SECTION 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY AND COVENANTS OF THE GENERAL PARTNER (a) The General Partner hereby assumes and shall be liable for the debts, obligations and liabilities of the Partnership, including, but not limited to, any liabilities arising under the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") and all costs and expenses relating to the investment by the Partnership in any Affiliate Investment Instruments (but not with respect to any losses related to any nonpayment with respect to such investments), and agrees to pay on behalf of the Partnership and solely out of its own funds to each Person to whom the Partnership is now or hereafter becomes indebted or liable (the "Beneficiaries"), whether such indebtedness, obligations or liabilities arise in contract, tort or otherwise (excluding payment obligations of HEI to Holders of the Partnership Preferred Securities in such Holders' capacities as Holders of such Partnership Preferred Securities, such obligations being separately guaranteed under the Partnership Guarantee to the extent set forth therein), the full payment of such indebtedness and any and all liabilities, when and as due. 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. (b) The General Partner agrees to pay on behalf of the Partnership and solely out of its own funds the expenses described in Sections 9.1 and 9.2 of this Agreement. (c) The General Partner covenants (i) subject to Section 12.1(b) of this Agreement to remain the sole general partner of the Partnership and to maintain direct ownership of 100% of the General Partner's interest in the Partnership, which interest will at all times represent at least 1% of the total capital of the Partnership, (ii) to cause the Partnership to remain a limited partnership and not to voluntarily dissolve, liquidate, wind-up or be terminated, except as permitted by this Agreement, (iii) to use its commercially reasonable efforts to ensure that the Partnership will not be an "investment company" for purposes of the 1940 Act and (iv) to take no action that would be reasonably likely 45 to cause the Partnership to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. SECTION 11.4 LIABILITY. Except as expressly set forth in this Agreement, (a) the General Partner shall not be personally liable for the return of any portion of the capital contributions (or any return thereon) of the Limited Partners; (b) the return of such capital contributions (or any return thereon) shall be made solely from assets of the Partnership; and (c) the General Partner shall not be required to pay to the Partnership or to any Limited Partner any deficit in any Limited Partner's Capital Account upon dissolution, winding-up or otherwise. Other than as expressly provided in this Agreement or under the Act, no Limited Partner shall have the right to demand or receive property other than cash for its respective Interest in the Partnership. The General Partner shall be liable to an unlimited extent for the debts and other obligations of the Partnership. SECTION 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof may engage in or possess an interest in other ventures of any nature or description, independently or with others, similar or dissimilar to the activities of the Partnership, and the Partnership and the Partners shall have no rights by virtue of this Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the activities of the Partnership, shall not be deemed wrongful or improper. No Partner or Affiliate thereof shall be obligated to present any particular investment opportunity to the Partnership even if such opportunity is of a character that, if presented to the Partnership, could be taken by the Partnership, and any Partner or Affiliate thereof shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity. SECTION 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this Agreement to the contrary notwithstanding, the General Partner shall not cause or permit the Partnership to: 46 (i) acquire any assets other than as expressly provided herein; (ii) do any act which would make it impractical or impossible to carry on the ordinary activity of the Partnership as set forth in Section 2.3 of this Agreement; (iii) possess Partnership property for other than a Partnership purpose; (iv) admit a Person as a Partner, except as expressly provided in this Agreement; (v) make any advances of funds to the General Partner or its Affiliates, other than such as represented by the Affiliate Investment Instruments; (vi) perform any act that would subject any Limited Partner to liability as a general partner in any jurisdiction; (vii) engage in any activity that is not consistent with the purposes of the Partnership, as set forth in Section 2.3 of this Agreement; (viii) without the written consent of the Holders of 66-2/3% in Liquidation Preference of the Partnership Preferred Securities, have an order for relief entered with respect to the Partnership or commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of the Partnership's property, or make any assignment for the benefit of creditors of the Partnership; or (ix) borrow money or become liable for the borrowings of any third party or to engage in any financial or other trade or business. 47 SECTION 11.7 EXCULPATION. (a) No Partnership Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Partnership or any Partnership Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Partnership Indemnified Person in good faith on behalf of the Partnership and in a manner such Partnership Indemnified Person reasonably believed to be within the scope of the authority conferred on such Partnership Indemnified Person by this Agreement or by law, except that a Partnership Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Partnership Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions. (b) A Partnership Indemnified Person shall be fully protected in relying in good faith upon the records of the Partnership and upon such information, opinions, reports or statements presented to the Partnership by any Person as to matters the Partnership 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 Partnership, 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 distributions to Partners might properly be paid. SECTION 11.8 FIDUCIARY DUTY. (a) To the extent that, at law or in equity, a Partnership Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to any other Partnership Covered Person, a Partnership Indemnified Person acting under this Agreement shall not be liable to the Partnership or to any other Partnership Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Partnership Indemnified Person otherwise existing at law or in equity, are 48 agreed by the parties hereto to replace such other duties and liabilities of such Partnership Indemnified Person. (b) Unless otherwise expressly provided herein, (i) whenever a conflict of interest exists or arises between Partnership Covered Persons and Partnership Indemnified Persons, or (ii) whether this Agreement or any other agreement contemplated herein or therein provides that a Partnership Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Partnership or any Partner, the Partnership Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Partnership Indemnified Person, the resolution, action or term so made, taken or provided by the Partnership Indemnified Person shall not constitute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Partnership Indemnified Person at law or in equity or otherwise. (c) Whenever in this Agreement a Partnership Indemnified Person is permitted or required to make a decision (i) in its "discretion" or under a grant of similar authority, the Partnership Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interest, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Partnership or any other Person, or (ii) in its "good faith" or under another express standard, the Partnership Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or by applicable law. SECTION 11.9 INDEMNIFICATION. (a) To the fullest extent permitted by applicable law, the Partnership shall indemnify and hold harmless each 49 Partnership Indemnified Person from and against any loss, damage or claim incurred by such Partnership Indemnified Person by reason of any act or omission performed or omitted by such Partnership Indemnified Person in good faith on behalf of the Partnership and in a manner such Partnership Indemnified Person reasonably believed to be within the scope of authority conferred on such Partnership Indemnified Person by this Agreement, except that no Partnership Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Partnership Indemnified Person by reason of gross negligence or willful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Partnership Indemnified Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of an undertaking by or on behalf of the Partnership Indemnified Person to repay such amount if it shall be determined that the Partnership Indemnified Person is not entitled to be indemnified as authorized in Section 11.9(a). SECTION 11.10 TAX MATTERS. (a) For purposes of section 6231(a)(7) of the Code, the "TAX MATTERS PARTNER" shall be the Company as long as it remains the general partner of the Partnership. The Tax Matters Partner shall keep the Limited Partners fully informed of any inquiry, examination or proceeding. (b) Neither the Partnership, nor the Tax Matters Partner on behalf of the Partnership, shall make an election under section 754 of the Code. (c) The General Partner and the Partnership Preferred Security Holders acknowledge that they intend, for United States federal income tax purposes, that the Partnership shall be treated as a "partnership" (other than a publicly traded partnership taxable as a corporation) and that the 50 General Partner and the Partnership Preferred Security Holders shall be treated as "partners" of the Partnership. (d) The General Partner shall retain, at the expense of the Partnership and at its sole discretion, a nationally recognized firm of certified public accountants which shall prepare all United States federal, state, local or other tax and information returns of the Partnership, as required by law, and the Schedule K-1's or any successor or similar forms or schedules. SECTION 11.11 CONSOLIDATION, AMALGAMATION, MERGER, OR SALE OF ASSETS. The Partnership may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person, except as permitted pursuant to this Section 11.11. The Partnership may, without the consent of the Holders of the Partnership Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by a limited partnership, limited liability company or trust organized as such under the laws of any state of the United States of America, provided that (i) such successor entity either (x) expressly assumes all of the obligations of the Partnership under the Partnership Preferred Securities or (y) substitutes for the Partnership Preferred Securities other securities having substantially the same terms as the Partnership Preferred Securities (the "PARTNERSHIP SUCCESSOR SECURITIES") so long as the Partnership Successor Securities are not junior to any other equity securities of the successor entity, with respect to participation in the profits and distributions, and in the assets, of the successor entity, (ii) the Investment Affiliates expressly acknowledge such successor entity as the holder of the Affiliate Investment Instruments, (iii) if the Partnership Preferred Securities are then so listed, the Partnership Preferred Securities continue to be listed, or any Partnership Successor Securities are or will be listed, upon notification of issuance, on any national securities exchange or other organization on which the Partnership Preferred Securities, if so listed, are then listed or quoted, (iv) such merger, consolidation, amalgamation or replacement does not cause the Trust Preferred Securities (or, in the event that the Trust is liquidated in connection with a Trust Special Event, the Partnership Preferred Securities (including any 51 Partnership Successor Securities)) to be downgraded by any nationally recognized statistical securities rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the powers, preferences and other special rights of the holders of the Trust Preferred Securities or the Holders of the Partnership Preferred Securities (including any Partnership Successor Securities) in any material respect (other than, in the case of the Partnership Preferred Securities, with respect to any dilution of the Holders' interest in the new resulting entity), (vi) such successor entity has a purpose substantially identical to that of the Partnership, (vii) prior to such merger, consolidation, amalgamation or replacement, the Company has received an opinion of independent counsel to the Partnership experienced in such matters to the effect that (A) such successor entity will be treated as a "partnership" for United States federal income tax purposes and not as an association or a publicly traded partnership taxable as a corporation, (B) such merger, consolidation, amalgamation or replacement will not cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes, (C) following such merger, consolidation, amalgamation or replacement, the Company and such successor entity will be in compliance with the 1940 Act without registering thereunder as an investment company, and (D) such merger, consolidation, amalgamation or replacement will not adversely affect the limited liability of the Holders of the Partnership Preferred Securities (or the Partnership Successor Securities) and (viii) HEI guarantees the obligations of such successor entity under the Partnership Successor Securities at least to the same extent provided by the Partnership Guarantee. ARTICLE XII TRANSFERS OF INTERESTS BY PARTNERS SECTION 12.1 TRANSFER OF INTERESTS. (a) Partnership Preferred Securities shall be freely transferable by a Holder. 52 (b) Except as provided in the next sentence, the General Partner may not assign or transfer its Interest in the Partnership in whole or in part unless, prior to such assignment or transfer, the General Partner has obtained the consent of the Holders of not less than 66-2/3% in Liquidation Preference of the Partnership Preferred Securities. The General Partner may assign or transfer its Interest in the Partnership without such consent only to HEI (or to a wholly-owned subsidiary of HEI whose obligations are guaranteed by HEI to the same extent as the General Partner's obligations are then guaranteed by HEI pursuant to the Partnership Agreement) or to an entity that is the survivor of a merger, amalgamation, conversion or consolidation of the General Partner in a transaction that meets the requirements of Section 11.11 and only if prior to such assignment or transfer the Company has received an opinion of independent tax counsel to the Partnership experienced in such matters to the effect that after such assignment or transfer the Partnership will continue to be treated as a partnership for United States federal income tax purposes and will not be treated as an association or a publicly traded partnership taxable as a corporation. "PERMITTED SUCCESSOR" shall mean an entity that is an assignee or transferee of the Interest of the General Partner as permitted by this Section 12.1(b). The admission of a Permitted Successor as a general partner of the Partnership shall be effective upon the filing of an amendment to the Certificate with the Secretary of State of the State of Delaware which indicates that the Permitted Successor has been admitted as a general partner of the Partnership. If the General Partner assigns its entire Interest, the General Partner shall cease to be a general partner of the Partnership simultaneously with the admission of the Permitted Successor as a general partner of the Partnership. Any such Permitted Successor is hereby authorized to and shall continue the business of the Partnership without dissolution. (c) Except as provided above, no Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Agreement. Any transfer or purported transfer of any Interest not made in accordance with this Agreement shall be null and void. 53 SECTION 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner shall provide for the registration of L.P. Certificates and of transfers of L.P. Certificates. Upon surrender for registration of transfer of any L.P. Certificate, the General Partner shall cause one or more new L.P. Certificates to be issued in the name of the designated transferee or transferees. Every L.P. Certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the General Partner duly executed by the Partnership Preferred Security Holder or his or her attorney duly authorized in writing. Each L.P. Certificate surrendered for registration of transfer shall be canceled by the General Partner. A transferee of an L.P. Certificate shall be admitted to the Partnership as a Limited Partner, shall become bound by this Agreement and shall be entitled to the rights and subject to the obligations of a Partnership Preferred Security Holder hereunder upon the receipt by the transferee of an L.P. Certificate, which receipt shall be deemed to constitute a request by such transferee that the books and records of the Partnership reflect such transferee's admission as a limited partner. The transferor of an L.P. Certificate, in whole, shall cease to be a Limited Partner at the time that the transferee of such L.P. Certificate is admitted to the Partnership as a Limited Partner in accordance with this Section 12.2. SECTION 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED PARTNERSHIP PREFERRED SECURITY HOLDERS. (a) Unless and until the Partnership issues a global L.P. Certificate pursuant to Section 12.4(a), the Partnership shall only issue definitive L.P. Certificates to the Partnership Preferred Security Holders. (b) The Partnership may treat the Person in whose name any L.P. Certificate shall be registered on the books and records of the Partnership as the sole holder of such L.P. Certificate and of the Partnership Preferred Securities represented by such L.P. Certificate for purposes of receiving Distributions and for all other purposes whatsoever (including without limitation, tax returns and information reports) and, accordingly, shall not be bound to recognize any equitable or 54 other claim to or interest in such L.P. Certificate or in the Partnership Preferred Securities represented by such L.P. Certificate on the part of any other Person, whether or not the Partnership shall have actual or other notice thereof. SECTION 12.4 BOOK-ENTRY PROVISIONS. (a) GENERAL. The provisions of this Section 12.4 shall apply only in the event that the Partnership Preferred Securities are distributed to the Holders of Trust Securities in connection with the involuntary or voluntary dissolution, winding-up or liquidation of the Trust as a result of the occurrence of a Trust Special Event. Upon the occurrence of such event, a global L.P. Certificate representing the Book-Entry Interests and executed on behalf of the Partnership by the manual signature of the General Partner, or by facsimile signature of the General Partner with the authentication by the Registrar (as defined herein) or the Transfer Agent (as defined herein) shall be delivered to DTC, the initial Depository, by, or on behalf of, the Partnership and any previously issued and still outstanding definitive L.P. Certificates shall be of no further force and effect. The global L.P. Certificate shall initially be registered on the books and records of the Partnership in the name of Cede & Co., the nominee of DTC, and no Partnership Preferred Security Beneficial Owner will receive a new definitive L.P. Certificate representing such Holder's interests in such L.P. Certificate, except as provided in Section 12.4(c). In connection with the involuntary or voluntary dissolution, winding-up or liquidation of the Trust as a result of the occurrence of a Trust Special Event, Cede & Co., the nominee of DTC, or the successor nominee of DTC or of any successor Depository, shall automatically be admitted to the Partnership as a Limited Partner. Receipt of the global L.P. Certificate shall be deemed to constitute a request by Cede & Co., the nominee of DTC, or the successor nominee of DTC or of any successor Depository, that the books and records of the Partnership reflect its admission as a Limited Partner. After the provisions of this Section 12.4 begin to apply in accordance with this Agreement, unless and until new definitive, fully registered L.P. Certificates (the "DEFINITIVE L.P. CERTIFICATES") have been issued to the Partnership Preferred Security Beneficial Owners pursuant to Section 12.4(c): 55 (i) The provisions of this Section 12.4 shall be in full force and effect and to the extent the provisions of this Section 12.4 conflict with any other provisions of this Agreement, the provisions of this Section 12.4 shall control; (ii) The Partnership, the General Partner and any Special Representative shall be entitled to deal with the Depository for all purposes of this Agreement (including the payment of Distributions, Redemption Price and liquidation proceeds on the L.P. Certificates and receiving approvals, votes or consents hereunder) as the Partnership Preferred Security Holder and the sole Holder of the L.P. Certificates and shall have no obligation to the Partnership Preferred Security Beneficial Owners; (iii) None of the Partnership, the Trust, the General Partner, any Special Representative or any agents of any of the foregoing shall have any liability or responsibility for any aspect of the records relating to or payments made on account of beneficial ownership interests in a global L.P. Certificate for such beneficial ownership interests or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests; and (iv) Except as provided in Section 12.4(c) below, the Partnership Preferred Security Beneficial Owners will not be entitled to receive physical delivery of the Partnership Preferred Securities in definitive form and will not be considered Holders thereof for any purpose under this Agreement, and no global L.P. Certificate representing Partnership Preferred Securities shall be exchangeable, except for another global L.P. Certificate of like denomination and tenor to be registered in the name of DTC or Cede & Co., or to a successor Depository or its nominee. Accordingly, each Partnership Preferred Security Beneficial Owner must rely on the procedures of DTC or if such person is not a Participant, on the procedures of the Participant through which such person owns its interest to exercise any rights of a Holder under the Agreement. (b) NOTICES TO DEPOSITORY. Whenever a notice or other communication to the Partnership Preferred Security 56 Holders is required under this Agreement, unless and until Definitive L.P. Certificates shall have been issued to the Partnership Preferred Security Beneficial Owners pursuant to Section 12.4(c), the General Partner and any Special Representative shall give all such notices and communications specified herein to be given to the Partnership Preferred Security Holders to the Depository, and shall have no obligations to the Partnership Preferred Security Beneficial Owners. (c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall be prepared by the Partnership and exchangeable for the global L.P. Certificate or L.P. Certificates if and only if (i) the Depository notifies the General Partner that it is unwilling or unable to continue its services as a securities depository and no successor depository shall have been appointed, (ii) the Depository, at any time, ceases to be a clearing agency registered under the Exchange Act at such time as the Depository is required to be so registered to act as such depository and no successor depository shall have been appointed, or (iii) the General Partner, in its sole discretion, determines that such global L.P. Certificate shall be so exchangeable. Upon surrender of the global L.P. Certificate or L.P. Certificates representing the Book-Entry Interests by the Depository, accompanied by registration instructions, the General Partner shall cause Definitive L.P. Certificates to be delivered to Partnership Preferred Security Beneficial Owners in accordance with the instructions of the Depository. Neither the General Partner nor the Partnership 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. Any Person receiving a Definitive L.P. Certificate in accordance with this Section 12.4 shall be admitted to the Partnership as a Limited Partner upon receipt of such Definitive L.P. Certificate and shall be registered on the books and records of the Partnership as a Partnership Preferred Security Holder. The Depository or the nominee of the Depository, as the case may be, shall cease to be a Limited Partner under this Section 12.4(c) at the time that at least one additional Person is admitted to the Partnership as a Limited Partner in accordance herewith. The Definitive L.P. Certificates shall be printed, lithographed or engraved or may 57 be produced in any other manner as may be required by any national securities exchange on which Partnership Preferred Securities may be listed and is reasonably acceptable to the General Partner, as evidenced by its execution thereof, which execution shall be by manual signature of the General Partner, or by facsimile signature of the General Partner with the authentication by the Registrar (as defined herein) or the Transfer Agent (as defined herein). SECTION 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT. (a) The General Partner will act as Registrar, Transfer Agent and Paying Agent for the Partnership Preferred Securities for so long as the Partnership Preferred Securities are held by the Trust or, if the Trust is liquidated in connection with a Trust Special Event, for so long as the Partnership Preferred Securities remain in book-entry only form. (b) Except in such case where the General Partner shall act as Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership shall maintain in the Borough of Manhattan, City of New York, State of New York (i) an office or agency where Partnership Preferred Securities may be presented for registration of transfer or for exchange ("REGISTRAR") and (ii) an office or agency where Partnership Preferred Securities may be presented for payment ("PAYING AGENT"). The Registrar shall keep a register of the Partnership Preferred Securities and of their transfer and exchange. The Partnership may appoint the Registrar and the Paying Agent and may appoint one or more co- registrars and one or more additional paying agents in such other locations as it shall determine. The term "PAYING AGENT" includes any additional paying agent. The Partnership may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder. If the Partnership fails to appoint or maintain another entity as Registrar or Paying Agent, the General Partner shall act as such. (c) Registration of transfers of Partnership Preferred Securities shall be effected without charge by or on 58 behalf of the Partnership, but upon payment (with the giving of such indemnity as the Partnership or the General Partner may require) in respect of any tax or other governmental charges that may be imposed. (d) The Partnership will not be required to register or cause to be registered the transfer of Partnership Preferred Securities after such Partnership Preferred Securities have been called for redemption. ARTICLE XIII WITHDRAWAL, DISSOLUTION; LIQUIDATION AND DISTRIBUTION OF ASSETS SECTION 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not at any time retire or withdraw from the Partnership except as otherwise permitted hereunder. If the General Partner retires or withdraws in contravention of this Section 13.1, it shall indemnify, defend and hold harmless the Partnership and the other Partners from and against any losses, expenses, judgments, fines, settlements or damages suffered or incurred by the Partnership or such other Partners arising out of or resulting from such retirement or withdrawal. SECTION 13.2 DISSOLUTION OF THE PARTNERSHIP. (a) The Partnership shall not be dissolved by the admission of Partners in accordance with the terms of this Agreement. The death, withdrawal, bankruptcy or dissolution of a Limited Partner, or the occurrence of any other event which terminates the Interest of a Limited Partner in the Partnership, shall not, in and of itself, cause the Partnership to be dissolved and its affairs wound up. To the fullest extent permitted by applicable law, upon the occurrence of any such event, the General Partner may, without any further act, vote or approval of any Partner, admit any Person to the Partnership as an additional or substitute limited partner in the Partnership, which admission shall be effective as of the date of the occurrence of such event, and the business of the Partnership shall be continued without dissolution. 59 (b) The Partnership shall be dissolved and its affairs shall be wound up upon the earliest to occur of any of the following events: (i) upon the bankruptcy, insolvency or dissolution of the General Partner; (ii) upon the assignment by the General Partner of its entire interest in the Partnership when the assignee is not admitted to the Partnership as a general partner of the Partnership in accordance with this Agreement, or the filing of a certificate of dissolution or its equivalent with respect to the General Partner, or the revocation of the General Partner's charter and the expiration of 90 days after the date of notice to the General Partner of revocation without a reinstatement of its charter, or if any other event occurs that causes the General Partner to cease to be a general partner of the Partnership under the Act, unless the business of the Partnership is continued in accordance with the Act; (iii) the Partnership has redeemed or otherwise purchased all of the Partnership Preferred Securities; (iv) the entry of a decree of judicial dissolution under Section 17-802 of the Act; or (v) the written consent of all Partners. (c) Upon dissolution of the Partnership, the Liquidator shall promptly notify the Partners of such dissolution. SECTION 13.3 LIQUIDATION. (a) In the event of the dissolution of the Partnership for any reason, the General Partner (or, if the Partnership is dissolved pursuant to Section 13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not less than 66 2/3% in Liquidation Preference of the Partnership Preferred Securities (the General Partner or such Person so appointed is hereinafter referred to as the "LIQUIDATOR")) 60 shall commence to wind up the affairs of the Partnership and to liquidate the Partnership's assets; provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Partnership and the satisfaction of liabilities to creditors so as to enable the Partners to minimize the normal losses attendant upon liquidation. The Partners shall continue to share all income, losses and distributions during the period of liquidation in accordance with Articles IV and V. Subject to the provisions of this Article XIII, the Liquidator shall have full right and unlimited discretion to determine the time, manner and terms of any sale or sales of Partnership property pursuant to such liquidation, giving due regard to the activity and condition of the relevant market and general financial and economic conditions. (b) The Liquidator shall have all of the rights and powers with respect to the assets and liabilities of the Partnership in connection with the liquidation and termination of the Partnership that the General Partner would have with respect to the assets and liabilities of the Partnership during the term of the Partnership, and the Liquidator is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Partnership and the transfer of any assets. (c) Notwithstanding the foregoing, a Liquidator that is not a General Partner shall not, by virtue of acting in such capacity, be deemed a Partner in this Partnership and shall not have any of the economic interests in the Partnership of a Partner; and such Liquidator may be compensated for its services to the Partnership at normal customary and competitive rates for its services to the Partnership as reasonably determined by all the Limited Partners. SECTION 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of liquidation shall be applied in the following order of priority (and without regard to the non-mandatory provisions of Section 17-804 of the Act): 61 (i) first, to creditors of the Partnership, including Partners who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Partnership (whether by payment or the making of reasonable provisions for payment thereof), other than liabilities for distributions (including Distributions) to Partners; (ii) second, following any allocations required under Section 4.2(e) of the Agreement, to the Limited Partners, an amount equal to the aggregate liquidation preference of their Partnership Preferred Securities, plus the amount of Distributions (including any Compounded Distributions) that are accumulated and unpaid as of the date of such liquidating distribution; and (iii) thereafter, to the General Partner. SECTION 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall look solely to the assets of the Partnership for all distributions with respect to the Partnership and such Partner's capital contribution (including returns thereof), and such Partner's share of profits or losses thereof, and shall have no recourse therefor (upon dissolution or otherwise) against the General Partner. No Partner shall have any right to demand or receive property other than cash upon dissolution and termination of the Partnership. SECTION 13.6 TERMINATION. The Partnership shall terminate when all of the assets of the Partnership shall have been disposed of and the assets shall have been distributed as provided in Section 13.4 and the Liquidator has executed and caused to be filed a certificate of cancellation of the Partnership. ARTICLE XIV AMENDMENTS AND MEETINGS SECTION 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and Section 6.2(h)(ii), this Agreement may be amended by, and only by, a written instrument executed by the 62 General Partner without the consent of any Limited Partner; provided, however, that no amendment shall be made, and any such purported amendment shall be void and ineffective, to the extent the result thereof would be to (A) cause the Partnership to be treated for United States federal income tax purposes as an association or a publicly traded partnership taxable as a corporation, (B) require the Partnership to register under the 1940 Act or (C) materially adversely affect the rights, privileges or preferences of the Partnership Preferred Securities. Notwithstanding any provision to the contrary, in the event of (i) a liquidation of the Trust for any reason or (ii) any other distribution which effectively causes Partnership Preferred Securities to be distributed to Holders of Trust Preferred Securities, the General Partner may amend this Agreement without the consent of the Limited Partners to provide for (A) orderly dissemination, purchase, sale, exchange and replacement of such Partnership Preferred Securities, (B) all other matters to the extent required by or desirable under then applicable law and (C) such other matters reasonably incidental or related thereto; provided, however, that no such amendment may materially adversely affect the rights, privileges, or preferences of the Partnership Preferred Securities without the consent of a Majority in Liquidation Preference. SECTION 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement shall be amended pursuant to Section 14.1, the General Partner shall amend the Certificate to reflect such change if it deems such amendment of the Certificate to be necessary or appropriate. SECTION 14.3 MEETINGS OF PARTNERS. (a) Meetings of the Limited Partners who are Holders may be called at any time by the General Partner to consider and act on any matter on which Limited Partners are entitled to act under the terms of this Agreement or the Act. The General Partner shall call a meeting of Holders if directed to do so by Holders of no less than 10% in Liquidation Preference of the Partnership Preferred Securities as permitted by this Agreement. Such direction shall be given by delivering to the General Partner a request in writing stating that the signing 63 Limited Partners desire to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Limited Partners calling a meeting shall specify in writing the L.P. Certificates held by the Limited Partners exercising the right to call a meeting and only those specified Interests shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. Except to the extent otherwise provided in this Agreement, the following provisions shall apply to meetings of Partners. (b) Notice of any such meeting shall be given to all Limited Partners having a right to vote thereat not less than seven Business Days nor more than 60 days prior to the date of such meeting. Each such notice shall set forth the date, time and place of the meeting, a description of any matter on which Holders are entitled to vote and instructions for the delivery of proxies or written consents. (c) Any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if a consent in writing setting forth the action so taken is signed by Limited Partners owning not less than the minimum Interests that would be necessary to authorize or take such action at a meeting in which all Limited Partners having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Limited Partners entitled to vote who have not consented in writing. The General Partner may provide that any written ballot submitted to the Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within a specified time. (d) Each Partner may authorize any Person to act for it by proxy on all matters as to which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Partner executing it. Except as otherwise provided herein, or pursuant to Section 14.3(f), 64 all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Partnership were a Delaware corporation and the Limited Partners were stockholders of a Delaware corporation. (e) Each meeting of Partners shall be conducted by the General Partner or by such other Person that the General Partner may designate. (f) The General Partner may establish all other reasonable procedures relating to meetings of Limited Partners or the giving of written consents, in addition to those expressly provided, including notice of time, place or purpose of any meeting at which any matter is to be voted on by any Partners, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XV MISCELLANEOUS SECTION 15.1 NOTICES. All notices provided for in this Agreement shall be in writing, and shall be delivered or mailed by first class or registered or certified mail or, with respect to the Partnership and General Partner, telecopied, as follows: (a) if given to the Partnership, in care of the General Partner at the Partnership's mailing address set forth below: HEI Preferred Funding, LP c/o HYCAP MANAGEMENT, INC. 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19806 65 (b) if given to the General Partner, at its mailing address set forth below: HYCAP MANAGEMENT, INC. 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19806 (c) if given to any other Partner at the address set forth on the books and records of the Partnership. SECTION 15.2 POWER OF ATTORNEY. Each Holder of a Partnership Preferred Security does hereby constitute and appoint the General Partner, and if applicable, any Special Representative appointed pursuant to Section 6.2(h)(i) of this Agreement, as its true and lawful representative and attorney- in-fact, in its name, place and stead to make, execute, sign, deliver and file (a) any amendment of the Certificate required because of an amendment of this Agreement or in order to effect any change in the Partnership, (b) this Agreement, (c) any amendments to this Agreement adopted in accordance with the terms of this Agreement and (d) all such other instruments, documents and certificates which from time to time may be required by the laws of the United States of America, the State of Delaware or any other jurisdiction, or any political subdivision or agency thereof, to effectuate, implement and continue the valid and subsisting existence of the Partnership or to dissolve the Partnership for any other purpose consistent with this Agreement and the transactions contemplated hereby. The power of attorney granted hereby is coupled with an interest and shall (a) survive and not be affected by the subsequent death, incapacity, disability, dissolution, termination, or bankruptcy of the Holder granting the same or the transfer of all or any portion of such Holder's Interest and (b) extend to such Holder's successors, assigns and legal representatives. SECTION 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties. It supersedes any prior agreement or understandings among them, and it may not be modified or amended in any manner other than as set forth herein. 66 SECTION 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. SECTION 15.5 EFFECT. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, successors and assigns. SECTION 15.6 PRONOUNS AND NUMBER. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or neuter shall include the masculine, feminine and neuter. SECTION 15.7 CAPTIONS. Captions, headings, and subheadings contained in this Agreement are included for convenience and identification purposes only and in no way define, limit or extend the scope or intent of this Agreement or any provision herein. SECTION 15.8 PARTIAL ENFORCEABILITY. If any provision of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. SECTION 15.9 COUNTERPARTS. This Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of the signature of each of the Partners to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. SECTION 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably waives any and all rights (if any) that such 67 Partner may have to maintain any action for partition of any of the Partnership's property. SECTION 15.11 REMEDIES. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above stated. GENERAL PARTNER: HYCAP MANAGEMENT, INC., a Delaware Corporation By:_____________________________ Name: Title: By:_____________________________ Name: Title: 68 INITIAL LIMITED PARTNER: HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, a Delaware Statutory business trust By: HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation Its: Sponsor By: __________________________ Name: Title: By: __________________________ Name: Title: 69 SCHEDULE 1 LIST OF PARTNERS Partner Capital Account - ------- --------------- HYCAP MANAGEMENT, INC. $______________ HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I $______________ ANNEX A FORM OF L.P. CERTIFICATE [IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT: This Partnership Preferred Security Certificate is a Global Certificate within the meaning of the Agreement of Limited Partnership hereinafter referred to and is registered in the name of The Depository Trust Company (the "DEPOSITORY") or a nominee of the Depository. This Partnership Preferred Security is exchangeable for Partnership Preferred Securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances described in the Agreement of Limited Partnership and no transfer of this Partnership Preferred Security (other than a transfer of this Partnership 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 Partnership Preferred Security is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York), a New York corporation, to the Partnership or its agent for registration of transfer, exchange or payment, and any Partnership Preferred Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depository and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of the Depository, 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.] [ ] CERTIFICATE EVIDENCING PARTNERSHIP PREFERRED SECURITIES OF HEI PREFERRED FUNDING, LP ____% Partnership Preferred Securities (liquidation amount $25 per Partnership Preferred Security) HEI PREFERRED FUNDING, LP, a limited partnership formed under the laws of the State of Delaware (the "PARTNERSHIP"), hereby certifies that The Bank of New York, the Property Trustee of Hawaiian Electric Industries Capital Trust I (the "Trust") pursuant to the Amended and Restated Trust Agreement of the Trust, dated as of ______________, 1997 (the "HOLDER"), is the registered owner of ____ preferred securities of the Partnership representing limited partner interests in the Partnership designated the ____% Partnership Preferred Securities (liquidation amount $25 per Partnership Preferred Security) (the "PARTNERSHIP PREFERRED SECURITIES"). The Partnership Preferred Securities are freely transferable on the books and records of the Partnership, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, powers, privileges, restrictions, preferences and other terms and provisions of the Partnership Preferred Securities represented hereby are set forth in, issued under and shall in all respects be subject to the provisions of the Amended and Restated Agreement of Limited Partnership, dated as of _____________, 1997, as the same may be amended from time to time (the "AGREEMENT OF LIMITED PARTNERSHIP"). Capitalized terms used herein but not defined shall have the meaning given to them in the Agreement of Limited Partnership. The Holder is entitled to the benefits of the Partnership Guarantee to the extent provided therein. The Partnership will provide a copy of the Agreement of Limited Partnership and the Partnership Guarantee to a Holder without charge upon written request to the Partnership at its principal place of business. Upon receipt of this certificate, the Holder is admitted to the Partnership as a Limited Partner, is bound by the Agreement of Limited Partnership and is entitled to the benefits thereunder. Each Holder of a Partnership Preferred Security, by acceptance of this Certificate and each Certificate owner, by acquisition of a beneficial interest in a Certificate, agrees to treat the Initial Debentures, and any other Affiliate Investment Instruments that are treated as debt instruments by the relevant Investment Affiliate and by the Partnership, as indebtedness for United States federal income tax purposes. IN WITNESS WHEREOF, the Partnership has executed this certificate this ____ day of _______________, 1997. HEI PREFERRED FUNDING, LP BY: HYCAP MANAGEMENT, INC. AS GENERAL PARTNER BY: ___________________________ NAME: ____________________ TITLE: ___________________ BY: ___________________________ NAME: ____________________ TITLE: ___________________ (SEE REVERSE FOR ADDITIONAL TERMS) [FORM OF REVERSE OF SECURITY] Distributions payable on each Partnership Preferred Security will be fixed at a rate per annum of ____% of the stated liquidation amount of $25 per Partnership Preferred Security. 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 ("COMPOUNDED DISTRIBUTIONS"). The term "DISTRIBUTIONS" as used herein shall mean ordinary cumulative distributions in respect of each quarterly payment period together with any such Compounded Distributions. Distributions on the Partnership Preferred Securities will be paid only if, as and when declared in the sole discretion of the General Partner of the Partnership out of funds legally available for the payment of such distributions. Amounts available to the Partnership for distribution to the holders of the Partnership Preferred Securities will be limited to payments received by the Partnership from Hawaiian Electric Industries, Inc. and certain of its subsidiaries on Affiliate Investment Instruments or from Hawaiian Electric Industries, Inc. on the Partnership Guarantee or on the Eligible Debt Securities. 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, and for any period shorter than a full quarterly Distribution period on the basis of the actual number of days elapsed in a 90-day quarter. Except as otherwise described herein, distributions on the Partnership Preferred Securities will be cumulative, will accrue from the date of initial issuance and will be payable quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 1997, if, as and when declared by the General Partner in its sole discretion. If the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred Securities) are in book-entry only form, Distributions will be payable to the Holders of record of Partnership Preferred Securities as they appear on the books and records of the Partnership on the relevant record dates, which will be one Business Day prior to the relevant payment dates. If the Trust or the Property Trustee is the Holder of the Partnership Preferred Securities, all distributions of cash shall be made by wire transfer of same day funds to such Holder by 12:00 Noon, New York City time, on the applicable Distribution Payment Date. Distributions payable on any Partnership Preferred Securities that are not punctually paid on any Distribution Payment Date will cease to be payable to the Person in whose name such Partnership Preferred Securities are registered on the relevant record date, and such Distribution will instead be payable to the Person in whose name such Partnership Preferred Securities are registered on the record date for payment of such defaulted or accrued Distribution. If the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred Securities) are not in book-entry only form, the relevant record dates shall be the 15th day of the month of the relevant payment dates. In the event that any date on which Distributions are payable is not a Business Day, payment of such Distributions shall be made on the next succeeding day which is a Business Day (without any interest 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 in interest or other amounts in respect of any such early payment), in each case with the same force and effect as if made on the payment date. The Partnership Preferred Securities shall be redeemable as provided in the Agreement of Limited Partnership. ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Partnership Preferred Security Certificate to: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ (INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER) _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ (INSERT ADDRESS AND ZIP CODE OF ASSIGNEE) and irrevocably appoints _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ agent to transfer this Partnership Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ______________________________ Signature: _________________________ (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS PARTNERSHIP PREFERRED SECURITY CERTIFICATE) EX-4.(F) 6 FORM OF AMENDED AND RESTATED TRUST AGMT. Exhibit 4(f) ------------ AMENDED AND RESTATED TRUST AGREEMENT OF HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ DATED AS OF , 1997 -------------- TABLE OF CONTENTS Page ---- ARTICLE I--INTERPRETATION AND DEFINITIONS
1.1 Definitions.................................. 1 ARTICLE II--TRUST INDENTURE ACT 2.1 Trust Indenture Act; Application............. 13 2.2 Lists of Holders of Trust Securities......... 13 2.3 Reports by the Property Trustee.............. 14 2.4 Periodic Reports to Property Trustee......... 14 2.5 Evidence of Compliance with Conditions Precedent.................... 14 2.6 Trust Enforcement Events; Waiver............. 15 2.7 Trust Enforcement Event; Notice.............. 17 ARTICLE III--ORGANIZATION 3.1 Name......................................... 18 3.2 Office....................................... 18 3.3 Purpose...................................... 18 3.4 Authority.................................... 18 3.5 Title to Property of the Trust............... 19 3.6 Powers and Duties of the Regular Trustees.... 19 3.7 Prohibition of Actions by the Trust and the Trustees............................. 22 3.8 Powers and Duties of the Property Trustee.... 23 3.9 Certain Duties and Responsibilities of the Property Trustee...................... 26 3.10 Certain Rights of Property Trustee........... 28 3.11 Delaware Trustee............................. 31 3.12 Execution of Documents....................... 31 3.13 Not Responsible for Recitals or Issuance of Trust Securities.............. 32 3.14 Duration of Trust............................ 32 3.15 Mergers...................................... 32
ARTICLE IV--SPONSOR 4.1 Responsibilities of the Sponsor.............. 34 4.2 Indemnification and Expenses of the Property Trustee and the Delaware Trustee...................................... 36 ARTICLE V--TRUST COMMON SECURITIES HOLDER 5.1 Company's Purchase of Trust Common Securities............................ 36 5.2 Covenants of the Trust Common Securities Holder............................ 36 ARTICLE VI--TRUSTEES 6.1 Number of Trustees........................... 36 6.2 Delaware Trustee............................. 37 6.3 Property Trustee; Eligibility................ 37 6.4 Qualifications of Regular Trustees and Delaware Trustee Generally............... 38 6.5 Regular Trustees............................. 38 6.6 Delaware Trustee............................. 39 6.7 Appointment, Removal and Resignation of Trustees.................................. 39 6.8 Vacancies among Trustees..................... 41 6.9 Effect of Vacancies.......................... 41 6.10 Meetings..................................... 41 6.11 Delegation of Power.......................... 42 6.12 Merger, Conversion, Consolidation or Succession to Business.................... 42 ARTICLE VII--DISTRIBUTIONS 7.1 Distributions................................ 43 ARTICLE VIII--ISSUANCE OF TRUST SECURITIES 8.1 Designation and General Provisions Regarding Trust Securities................... 45 8.2 Redemption of Trust Securities............... 48 8.3 Redemption Procedures........................ 50 8.4 Voting Rights of Trust Preferred Securities................................... 52
8.5 Voting Rights of Trust Common Securities..... 56 8.6 Paying Agent................................. 58 8.7 Listing...................................... 59 8.8 Acceptance of Trust Agreement, Affiliate Investment Instruments, Guarantees and Agreement of Limited Partnership.................................. 59 ARTICLE IX--TERMINATION AND LIQUIDATION OF THE TRUST 9.1 Dissolution of Trust......................... 59 9.2 Liquidation Distribution Upon Termination and Dissolution of the Trust..... 60 ARTICLE X--TRANSFER OF INTERESTS 10.1 Transfer of Trust Securities................. 62 10.2 Transfer of Certificates..................... 63 10.3 Deemed Security Holders...................... 63 10.4 Book-Entry Interests......................... 63 10.5 Notices to Clearing Agency................... 65 10.6 Appointment of Successor Clearing Agency..... 65 10.7 Definitive Trust Preferred Security Certificates........................ 65 10.8 Mutilated, Destroyed, Lost or Stolen Certificates....................... 66 ARTICLE XI--LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS 11.1 Liability.................................... 67 11.2 Exculpation.................................. 68 11.3 Fiduciary Duty............................... 68 11.4 Indemnification.............................. 70 11.5 Outside Businesses........................... 74 ARTICLE XII--ACCOUNTING 12.1 Fiscal Year.................................. 74 12.2 Certain Accounting Matters................... 75 12.3 Banking...................................... 76 12.4 Withholding.................................. 76
ARTICLE XIII--AMENDMENTS AND MEETINGS 13.1 Amendments................................... 77 13.2 Meetings of the Holders of Trust Securities; Action by Written Consent........ 80 ARTICLE XIV--REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE 14.1 Representations and Warranties of Property Trustee.......................... 82 14.2 Representations and Warranties of Delaware Trustee.......................... 83 ARTICLE XV--MISCELLANEOUS 15.1 Notices...................................... 84 15.2 Governing Law................................ 85 15.3 Intention of the Parties..................... 85 15.4 Headings..................................... 85 15.5 Successors and Assigns....................... 85 15.6 Partial Enforceability....................... 86 15.7 Counterparts................................. 86 EXHIBIT A-1 -- FORM OF PREFERRED SECURITY CERTIFICATE..... A-1.1 EXHIBIT A-2 -- FORM OF COMMON SECURITY CERTIFICATE........ A-2.1
CROSS-REFERENCE TABLE*
SECTION OF SECTION OF ACT TRUST AGREEMENT -------------- --------------- 310(a)(1) and (2)........................ 6.3(a) 310(a)(3) and (4)........................ Inapplicable 310(b)................................... 6.3(b) 310(c)................................... Inapplicable 311(a)................................... 2.2(b) 311(b)................................... 2.2(b) 311(c)................................... Inapplicable 312(a)................................... 2.2(a) 312(b)................................... 2.2(b) 312(c)................................... 2.2(b) 313(a),(b)(2),(c) and (d)................ 2.3, 12.2(b) 313(b)(1)................................ Inapplicable 314(a)................................... 2.4 314(b)................................... Inapplicable 314(c)(1) and (2)........................ 2.5 314(c)(3)................................ Inapplicable 314(d)................................... Inapplicable 314(e)................................... 1.1 314(f)................................... Inapplicable 315(a) and (d)........................... 3.9(b) 315(b)................................... 2.7 315(c)................................... 3.9(a) 315(e)................................... 2.1(a) 316(a)(1)................................ 2.6, 8.4, and 8.5 316(a)(2)................................ Not required 316(a) (last sentence)................... 1.1 316(b)................................... 2.1 316(c)................................... 3.6(d) 317(a)................................... 2.1 317(b)................................... 3.8(g) 318(a)................................... 2.1(c)
- ------------------------- * This Cross-Reference Table does not constitute part of this Trust Agreement and shall not affect the interpretation of any of its terms or provisions. AMENDED AND RESTATED TRUST AGREEMENT OF HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement") dated and effective as of _____________, 1997, by the Trustees (as defined herein), the Sponsor (as defined herein) and by the Holders (as defined herein), from time to time, of undivided beneficial interests in the Trust to be issued pursuant to this Trust Agreement; WHEREAS, certain of the Trustees and the Sponsor established HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ (the "Trust"), a statutory business trust created under the Business Trust Act (as defined herein) pursuant to a Trust Agreement dated as of December 19, 1996 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on December 23, 1996, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in the Partnership Preferred Securities (as defined herein); WHEREAS, the parties hereto by this Trust Agreement, wish to amend and restate each and every term and provision of the Original Declaration. NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a business trust under the Business Trust Act and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the Holders, from time to time, of the securities representing undivided beneficial ownership interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I INTERPRETATION AND DEFINITIONS Section 1.1 Definitions. ----------- Unless the context otherwise requires: (a) capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Declaration has the same meaning throughout; (c) all references to "this Trust Agreement" are to this Trust Agreement as modified, supplemented or amended from time to time; (d) all references in this Trust Agreement to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Trust Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Trust Agreement unless otherwise defined in this Trust Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) a term used in this Trust Agreement and not otherwise defined herein shall have the meaning ascribed to such term in the Agreement of Limited Partnership. "Affiliate" means, with respect to any specified person, any other person that directly or indirectly controls or is controlled by, or is under common control with such specified person. 1 "Affiliate Investment Instruments" has the meaning set forth in Section 7.1 of the Agreement Limited Partnership. "Agreement of Limited Partnership" means the Amended and Restated Agreement of Limited Partnership of HEI Preferred Funding, LP dated as of 1997. - --------------, "Authorized Officer" of a Person means any Person that is authorized to bind such Person. "Book-Entry Interest" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as set forth in Section 10.4 of this Trust Agreement. "Business Day" means any day other than a day on which banking institutions in The City of New York are authorized or required by law to close. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801 et seq., as it may be amended from time to time, or any successor legislation. "Certificate" means a Trust Common Security Certificate or a Trust Preferred Security Certificate. "Change in 1940 Act Law" means any change on or after the date of the prospectus supplement relating to the issuance of the Trust Preferred Securities in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority with the result that there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the 1940 Act. "Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary for the Trust Preferred Securities and in whose name or in the name of a nominee of that organization shall be registered a Global Certificate and which shall undertake to effect book-entry transfers and pledges of beneficial interests in the Trust Preferred Securities. 2 "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book-entry transfers and pledges of interest in securities deposited with the Clearing Agency. "Closing Date" means _______________, 1997. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. "Commission" means the Securities and Exchange Commission. "Common Security Holder of the Trust" means the Company in its capacity as Holder of the Trust Common Security. "Company" means Hawaiian Electric Industries, Inc., a Hawaii corporation. "Company Indemnified Person" means (a) any Regular Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Regular Trustee; or (d) any officer, director, shareholder, member, partner, employee, representative or agent of the Trust or its Affiliates. "Compounded Distributions" has the meaning set forth in Section 7.1(a) of this Trust Agreement. "Corporate Trust Office" means the principal corporate trust office of the Property Trustee at which, at any particular time, its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, 21st Floor, New York, NY 10286. "Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Trust Securities. 3 "Definitive Trust Preferred Security Certificates" has the meaning set forth in Section 10.4 of this Trust Agreement. "Delaware Trustee" has the meaning set forth in Section 6.2 of this Trust Agreement. "Distribution" has the meaning set forth in Section 7.1(a) of this Trust Agreement. "DTC" means The Depository Trust Company, the initial Clearing Agency. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Fiduciary Indemnified Person" has the meaning set forth in Section 11.4(b) of this Trust Agreement. "Fiscal Period" has the meaning set forth in Section 1.1 of the Agreement of Limited Partnership. "Fiscal Year" has the meaning set forth in Section 12.1 of this Trust Agreement. "General Partner" means Hycap Management, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, in its capacity as the general partner of the Partnership, its permitted successors, or any successor general partner in the Partnership admitted as such pursuant to the Agreement of Limited Partnership. "Global Certificate" has the meaning set forth in Section 10.4 of this Trust Agreement. "Holder" means a Person in whose name a certificate representing a Trust Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person. 4 "Initial Debentures" has the meaning set forth in Section 7.1(b) of the Agreement of Limited Partnership. "Investment Affiliate" means the Company or any corporation, partnership, limited liability company or other entity (other than the Partnership or the Trust) that is controlled by the Company and is not an Investment Company by reason of Section 3(a) or 3(b) of the 1940 Act. "Investment Company" means an investment company as defined in the 1940 Act. "Investment Guarantee" means any guarantee by the Company with respect to (1) payment of interest, principal and other payment terms of Affiliate Investment Instruments that are debt securities of an Investment Affiliate and (2) the payment of dividends, distributions and other payment terms of Affiliate Investment Instruments that are preferred or preference stock of an Investment Affiliate when, as and if declared by such Investment Affiliate. "Legal Action" has the meaning set forth in Section 3.6(h) of this Trust Agreement. "List of Holders" has the meaning set forth in Section 2.2(a) of this Trust Agreement. "Majority in liquidation amount of the Trust Securities" means, 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, as the context may require, Holders of outstanding Trust Preferred Securities or the Holder of the outstanding Trust Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (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 Securities of the relevant class, as the case may be. 5 "Ministerial Action" means, a ministerial action (such as filing a form or making an election or pursuing some other similar reasonable measure) which in the sole judgment of the Company has or will cause no adverse effect on the Trust, the Partnership, the Company, or the Holders of the Trust Securities and will involve no material cost. "Nasdaq" means the National Association of Securities Dealers Automated Quotation System. "1940 Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Officers' Certificate" means, with respect to any Person (who is not an individual), a certificate signed by two authorized officers of such Person, and, with respect to a natural person, a certificate signed by such person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Partnership" means HEI Preferred Funding, LP, a Delaware limited partnership formed pursuant to the Agreement of Limited Partnership and any successor entity thereto. 6 "Partnership Enforcement Event" has the meaning set forth in Section 6.2(h)(i) of the Agreement of Limited Partnership. "Partnership Guarantee" means the Partnership Guarantee Agreement between the Company and The Bank of New York, as trustee, dated as of _____________, 1997, by the Company in favor of the Partnership Preferred Security Holders with respect to the Partnership Preferred Securities, as amended or supplemented from time to time. "Partnership Preferred Securities" has the meaning set forth in Section 1.1 of the Agreement of Limited Partnership. "Partnership Special Event" has the meaning set forth in Section 1.1 of the Agreement of Limited Partnership. "Payment Amount" has the meaning set forth in Section 7.1(a) of this Trust Agreement. "Paying Agent" has the meaning set forth in Section 3.8(g) of this Trust Agreement. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Security Beneficial Owner" means, with respect to a Book- Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, and in each case in accordance with the rules of such Clearing Agency). "Property Account" has the meaning set forth in Section 3.8(c) of this Trust Agreement. 7 "Property Trustee" means the Trustee meeting the eligibility requirements set forth in Section 6.3 of this Trust Agreement. "Pro Rata" means, in reference to any distributions on or redemptions of Trust Securities or the distribution of Partnership Preferred Securities or any other payment with respect to Trust Securities in connection with a Trust Special Event or liquidation of the Trust, pro rata to each Holder of Trust Securities according to the aggregate liquidation amount of the Trust Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Trust Securities outstanding. "Quorum" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both of them. "Redemption Price" has the meaning set forth in Section 8.2(a) of this Trust Agreement. "Regular Trustee" has the meaning set forth in Section 6.1 of this Trust Agreement. "Related Party" means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary of the Sponsor or any Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor. "Responsible Officer" means, with respect to the Property Trustee, any officer within the Corporate Trust Office of the Property Trustee, including any vice-president, any assistant vice-president, any secretary, any assistant secretary, the treasurer, any assistant treasurer or other officer of the Corporate Trust Office of the Property Trustee customarily performing functions similar to those performed by any of the above designated officers, who has direct responsibility for the administration of the Trust, 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. "Rule 3a-5" means Rule 3a-5 under the 1940 Act. 8 "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Special Representative" has the meaning set forth in Section 6.2(h)(i) of the Agreement of Limited Partnership. "Sponsor" means the Company or any successor entity in a merger, conversion, consolidation or amalgamation, in its capacity as sponsor of the Trust. "Successor Delaware Trustee" has the meaning set forth in Section 6.7(b) of this Trust Agreement. "Successor Entity" has the meaning set forth in Section 3.15 of this Trust Agreement. "Successor Property Trustee" has the meaning set forth in Section 6.7(b) of this Trust Agreement. "Successor Trust Securities" has the meaning set forth in Section 3.15 of this Trust Agreement. "Super Majority" has the meaning set forth in Section 2.6(a)(ii) of this Trust Agreement. "Tax Action" means (a) an amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) a judicial decision interpreting, applying or clarifying such laws or regulations, (c) an 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 (d) a threatened challenge asserted in connection with an audit of the Company or any of its subsidiaries, the Partnership or the Trust, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Initial Debentures, the Partnership Preferred Securities or the Trust Preferred Securities, which amendment or change is adopted or which decision, pronouncement or 9 proposed change is announced or which action, clarification or challenge occurs on or after the date of the prospectus related to the issuance of the Trust Preferred Securities. "10% in liquidation amount of the Trust Securities" means, 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, as the context may require, Holders of outstanding Trust Preferred Securities or the Holder of the outstanding Trust Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate liquidation amount (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 Securities of the relevant class, as the case may be. "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury Department, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Trust Common Security" has the meaning set forth in Section 8.1 of this Trust Agreement. "Trust Common Security Certificate" means a definitive certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-2. "Trust Common Securities Guarantee" means the Trust Common Securities Guarantee Agreement dated as of ____________, 1997, entered into by the Company, as Guarantor, for the benefit of the holders of the Trust Common Securities. "Trust Dissolution Tax Opinion" means an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that there has been a Trust Tax Event. 10 "Trust Enforcement Event" means the occurrence, at any time, of (i) arrearages on distributions on the Trust Preferred Securities that shall exist for six consecutive quarterly distribution periods, (ii) a default by the Company in respect of any of its obligations under the Trust Preferred Securities Guarantee or (iii) a Partnership Enforcement Event. "Trust Guarantees" means the Trust Common Securities Guarantee and the Trust Preferred Securities Guarantee, collectively. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "Trust Investment Company Event" means that the Company shall have requested and received and shall have delivered to the Regular Trustees an opinion of nationally recognized independent legal counsel experienced in such matters to the effect that, as a result of a Change in 1940 Act Law, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the 1940 Act. "Trust Liquidation" has the meaning set forth in Section 9.2(a) of this Trust Agreement. "Trust Liquidation Distribution" has the meaning set forth in Section 9.2(a) of this Trust Agreement. "Trust Preferred Securities Guarantee" has the meaning set forth in Section 1.1 of the Agreement of Limited Partnership. "Trust Preferred Security" has the meaning set forth in Section 8.1(a) of this Trust Agreement. "Trust Preferred Security Beneficial Owner" means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in 11 each case in accordance with the rules of such Clearing Agency). "Trust Preferred Security Certificate" means a certificate representing a Trust Preferred Security substantially in the form of Exhibit A-1. "Trust Redemption Tax Opinion" means an opinion of nationally recognized independent tax counsel (which may be counsel for the Company) experienced in such matters that there has been a Trust Tax Event, and following such Trust Tax Event there is more than an insubstantial risk that interest payable by one or more of the Investment Affiliates with respect to the Initial Debentures issued by such Investment Affiliate is not, or will not be, deductible by such Investment Affiliate for United States federal income tax purposes even if the Partnership Preferred Securities were distributed to the Holders of the Trust Securities in liquidation of such Holders' interests in the Trust. "Trust Securities" means the Trust Common Securities and the Trust Preferred Securities. "Trust Special Event" means a Trust Tax Event or a Trust Investment Company Event. "Trust Tax Event" means that the Company shall have requested and received and shall have delivered to the Regular Trustees, a Trust Dissolution Tax Opinion to the effect that there has been a Tax Action that results in there being more than an insubstantial risk that (i) the Trust is, or will be, subject to United States federal income tax with respect to income accumulated or received on the Partnership Preferred Securities, (ii) the Trust is, or will be, subject to more than a de minimis amount of other taxes, duties or other governmental charges or (iii) interest payable by an Investment Affiliate with respect to the Initial Debentures is not, or will not be, deductible by such Investment Affiliate for United States federal income tax purposes. "Trustee" or "Trustees" means each Person who has signed this Trust Agreement as a trustee, so long as such Person shall continue in office in accordance with the terms 12 hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. ARTICLE II TRUST INDENTURE ACT Section 2.1 Trust Indenture Act; Application. -------------------------------- (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, including, but not limited to, Sections 315(e), 316(b) and 317(a) of the Trust Indenture Act. (b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act. (c) If and to the extent that any provision of this Trust Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such duties imposed by the Trust Indenture Act shall control. (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 2.2 Lists of Holders of Trust Securities. ------------------------------------ (a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Property Trustee (i) within 14 days after each record date for payment of Distributions, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders of the Trust Securities ("List of Holders") as of such record date, provided that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Sponsor and the Regular Trustees on 13 behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity) provided that the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Property Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. The Property Trustee and Sponsor are protected under Section 312(c) of the Trust Indenture Act. Section 2.3 Reports by the Property Trustee. Within 60 days after ------------------------------- May 15 of each year, the Property Trustee shall provide to the Holders of the Trust Preferred Securities such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with Section 313(b) of the Trust Indenture Act, if and as required, in the form and manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. Section 2.4 Periodic Reports to Property Trustee. Each of the ------------------------------------ Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314(a) 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(a) of the Trust Indenture Act. Section 2.5 Evidence of Compliance with Conditions Precedent. Each ------------------------------------------------ of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any 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. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. 14 Section 2.6 Trust Enforcement Events; Waiver. -------------------------------- (a) The Holders of a Majority in liquidation amount of Trust Preferred Securities may, by vote, on behalf of the Holders of all of the Trust Preferred Securities, waive any past Trust Enforcement Event in respect of the Trust Preferred Securities and its consequences, provided that, if the underlying event of default or Partnership Enforcement Event: (i) is not waivable under the Trust Preferred Securities Guarantee or the Agreement of Limited Partnership, the Trust Enforcement Event under this Trust Agreement shall also not be waivable; or (ii) requires the consent or vote of the Holders of greater than a Majority in liquidation amount of the Trust Preferred Securities to be waived under the Trust Preferred Securities Guarantee or the Partnership Preferred Securities to be waived under the Agreement of Limited Partnership (a "Super Majority"), the Trust Enforcement Event under this Trust Agreement may only be waived by the vote of the Holders of at least the relevant Super Majority in liquidation amount of the Trust Preferred Securities. The foregoing provisions of this Section 2.6(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Trust Agreement and the Trust Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Trust Enforcement Event with respect to the Trust Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Trust Agreement, but no such waiver shall extend to any subsequent or other default or Trust Enforcement Event with respect to the Trust Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Trust Preferred Securities of Trust Enforcement Events with respect to the Trust Preferred Securities shall also be deemed to constitute a waiver by the Holder of the Trust Common Securities of any such Trust Enforcement Event with respect to the Trust Common Securities for all purposes of this Trust Agreement without any further 15 act, vote, or consent of the Holder of the Trust Common Securities. (b) The Holder of the Trust Common Securities may waive any past Trust Enforcement Event with respect to the Trust Common Securities and its consequences, provided that, if the underlying event of default or Partnership Enforcement Event: (i) is not waivable under the Trust Common Securities Guarantee or the Agreement of Limited Partnership, except where the Holder of the Trust Common Securities is deemed to have waived such Trust Enforcement Event under this Trust Agreement as provided below in this Section 2.6(b), the Trust Enforcement Event under this Trust Agreement shall also not be waivable; or (ii) requires the consent or vote of the Holders of a Super Majority to be waived, except where the Holder of the Trust Common Securities is deemed to have waived such Trust Enforcement Event under the Trust Agreement as provided below in this Section 2.6(b), the Trust Enforcement Event under this Trust Agreement may only be waived by the vote of the Holder of the Trust Common Securities; provided further, the Holder of Trust Common Securities will be deemed to have waived any such Trust Enforcement Event and all Trust Enforcement Events with respect to the Trust Common Securities and its consequences until all Trust Enforcement Events with respect to the Trust Preferred Securities have been cured, waived or otherwise eliminated, and until such Trust Enforcement Events have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Trust Preferred Securities and only the Holders of the Trust Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Trust Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Trust Agreement and the Trust Securities, as permitted by the Trust Indenture Act. 16 Subject to the foregoing provisions of this Section 2.6(b), upon such waiver, any such default shall cease to exist and any Trust Enforcement Event with respect to the Trust Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Trust Agreement, but no such waiver shall extend to any subsequent or other default or Trust Enforcement Event with respect to the Trust Common Securities or impair any right consequent thereon. (c) A waiver of Partnership Enforcement Events under the Agreement of Limited Partnership by the Property Trustee at the direction of the Holders of the Trust Preferred Securities constitutes a waiver of the corresponding Trust Enforcement Event under this Trust Agreement. The foregoing provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Trust Agreement and the Trust Securities, as permitted by the Trust Indenture Act. Section 2.7 Trust Enforcement Event; Notice. The Property Trustee ------------------------------- shall, within 90 days after the occurrence of a Trust Enforcement Event, transmit by mail, first class postage prepaid, to the Holders of the Trust Securities as the names and addresses of the Holders appear on the books and records of the Trust, notices of all defaults with respect to the Trust Securities actually known to a Responsible Officer of the Property Trustee, unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 2.7 being hereby defined to be defaults as defined in the Trust Guarantees or the Agreement of Limited Partnership, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); provided that, except for a default in the payment of principal of (or premium, if any) or interest on any of the Affiliate Investment Instruments or in the payment of any sinking fund installment established for the Affiliate Investment Instruments, the Property Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Trust Securities. 17 ARTICLE III ORGANIZATION Section 3.1 Name. The Trust is named "Hawaiian Electric Industries ---- Capital Trust __", as such name may be modified from time to time by the Regular Trustees following written notice to the Holders of Trust Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. Section 3.2 Office. The address of the principal office of the Trust ------ is c/o Hycap Management, Inc., 300 Delaware Avenue, Suite 1704, Wilmington, Delaware 19806. On ten Business Days written notice to the Holders of Trust Securities, the Regular Trustees may designate another principal office. Section 3.3 Purpose. The exclusive purposes and functions of the ------- Trust are (a) to issue and sell Trust Securities and to use the proceeds from such sale to acquire the Partnership Preferred Securities, and (b) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would be inconsistent with the Trust being classified for United States federal income tax purposes as a grantor trust. Section 3.4 Authority. Subject to the limitations provided in this --------- Trust Agreement and to the specific duties of the Property Trustee, the Regular Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Regular Trustees and the Sponsor in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee on behalf of the Trust in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees and the Sponsor acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees or the Sponsor to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees and the Sponsor as set forth in this Trust Agreement. 18 Section 3.5 Title to Property of the Trust. Except as provided in ------------------------------ Section 3.8 with respect to the Partnership Preferred Securities and the Property Account or as otherwise provided in this Trust Agreement, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial ownership interest in the assets of the Trust. Section 3.6 Powers and Duties of the Regular Trustees. The Regular ----------------------------------------- Trustees shall have the exclusive power, duty and authority to cause the Trust to engage in the following activities: (a) To issue and sell the Trust Securities in accordance with this Trust Agreement, and to execute and deliver (after authentication thereof by the Property Trustee if such execution is by the facsimile signature of a Regular Trustee) 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) To acquire the Partnership Preferred Securities with the proceeds of the sale of the Trust Securities, including the execution and delivery of the Agreement of Limited Partnership in connection therewith on behalf of the Trust, as the initial limited partner; provided, however, that the Regular Trustees shall cause legal title to the Partnership Preferred Securities to be held of record in the name of the Property Trustee for the benefit of the Holders of the Trust Preferred Securities and the Holder of the Trust Common Securities; (c) To give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Trust Special Event; provided that the Regular Trustees shall consult with the Sponsor and the Property Trustee before taking or refraining from taking any Ministerial Action in relation to a Trust Special Event; 19 (d) To establish 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, and to issue relevant notices to the Holders of Trust Preferred Securities and the Holder of the Trust Common Securities as to such actions and applicable record dates; (e) To give prompt written notice to the Holders of the Trust Securities of any notice received from the Partnership of the General Partner's election not to make a current, quarterly distribution on the Partnership Preferred Securities under the Agreement of Limited Partnership; (f) To take all actions and perform such duties as may be required of the Regular Trustees pursuant to the terms of the Trust Securities; (g) To bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless, pursuant to Section 3.8(f), the Property Trustee has the exclusive power to bring such Legal Action; (h) To employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (i) To cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) To give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Regular Trustee; (k) To incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; (l) To act as, or appoint another Person to act as, registrar and transfer agent for the Trust Securities; 20 (m) To execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing; (n) To take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to 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; and (o) To take any action, or to take no action, not inconsistent with this Trust Agreement or with applicable law, that the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.6, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the 1940 Act; and (ii) taking no action which would be inconsistent with the Trust being classified as a grantor trust for United States federal income tax purposes; provided that such action does not materially adversely affect the interests of Holders; and (p) To take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of the Trust. The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.3. 21 Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.8. Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of the Agreement of Limited Partnership. Section 3.7 Prohibition of Actions by the Trust and the Trustees. ---------------------------------------------------- The Trust shall not, and the Trustees (including the Property Trustee) shall cause the Trust not to, engage in any activity other than as required or authorized by this Trust Agreement. In particular, the Trust shall not and the Trustees (including the Property Trustee) shall cause the Trust not to: (a) invest any proceeds received by the Trust from holding the Partnership Preferred Securities, but shall distribute all such proceeds to Holders of Trust Securities pursuant to the terms of this Trust Agreement and of the Trust Securities; (b) acquire any assets other than as expressly provided herein; (c) possess Trust property for other than a Trust purpose; (d) make any loans or incur any indebtedness or acquire any securities other than the Partnership Preferred Securities; (e) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Trust Securities in any way whatsoever; (f) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Trust Securities; (g) other than as set forth herein, (A) cause the Special Representative to direct the time, method and place of conducting any proceeding for any remedy available to the 22 Special Representative or exercising any trust or power conferred upon the Special Representative with respect to the Partnership Preferred Securities, the Affiliate Investment Instruments, and the Investment Guarantees, (B) cause the Special Representative to waive any past default that is waivable under the Agreement of Limited Partnership, the Affiliate Investment Instruments or the Investment Guarantees, (C) cause the Special Representative to exercise any right to rescind or annul any declaration that the principal of, or other amounts in respect of, any Affiliate Investment Instruments is due and payable or (D) consent to any amendment, modification or termination of the Agreement of Limited Partnership or the Partnership Preferred Securities where such consent shall be required; and (h) other than in connection with the liquidation of the Trust pursuant to a Trust Special Event or upon redemption of all the Trust Securities, file a certificate of cancellation of the Trust. Section 3.8 Powers and Duties of the Property Trustee. ----------------------------------------- (a) The legal title to the Partnership Preferred Securities shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Holders of the Trust Securities. The right, title and interest of the Property Trustee to the Partnership Preferred Securities shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 6.7. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Partnership Preferred Securities have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Partnership Preferred Securities to the Regular Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). 23 (c) The Property Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "Property Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Trust Securities and, upon the receipt of payments of funds made in respect of the Partnership Preferred Securities held by the Property Trustee, deposit such funds into the Property Account and make payments to the Holders of the Trust Securities from the Property Account in accordance with Section 7.1. Funds in the Property Account shall be held uninvested until disbursed in accordance with this Trust Agreement. The Property Account shall be an account that is maintained with a banking institution authorized to exercise corporate trust powers and having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authority; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Trust Securities to the extent the Partnership Preferred Securities are redeemed; and (iii) upon written notice of distribution issued by the Regular Trustees in accordance with the terms of the Trust Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Partnership Preferred Securities to Holders of Trust Securities upon the occurrence of a Trust Special Event. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of the Trust Securities. (e) The Property Trustee shall take any Legal Action which arises out of or in connection with (i) a Trust Enforcement Event of which a Responsible Officer of the Property Trustee has actual knowledge or (ii) the Property Trustee's duties and obligations under this Trust Agreement or the Trust Indenture Act. (f) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a 24 Holder of Partnership Preferred Securities and, if a Trust Enforcement Event occurs and is continuing, the Property Trustee shall, for the benefit of Holders of the Trust Securities, enforce its rights as Holder of the Partnership Preferred Securities subject to the rights of the Holders pursuant to the terms of such Trust Securities. (g) The Property Trustee may authorize one or more Persons (each, a "Paying Agent") to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to all Trust Securities and any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the Property Trustee at any time and a successor Paying Agent or additional Paying Agents may be appointed at any time by the Property Trustee. (h) The Property Trustee shall continue to serve as a Trustee until either: (i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Trust Securities pursuant to the terms of the Trust Securities; or (ii) a Successor Property Trustee has been appointed and has accepted that appointment in accordance with Section 6.7. (i) Subject to this Section 3.8, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6. The Property Trustee must exercise the powers set forth in this Section 3.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Property Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3. 25 Section 3.9 Certain Duties and Responsibilities of the Property --------------------------------------------------- Trustee. - ------- (a) The Property Trustee, before the occurrence of any Trust Enforcement Event and after the curing or waiver of all Trust Enforcement Events that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Trust Agreement and no implied covenants shall be read into this Trust Agreement against the Property Trustee. In case a Trust Enforcement Event has occurred (that has not been cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of a Trust Enforcement Event and after the curing or waiving of all such Trust Enforcement Events that may have occurred: (A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Trust Agreement and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Trust Agreement, and no implied covenants or obligations shall be read into this Trust Agreement against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property 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 Property Trustee and conforming to the requirements of this Trust Agreement; but in the case of any such certificates or opinions that by any 26 provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Trust Agreement; (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (iii) subject to the requirement of the Property Trustee receiving a tax opinion as set forth in Section 8.4(d) or 8.5(c), as the case may be, the Property 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 not less than a Majority in liquidation amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; (iv) no provision of this Trust Agreement shall require the Property 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 it 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 Agreement or indemnity reasonably satisfactory to the Property Trustee against such risk or liability is not reasonably assured to it; (v) the Property Trustee's sole duty with respect to the custody, safekeeping and physical preservation of the Partnership Preferred Securities and the Property Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act; (vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, 27 existence or sufficiency of the Partnership Preferred Securities or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Account maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law; and (viii) the Property Trustee shall not be responsible for monitoring the compliance by the Regular Trustees or the Sponsor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for any default or misconduct of the Regular Trustees or the Sponsor. Section 3.10 Certain Rights of Property Trustee. ---------------------------------- (a) Subject to the provisions of Section 3.9: (i) the Property Trustee may conclusively 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; (ii) any direction or act of the Sponsor or the Regular Trustees acting on behalf of the Trust contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Regular Trustees; 28 (iv) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or registration thereof; (v) the Property Trustee may, at the expense of the Sponsor, consult with counsel or other experts and the advice or opinion of such counsel and 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 accordance with such advice or opinion; such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of its employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; (vi) 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 Holder, unless (a) such Holder shall have provided to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the fees, charges, costs, expenses (including attorneys' fees and expenses and the expenses of the Property Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Property Trustee and (b) the Property Trustee has obtained the legal opinions, if any, required by Section 8.4(d) or 8.5(c), as the case may be, of this Agreement; provided, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence of a Trust Enforcement Event, of its obligation to exercise the rights and powers vested in it by this Trust Agreement; (vii) 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, bond, 29 debenture, note, 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; (viii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees 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; (ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Trust Securities, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Trust Agreement, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (x) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (a) may request instructions from the Holders of the Trust Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (b) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (c) shall be protected in conclusively relying on or acting in accordance with such instructions; provided, however, that the Property Trustee shall not be required to take any action unless it shall have obtained such legal opinions, if any, required by Sections 8.4(d) or 8.5(c), as the case may be, of this Agreement; and (xi) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under 30 any obligation to take any action that is discretionary under the provisions of this Trust Agreement. In the event that the Property Trustee is also acting as authenticating agent, Paying Agent, transfer agent and security registrar, the rights and protections afforded to the Property Trustee pursuant to this Article III shall also be afforded to such authenticating agent, Paying Agent, transfer agent and security registrar. (b) No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property 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 Property 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 Property Trustee shall be construed to be a duty. Section 3.11 Delaware Trustee. Notwithstanding any provision of this ---------------- Trust Agreement other than Section 6.2, 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 Regular Trustees or the Property Trustee described in this Trust Agreement. Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Business Trust Act. In no event shall the Property Trustee or the Delaware Trustee be liable for any act or omission of any of the Regular Trustees hereunder. Section 3.12 Execution of Documents. Unless otherwise determined by ---------------------- the Regular Trustees, and except as otherwise required by the Business Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf of the Trust any documents that the Regular Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.6. 31 Section 3.13 Not Responsible for Recitals or Issuance of Trust ------------------------------------------------- Securities. The recitals contained in this Trust Agreement and the Trust - ---------- Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Trust Agreement or the Trust Securities. Section 3.14 Duration of Trust. The Trust, unless dissolved pursuant ----------------- to the provisions of Article IX hereof, shall have perpetual existence. Section 3.15 Mergers. ------- (a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described in Section 3.15(b) and (c) or Section 9.2(a). (b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a majority of the Regular Trustees and without the consent of the Holders of the Trust Securities, the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State of the United States; provided that: (i) if the Trust is not the survivor, such successor entity (the "Successor Entity") either: (A) expressly assumes all of the obligations of the Trust under the Trust Securities; or (B) substitutes for the Trust Preferred Securities other securities having substantially the same terms as the Trust Preferred Securities (the "Successor Trust Securities") so long as the Successor Trust Securities rank the same as the Trust Preferred Securities rank with respect to Distributions, assets and payments upon liquidation, redemption and otherwise; 32 (ii) the Company expressly acknowledges a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the Holder of the Partnership Preferred Securities; (iii) the Trust Preferred Securities or any Successor Trust Securities are listed, or any Successor Trust Securities will be listed upon notification of issuance, on any national securities exchange or with another organization on which the Trust Preferred Securities are then listed or quoted; (iv) such merger, consolidation, amalgamation or replacement does not cause the Trust Preferred Securities (including any Successor Trust Securities) to be downgraded by any nationally recognized statistical rating organization; (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Trust Preferred Securities (including any Successor Trust Securities) in any material respect; (vi) such Successor Entity has a purpose substantially identical to that of the Trust; (vii) the Company guarantees the obligations of such Successor Entity under the Successor Trust Securities at least to the extent provided by the Trust Guarantees; and (viii) prior to such merger, consolidation, amalgamation or replacement, the Sponsor has received an opinion of a nationally recognized independent counsel (which may be counsel to the Sponsor) to the Trust experienced in such matters to the effect that: (A) such merger, consolidation, amalgamation or replacement will not adversely affect the rights, preferences and privileges of the Holders of the Trust Preferred Securities (including any Successor Trust Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the new entity); 33 (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company under the 1940 Act; (C) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will not be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes; and (D) following such merger, consolidation, amalgamation or replacement, the Partnership will not be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. (c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the Trust Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or Successor Entity to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. ARTICLE IV SPONSOR Section 4.1 Responsibilities of the Sponsor. In connection with the ------------------------------- issue and sale of the Trust Preferred Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: (a) To execute and file with the Commission the registration statement on Form S-3, including any amendments thereto, pertaining to the Trust Preferred Securities; 34 (b) To execute and file any documents or take any action as determined necessary by the Sponsor in order to qualify or register all or part of the Trust Preferred Securities in any jurisdiction; (c) To execute and file an application to the New York Stock Exchange, Inc. or any other national stock exchange or the Nasdaq Stock Market's National Market System for listing upon notice of issuance of the Trust Preferred Securities; (d) To execute and file with the Commission a registration statement on Form 8-A, including any amendments thereto, relating to the registration of the Trust Preferred Securities under Section 12(b) of the Exchange Act; (e) To negotiate, execute and enter into an underwriting agreement providing for the sale of the Trust Preferred Securities; and (f) To execute and enter into the Agreement of Limited Partnership; Section 4.2 Indemnification and Expenses of the Property Trustee and -------------------------------------------------------- the Delaware Trustee. To the extent the Partnership fails to do so, the Sponsor - -------------------- agrees to indemnify the Property Trustee and the Delaware Trustee and their respective officers, directors, employees and agents for, and to hold each of them harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Property Trustee or the Delaware Trustee, as the case may be, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending either of them against any claim or liability in connection with the exercise or performance of any of their respective powers or duties hereunder; the provisions of this Section 4.2 shall survive the resignation or removal of the Delaware Trustee or the Property Trustee or the termination of this Trust Agreement. 35 ARTICLE V TRUST COMMON SECURITIES HOLDER Section 5.1 Company's Purchase of Trust Common Securities. On the --------------------------------------------- Closing Date the Company will purchase all of the Trust Common Securities issued by the Trust, for an amount at least equal to 3% of the capital of the Trust, at the same time as the Trust Preferred Securities are sold. Section 5.2 Covenants of the Trust Common Securities Holder. For so ----------------------------------------------- long as the Trust Preferred Securities remain outstanding, the Company will covenant (i) to maintain directly 100 percent ownership of the Trust Common Securities, (ii) to cause the Trust to remain a statutory business trust and not to voluntarily dissolve, wind up, liquidate, or be terminated, except as permitted by this Trust Agreement, (iii) to use its commercially reasonable efforts to ensure that the Trust will not be an Investment Company for purposes of the 1940 Act, and (iv) to take no action which would be reasonably likely to cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes. ARTICLE VI TRUSTEES Section 6.1 Number of Trustees. The number of Trustees initially ------------------ shall be five (5), and: (a) At any time before the issuance of any Trust Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and (b) After the issuance of any Trust Securities, the number of Trustees may be increased or decreased by vote of the Holder of Trust Common Securities voting as a class; provided, however, that the number of Trustees shall in no event be less than three (3); provided further that (1) if required by the Business Trust Act, one Trustee is the Delaware Trustee; (2) there shall be at least one Trustee who is an employee or officer of, or is affiliated 36 with the Company (each, a "Regular Trustee"); and (3) one Trustee shall be the Property Trustee for so long as this Trust Agreement is required to qualify as an indenture under the Trust Indenture Act, and such Property Trustee may also serve as Delaware Trustee if it meets the applicable requirements. Section 6.2 Delaware Trustee. If required by the Business Trust Act, ---------------- one Trustee (the "Delaware Trustee") shall be: (a) A natural person who is a resident of the State of Delaware; or (b) If not a natural person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law, provided that, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee may also be the Delaware Trustee (in which case Section 3.11 shall have no application). Section 6.3 Property Trustee; Eligibility. ----------------------------- (a) There shall at all times be one Trustee which shall act as Property Trustee which shall: (i) not be an Affiliate of the Sponsor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 6.3(a)(ii), the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus 37 as set forth in its most recent report of condition so published. (b) If at any time the Property Trustee shall cease to be eligible to so act under Section 6.3(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 6.7(c). (c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Trust Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. (d) The Trust Preferred Securities Guarantee shall be deemed to be specifically described in this Trust Agreement for purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. (e) The initial Property Trustee shall be: The Bank of New York Section 6.4 Qualifications of Regular Trustees and Delaware Trustee ------------------------------------------------------- Generally. Each Regular Trustee and the Delaware Trustee (unless the Property - --------- Trustee also acts as Delaware 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 Authorized Officers. Section 6.5 Regular Trustees. ---------------- The initial Regular Trustees shall be: Robert F. Clarke Robert F. Mougeot Constance H. Lau Except as expressly set forth in this Trust Agreement and except if a meeting of the Regular Trustees is called with respect to any matter over which the Regular Trustees have 38 power to act, any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular Trustee. Section 6.6 Delaware Trustee. The initial Delaware Trustee shall be: ---------------- The Bank of New York (Delaware) Section 6.7 Appointment, Removal and Resignation of Trustees. ------------------------------------------------ (a) Subject to Section 6.7(b), Trustees may be appointed or removed without cause at any time: (i) until the issuance of any Trust Securities, by written instrument executed by the Sponsor; and (ii) after the issuance of any Trust Securities, by vote of the Holders of a Majority in liquidation amount of the Trust Common Securities voting as a class at a meeting of the Holders of the Trust Common Securities. (b) (i) the Trustee that acts as Property Trustee shall not be removed in accordance with Section 6.7(a) until a successor Trustee possessing the qualifications to act as Property Trustee under Section 6.3 (a "Successor Property Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Regular Trustees and the Sponsor; (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 6.7(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor; (iii) no such removal of the Property Trustee or the Delaware Trustee shall be effective until all of the fees, charges, and expenses incurred by such entity have been paid. 39 (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that: (i) no such resignation of the Trustee that acts as the Property Trustee shall be effective: (A) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Trust Securities; (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee; and (iii) no such resignation of the Property Trustee or the Delaware Trustee shall be effective until all of the fees, charges, and expenses incurred by such entity have been paid. (d) The Holder of the Trust Common Securities shall use its best efforts to promptly appoint a Successor Delaware Trustee or Successor Property Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 6.7. (e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 6.7 within 60 days 40 after delivery to the Sponsor and the Trust of an instrument of resignation, the resigning Property Trustee or Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (f) No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or successor Delaware Trustee, as the case may be. Section 6.8 Vacancies among Trustees. If a Trustee ceases to hold ------------------------ office for any reason and the number of Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is increased pursuant to Section 6.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 6.7. Section 6.9 Effect of Vacancies. The death, resignation, retirement, ------------------- removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by the appointment of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Trust Agreement. Section 6.10 Meetings. If there is more than one Regular Trustee, -------- meetings of the Regular Trustees shall be held from time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in- person meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall be hand delivered or otherwise delivered in writing (including by 41 facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Trust Agreement, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the Regular Trustees. Notwithstanding the foregoing, any and all actions of the Regular Trustees may be taken by the unanimous written consent of all Regular Trustees. Section 6.11 Delegation of Power. ------------------- (a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 3.6. (b) The Regular Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular 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 6.12 Merger, Conversion, Consolidation or Succession to -------------------------------------------------- Business. Any Person into which the Property Trustee or the Delaware Trustee, - -------- as the case may be, may be merged or converted or with which either may be consolidated, or any Person resulting from any merger, conversion or 42 consolidation to which the Property Trustee or the Delaware Trustee, as the case may be, shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE VII DISTRIBUTIONS Section 7.1 Distributions. ------------- (a) Holders of Trust Securities shall be entitled to receive cumulative cash distributions at the rate per annum of _____% of the stated liquidation amount of $25 per Trust Security, calculated on the basis of a 360- day year consisting of twelve 30-day months. For any period shorter than a full 90-day quarter, distributions will be computed on the basis of the actual number of days elapsed in such 90-day quarter. Distributions shall be made on the Trust Preferred Securities and the Trust Common Securities on a Pro Rata basis. Distributions on the Trust Securities shall, from the date of original issue, accumulate and be cumulative and shall be payable quarterly only to the extent that the Trust has funds legally available for the payment of such Distributions in the Property Account. Distributions not paid on the scheduled payment date will accumulate and compound quarterly at the rate of __% per annum ("Compounded Distributions"). "Distributions" shall mean ordinary cumulative distributions in respect of each Fiscal Period together with any Compounded Distributions. If and to the extent that the Partnership makes a distribution on the Partnership Preferred Securities held by the Property Trustee or the Company makes a payment under the Partnership Guarantee (the amount of any such partnership distribution, including any compounded partnership distributions, or guarantee payment being a "Payment Amount"), the Trust shall and the Property Trustee is directed, to the extent funds are 43 available for that purpose pursuant to Section 7.1(c), to make a Pro Rata Distribution of the Payment Amount to Holders. (b) Distributions on the Trust Securities will be cumulative, will accumulate from the date of initial issuance and will be payable quarterly in arrears on each March 31, June 30, September 30 and December 31, commencing March 31, 1997, when, as and if legally available for payment, by the Property Trustee, except as otherwise described below. If Distributions are not paid when scheduled, the 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 7.1(d) below with respect to the actual payment date for the Trust Securities, which will correspond to the actual payment date fixed by the Partnership with respect to the payment of cumulative distributions on the Partnership Preferred Securities not declared and paid when regularly scheduled. (c) Amounts available to the Trust for distribution to the Holders of the Trust Securities will be limited to payments received by the Trust from the Partnership on the Partnership Preferred Securities or from the Company on the Partnership Guarantee or the Trust Guarantee. If the Property Trustee, as the holder of the Partnership Preferred Securities for the benefit of the Holders of the Trust Securities, receives written notice of any determination by the Partnership not to pay distributions on such Partnership Preferred Securities, the Property Trustee shall give notice of such determination to the Holders. (d) Distributions on the Trust Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates, which relevant record dates, as long as the Trust Preferred Securities remain in book-entry only form, will be one Business Day prior to the relevant payment dates. Such distributions will be paid through the Property Trustee who will hold amounts received in respect of the Partnership Preferred Securities in the Property Account for the benefit of the Holders of the Trust Securities. In the event that the Trust Securities do not remain in book-entry only form, the relevant record dates shall be the 15th day of the month of the relevant payment 44 dates. In the event that any date on which distributions are payable on the Trust Securities is not a Business Day, payment of the distribution payable on such date will be made on the next succeeding day which is a Business Day (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 such date. ARTICLE VIII ISSUANCE OF TRUST SECURITIES Section 8.1 Designation and General Provisions Regarding Trust -------------------------------------------------- Securities. - ---------- (a) The Regular Trustees shall on behalf of the Trust issue one class of preferred securities representing undivided beneficial ownership interests in the assets of the Trust (the "Trust Preferred Securities") and one class of common securities representing undivided beneficial ownership interests in the assets of the Trust (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities") as follows: (i) Trust Preferred Securities. 4,000,000 Trust Preferred -------------------------- Securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of one hundred million dollars ($100,000,000) and a liquidation amount with respect to the assets of the Trust of $25 per preferred security, are hereby designated for the purpose of identification only as ______% Trust Originated Preferred Securities. The Trust Preferred Security Certificates evidencing the Trust Preferred Securities shall be substantially in the form of Exhibit A-1 to this Trust Agreement, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Trust Preferred Securities are listed. 45 (ii) Trust Common Securities. 123,732 Trust Common Securities of ----------------------- the Trust with an aggregate liquidation amount with respect to the assets of the Trust of three million ninety-three thousand dollars ($3,093,000) and a liquidation amount with respect to the assets of the Trust of $25 per common security, are hereby designated for the purposes of identification only as _____% Trust Common Securities. The Trust Common Security Certificates evidencing the Trust Common Securities shall be substantially in the form of Exhibit A-2 to the Trust Agreement, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. (b) Except as provided in Section 9.2(b) of this Trust Agreement, the Trust Preferred Securities rank pari passu and payment thereon shall be made Pro Rata with the Trust Common Securities. The Trust shall issue no securities or other interests in the assets of the Trust other than the Trust Preferred Securities and the Trust Common Securities. (c) One or more Regular Trustees shall sign the Trust Securities Certificates for the Trust by manual or facsimile signature. In case any Regular Trustee of the Trust who shall have signed any of the Trust Securities shall cease to be a Regular Trustee before the certificates so signed shall be delivered by the Trust, such certificates nevertheless may be delivered as though the person who signed such certificates had not ceased to be such Regular Trustee; and any certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Trust Security, shall be the Regular Trustees of the Trust, although at the date of the execution and delivery of this Trust Agreement any such person was not such a Regular Trustee. Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with any rule or regulation of any stock exchange on which Trust Securities may be listed, or to conform to usage. 46 If executed by the facsimile signature of a Regular Trustee, a Trust Security shall not be valid until authenticated by the manual signature of an authorized officer of the Property Trustee. Such signature shall be conclusive evidence that the Trust Security has been authenticated under this Trust Agreement. Upon a written order of the Trust, signed by at least one Regular Trustee, directing the Property Trustee to authenticate and deliver Trust Securities (if the Trust Securities Certificates are executed by the facsimile signature of a Regular Trustee), the Property Trustee shall authenticate and deliver the Trust Securities for original issue. The aggregate number of Trust Securities outstanding at any time shall not exceed the number set forth in this Trust Agreement. The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Trust Securities. An authenticating agent may authenticate Trust Preferred Securities whenever the Property Trustee may do so. Each reference in this Trust Agreement to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor. (d) The consideration received by the Trust for the issuance of the Trust Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (e) Upon issuance of the Trust Securities as provided in this Trust Agreement, the Trust Securities so issued shall be deemed to be validly issued, fully paid and nonassessable, subject to Section 11.1 with respect to the Trust Common Securities. (f) Every Person, by virtue of having become a Holder or a Trust Preferred Security Beneficial Owner in accordance with the terms of this Trust Agreement, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Trust Agreement. 47 Section 8.2 Redemption of Trust Securities. ------------------------------ (a) Upon a purchase of the Partnership Preferred Securities by the Partnership upon redemption or otherwise, the proceeds from such purchase shall be simultaneously applied Pro Rata to redeem Trust Securities having an aggregate liquidation preference equal to the aggregate liquidation preference of the Partnership Preferred Securities so purchased or redeemed for an amount equal to $25 per Trust Security plus an amount equal to accumulated and unpaid Distributions, including any Compounded Distributions thereon through the date of the redemption or such lesser amount as shall be received by the Trust in respect of the Partnership Preferred Securities so purchased or redeemed as calculated by the Regular Trustees (the "Redemption Price"). Holders will be given not less than 30 nor more than 60 days notice of such redemption. (b) If fewer than all the outstanding Trust Securities are to be so redeemed, the Trust Common Securities and the Trust Preferred Securities will be redeemed Pro Rata and the Trust Preferred Securities to be redeemed will be redeemed as described in Section 8.3 below. (c) If, at any time, a Trust Special Event shall occur and be continuing, the Regular Trustees shall, unless the Partnership Preferred Securities are redeemed in the limited circumstances described below, within 90 days following the occurrence of such Trust Special Event elect to either (i) dissolve the Trust upon not less than 30 nor more than 60 days' notice with the result that, after satisfaction of creditors, if any, of the Trust, Partnership Preferred Securities with an aggregate liquidation preference equal to the aggregate stated liquidation amount of, with a distribution rate identical to the distribution rate of, and accumulated and unpaid distributions equal to accumulated and unpaid distributions on, and having the same record date for payment as, the Trust Preferred Securities and the Trust Common Securities outstanding at such time would be distributed on a Pro Rata basis to the Holders of the Trust Preferred Securities and the Trust Common Securities in liquidation of such Holders' interests in the Trust; provided, however, that if at the time there is available to the Trust the opportunity to eliminate, 48 within such 90-day period, the Trust Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure which in the sole judgment of the Sponsor has or will cause no adverse effect on the Trust, the Partnership, the Sponsor or the Holders of the Trust Securities and will involve no material cost, the Trust will pursue such measure in lieu of dissolution or (ii) cause the Trust Preferred Securities to remain outstanding, provided that in the case of this clause (ii), the Sponsor shall pay any and all expenses incurred by or payable by the Trust attributable to the Trust Special Event. Furthermore, if in the case of the occurrence of a Trust Tax Event, the Regular Trustees have received a Trust Redemption Tax Opinion, then the General Partner shall have the right, within 90 days following the occurrence of such Trust Tax Event, to elect to cause the Partnership to redeem the Partnership Preferred Securities in whole (but not in part) for cash upon not less than 30 nor more than 60 days' notice and promptly following such redemption, the Trust Securities will be redeemed by the Trust at the Redemption Price. (d) If the Partnership Preferred Securities are distributed to the Holders of the Trust Preferred Securities, the Sponsor will use its best efforts to cause the Partnership Preferred Securities to be listed on the New York Stock Exchange or on such other national securities exchange or similar organization as the Trust Preferred Securities are then listed or quoted. (e) On the date fixed for any distribution of Partnership Preferred Securities, upon dissolution of the Trust, (i) the Trust Preferred Securities and the Trust Common Securities will no longer be deemed to be outstanding and (ii) certificates representing Trust Securities will be deemed to represent the Partnership Preferred Securities having an aggregate principal preference equal to the stated liquidation amount of, and bearing accumulated and unpaid distributions equal to accumulated and unpaid distributions on, such Trust Securities until such certificates are presented to the Sponsor or its agent for transfer or reissuance. 49 Section 8.3 Redemption Procedures. --------------------- (a) Notice of any redemption of, or notice of distribution of Partnership Preferred Securities in exchange for, the Trust Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Trust Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Partnership Preferred Securities. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 8.3, a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of Trust Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of Trust Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (b) In the event that fewer than all the outstanding Trust Securities are to be redeemed, the Trust Securities to be redeemed shall be redeemed Pro Rata from each Holder of Trust Securities, provided that, in respect of Trust Preferred Securities registered in the name of and held of record by DTC or its nominee (or any successor Clearing Agency or its nominee), the distribution of the proceeds of such redemption will be made to each Clearing Agency Participant (or Person on whose behalf such nominee holds such securities) in accordance with the procedures applied by DTC or such Clearing Agency or nominee. The Trust may not redeem fewer than all of the outstanding Trust Preferred Securities unless all accumulated and unpaid Distributions (including Compounded Distributions) have been paid on all Trust Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption. (c) If Trust Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, which notice may 50 only be issued if the Partnership Preferred Securities are redeemed as set out in this Section 8.3 (which notice will be irrevocable), then (A) while the Trust Preferred Securities are in book-entry only form, by 12:00 noon, New York City time, on the redemption date, the Property Trustee will deposit irrevocably with the DTC or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the applicable Redemption Price with respect to the Trust Preferred Securities and will give the DTC irrevocable instructions and authority to pay the Redemption Price to the Trust Preferred Securities Beneficial Owners, and (B) with respect to Trust Preferred Securities issued in certificated form and Trust Common Securities, the Property Trustee will pay the relevant Redemption Price to the Holders of such Trust Securities by check mailed to the address of the relevant Holder appearing on the books and records of the Trust on the redemption date. If a Redemption/Distribution Notice shall have been given and funds deposited as required, if applicable, then immediately prior to the close of business on the date of such deposit, or on the redemption date, as applicable, distributions will cease to accumulate on the Trust Securities so called for redemption and all rights of Holders of such Trust Securities will cease, except the right of the Holders of such Trust Securities to receive the Redemption Price, but without interest on such Redemption Price and, from and after the date fixed for redemption, such Trust Securities will not accumulate Distributions or bear interest. If any date fixed for redemption of Trust Securities is not a Business Day, then payment of the Redemption Price 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 falls in the next calendar year, such payment will be made on the immediately preceding Business Day (without any reduction in interest or other payments in respect of such early payment). If payment of the Redemption Price in respect of any Trust Securities is improperly withheld or refused and not paid either by the Property Trustee or by the Sponsor pursuant to the Trust Preferred Securities Guarantee, Distributions on such Trust Securities will continue to accumulate at the then applicable rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of 51 calculating the Redemption Price. For these purposes, the applicable Redemption Price shall not include Distributions which are being paid to Holders who were Holders on a relevant record date. Neither the Regular Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Trust Securities that have been called for redemption. (d) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Company or its subsidiaries may at any time and from time to time purchase outstanding Trust Preferred Securities by tender, in the open market or by private agreement. Section 8.4 Voting Rights of Trust Preferred Securities. ------------------------------------------- (a) Except as provided under Sections 2.6, 6.1(b) and this Article VIII and as otherwise required by the Business Trust Act, the Trust Indenture Act and other applicable law, the Holders of the Trust Preferred Securities will have no voting rights. (b) Subject to the requirement of the Property Trustee obtaining a tax opinion in certain circumstances set forth in Section 8.4(d) below, the Holders of a Majority in liquidation amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or direct the exercise of any trust or power conferred upon the Property Trustee under this Trust Agreement, including the right to direct the Property Trustee, as Holder of the Partnership Preferred Securities, to (i) exercise the remedies available to it under the Agreement of Limited Partnership as a 52 Holder of the Partnership Preferred Securities, including the right to direct the Special Representative of the Partnership as elected by the Holders of the Partnership Preferred Securities in accordance with the Agreement of Limited Partnership to enforce, to the fullest extent permitted by law, (A) the Partnership's creditors rights and other rights with respect to the Affiliate Investment Instruments and any Investment Guarantees, (B) the rights of the holders of the Partnership Preferred Securities under the Partnership Guarantee, and (C) the rights of the holders of the Partnership Preferred Securities to receive distributions (if and to the extent such distributions have been declared out of funds legally available therefor by the General Partner in its sole discretion) on the Partnership Preferred Securities or (ii) consent to any amendment, modification, or termination of the Agreement of Limited Partnership or the Partnership Preferred Securities where such consent shall be required; provided, however, that where a consent or action under the Agreement of Limited Partnership would require the consent or act of the Holders of more than a majority of the aggregate liquidation amount of Partnership Preferred Securities affected thereby, only the Holders of the percentage of the aggregate stated liquidation amount of the Trust Preferred Securities which is at least equal to the percentage required under the Agreement of Limited Partnership may direct the Property Trustee to give such consent or take such action on behalf of the Trust. (c) If the Property Trustee fails to enforce its rights under the Partnership Preferred Securities after a Holder of record of Trust Preferred Securities has made a written request, such Holder of record of Trust Preferred Securities may, to the fullest extent permitted by law, directly institute a legal proceeding against the General Partner or the Special Representative, to enforce the Property Trustee's rights under the Partnership Preferred Securities without first instituting any legal proceeding against the Property Trustee, the Trust or any other Person. Notwithstanding the foregoing, for so long as the Property Trustee is the holder of any Partnership Preferred Securities, if a Trust Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any 53 Affiliate Investment Instrument and the failure of the Company to make any required payment with respect thereto when due on any Investment Guarantee, then a Holder of Trust Preferred Securities may, on behalf of the Partnership, directly institute a proceeding against such Investment Affiliate with respect to such Affiliate Investment Instrument or against the Company with respect to any such Investment Guarantee, in each case for enforcement of payment. (d) The Property Trustee shall notify all Holders of the Trust Preferred Securities of any notice of any Partnership Enforcement Event received from the General Partner with respect to the Partnership Preferred Securities and the Affiliate Investment Instruments. Such notice shall state that such Partnership Enforcement Event also constitutes a Trust Enforcement Event. Except with respect to directing the time, method, and place of conducting a proceeding for a remedy, the Property Trustee shall be under no obligation to take any of the actions described in clause 8.4(b)(i) and (ii) above unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that as a result of such action, the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes and each Holder will continue to be treated as owning an undivided beneficial ownership interest in the Partnership Preferred Securities. (e) In the event the consent of the Property Trustee, as the Holder of the Partnership Preferred Securities, is required under the Agreement of Limited Partnership with respect to any amendment, modification or termination of the Agreement of Limited Partnership, the Property Trustee shall request the direction of the Holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where a consent under the Agreement of Limited Partnership would require the consent of the Holders of more than a majority of the aggregate principal amount of the Partnership Preferred Securities, the Property Trustee may only give such consent at the direction of the Holders of at least the same proportion in aggregate stated liquidation amount of the Trust Securities. The Property Trustee shall not take any such action in accordance with the directions of the Holders of 54 the Trust Securities unless the Property Trustee has obtained an opinion of tax counsel to the effect that such action is not inconsistent with the Trust being classified as a grantor trust for United States federal income tax purposes. (f) A waiver of a Partnership Enforcement Event with respect to the Partnership Preferred Securities will constitute a waiver of the corresponding Trust Enforcement Event. (g) Any required approval or direction of Holders of Trust Preferred Securities may be given at a separate meeting of Holders of Trust Preferred Securities convened for such purpose, at a meeting of all of the Holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Trust Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Trust Preferred Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. (h) No vote or consent of the Holders of Trust Preferred Securities will be required for the Trust to redeem and cancel Trust Preferred Securities or distribute Partnership Preferred Securities in accordance with the Trust Agreement. (i) Notwithstanding that Holders of Trust Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Trust Securities that are beneficially owned at such time by the Company or any entity directly or indirectly controlled by, or under direct or indirect common control with, the Company, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if such Trust Securities were not outstanding, provided, however that persons otherwise eligible to vote to whom the Company or any of its subsidiaries have pledged Trust Preferred Securities may vote or consent 55 with respect to such pledged Trust Preferred Securities under any of the circumstances described herein. (j) Holders of the Trust Preferred Securities will have no rights to appoint or remove the Regular Trustees, who may be appointed, removed or replaced solely by the Company, as the Holder of all of the Trust Common Securities. Section 8.5 Voting Rights of Trust Common Securities. ---------------------------------------- (a) Except as provided under this Section 8.5 or as otherwise required by the Business Trust Act, the Trust Indenture Act or other applicable law or provided by the Trust Agreement, the Holders of the Trust Common Securities will have no voting rights. (b) The Holder of the Trust Common Securities is entitled, subject to Article VI hereof, to vote to appoint, remove or replace any Trustee or to increase or decrease the number of Trustees. (c) Subject to Section 2.6 of the Trust Agreement and only after all Trust Enforcement Events with respect to the Trust Preferred Securities have been cured, waived, or otherwise eliminated and subject to the requirement of the Property Trustee obtaining a tax opinion in certain circumstances set forth in this paragraph (c), the Holder of the Trust Common Securities has the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or direct the exercise of any trust or power conferred upon the Property Trustee under this Trust Agreement, including the right to direct the Property Trustee, as Holder of the Partnership Preferred Securities, to (i) exercise the remedies available to it under the Agreement of Limited Partnership as a Holder of the Partnership Preferred Securities, including the right to direct the Special Representative of the Partnership as elected by the Holders of the Partnership Preferred Securities in accordance with the Agreement of Limited Partnership to enforce, to the fullest extent permitted by law, (A) the Partnership's creditors rights and other rights with respect to the Affiliate Investment 56 Instruments and any Investment Guarantees, (B) the rights of the Holders of the Partnership Preferred Securities under the Partnership Guarantee, and (C) the rights of the Holders of the Partnership Preferred Securities to receive distributions (if and to the extent such distributions have been declared out of funds legally available therefor by the General Partner in its sole discretion) on the Partnership Preferred Securities or (ii) consent to any amendment, modification, or termination of the Agreement of Limited Partnership or the Partnership Preferred Securities where such consent shall be required; provided, however, that where a consent or action under the Agreement of Limited Partnership would require the consent or act of the Holders of more than a majority of the aggregate liquidation amount of Partnership Preferred Securities affected thereby, only the Holders of the percentage of the aggregate stated liquidation amount of the Trust Common Securities which is at least equal to the percentage required under the Agreement of Limited Partnership may direct the Property Trustee to give such consent or take such action on behalf of the Trust. Except with respect to directing the time, method, and place of conducting a proceeding for a remedy, the Property Trustee shall be under no obligation to take any of the actions described in clause 8.5(c)(i) and (ii) above unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, for United States federal income tax purposes the Trust will not be classified as an association or a publicly traded partnership taxable as a corporation. (d) If the Property Trustee fails to enforce its rights under the Partnership Preferred Securities after a Holder of record of Trust Common Securities has made a written request, such Holder of record of Trust Common Securities may, to the fullest extent permitted by law, directly institute a legal proceeding directly against the General Partner of the Partnership or the Special Representative, to enforce the Property Trustee's rights under the Partnership Preferred Securities without first instituting any legal proceeding against the Property Trustee, the Trust or any other Person. Notwithstanding the foregoing, if a Trust Enforcement Event has occurred and is continuing and such event is attributable to the failure of an Investment Affiliate to make any required payment when due on any Affiliate Investment 57 Instrument, then a Holder of Trust Common Securities may directly institute a proceeding against such Investment Affiliate for enforcement of payment with respect to such Affiliate Investment Instrument. (e) A waiver of a Partnership Enforcement Event with respect to the Partnership Preferred Securities will constitute a waiver of the corresponding Trust Enforcement Event. (f) Any required approval or direction of the Holder of the Trust Common Securities may be given at a separate meeting of the Holder of the Trust Common Securities convened for such purpose, at a meeting of all of the Holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which the Holder of the Trust Common Securities is entitled to vote, or of any matter upon which action by written consent of such Holder is to be taken, to be mailed to the Holder of record of the Trust Common Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such Holder is entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. (g) No vote or consent of the Holder of the Trust Common Securities shall be required for the Trust to redeem and cancel Trust Common Securities or to distribute Partnership Preferred Securities in accordance with the Trust Agreement and the terms of the Trust Securities. Section 8.6 Paying Agent. In the event that the Trust Preferred ------------ Securities are not in book-entry only form, the Trust shall maintain in the Borough of Manhattan, City of New York, State of New York, an office or agency where the Trust Preferred Securities may be presented for payment ("Paying Agent"). The Trust may appoint the Paying Agent and may appoint one or more additional paying agents in such other locations as it shall determine. The term "Paying Agent" includes any additional paying agent. The Trust may change any Paying Agent without prior notice to any Holder. The Trust shall notify the Property Trustee of the name and address of 58 any Paying Agent not a party to this Trust Agreement. If the Trust fails to appoint or maintain another entity as Paying Agent, the Property Trustee shall act as such. The Trust or any of its Affiliates may act as Paying Agent. The Bank of New York shall initially act as Paying Agent for the Trust Preferred Securities and the Trust Common Securities. Section 8.7 Listing. The Sponsor shall use its best efforts to cause ------- the Trust Preferred Securities to be listed for quotation on the New York Stock Exchange. Section 8.8 Acceptance of Trust Agreement, Affiliate Investment --------------------------------------------------- Instruments, Guarantees and Agreement of Limited Partnership. Each Holder of - ------------------------------------------------------------ Trust Preferred Securities and Trust Common Securities, by the acceptance thereof, agrees to the provisions of this Trust Preferred Securities Agreement, the Trust Guarantee, the Partnership Guarantee, any Investment Guarantee and the Agreement of Limited Partnership, respectively, including the subordination provisions therein. ARTICLE IX DISSOLUTION AND LIQUIDATION OF THE TRUST Section 9.1 Dissolution of Trust. -------------------- (a) The Trust shall dissolve: (i) upon the bankruptcy, insolvency or dissolution of the Holder of Trust Common Securities or the Sponsor; (ii) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor, the filing of a certificate of cancellation with respect to the Trust after having obtained the consent of at least a Majority in liquidation amount of the Trust Securities, voting together as a single class, to file such certificate of cancellation, or the revocation of the Sponsor's charter and the expiration of 90 days after the date of revocation without a reinstatement thereof; 59 (iii) upon the entry of a decree of judicial dissolution of the Sponsor or the Trust; (iv) when all of the Trust Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Trust Securities; (v) upon the election of the Regular Trustees, following the occurrence and continuation of a Trust Special Event, pursuant to which the Trust shall have been dissolved in accordance with the terms of the Trust Securities and, after satisfaction of the Trust's liabilities, all of the Partnership Preferred Securities shall have been distributed to the Holders of Trust Securities in exchange for all of the Trust Securities; or (vi) before the issuance of any Trust Securities, with the consent of all of the Regular Trustees and the Sponsor. (b) As soon as is practicable after the occurrence of an event referred to in Section 9.1(a), the Trustees shall file a certificate of cancellation with the Secretary of State of the State of Delaware. (c) The provisions of Section 3.9 and Article XI shall survive the termination of the Trust. Section 9.2 Liquidation Distribution Upon Termination and Dissolution --------------------------------------------------------- of the Trust. - ------------ (a) In the event of any voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each a "Trust Liquidation"), the Holders of the Trust Preferred Securities on the date of the Trust Liquidation will be entitled to receive, out of the assets of the Trust available for distribution to Holders of Trust Securities after satisfaction of the Trusts' liabilities to creditors, distributions in cash or other immediately available funds in an amount equal to the aggregate of the stated liquidation amount of $25 per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being 60 the "Trust Liquidation Distribution"), unless, in connection with such Trust Liquidation, Partnership Preferred Securities in an aggregate stated liquidation preference equal to the aggregate stated liquidation amount of, with a distribution rate identical to the distribution rate of, and accrued and unpaid distributions equal to accumulated and unpaid distributions on, such Trust Securities shall be distributed on a Pro Rata basis to the Holders of the Trust Securities in exchange for such Trust Securities. (b) If, upon any such Trust Liquidation, the Trust Liquidation Distribution can be paid only in part because the Trust has insufficient assets legally available to pay in full the aggregate Trust Liquidation Distribution, then, except as provided below, the amounts payable directly by the Trust on the Trust Securities shall be paid on a Pro Rata basis. The Holders of the Trust Common Securities will be entitled to receive distributions upon any such Trust Liquidation Pro Rata with the Holders of the Trust Preferred Securities except that if the Company is in default on any of its obligations under the Trust Preferred Securities Guarantee or the Partnership Guarantee, or if any Investment Event of Default has occurred and is continuing with respect to an Affiliate Investment Instrument and the Company is in default on any of its obligations with respect thereto under an applicable Investment Guarantee, the Trust Preferred Securities shall have a preference over the Trust Common Securities with regard to such distributions as provided below. Such preference is effectuated by the Holder of the Trust Common Securities hereby agreeing to provide limited recourse guarantees (such recourse being limited to the interests in the Trust represented by the Trust Common Securities) as follows: (i) to the Holders of the Trust Preferred Securities, of the Company's obligations under the Trust Preferred Securities Guarantee; (ii) to the Trust and the Holders of the Trust Preferred Securities, of the Company's obligations under the Partnership Guarantee; and (iii) to the Partnership and the Holders of the Trust Preferred Securities, of the Company's obligations under any Investment Guarantee and/or the obligations of any Investment Affiliate under an Affiliate Investment Instrument. In the case of the limited recourse guarantee given by the Holder of the Trust Common Securities to the Partnership and the Holder of the Trust Preferred Securities in respect of the Company's obligations 61 under any Investment Guarantee and/or any Investment Affiliate's obligations under an Affiliate Investment Instrument, (i) the Trust Common Securities Holder will be deemed to have pledged the amount due in respect of its Trust Common Securities upon a liquidation of the Trust to the Partnership and the Holders of Trust Preferred Securities; (ii) the Trust Common Securities Holder will be deemed to have paid such amount to the Partnership in respect of such defaulted Investment Guarantee and/or Affiliate Investment Instrument, as the case may be; (iii) the Partnership will be deemed to have paid such amount to the Trust; and (iv) the Property Trustee is hereby authorized to distribute such amount to the Holders of Trust Preferred Securities (on a Pro Rata basis among such Trust Preferred Securities Holders) in respect of the Trust Common Securities Holder's pledge of such amounts to such Trust Preferred Securities Holders. In the case of a limited recourse guarantee given by the Holder of the Trust Common Securities to the Trust and the Holders of the Trust Preferred Securities in respect of the Company's obligations under the Partnership Guarantee, (i) the Holder of the Trust Common Securities will be deemed to have pledged the amount due in respect of its Trust Common Securities upon a liquidation of the Trust to the Trust and the Holders of the Trust Preferred Securities; (ii) the Holder of the Trust Common Securities will be deemed to have paid such amount to the Trust in respect of its obligations under the Partnership Guarantee; and (iii) the Property Trustee is hereby authorized to distribute such amount to the Holders of the Trust Preferred Securities (on a Pro Rata basis among such Trust Preferred Securities Holders) in respect of the Trust Common Securities Holder's pledge of such amount to such Trust Preferred Securities Holders. ARTICLE X TRANSFER OF INTERESTS Section 10.1 Transfer of Trust Securities. ---------------------------- (a) Trust Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Trust Agreement and in the terms of the Trust Securities. Any transfer or purported transfer of any Trust 62 Security not made in accordance with this Trust Agreement shall be null and void. (b) Subject to this Article X, Trust Preferred Securities shall be freely transferable. Section 10.2 Transfer of Certificates. The Regular Trustees shall ------------------------ provide for the registration of certificates and of transfers of certificates, which will be effected without charge but only upon payment (with such indemnity as the Regular Trustees may require) in respect of any tax or other government charges that may be imposed in relation to it. Upon surrender for registration of transfer of any certificate, the Regular Trustees shall cause one or more new certificates to be issued in the name of the designated transferee or transferees. Every certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Regular Trustees duly executed by the Holder or such Holder's attorney duly authorized in writing. Each certificate surrendered for registration of transfer shall be canceled by the Regular Trustees. A transferee of a certificate shall be entitled to the rights and be subject to the obligations of a Holder hereunder upon the receipt by such transferee of a certificate. By acceptance of a certificate, each transferee shall be deemed to have agreed to be bound by this Trust Agreement. Section 10.3 Deemed Security Holders. The Trustees may treat the ----------------------- Person in whose name any certificate shall be registered on the books and records of the Trust as the sole Holder of such certificate and of the Trust Securities represented by such certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such certificate or in the Trust Securities represented by such certificate on the part of any Person, whether or not the Trust shall have actual or other notice thereof. Section 10.4 Book-Entry Interests. Unless otherwise specified in the -------------------- terms of the Trust Preferred Securities, the Trust Preferred Securities Certificates, on original issuance, will be issued in the form of one or more fully registered, 63 global Trust Preferred Security Certificates (each a "Global Certificate"), to be delivered to DTC, the initial Clearing Agency, or its custodian by, or on behalf of, the Trust. Such Global Certificates shall initially be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC, and no Trust Preferred Security Beneficial Owner will receive a Definitive Trust Preferred Security Certificate representing such Trust Preferred Security Beneficial Owner's interests in such Global Certificates, except as provided in Section 10.7. Unless and until definitive, fully registered Trust Preferred Security Certificates (the "Definitive Trust Preferred Security Certificates") have been issued to the Trust Preferred Security Beneficial Owners pursuant to Section 10.7: (a) the provisions of this Section 10.4 shall be in full force and effect; (b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement (including the payment of Distributions on the Global Certificates and receiving approvals, votes or consents hereunder) as the Holder of the Trust Preferred Securities and the sole Holder of the Global Certificates and shall have no obligation to the Trust Preferred Security Beneficial Owners; (c) to the extent that the provisions of this Section 10.4 conflict with any other provisions of this Trust Agreement, the provisions of this Section 10.4 shall control; and (d) the rights of the Trust Preferred Security Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Trust Preferred Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants and the Clearing Agency shall receive and transmit payments of Distributions on the Global Certificates to such Clearing Agency Participants. The Clearing Agency will make book-entry transfers among the Clearing Agency Participants; provided, that solely for the purposes of determining whether the Holders of the requisite amount of Trust Preferred Securities have voted on any matter provided for in this Trust Agreement, so long as Definitive Trust Preferred Security 64 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 Clearing Agency setting forth the Trust Preferred Security Beneficial Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. Section 10.5 Notices to Clearing Agency. Whenever a notice or other -------------------------- communication to the Trust Preferred Security Holders is required under this Trust Agreement, unless and until Definitive Trust Preferred Security Certificates shall have been issued to the Trust Preferred Security Beneficial Owners pursuant to Section 10.7, the Regular Trustees shall give all such notices and communications specified herein to be given to the Trust Preferred Security Holders to the Clearing Agency, and shall have no notice obligations to the Trust Preferred Security Beneficial Owners. Section 10.6 Appointment of Successor Clearing Agency. If any ---------------------------------------- Clearing Agency elects to discontinue its services as securities depositary with respect to the Trust Preferred Securities, the Regular Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to such Trust Preferred Securities. Section 10.7 Definitive Trust Preferred Security Certificates. If ------------------------------------------------ (a) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Trust Preferred Securities and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 10.6; (b) the Regular Trustees elect after consultation with the Sponsor to terminate the book-entry system through the Clearing Agency with respect to the Trust Preferred Securities; or (c) there is a Trust Enforcement Event; then: (i) Definitive Trust Preferred Security Certificates shall be prepared by the Regular Trustees on behalf of the Trust with respect to such Trust Preferred Securities; and (ii) upon surrender of the Global Certificates by the Clearing Agency, accompanied by registration 65 instructions, the Regular Trustees shall cause Definitive Trust Preferred Security Certificates to be delivered to Trust Preferred Security Beneficial Owners in accordance with the instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on and shall be protected in relying on, said instructions of the Clearing Agency. The Definitive Trust Preferred Security Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by one or more of their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, 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 stock exchange on which Trust Preferred Securities may be listed, or to conform to usage. Section 10.8 Mutilated, Destroyed, Lost or Stolen Certificates. If ------------------------------------------------- (a) any mutilated certificates should be surrendered to the Regular Trustees, or if the Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of any certificate; and (b) there shall be delivered to the Regular Trustees such security or indemnity as may be required by them to keep each of them harmless, then, in the absence of notice that such certificate shall have been acquired by a bona fide purchaser, one or more Regular Trustees on behalf of the Trust shall execute and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen certificate, a new certificate of like denomination. In connection with the issuance of any new certificate under this Section 10.8, the Regular Trustees 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 certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Trust Securities, as if originally issued, whether or not the lost, stolen or destroyed certificate shall be found at any time. 66 ARTICLE XI LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS Section 11.1 Liability. --------- (a) Except as expressly set forth in this Trust Agreement, the Trust Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees shall not be: (i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Trust Securities which shall be made solely from assets of the Trust; and (ii) required to pay to the Trust or to any Holder of Trust Securities any deficit upon dissolution of the Trust or otherwise. (b) Notwithstanding any other provision herein, the Holder of the Trust Common Securities, by entering into this Agreement, agrees that it shall be liable directly to any creditor or claimant of or against the Trust for the entire amount of all of the debts and obligations of the Trust (other than obligations to the Holders of Trust Securities in their capacities as Holders) to the extent not satisfied out of the Trust's assets as if the Holder of the Trust Common Securities were the general partner of a limited partnership organized under the Delaware Revised Uniform Limited Partnership Act. This Section 11.1(b) will automatically terminate upon (i) the adoption of final or temporary United States federal tax regulations which, if the Trust were not classified as a grantor trust for United States federal income tax purposes, would result in the classification of the Trust as a partnership for United States federal tax purposes without regard to its organic characteristics and (ii) the taking of such action, if any, by the Trust or the Holders of Trust Securities as may be necessary to achieve such classification. (c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Trust Preferred Securities shall 67 be entitled to the same limitation of personal liability extended to shareholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Section 11.2 Exculpation. ----------- (a) No Company Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Company Indemnified Person in good faith on behalf of the Trust and in a manner such Company Indemnified Person reasonably believed to be within the scope of the authority conferred on such Company Indemnified Person by this Trust Agreement or by law, except that a Company Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Company 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 Trust and upon such information, opinions, reports or statements presented to the Trust 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 Trust, 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 Distributions to Holders of Trust Securities might properly be paid. Section 11.3 Fiduciary Duty. -------------- (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Trust Agreement shall not be liable to the Trust or to any other Covered Person for its 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 68 an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between an Indemnified Person and any Covered Person; or (ii) whenever this Trust Agreement or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Trust Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Trust Agreement or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Trust Agreement an Indemnified Person is permitted or required to make a decision: (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or 69 different standard imposed by this Trust Agreement or by applicable law. Section 11.4 Indemnification. --------------- (a) (i) To the fullest extent permitted by applicable law, the Sponsor shall indemnify and hold harmless any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Company Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (ii) The Sponsor shall indemnify, to the fullest extent permitted by law, any Company Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Company Indemnified Person against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Company Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the 70 extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper. (iii) To the extent that a Company Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 11.4(a), or in defense of any claim, issue or matter therein, he shall be indemnified, to the fullest extent permitted by law, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (iv) Any indemnification under paragraphs (i) and (ii) of this Section 11.4(a) (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Company Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a majority vote of a quorum consisting of such Regular Trustees who were not parties to such action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Holder of the Trust Common Securities. (v) To the fullest extent permitted by law, expenses (including attorneys' fees) incurred by a Company Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 11.4(a) shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such amount if it shall ultimately be 71 determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 11.4(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Regular Trustees by a majority vote of a Quorum of disinterested Regular Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion or (iii) the Holder of the Trust Common Securities, that, based upon the facts known to the Regular Trustees, counsel or the Holder of the Trust Common Securities at the time such determination is made, such Company Indemnified Person acted in bad faith or in a manner that such Person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Company Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Regular Trustees, independent legal counsel or Holder of the Trust Common Securities reasonably determine that such Person deliberately breached his duty to the Trust or the Holder of the Trust Common Securities. (vi) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 11.4(a) shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of shareholders or disinterested directors of the Sponsor or Holders of the Trust Preferred Securities or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 11.4(a) shall be deemed to be provided by a contract between the Sponsor and each Company Indemnified Person who serves in such capacity at any time while this Section 11.4(a) is in effect. Any repeal or modification of this Section 11.4(a) shall not affect any rights or obligations then existing. (vii) The Sponsor or the Trust may purchase and maintain insurance on behalf of any Person who is or was a Company Indemnified Person against any liability asserted 72 against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 11.4(a). (viii) For purposes of this Section 11.4(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any Person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 11.4(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued. (ix) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 11.4(a) shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be a Company Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. (b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Property Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on the part of the Fiduciary Indemnified Person 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 73 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 11.4(b) shall survive the satisfaction and discharge of this Trust Agreement. Section 11.5 Outside Businesses. Any Covered Person, the Sponsor, ------------------ the Delaware Trustee and the Property Trustee (subject to Section 6.3(c)) may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Trust Securities shall have no rights by virtue of this Trust Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee, nor the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of Holders of, securities or other obligations of the Sponsor or its Affiliates. ARTICLE XII ACCOUNTING Section 12.1 Fiscal Year. The fiscal year ("Fiscal Year") of the ----------- Trust shall be the calendar year, or such other year as is required by the Code or the Treasury Regulations. 74 Section 12.2 Certain Accounting Matters. -------------------------- (a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied. (b) Within 60 days after May 15 of each year, the Property Trustee shall provide to the Holders of the Trust Securities 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(a) of the Trust Indenture Act. The Property Trustee shall also comply with Section 313(b) of the Trust Indenture Act, if and as required, in the form and manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. (c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders of Trust Securities, any annual United States federal income tax information statement, required by the Code, containing such information with regard to the Trust Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. (d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States federal income tax return on such form or statement as may be appropriate under United States federal income tax law, and any other annual income tax returns required to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing authority. 75 Section 12.3 Banking. The Trust shall maintain one or more bank ------- accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Partnership Preferred Securities held by the Property Trustee shall be made directly to the Property Account and no other funds of the Trust shall be deposited in the Property Account. The sole signatories for such accounts shall be designated by the Regular Trustees; provided, however, that the Property Trustee shall designate the signatories for the Property Account. Section 12.4 Withholding. The Regular Trustees shall cause the Trust ----------- to comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Regular Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding. Notwithstanding anything herein to the contrary, the Regular Trustees shall cause the Trust, absent receipt of an opinion of nationally recognized tax counsel to the contrary, to withhold thirty percent (30%) (or such other rate as may be imposed as a result of an amendment to the Code or such lower rate as may be imposed under an applicable income tax treaty) on the gross amount of any Distributions on Trust Preferred Securities held by a Holder that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code. 76 ARTICLE XIII AMENDMENTS AND MEETINGS Section 13.1 Amendments. ---------- (a) Except as otherwise provided in this Trust Agreement or by any applicable terms of the Trust Securities, this Trust Agreement may only be amended by a written instrument approved and executed by: (i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of the Regular Trustees); (ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee; and (iii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee; (b) no amendment shall be made, and any such purported amendment shall be void and ineffective: (i) unless, in the case of any proposed amendment, the Property Trustee and the Delaware Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Trust Agreement (including the terms of the Trust Securities); (ii) unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Property Trustee or the Delaware Trustee, the Property Trustee or the Delaware Trustee, as the case may be, shall have first received an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Trust Agreement (including the terms of the Trust Securities); and (iii) to the extent the result of such amendment would be to: 77 (A) cause the Trust to be classified for purposes of United States federal income taxation as an association or a publicly traded partnership taxable as a corporation; (B) cause the Partnership to be classified for purposes of United States federal income tax as an association or a publicly traded partnership taxable as a corporation; (C) reduce or otherwise adversely affect the powers of the Property Trustee in contravention of the Trust Indenture Act; or (D) cause the Trust to be deemed to be an Investment Company required to be registered under the 1940 Act. (c) In the event the consent of the Property Trustee, as the Holder of the Partnership Preferred Securities is required under the Agreement of Limited Partnership with respect to any amendment, modification or termination of the Agreement of Limited Partnership or the Partnership Preferred Securities the Property Trustee shall request the direction of the Holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Trust Securities voting together as a single class; provided, however, that where a consent under the Agreement of Limited Partnership would require the consent of a Super Majority of the Holders of Partnership Preferred Securities the Property Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of the Trust Securities which the relevant Super Majority represents of the aggregate liquidation amount of the Partnership Preferred Securities outstanding; provided, further, that the Property Trustee shall not be obligated to take any action in accordance with the directions of the Holders of the Trust Securities under this Section 13.1(c) unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that such action is not inconsistent with the 78 being classified as a grantor trust for United States federal income tax purposes (d) At such time after the Trust has issued any Trust Securities that remain outstanding, any amendment that would (i) adversely affect the powers, preferences or special rights of the Trust Securities or (ii) provide for the dissolution, winding-up or termination of the Trust other than pursuant to the terms of this Trust Agreement, may be effected only with the approval of the Holders of at least a Majority in liquidation amount of the Trust Securities affected thereby; provided, that if any amendment or proposal referred to in clause (i) hereof would adversely affect only the Trust Preferred Securities or the Trust Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Trust Securities; (e) Section 11.1(c) and this Section 13.1 shall not be amended without the consent of all of the Holders of the Trust Securities; (f) Article V shall not be amended without the consent of the Holder of the Trust Common Securities; (g) The rights of the Holder of the Trust Common Securities under Article VI to increase or decrease the number of, and appoint and remove, Trustees shall not be amended without the consent of the Holder of the Trust Common Securities; and (h) Notwithstanding Section 13.1(c), this Trust Agreement may be amended without the consent of the Holders of the Trust Securities: (i) to cure any ambiguity; (ii) to correct or supplement any provision in this Trust Agreement that may be defective or inconsistent with any other provision of this Trust Agreement; 79 (iii) to add to the covenants, restrictions or obligations of the Sponsor; (iv) to conform to any change in the 1940 Act or written change in interpretation or application of the rules and regulations promulgated thereunder by any legislative body, court, government agency or regulatory authority; (v) to conform to any change in the Trust Indenture Act or written change in interpretation or application of the rules and regulations promulgated thereunder by any legislative body, court, government agency or regulatory authority; and (vi) to modify, eliminate and add to any provision of this Trust Agreement to such extent as may be necessary or desirable; provided that such amendments do not have a material adverse effect on the rights, preferences or privileges of the Holders of the Trust Securities. Section 13.2 Meetings of the Holders of Trust Securities; Action by ------------------------------------------------------ Written Consent. - --------------- (a) Meetings of the Holders of any class of Trust Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Trust Securities) to consider and act on any matter on which Holders of such class of Trust Securities are entitled to act under the terms of this Trust Agreement, the terms of the Trust Securities, the Agreement of Limited Partnership, the rules of any stock exchange on which the Trust Preferred Securities are listed or admitted for trading, the Business Trust Act or other applicable law. The Regular Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Trust Securities. Such direction shall be given by delivering to the Regular Trustees one or more calls in writing stating that the signing Holders of Trust Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Trust Securities calling a meeting shall specify in writing the certificates held by the Holders of Trust Securities exercising the right to call a meeting and only those Trust Securities specified shall 80 be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Trust Securities, the following provisions shall apply to meetings of Holders of Trust Securities: (i) notice of any such meeting shall be given to all the Holders of Trust Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Any action that may be taken at a meeting of the Holders of Trust Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of Trust Securities owning not less than the minimum amount of Trust Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of Trust Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Trust Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written ballot submitted to the Holder for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees; (ii) each Holder of a Trust Security may authorize any Person to act for it by proxy on all matters in which a Holder of Trust Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Trust Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Trust Securities were shareholders of a Delaware corporation; 81 (iii) each meeting of the Holders of the Trust Securities shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate; and (iv) unless the Business Trust Act, this Trust Agreement, the terms of the Trust Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Trust Preferred Securities are then listed for trading, otherwise provide, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Trust Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Trust Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XIV REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section 14.1 Representations and Warranties of Property Trustee. The -------------------------------------------------- Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Trust Agreement, and each Successor Property Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: (a) The Property Trustee is a New York banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of New York, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Trust Agreement; (b) The execution, delivery and performance by the Property Trustee of the Trust Agreement has been duly authorized by all necessary corporate action on the part of the Property Trustee. The Trust Agreement has been duly executed and delivered by the Property Trustee; 82 (c) The execution, delivery and performance of the Trust Agreement by the Property Trustee does not conflict with or constitute a breach of the Articles of Incorporation or Bylaws of the Property Trustee; and (d) The Property Trustee, pursuant to this Trust Agreement, shall hold legal title to, and a valid ownership interest on behalf of the Holders of the Trust Securities, in the Partnership Preferred Securities and agrees that, except as expressly provided or contemplated by this Agreement, it will not create, incur or assume, or suffer to exist any mortgage, pledge, hypothecation, encumbrance, lien or other charge or security interest upon the Partnership Preferred Securities. Section 14.2 Representations and Warranties of Delaware Trustee. The -------------------------------------------------- Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Trust Agreement, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that: (a) The Delaware Trustee is a Delaware corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Trust Agreement; (b) The Delaware Trustee has been authorized to perform its obligations under the Certificate of Trust and the Trust Agreement; and (c) The Delaware Trustee is an entity which has its principal place of business in the State of Delaware. 83 ARTICLE XV MISCELLANEOUS Section 15.1 Notices. All notices provided for in this Trust ------- Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) If given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Trust Securities): Hawaiian Electric Industries Capital Trust I c/o The Bank of New York 101 Barclay Street, 21st Floor New York, NY 10286 (b) If given to the Delaware Trustee, at the mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the other Trustees): The Bank of New York (Delaware) White Clay Center, Route 273 Newark, DE 19711 Attention: Corporate Trust Trustee Department (c) If given to the Property Trustee, at the mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders of the Trust Securities and the other Trustee): The Bank of New York 101 Barclay Street, 21st Floor New York, NY 10286 Attention: Global Trust Services (d) If given to the Holder of the Trust Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Trust Common Securities may give notice of to the Trust): 84 Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Attention: Treasury Department (e) if given to any other Holder, at the address set forth on the books and records of the Trust. All such notices 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 15.2 Governing Law. This Trust Agreement and the rights of ------------- the parties hereunder shall be governed by and construed in accordance with the internal laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. Section 15.3 Intention of the Parties. It is the intention of the ------------------------ parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Trust Agreement shall be interpreted to further this intention of the parties. Section 15.4 Headings. Headings contained in this Trust Agreement -------- are inserted for convenience of reference only and do not affect the interpretation of this Trust Agreement or any provision hereof. Section 15.5 Successors and Assigns. Whenever in this Trust ---------------------- Agreement any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Trust Agreement by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. 85 Section 15.6 Partial Enforceability. If any provision of this Trust ---------------------- Agreement, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Trust Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. Section 15.7 Counterparts. This Trust Agreement may contain more ------------ than one counterpart of the signature page and this Trust Agreement may be executed by the affixing of the signature of each of the Trustees and a duly authorized officer of the Sponsor to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. IN WITNESS WHEREOF, each of the undersigned has caused these presents to be executed as of the day and year first above written. ______________________________________ Robert F. Clarke, as Regular Trustee ______________________________________ Robert F. Mougeot, as Regular Trustee ______________________________________ Constance H. Lau, as Regular Trustee THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee By: __________________________________ Name: Title: 86 THE BANK OF NEW YORK, as Property Trustee By: __________________________________ Name: Title: HAWAIIAN ELECTRIC INDUSTRIES, INC., as Sponsor By: __________________________________ Name: Title: By: __________________________________ Name: Title: 87 EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE This Trust Preferred Security is a Global Certificate within the meaning of the Declaration hereinafter referred to and is registered in the name of The Depository Trust Company (the "Depositary") or a nominee of the Depositary. This Trust Preferred Security is exchangeable for Trust Preferred Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Declaration and no transfer of this Trust Preferred Security (other than a transfer of this Trust Preferred Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Trust Preferred Security is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York), a New York corporation, to the Trust 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 Depositary and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of the Depositary, 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. A-1.1 TP-1 [ ] CUSIP NO. _________ CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES OF HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ ____% Trust Preferred Securities (liquidation amount $25 per Trust Preferred Security) HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of __________ preferred securities of the Trust representing undivided beneficial ownership interests in the assets of the Trust designated the _____% Trust Preferred Securities (liquidation amount $25 per Trust Preferred Security) (the "Trust Preferred Securities"). 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. The designation, rights, powers, privileges, restrictions, preferences and other terms and provisions of the Trust Preferred Securities represented hereby are set forth in, issued under and shall in all respects be subject to the provisions of the Amended and Restated Trust Agreement dated as of _____________, 1997, as the same may be amended from time to time (the "Trust Agreement"). Capitalized terms used herein but not defined shall have the meaning given them in the Trust Agreement. The Holder is entitled to the benefits of the Trust Preferred Securities Guarantee to the extent provided therein. Each Holder of a Trust Preferred Security, by acceptance of this certificate and each Trust Preferred Security Beneficial Owner, by acquisition of a beneficial interest in a certificate, A-1.2 agrees to treat the Initial Debentures, and any other Affiliate Investment Instruments that are treated as debt instruments by the relevant Investment Affiliate and by the Partnership, as indebtedness for United States federal income tax purposes. The Sponsor will provide a copy of the Trust Agreement, the Trust Preferred Securities Guarantee and the Agreement of Limited Partnership to a Holder without charge upon written request to the Trust at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day of _______________, 1997. HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ --------------------------------- _______________, as Regular Trustee --------------------------------- _______________, as Regular Trustee --------------------------------- _______________, as Regular Trustee A-1.3 CERTIFICATE OF AUTHENTICATION This certificate is one of the issue of Trust Preferred Securities described in the Trust Agreement. Date of Authentication: _______________. THE BANK OF NEW YORK, as Property Trustee By: ____________________________ Name: Title: (See reverse for additional terms) A-1.4 [REVERSE OF SECURITY] Holders of Trust Preferred Securities shall be entitled to receive cumulative cash distributions at a rate per annum of _____% of the stated liquidation amount 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 only to the extent that the Trust has funds available for the payment of such distributions in the Property Account. 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 term "Distributions" as used herein shall mean ordinary cumulative distributions in respect of each Fiscal Period together with any such Compounded Distributions. Amounts available to the Trust for distribution to the Holders of the Trust Preferred Securities will be limited to payments received by the Trust from the Partnership on the Partnership Preferred Securities or from the Company on the Partnership Guarantee. Distributions on the Partnership Preferred Securities will be paid only if, as and when declared in the sole discretion of the General Partner of the Partnership. If and to the extent that the Partnership makes a distribution on the Partnership Preferred Securities held by the Property Trustee or the Company makes a payment under the Partnership Guarantee (the amount of any such partnership distribution, including any compounded partnership distributions or guarantee payment being a "Payment Amount"), the Trust shall and the Property Trustee is directed, to the extent funds are legally available for that purpose, to make a Pro Rata Distribution of the Payment Amount to Holders. 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, and for any period shorter than a full quarterly Distribution period on the basis of the actual number of days elapsed in a 90-day quarter. A-1.5 Except as otherwise described herein, distributions on the Trust Preferred Securities will be cumulative, will accumulate from the date of initial issuance and will be payable quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 1997 if, as and when legally available for payment by the Property Trustee. If the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred Securities) are in book-entry-only form, Distributions will be payable to the Holders of record of Trust Preferred Securities as they appear on the books and records of the Trust on the relevant record dates, which will be one Business Day prior to the relevant payment dates. If the Trust Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred Securities) do not remain in book-entry-only form, the relevant record dates shall be the 15th day of the month of the relevant payment dates. In the event that any date on which distributions are 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 interest 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 interest or other payments in respect of such early payment). Payments of accumulated Distributions will be payable to Holders of record of Trust Preferred Securities as they appear on the books and records of the Trust on the record date with respect to the payment date for the Trust Preferred Securities which corresponds to the payment date fixed by the Partnership with respect to the payment of cumulative distributions on the Partnership Preferred Securities. The Trust Preferred Securities shall be redeemable as provided in the Trust Agreement. A-1.6 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred Security Certificate to: _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ (Insert assignee's social security or tax identification number) _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ (Insert address and zip code of assignee) and irrevocably appoints _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ agent to transfer this Trust Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ______________________________ Signature: _________________________ (Sign exactly as your name appears on the other side of this Trust Preferred Security Certificate) A-1.7 EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE CS-1 [ ] CERTIFICATE EVIDENCING TRUST COMMON SECURITIES OF HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __ ____% Trust Common Securities (liquidation amount $25 per Trust Common Security) HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST __, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Holder") is the registered owner of _____ common securities of the Trust representing undivided beneficial ownership interests in the assets of the Trust designated the ____% Trust Common Securities (liquidation amount $25 per Trust Common Security) (the "Trust Common Securities"). The designation, rights, powers, privileges, restrictions, preferences and other terms and provisions of the Trust Common Securities represented hereby are set forth in, issued under and shall in all respects be subject to the provisions of the Amended and Restated Trust Agreement dated as of ______________, 1997, as the same may be amended from time to time (the "Trust Agreement"). Capitalized terms used herein but not defined shall have the meaning given them in the Trust Agreement. The Holder is entitled to the benefits of the Trust Common Securities Guarantee to the extent provided therein. Each Holder of a Trust Common Security, by acceptance of this certificate, agrees to treat the Initial Debentures, and any other Affiliate Investment Instruments that A-2.1 are treated as debt instruments by the relevant Investment Affiliate and by the Partnership, as indebtedness for United States federal income tax purposes. The Sponsor will provide a copy of the Trust Agreement, the Trust Common Securities Guarantee and the Agreement of Limited Partnership to a Holder without charge upon written request to the Sponsor at its principal place of business. THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON THE BOOKS AND RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE TRUST AGREEMENT. A-2.2 Upon receipt of this certificate, the Sponsor is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day of _______________, 1997. HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I _________________________________ _____________________, as Regular Trustee _________________________________ _____________________, as Regular Trustee _________________________________ _____________________, as Regular Trustee CERTIFICATE OF AUTHENTICATION This certificate is one of the issue of Trust Common Securities described in the Trust Agreement. Date of Authentication: _______________. THE BANK OF NEW YORK, as Property Trustee By: ____________________________ Name: Title: (See reverse for additional terms) A-2.3 FORM OF REVERSE OF SECURITY The Holder of Trust Common Securities shall be entitled to receive cumulative cash distributions at a rate per annum of _____% of the stated liquidation amount of $25 per Trust Common Security. Distributions on the Trust Common Securities shall, from the date of original issue, accrue and be cumulative and shall be payable quarterly only to the extent that the Trust has funds available for the payment of such distributions in the Property Account. 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 term "Distributions" as used herein shall mean ordinary cumulative distributions in respect of each Fiscal Period together with any such Compounded Distributions. Amounts available to the Trust for distribution to the Holder of the Trust Common Securities will be limited to payments received by the Trust from the Partnership on the Partnership Preferred Securities or from the Company on the Partnership Guarantee. Distributions on the Partnership Preferred Securities will be paid only if, as and when declared in the sole discretion of the General Partner of the Partnership. If and to the extent that the Partnership makes a distribution on the Partnership Preferred Securities held by the Property Trustee or the Company makes a payment under the Partnership Guarantee (the amount of any such partnership distribution, including any compounded partnership distributions or guarantee payment being a "Payment Amount"), the Trust shall and the Property Trustee is directed, to the extent funds are available for that purpose, to make a Pro Rata Distribution of the Payment Amount to Holders. 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, and for any period shorter than a full quarterly Distribution period on the basis of the actual number of days elapsed in a 90- day quarter. Except as otherwise described herein, distributions on the Trust Common Securities will be cumulative, will accrue A-2.4 from the date of initial issuance and will be payable quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 1997 if, as and when legally available for payment by the Property Trustee. Distributions will be payable to the Holder of record of the Trust Common Securities as they appear on the books and records of the Trust on the relevant record dates, which will be one Business Day prior to the relevant payment dates. In the event that any date on which distributions are payable is not a Business Day, payment of the Distribution shall be made on the next succeeding day which is a Business Day (without any interest 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 interest or other payments in respect of such early payment). Payments of accumulated Distributions will be payable to the Holder of record of the Trust Common Securities as recorded in the books and records of the Trust on the record date with respect to the payment date for the Trust Common Securities which corresponds to the payment date fixed by the Partnership with respect to the payment of cumulative distributions on the Partnership Preferred Securities. The Trust Common Securities shall be redeemable as provided in the Trust Agreement. A-2.5 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common Security Certificate to: ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ (Insert assignee's social security or tax identification number) ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ (Insert address and zip code of assignee) and irrevocably appoints ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ agent to transfer this Trust Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: _____________________________ Signature: ________________________ (Sign exactly as your name appears on the other side of this Trust Common Security Certificate) A-2.6 EX-4.(G) 7 FORM OF SENIOR INDENTURE Exhibit 4(g) ------------ =============================================================================== HAWAIIAN ELECTRIC INDUSTRIES, INC. AND ___________________________, Trustee Senior Indenture Dated as of ______________, _____ _______________ =============================================================================== CROSS REFERENCE SHEET/1/ _______________ Between Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of _____________, _____ between HAWAIIAN ELECTRIC INDUSTRIES, INC. and __________________, Trustee:
SECTION OF THE ACT SECTION OF INDENTURE - ------------------ -------------------- 310(a)(1) and (2)........ 6.9 310(a)(3) and (4)........ Inapplicable 310(b)................... 6.8 and 6.10(a), (b) and (d) 310(c)................... Inapplicable 311(a)................... 6.13 311(b)................... 6.13 311(c)................... Inapplicable 312(a)................... 4.1 and 4.2 312(b)................... 4.2 312(c)................... 4.2 313(a)................... 4.4 313(b)(1)................ Inapplicable 313(b)(2)................ 4.4 313(c)................... 4.4, 5.11, 6.10, 6.11, 8.2 and 12.2 313(d)................... 4.4 314(a)................... 3.5 and 4.3 314(b)................... Inapplicable 314(c)(1) and (2)........ 11.5 314(c)(3)................ Inapplicable 314(d)................... Inapplicable 314(e)................... 11.5 314(f)................... Inapplicable 315(a), (c) and (d)...... 6.1 315(b)................... 5.11 315(e)................... 5.12 316(a)(1)................ 5.9 and 5.10 316(a)(2)................ Not required 316(a) (last sentence)... 7.4 316(b)................... 5.7 317(a)................... 5.2 317(b)................... 3.4(a) and (b) 318(a)................... 11.7
- ---------------------- /1/ This Cross Reference Sheet is not part of the Indenture. TABLE OF CONTENTS _______________ PAGE ---- PARTIES..................................................... RECITALS Authorization of Indenture............................. Compliance with Legal Requirements..................... Purpose of and Consideration for Indenture............. ARTICLE ONE DEFINITIONS SECTION 1.1 Certain Terms Defined...................... Authenticating Agent....................... Authorized Newspaper....................... Board of Directors......................... Board Resolution........................... Business Day............................... Commission................................. Consolidated Total Assets.................. Corporate Trust Office..................... Coupon..................................... covenant defeasance........................ Depositary................................. Dollar..................................... ECU........................................ Event of Default........................... Fair Value................................. Foreign Currency........................... Holder, Holder of Securities, Securityholder........................... Indebtedness............................... Indenture.................................. Issuer..................................... Issuer Order............................... Judgment Currency.......................... Officer's Certificate...................... i Opinion of Counsel......................... Original Issue Date........................ Original Issue Discount Security........... Outstanding................................ Periodic Offering.......................... Person..................................... principal.................................. record date................................ Registered Global Security................. Registered Security........................ Required Currency.......................... Responsible Officer........................ Restricted Subsidiary...................... Security or Securities..................... Subsidiary................................. Trust Indenture Act of 1939................ Trustee.................................... Unregistered Security...................... U. S. Government Obligations............... Voting Stock............................... Yield to Maturity.......................... ARTICLE TWO SECURITIES SECTION 2.1 Forms Generally............................ SECTION 2.2 Form of Trustee's Certificate of Authentication........................ SECTION 2.3 Amount Unlimited; Issuable in Series....... SECTION 2.4 Authentication and Delivery of Securities............................... SECTION 2.5 Execution of Securities.................... SECTION 2.6 Certificate of Authentication.............. SECTION 2.7 Denomination and Date of Securities; Payments of Interest......... SECTION 2.8 Registration, Transfer and Exchange........ SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.................... SECTION 2.10 Cancellation of Securities; Destruction Thereof...................... SECTION 2.11 Temporary Securities....................... SECTION 2.12 Computation of Interest.................... ii ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1 Payment of Principal and Interest.......... SECTION 3.2 Offices for Payments, etc.................. SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee........................ SECTION 3.4 Paying Agents.............................. SECTION 3.5 Written Statement to Trustee............... SECTION 3.6 Corporate Existence........................ SECTION 3.7 Maintenance of Properties.................. SECTION 3.8 Payment of Taxes and Other Claims.......... SECTION 3.9 Restriction on Liens....................... SECTION 3.10 SEC Reports................................ ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders.......................... SECTION 4.2 Preservation and Disclosure of Securityholders Lists.................... SECTION 4.3 Reports by the Issuer...................... SECTION 4.4 Reports by the Trustee..................... ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default........... SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt................... SECTION 5.3 Application of Proceeds.................... SECTION 5.4 Suits for Enforcement...................... SECTION 5.5 Restoration of Rights on Abandonment iii of Proceedings........................... SECTION 5.6 Limitations on Suits by Securityholders.......................... SECTION 5.7 Unconditional Right of Securityholders to Institute Certain Suits............................ SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.................................. SECTION 5.9 Control by Holders of Securities........... SECTION 5.10 Waiver of Past Defaults.................... SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances............................ SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs.............. ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default.................................. SECTION 6.2 Certain Rights of the Trustee.............. SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof.......... SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; Collections, etc............. SECTION 6.5 Moneys Held by Trustee..................... SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim........... SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, etc............... SECTION 6.8 Indentures Not Creating Potential Conflicting Interests for the Trustee.................................. SECTION 6.9 Persons Eligible for Appointment as Trustee............................... SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee..................... SECTION 6.11 Acceptance of Appointment by Successor Trustee........................ iv SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee........ SECTION 6.13 Preferential Collection of Claims Against Issuer........................... SECTION 6.14 Appointment of Authenticating Agent........ ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1 Evidence of Action Taken by Securityholders.......................... SECTION 7.2 Proof of Execution of Instruments and Holding of Securities.................... SECTION 7.3 Holders to be Treated as Owners............ SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding.............................. SECTION 7.5 Right of Revocation of Action Taken........ ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1 Supplemental Indentures Without Consent of Securityholders............... SECTION 8.2 Supplemental Indentures With Consent of Securityholders....................... SECTION 8.3 Effect of Supplemental Indenture........... SECTION 8.4 Documents to Be Given to Trustee........... SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.................. ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Issuer May Consolidate, Etc., Only on Certain Terms......................... SECTION 9.2 Successor Corporation Substituted.......... SECTION 9.3 Restrictions on Dispositions of HECO Shares........................... v ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 10.1 Satisfaction and Discharge of Indenture................................ SECTION 10.2 Application by Trustee of Funds Deposited for Payment of Securities...... SECTION 10.3 Repayment of Moneys Held by Paying Agent.................................... SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years.................................... SECTION 10.5 Indemnity For U.S. Government Obligations.............................. ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability..................... SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons................... SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture....................... SECTION 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities and Coupons.............................. SECTION 11.5 Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein........................ SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays............................. SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939.............................. SECTION 11.8 New York Law to Govern..................... SECTION 11.9 Counterparts............................... SECTION 11.10 Effect of Headings......................... vi SECTION 11.11 Securities in a Foreign Currency or in ECU................................ SECTION 11.12 Judgment Currency.......................... SECTION 11.13 Separability Clause........................ ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1 Applicability of Article................... SECTION 12.2 Notice of Redemption; Partial Redemptions.............................. SECTION 12.3 Payment of Securities Called for Redemption............................... SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption............................... SECTION 12.5 Mandatory and Optional Sinking Funds.................................... TESTIMONIUM................................................. SIGNATURES.................................................. vii THIS INDENTURE, dated as of _______________ between HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation (the "Issuer"), and ________________________, a _____________________, as trustee (the "Trustee"), W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture; WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the coupons, if any, appertaining thereto as follows: ARTICLE ONE DEFINITIONS ----------- SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except ---------------------- as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939, including terms defined therein by reference to the Securities Act of 1933 (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" ---------------------------------------- means such accounting principles as are generally accepted at the time of any computation. The words "HEREIN", "HEREOF" and "HEREUNDER" and other words of ------ ------ --------- similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "AUTHENTICATING AGENT" shall have the meaning set forth in Section -------------------- 6.14. "AUTHORIZED NEWSPAPER" means a newspaper (which, in the case of The -------------------- City of New York, will, if practicable, be The Wall Street Journal (Eastern Edition) published in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in The City of New York or in any other applicable city or country. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. "BOARD OF DIRECTORS" means either the Board of Directors of the Issuer ------------------ or any committee of such Board duly authorized to act on its behalf. "BOARD RESOLUTION" means a copy of one or more resolutions, certified ---------------- by the secretary or an assistant secretary of the Issuer to have been duly adopted or consented 2 to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. "BUSINESS DAY" means, with respect to any Security, a day that in the ------------ city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, is not a day on which banking institutions are authorized or required by law or regulation to close. "COMMISSION" means the Securities and Exchange Commission, as from ---------- time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "CONSOLIDATED TOTAL ASSETS" means, in respect of the Issuer as of any ------------------------- date of determination, the amount of total assets shown on the consolidated balance sheet of the Issuer and its consolidated subsidiaries contained in the most recent annual or quarterly report filed with the Commission, or if the Issuer is not then subject to the Securities Exchange Act of 1934, the most recent annual or quarterly report to stockholders and, in respect of any Subsidiary as of any date of determination, the amount of total assets of such Subsidiary and its consolidated subsidiaries from which such consolidated balance sheet of the Issuer and its consolidated Subsidiaries was derived. "CORPORATE TRUST OFFICE" means the office of the Trustee at which the ---------------------- corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located in the County of ______________, the City of ______________. "COUPON" means any interest coupon appertaining to an Unregistered ------ Security. "COVENANT DEFEASANCE" shall have the meaning set forth in Section ------------------- 10.1(C). "DEPOSITARY" means, with respect to the Securities of any series ---------- issuable or issued in the form of one or more 3 Registered Global Securities, the Person designated as Depositary by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "DEPOSITARY" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "DEPOSITARY" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. "DOLLAR" means the 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. "ECU" means the European Currency Unit as defined and revised from --- time to time by the Council of European Communities. "EVENT OF DEFAULT" means any event or condition specified as such in ---------------- Section 5.1. "FAIR VALUE" when used with respect to any Voting Stock means the fair ---------- value as determined in good faith by the Board of Directors of the Issuer. "FOREIGN CURRENCY" means a currency issued by the government of a ---------------- country other than the United States. "HOLDER", "HOLDER OF SECURITIES", "SECURITYHOLDER" or other similar ------ -------------------- -------------- terms mean (a) in the case of any Registered Security, the person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security, or any Coupon appertaining thereto, as the case may be. "INDEBTEDNESS" shall have the meaning set forth in Section 5.1. ------------ "INDENTURE" means this instrument as originally executed and delivered --------- or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. 4 "ISSUER" means (except as otherwise provided in Article Six) Hawaiian ------ Electric Industries, Inc., a Hawaii corporation and, subject to Article Nine, its successors and assigns. "ISSUER ORDER" means a written statement, request or order of the ------------ Issuer signed in its name by the the president, any vice president or the treasurer or controller of the Issuer. "JUDGMENT CURRENCY" shall have the meaning set forth in Section 11.12. ----------------- "OFFICER'S CERTIFICATE" means a certificate signed by the presiden, --------------------- any vice president, the treasurer or the controller of the Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "OPINION OF COUNSEL" means an opinion in writing signed by the General ------------------ Counsel of the Issuer or by such other legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "ORIGINAL ISSUE DATE" of any Security (or portion thereof) means the ------------------- earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. "ORIGINAL ISSUE DISCOUNT SECURITY" means any Security that provides -------------------------------- for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "OUTSTANDING" (except as otherwise provided in Section 7.4), when used ----------- with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except 5 (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which moneys or U.S. Government Obligations (as provided for in Section 10.1) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own paying agent), PROVIDED that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities which shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer). In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "PERIODIC OFFERING" means an offering of Securities of a series from ----------------- time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. 6 "PERSON" means any individual, corporation, partnership, limited ------ liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Securities of any ---------------- series, means the place or places where the principal of and interest on the Securities of that series are payable as specified as contemplated by Section 2.3. "PRINCIPAL" whenever used with reference to the Securities or any --------- Security or any portion thereof, shall be deemed to include "and premium, if any". "RECORD DATE" shall have the meaning set forth in Section 2.7. ----------- "REGISTERED GLOBAL SECURITY", means a Security evidencing all or a -------------------------- part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4. "REGISTERED SECURITY" means any Security registered on the Security ------------------- register of the Issuer. "REQUIRED CURRENCY" shall have the meaning set forth in Section 11.12. ----------------- "RESPONSIBLE OFFICER" when used with respect to the Trustee means the ------------------- chairman of the board of directors, any vice chairman of the board of directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, (whether or not designated by numbers or words added before or after the title "VICE PRESIDENT") the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. 7 "SECURITY" or "SECURITIES" (except as otherwise provided in Section -------- ---------- 7.4) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture. "SUBSIDIARY" means any corporation, partnership or other entity of ---------- which at the time of determination the Issuer owns or controls directly or indirectly more than 50% of the shares of Voting Stock. "TRUST INDENTURE ACT OF 1939" (except as otherwise provided in --------------------------- Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally executed. "TRUSTEE" means the Person identified as "Trustee" in the first ------- paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series. "UNREGISTERED SECURITY" means any Security other than a Registered --------------------- Security. "U.S. GOVERNMENT OBLIGATIONS" shall have the meaning set forth in --------------------------- Section 10.1(A). "VOTING STOCK" means stock of any class or classes having general ------------ voting power under ordinary circumstances to 8 elect a majority of the board of directors, managers or trustees of the corporation in question, PROVIDED that, for the purposes hereof, stock which carries only the right to vote conditionally on the happening of an event shall not be considered voting stock whether or not such event shall have happened. "YIELD TO MATURITY" means the yield to maturity on a series of ----------------- securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. ARTICLE TWO SECURITIES ---------- SECTION 2.1 FORMS GENERALLY. The Securities of each series and the --------------- Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons. The definitive Securities and Coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons, if any. 9 SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The ----------------------------------------------- Trustee's certificate of authentication on all Securities shall be in substantially the following form: "This is one of the Securities referred to in the within-mentioned Senior Indenture. _______________________________, as Trustee By_____________________________ Authorized Signatory" If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Trustee's Certificate of Authentication to be borne by the Securities of each such series shall be substantially as follows: "This is one of the Securities referred to in the within-mentioned Senior Indenture. ______________________________, as Authenticating Agent By____________________________ Authorized Signatory" SECTION 2.3 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate ------------------------------------ principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series and each such series shall rank equally and pari passu with all other unsecured and unsubordinated debt of the Issuer. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to rather than set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, (1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series; 10 (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3); (3) if other than Dollars, the coin or currency in which the Securities of that series are denominated (including, but not limited to, any Foreign Currency or ECU); (4) the date or dates on which the principal of the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined; (6) the place or places of payment where the principal of and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2); (7) the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise; 11 (8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, the denominations in which Securities of the series shall be issuable; (10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof; (11) if other than the coin or currency in which the Securities of that series are denominated, the coin or currency in which payment of the principal of or interest on the Securities of such series shall be payable; (12) if the principal of or interest on the Securities of such series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined; (14) whether the Securities of the series will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any 12 restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa; (15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts; (16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (17) any trustees, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series; (18) any other events of default or covenants with respect to the Securities of such series in addition to the Events of Default or covenants set forth herein; and (19) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and Coupons, if any, appertaining thereto, shall be substantially identical, except in the case of Registered Securities as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any such indenture supplemental hereto. 13 SECTION 2.4 AUTHENTICATION AND DELIVERY OF SECURITIES. The Issuer ----------------------------------------- may deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and deliver such Securities to or upon the order of the Issuer (contained in the Issuer Order referred to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series and Coupons, if any, appertaining thereto shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral instructions from the Issuer or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs 2, 3 and 4 below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such series) and (subject to Section 6.1) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked: (1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities and Coupons, if any, are not to be delivered to the Issuer, provided that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order, (c) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by an Issuer 14 Order or pursuant to such procedures and (d) if provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing; (2) any Board Resolution, Officer's Certificate and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities and Coupons, if any, were established; (3) an Officer's Certificate setting forth the form or forms and terms of the Securities and Coupons, if any, stating that the form or forms and terms of the Securities and Coupons, if any, have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and (4) At the option of the Issuer, either one or more Opinions of Counsel, or a letter addressed to the Trustee permitting it to rely on one or more Opinions of Counsel, substantially to the effect that: (a) the forms of the Securities and Coupons, if any, have been duly authorized and established in conformity with the provisions of this Indenture; (b) in the case of an underwritten offering, the terms of the Securities have been duly authorized and established in conformity with the provisions of this Indenture, and, in the case of an offering that is not underwritten, certain terms of the Securities have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; 15 (c) when the Securities and Coupons, if any, have been executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, they will have been duly issued under this Indenture, will be entitled to the benefits of this Indenture, and will be valid and binding obligations of the Issuer, enforceable in accordance with their respective terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) rights of acceleration, if any, and the availability of equitable remedies may be limited by equitable principles of general applicability; and (d) the execution and delivery by the Issuer of, and the performance by the Issuer of its obligations under, the Securities and Coupons, if any, will not contravene any provision of any material applicable law or the certificate of incorporation or bylaws of the Issuer or any agreement or other instrument binding upon the Issuer or any of its "significant subsidiaries" (as defined in Article 1 of Regulation S-X under the Securities Act of 1933) that is material to the Issuer and its subsidiaries, taken as a whole, or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Issuer or any "significant subsidiary" (as defined above), and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Issuer of its obligations under the Securities and Coupons, if any, except such as are specified and have been obtained and such as may be required by the securities or blue sky laws of the various states in connection with the offer and sale of the Securities and Coupons, if any. In rendering such opinions, any counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and other similar laws affecting the rights and remedies of creditors and is subject 16 to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely upon opinions of other counsel (copies of which shall be delivered to the Trustee), who shall be counsel reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes he and the Trustee are entitled so to rely. Such counsel may also state that, insofar as such opinion involves factual matters, he has relied, to the extent he deems proper, upon certificates of officers of the Issuer and its subsidiaries and certificates of public officials. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise. If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the Issuer Order with respect to such series, authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." 17 Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 2.5 EXECUTION OF SECURITIES. The Securities and, if ----------------------- applicable, each Coupon appertaining thereto shall be signed on behalf of the Issuer by its president, any vice president or its treasurer or controller, under its corporate seal (except in the case of Coupons) which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities or Coupons, if any, shall cease to be such officer before the Security or Coupon so signed (or the Security to which the Coupon so signed appertains) shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6 CERTIFICATE OF AUTHENTICATION. Only such Securities as ----------------------------- shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid and obligatory for any purpose until the certificate of 18 authentication on the Security to which such Coupon appertains shall have been duly executed by the Trustee. The execution of such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.7 DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF ------------------------------------------------ INTEREST. The Securities of each series shall be issuable as Registered - -------- Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, with respect to the Registered Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. If denominations of Unregistered Securities of any series are not so established, such Securities shall be issuable in denominations of $1,000 and $5,000. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof. Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in the resolution or resolutions of the Board of Directors of the Issuer referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3. The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the 19 date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day. SECTION 2.8 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will ----------------------------------- keep at each office or agency to be maintained for the purpose as provided in Section 3.2 for each series of Securities a register or registers in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration of Registered Securities of such series and the registration of transfer of Registered Securities of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series, maturity date, interest rate and original issue date in authorized denominations for a like aggregate principal amount. Unregistered Securities (except for any temporary global Unregistered Securities) and Coupons (except for Coupons attached to any temporary global Unregistered Securities) shall be transferable by delivery. 20 At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, except as otherwise specified pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer has received from the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that the inclusion of terms permitting Registered Securities to be exchanged for Unregistered Securities would result in no adverse Federal 21 income tax effect to the Issuer or to any Holder. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities and Coupons surrendered upon any exchange or transfer provided for in this Indenture shall be promptly cancelled and disposed of by the Trustee and the Trustee will deliver a certificate of disposition thereof to the Issuer. All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing of notice of redemption of Securities of such series to be redeemed or (b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed. Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred or exchanged except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. If at any time the Depositary for any Registered Securities of a series represented by one or more Registered 22 Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Registered Securities or if at any time the Depositary for such Registered Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary eligible under Section 2.4 with respect to such Registered Securities. If a successor Depositary eligible under Section 2.4 for such Registered Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Registered Securities be represented by one or more Registered Global Securities shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities in exchange for such Registered Global Security or Securities. The Issuer may at any time and in its sole discretion determine that the Registered Securities of any series issued in the form of one or more Registered Global Securities shall no longer be represented by a Registered Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities, in exchange for such Registered Global Security or Securities. If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge, 23 (i) to the Person specified by such Depositary a new Registered Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and (ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above. Upon the exchange of a Registered Global Security for Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Security shall be cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form without coupons issued in exchange for a Registered Global Security pursuant to this Section 2.8 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the terms of any series of Securities to the contrary, none of the Issuer, the Trustee or any agent of the Issuer or the Trustee (any of which, other than the Issuer, shall rely on an Officer's Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Issuer (such as, for example, the inability of the Issuer to deduct from its income, as computed for 24 Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. SECTION 2.9 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN ---------------------------------------------- SECURITIES. In case any temporary or definitive Security or any Coupon - ---------- appertaining to any Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver a new Security of the same series, maturity date, interest rate and original issue date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Securities so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof and in the case of mutilation or defacement shall surrender the Security and related Coupons to the Trustee or such agent. Upon the issuance of any substitute Security or Coupon, the Issuer 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) or its agent connected therewith. In case any Security or Coupon which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Security, pay or authorize the payment of the same or the relevant Coupon (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee 25 and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof. Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities and Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and Coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10 CANCELLATION OF SECURITIES; DESTRUCTION THEREOF. All ----------------------------------------------- Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall dispose of cancelled Securities and Coupons held by it and deliver a certificate of disposition to the Issuer. If the Issuer or its agent shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities 26 or Coupons unless and until the same are delivered to the Trustee or its agent for cancellation. SECTION 2.11 TEMPORARY SECURITIES. Pending the preparation of -------------------- definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, or as Unregistered Securities with or without coupons attached thereto, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a 27 depositary or agency located outside the United States and the procedures pursuant to which definitive or global Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). SECTION 2.12 COMPUTATION OF INTEREST. Except as otherwise specified ----------------------- as contemplated by Section 2.3 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE THREE COVENANTS OF THE ISSUER ----------------------- SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants --------------------------------- and agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities of such series (together with any additional amounts payable pursuant to the terms of such Securities) at the place or places, at the respective times and in the manner provided in such Securities and in the Coupons, if any, appertaining thereto and in this Indenture. The interest on Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. If any temporary Unregistered Security provides that interest thereon may be paid while such Security is in temporary form, the interest on any such temporary Unregistered Security (together with any additional amounts payable pursuant to the terms of such Security) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest, in each case subject to any restrictions that may be established pursuant to Section 2.3. The interest on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at the option of the Issuer, may be paid by wire transfer or by mailing checks for such interest 28 payable to or upon the written order of such Holders at their last addresses as they appear on the registry books of the Issuer. SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any Registered ------------------------- Securities are authorized for issuance pursuant to this Indenture or are outstanding hereunder, the Issuer will maintain in the Place of Payment an office or agency where the Registered Securities of each series may be presented for payment, where the Securities of each series may be presented for exchange as is provided in this Indenture and, if applicable, pursuant to Section 2.3 and where the Registered Securities of each series may be presented for registration of transfer as in this Indenture provided. If provided for pursuant to Section 2.3, the Issuer will maintain one or more offices or agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) as a Place of Payment where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect such payment can be made without adverse tax consequences to the Issuer. Notwithstanding the foregoing, payments in Dollars of Unregistered Securities of any series and Coupons appertaining thereto which are payable in Dollars may be made at an agency of the Issuer maintained in a Place of Payment within the United States if such payment in Dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. The Issuer will maintain in the Borough of Manhattan, The City of New York, Places of Payment or at such other place or places as provided pursuant to Section 2.3, an office or agency where notices and demands to or upon the Issuer in respect of the Securities of any series, the Coupons appertaining thereto or this Indenture may be served. 29 The Issuer will give to the Trustee prompt written notice of the location of each such office or agency and of any change of location thereof. In case the Issuer shall fail to maintain any agency required by this Section to be located in the Places of Payment, or shall fail to give such notice of the location or of any change in the location of any of the above agencies, presentations, surrenders, notices and demands may be made and notices may be served at the Corporate Trust Office of the Trustee, and the Issuer hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Issuer may from time to time designate one or more additional offices or agencies where the Securities of a series and any Coupons appertaining thereto may be presented for payment, where the Securities of that series may be presented for exchange as provided in this Indenture and pursuant to Section 2.3 and where the Registered Securities of that series may be presented for registration of transfer as in this Indenture provided, and the Issuer may from time to time rescind any such designation, as the Issuer may deem desirable or expedient; PROVIDED, HOWEVER, that no such designation or -------- ------- rescission shall in any manner relieve the Issuer of its obligation to maintain the agencies provided for in this Section. The Issuer will give to the Trustee prompt written notice of any such designation or rescission thereof. SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The -------------------------------------------------- Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a ------------- paying agent other than the Issuer or the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have 30 been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the Holders of the Securities of such series, or Coupons appertaining thereto, if any, or of the Trustee, until such sums shall be paid or otherwise disposed of as provided herein, (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable, and (c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in clause (b) above. The Issuer will, on or prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent, if any, a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of its action or any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of its action or any failure to take such action. Anything in this Section to the contrary notwithstanding, but subject to Section 10.1, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. 31 Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. SECTION 3.5 WRITTEN STATEMENT TO TRUSTEE. The Issuer will furnish to ---------------------------- the Trustee within 120 days after the end of each year that the Securities are outstanding a brief certificate (which need not comply with Section 11.5) from the principal executive, financial or accounting officer of the Issuer stating whether or not to the best knowledge of the signers thereof the Issuer is in default in the performance of all conditions and covenants under this Indenture. SECTION 3.6 CORPORATE EXISTENCE. Subject to Article Nine, the Issuer ------------------- will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory) and franchises of the Issuer and its Subsidiaries; PROVIDED, HOWEVER, that the -------- ------- Issuer shall not be required to preserve any such right or franchise, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Subsidiaries taken as a whole and the loss thereof is not disadvantageous in any material respect to the Securityholders. SECTION 3.7 MAINTENANCE OF PROPERTIES. The Issuer will cause all ------------------------- material properties used in or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all time except to the extent that the Issuer may be prevented from so doing by circumstances beyond its control; PROVIDED, HOWEVER, that nothing in -------- ------- this Section shall prevent the Issuer from discontinuing, or from causing or permitting a Subsidiary to continue, the operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Issuer, desirable in the conduct of the business of the Issuer or any Subsidiary and not disadvantageous in any material respect to the Securityholders. 32 SECTION 3.8 PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer will pay --------------------------------- or discharge or cause to be paid or discharged, before the same shall become delinquent: (a) all taxes, assessments and governmental charges levied or imposed upon the Issuer or any Subsidiary or upon the income, profits or property of the Issuer or any Subsidiary that are material to the Issuer and its Subsidiaries taken as a whole; and (b) all lawful claims for labor, materials, and supplies, which, if unpaid, might by law become a lien upon the property of the Issuer or any Subsidiary and that are material to the Issuer and its Subsidiaries taken as a whole; PROVIDED, HOWEVER, that the Issuer shall not be -------- ------- required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and provided further that the Issuer shall not be required to cause to be paid or discharged any such tax, assessment, charge or claim if the Issuer shall determine that such payment is not advantageous to the conduct of the business of the Issuer and its Subsidiaries taken as a whole and that the failure so to pay or discharge is not disadvantageous in any material respect to the Securityholders. SECTION 3.9 RESTRICTION ON LIENS. So long as any Securities are -------------------- Outstanding, the Issuer shall not create, incur, issue, or assume any Indebtedness (as defined below) secured after the date hereof by any security interest (including, without limitation, any mortgage, pledge, encumbrance, lien or charge of any kind) on any property of the Issuer (including, without limitation, property of the Issuer consisting of any share or shares of capital stock or indebtedness owed to the Issuer by any subsidiary of the Issuer) whether such property, shares or indebtedness are owned by the Issuer at the date of this Indenture or thereafter acquired, without effectively providing concurrently with the creation, incurrence, issuance or assumption of such Indebtedness or the time when such Indebtedness is permitted or suffered to exist that the Securities (together with, if the Issuer shall so determine, any other indebtedness of the Issuer ranking equally with the Securities and then existing or thereafter created) shall be secured equally and ratably with (or prior to) the Indebtedness so created, incurred, issued or assumed; provided, however, that the foregoing shall not apply to: 33 (a) security interests on any property acquired, constructed or improved by the Issuer or on any shares of capital stock or indebtedness of any subsidiary acquired by the Issuer after the date of this Indenture to secure the payment of all or any part of the purchase price of such property, shares of capital stock or indebtedness upon the acquisition thereof by the Issuer or within 270 days thereafter, or to secure payment of all or any part of the cost of such construction or improvements as they are incurred or within 270 days thereafter, and provided that, in the case of any such acquisition, construction or improvement, such security interest does not apply to any property or shares of capital stock or indebtedness theretofore owned by the Issuer, other than, in the case of any such construction or improvement, any real property on which the property is so constructed or the improvement is located; (b) security interests on any property, shares of capital stock, or indebtedness which security interests exist at the time of acquisition of such property, shares or indebtedness by the Issuer; (c) security interests on any property of a corporation or other Person, which interests exist at the time such corporation is merged with or into or consolidated with the Issuer or which interests exist at the time of a sale or transfer of the properties of such corporation or other Person as an entirety or substantially as an entirety to the Issuer; (d) security interest in favor of the United States of America or any State thereof, or of any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or political subdivision, (A) to secure partial progress, advance or other payments pursuant to any contract or statute, (B) to secure any indebtedness incurred or guaranteed for the purpose of financing or refinancing all or any part of the purchase price of the property, shares of capital stock or indebtedness subject to such security interests, or (C) to secure the cost of constructing or improving the property subject to such security interests (including, without limitation, 34 security interests incurred in connection with pollution control, industrial revenue or similar financings); (e) security interests on any property arising in connection with any defeasance, covenant defeasance or in substance defeasance of any Indebtedness pursuant to express contractual provision with respect thereto or generally accepted accounting principles; (f) security interests on any capital stock of any corporation which is registered in the name of the Issuer or otherwise owned by or held for the benefit of the Issuer which may constitute "margin stock" as such term is defined in Section 207.2(i) of Title 12 of the Code of Federal Regulations (or any successor provisions); and (g) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any security interest referred to in the foregoing clauses (a) through (f), inclusive; provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the original principal amount of Indebtedness and that such extension, renewal or replacement shall be limited to all or a part of the property (plus improvements and construction on such property), shares of capital stock or indebtedness which was subject to the security interest so extended, renewed or replaced. Notwithstanding the foregoing provisions of this Section, the Issuer may, without equally and ratably securing the Securities, create, incur, issue or assume, Indebtedness secured by any security interest not excepted by the foregoing Clauses (a) through (g), if the aggregate amount of such Indebtedness, together with all other Indebtedness of the Issuer existing at such time and secured by security interests not so excepted, does not exceed 10% of the Issuer's Consolidated Net Assets at such time. For the purposes of this Section only, "Indebtedness" shall mean (i) any indebtedness, whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed, (ii) all deferred indebtedness (including, without limitation, capitalized leases) for the payment of the purchase price of property or assets purchased, and (iii) all 35 guarantees, endorsements, assumptions or other contingent obligations in respect of, or to purchase or otherwise to acquire, indebtedness of the types described in clauses (i) and (ii) above. For the purposes of this Section only, "Consolidated Net Assets" shall mean the total amount of assets appearing on the consolidated balance sheet of the Issuer and its subsidiaries less, without duplication: (a) all current liabilities (excluding current liabilities of "American Savings Bank, F.S.B. and any current liabilities which are by their terms extendable or renewable at the sole option of the obligor thereon without requiring the consent of the obligee to a date more than 12 months after the date of determination); (b) all reserves for depreciation and other asset valuation reserves but excluding any reserves for deferred Federal income taxes arising from accelerated amortization or otherwise; and (c) all appropriate adjustments on account of minority interests of other persons holding common stock in any subsidiary and trust originated preferred securities. Consolidated Net Assets are determined in accordance with generally accepted accounting principles and as of a date not more than 90 days prior to the happening of the event for which such determination is being made. SECTION 3.10 SEC REPORTS. The Issuer shall file with the Trustee, ----------- within 15 days after it files such annual and quarterly reports, information, documents and other reports with the Commission, 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 Commission may by rules and regulations prescribe) which the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE --------------------------------------- SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ----------------------------------------------------- ADDRESSES OF SECURITYHOLDERS. If and so long as the Trustee shall not be the - ---------------------------- Security registrar for the Securities of any series, the Issuer and any other obligor on the Securities will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably 36 require of the names and addresses of the Holders of the Registered Securities of such series pursuant to Section 312 of the Trust Indenture Act of 1939 (a) semi-annually not more than 5 days after each record date for the payment of interest on such Registered Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non- interest bearing Registered Securities in each year, and (b) at such other times as the Trustee may request in writing, within thirty days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished. SECTION 4.2 PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS LISTS. ---------------------------------------------------- (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses the Holders contained in the most recent list furnished to the Trustee as provided in Section 4.1 and the names and addresses of Holders received by the Trustee in its capacity, if any, as Security registrar. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) If three or more Holders (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanies by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 4.2(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 37 4.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 4.2(a) copies of the form of proxy or other communication which is specified in the request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, of the reasonable expenses of such mailing, unless within five days after such tender, the Trustee shall mail to such applicants, and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be a violation of applicable law. Such statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 4.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 4.2(b). 38 SECTION 4.3 REPORTS BY THE ISSUER. The Issuer covenants to file with --------------------- the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports that the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 or pursuant to Section 314 of the Trust Indenture Act of 1939. SECTION 4.4 REPORTS BY THE TRUSTEE. Any Trustee's report required ---------------------- under Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or before __________ in each year beginning _____________, as provided in Section 313(c) of the Trust Indenture Act of 1939, so long as any Securities are Outstanding hereunder, and shall be dated as of a date convenient to the Trustee no more than 60 days prior thereto. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Issuer. The Issuer will notify the Trustee when any Securities are listed on any stock exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT ------------------------------------------- SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; --------------------------------------------------- WAIVER OF DEFAULT. "Event of Default" with respect to Securities of any series - ----------------- wherever used herein, means each one of the following events which shall have occurred and be continuing (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): (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or 39 (b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise, and continuance of such default for a period of three business days; or (c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of the Securities of such series, and continuance of such default for a period of three business days; or (d) failure on the part of the Issuer duly to observe or perform any other of the covenants or agreements on the part of the Issuer in the Securities of such series (other than a covenant or agreement in respect of the Securities of such series a default in the performance or breach of which is elsewhere in this Section specifically dealt with) or contained in this Indenture (other than a covenant or agreement included in this Indenture solely for the benefit of a series of Securities other than such series) for a period of 60 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Issuer remedy the same, shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Securities of all series affected thereby; or (e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer for any substantial part of its or their property or ordering the winding up or liquidation of its or their affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or 40 (f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or any Restricted Subsidiary or for any substantial part of its or their property, or make any general assignment for the benefit of creditors; or (g) an event of default, as defined in any one or more mortgages, indentures, instruments, bonds, debentures, notes or other similar instruments under which there may be issued, or by which there may be secured or evidenced, any indebtedness (other than the Securities of such series or nonrecourse obligations) ("Indebtedness") in excess in aggregate principal amount of $10,000,000 for money borrowed by the Issuer shall occur, if such event of default shall result in the acceleration of such Indebtedness prior to its expressed maturity under the terms of the instrument under which the indebtedness is issued or secured unless such Indebtedness is discharged or such acceleration is cured, waived, rescinded or annulled within 20 days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities (treated as one class) which notice shall state that it is a "Notice of Default" hereunder; or (h) any other Event of Default provided in the supplemental indenture under which such series of Securities is issued or in the form of Security for such series; PROVIDED that if any such default or acceleration referred to in clause (g) - -------- above shall cease or be cured, waived, rescinded or annulled, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon cured. If an Event of Default described in clause (a), (b), (c), (d) or (h) (if the Event of Default under clause (d) or (h), as the case may be, is with respect to such series of securities and to less than all 41 series of Securities then Outstanding) occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of each such affected series then Outstanding hereunder (voting as a single class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration, the same shall become immediately due and payable. If an Event of Default described in clause (d) or (h) (if the Event of Default under clause (d) or (h), as the case may be, is with respect to all series of Securities then Outstanding), (e) or (f) occurs and is continuing, then and in each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities then Outstanding, and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or of all the Securities, as the case may be) and the principal of any and all Securities of each such series (or of all the Securities, as the case may be) 42 which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the nonpayment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the Holders of a majority in aggregate principal amount of all the Securities of each such series, or of all the Securities, in each case voting as a single class, then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. 43 SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE -------------------------------------------------------- DEBT. The Issuer covenants that (a) in case default shall be made in the - ---- payment of any installment of interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise -- then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series, and such Coupons, for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered holders, whether or not the Securities of such Series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon the Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Securities, wherever situated the moneys adjudged or decreed to be payable. 44 In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, 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 reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and 45 (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities of such series or Coupons appertaining to such Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the 46 Trustee shall be held to represent all the Holders of the Securities or Coupons appertaining to such Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings. SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the ----------------------- Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities and Coupons appertaining to such Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which monies have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith; SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected 47 shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has --------------------- occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In --------------------------------------------------- case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. 48 SECTION 5.6 LIMITATIONS ON SUITS BY SECURITYHOLDERS. No Holder of --------------------------------------- any Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, against the Issuer unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of each affected series then Outstanding (treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Securities or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series and Coupons appertaining to such Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE --------------------------------------------------- CERTAIN SUITS. Notwithstanding any other provision in this Indenture and any - ------------- provision of any Security, the right of any Holder of any Security or Coupon to receive 49 payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT ----------------------------------------------------- WAIVER OF DEFAULT. Except as provided in Section 5.6, no right or remedy herein - ----------------- conferred upon or reserved to the Trustee or to the Holders of Securities or Coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of Securities or Coupons to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the Holders of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders of Securities or Coupons. SECTION 5.9 CONTROL BY HOLDERS OF SECURITIES. The Holders of a -------------------------------- majority in aggregate principal amount of the Securities of each series affected (with all such series voting as a single class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; PROVIDED that such direction shall not be otherwise than in -------- accordance with law and the provisions of this Indenture and PROVIDED FURTHER ---------------- that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board 50 of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders. SECTION 5.10 WAIVER OF PAST DEFAULTS. Prior to the acceleration of ----------------------- the maturity of any Securities as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding with respect to which an event of default shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past default or Event of Default described in Section 5.1 and its consequences, except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN ------------------------------------------------------ CERTAIN CIRCUMSTANCES. The Trustee shall, within ninety days after the - --------------------- occurrence of a default with 51 respect to the Securities of any series, give notice of all defaults with respect to that series known to the Trustee (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in the Place or Places of Payment (and, if required, in an Authorized Newspaper any other place or places) and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act of 1939, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term "defaults" for the purpose of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); PROVIDED that, except in the case -------- of default in the payment of the principal of or interest on any of the Securities of such series, or in the payment of any sinking or purchase fund installment on such series, the 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 trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY ------------------------------------------------------ COSTS. All parties to this Indenture agree, and each Holder of any Security or - ----- Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series, or, in the case of any suit relating to or arising under clause (d) or (h) of Section 5.1 (if the suit relates to Securities of more than one but 52 less than all series), 10% in aggregate principal amount of Securities then Outstanding and affected thereby, or in the case of any suit relating to or arising under clause (d) or (h) (if the suit under clause (d) or (h) relates to all the Securities then Outstanding), (e), (f) or (g) of Section 5.1, 10% in aggregate principal amount of all Securities then Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security or any date fixed for redemption. ARTICLE SIX CONCERNING THE TRUSTEE ---------------------- SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING -------------------------------------------------- DEFAULT; PRIOR TO DEFAULT. With respect to the Holders of any series of - ------------------------- Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this 53 Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the 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 pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the 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 there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The provisions of this Section 6.1 are in furtherance of and subject to Section 315 of the Trust Indenture Act of 1939. 54 SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. In furtherance of and ----------------------------- subject to the Trust Indenture Act of 1939, and subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any written advice or any Opinion of Counsel 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 reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any 55 resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; PROVIDED -------- that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the 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. SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF ---------------------------------------------------- SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein - --------------------------------------------- and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES OR COUPONS; -------------------------------------------------- COLLECTIONS, ETC. The Trustee or any agent of the Issuer or the Trustee, in its - ---------------- individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the 56 same rights it would have if it were not the Trustee or such agent. SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of ---------------------- Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR --------------------------------------------------------- CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time, - ----- and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or Coupons, and the Securities are hereby subordinated to such senior claim. 57 SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICER'S CERTIFICATE, ETC. ------------------------------------------------------ Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 6.8 INDENTURES NOT CREATING POTENTIAL CONFLICTING INTERESTS ------------------------------------------------------- FOR THE TRUSTEE. The following indentures are hereby specifically described for - --------------- the purposes of Section 310(b)(1) of the Trust Indenture Act of 1939; this Indenture with respect to the Securities of any other series. SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee ------------------------------------------- for each series of Securities hereunder shall at all times be a corporation or banking association organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, State or District of Columbia authority. Such corporation or banking association shall have a place of business in _______________________ and the Place or Places of Payment if there be such a corporation in such locations willing to act upon reasonable and customary terms and conditions. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, 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. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. 58 The provisions of this Section 6.9 are in furtherance of and subject to Section 310(a) of the Trust Indenture Act of 1939. SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR ------------------------------------------------- TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may - ------- at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in _____________________, and in an Authorized Newspaper in the Place or Places of Payment (and, if required, in an Authorized Newspaper in any other place or places), (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 at such addresses as were so furnished to the Trustee and (iii) by mailing notice of such resignation to the Holders of then Outstanding Registered Securities of each series affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: 59 (i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act of 1939 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and Section 310(a) of the Trust Indenture Act of 1939 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act of 1939, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to 60 the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11. SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any ---------------------------------------------- successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the 61 predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture 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 supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under Section 310(b) of the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in _________________________ and in an Authorized Newspaper in the Place or Places of Payment (and, if required, in an Authorized Newspaper in any other place or places), (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) to the Holders of Registered Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer. 62 SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO -------------------------------------------------- BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or - ------------------- converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED that such -------- corporation shall be qualified under Section 310(b) of the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; PROVIDED, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. ------------------------------------------------ (a) Subject to Section 6.13(b), if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Issuer of the Securities within three months prior to a default, as defined in Section 6.13(c), or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually and the Holders of the Securities and the holders of other indenture securities, as defined in Section 6.13(c): 63 (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months' period and valid as against the Issuer and their other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Issuer upon the date of such default; and (2) all property received by the Trustee in respect of any claims as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if ------- ------- any, of the Issuer and their other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Issuer) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, 64 upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default, as defined in Section 6.13(c), would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Issuer of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture 65 securities dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, whether such distribution is made in cash, securities or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee, the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: 66 (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three months' period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. In any case commenced under the Bankruptcy Act of July 1, 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months contained in this Section 6.13(a) shall be deemed to be references to periods of four months. (b) There shall be excluded from the operation of Subsection (a) of this Section 6.13 a creditor relationship arising from: (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness' created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or 67 securities sold in a cash transaction, as defined in Subsection (c) of this Section 6.13; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Issuer; and (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper, as defined in Subsection (c) of this Section 6.13. (c) For the purposes of this Section 6.13 only: (1) the term "default" means any failure to make payment in full of the principal of or interest on any of the Securities or upon the other indenture securities when and as such principal or interest becomes due and payable; (2) the term "other indenture securities" means securities upon which the Issuer is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which is qualified under the Trust Indenture Act of 1939, (iii) which contains provisions substantially similar to the provisions of this Section 6.13, and (iv) under which a default exists at the time of the apportionment of the funds and property held in such special account; (3) the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale 68 of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; (5) the term "Issuer" means the Issuer and any other obligor upon the Securities; and (6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or Title 11 of the United States Code. SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. As long as any ----------------------------------- Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent") which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a Certificate of Authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000 (determined as provided in Section 6.9 with respect to the Trustee) and subject to supervision or examination by Federal or State authority. 69 Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.14 with respect to one or more series of Securities, the Trustee shall upon receipt of an Issuer Order appoint a successor Authenticating Agent and the Issuer shall provide notice of such appointment to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any Authenticating Agent. ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS ------------------------------ SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any ------------------------------------------- request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage 70 in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by 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. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF --------------------------------------------------- SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by - ---------- a Securityholder or his agent or proxy may be proved in the following manner: (a) The fact and date of the execution by any Holder of any instrument may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the person executing such instruments acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute sufficient proof of the authority of the person executing the same. The fact of the holding by any Holder of an Unregistered Security of any series, and the identifying number of such Security and the date of his holding the same, may be proved by the production of such Security or by a certificate executed by any trust company, bank, banker or recognized securities dealer wherever situated satisfactory to the Trustee, if such certificate shall be deemed by the Trustee to be satisfactory. Each such certificate shall be dated and shall state that on the date thereof a Security of such series bearing a specified identifying number was deposited with or exhibited to such trust company, bank, banker or recognized securities dealer by the person named in such certificate. Any such certificate may be issued in respect of one or more Unregistered Securities of one or more series specified therein. The holding by the 71 person named in any such certificate of any Unregistered Securities of any series specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (1) another certificate bearing a later date issued in respect of the same Securities shall be produced, or (2) the Security of such series specified in such certificate shall be produced by some other person, or (3) the Security of such series specified in such certificate shall have ceased to be Outstanding. Subject to Sections 6.1 and 6.2, the fact and date of the execution of any such instrument and the amount and numbers of Securities of any series held by the person so executing such instrument and the amount and numbers of any Security or Securities for such series may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee for such series or in any other manner which the Trustee for such series may deem sufficient. (b) In the case of Registered Securities, the ownership of such Securities shall be proved by the Security register or by a certificate of the Security registrar. The Issuer may set a record date for purposes of determining the identity of Holders of Registered Securities of any series entitled to vote or consent to any action referred to in Section 7.1, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than 60 days nor less than five days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, with respect to Registered Securities of any series, only Holders of Registered Securities of such series of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent. SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee ------------------------------- and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment 72 of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Unregistered Security or Coupon. SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In ------------------------------------------------- determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an 73 Officer's Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above- described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior ----------------------------------- to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE EIGHT SUPPLEMENTAL INDENTURES ----------------------- SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF ------------------------------------------ SECURITYHOLDERS. The Issuer, when authorized by a resolution of its Board of - --------------- Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), 74 and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as the Issuer and the Trustee shall consider to be for the protection of the Holders of Securities or Coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; PROVIDED, that in -------- respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make any other provisions as the Issuer may deem necessary or desirable, PROVIDED that no such action shall adversely -------- affect the interests of the Holders of the Securities or Coupons; 75 (e) to establish the forms or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; and (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. ------------------------------------------------------- With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series or of the Coupons appertaining to such Securities; PROVIDED, that -------- 76 no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof, or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities and Coupons or in accordance with the terms thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or 11.12 or impair or affect the right of any Securityholder to institute suit for the payment thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder, in each case without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series, or of Coupons appertaining to such Securities, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the Coupons appertaining to such Securities. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture 77 affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give notice thereof (i) to the Holders of then Outstanding Registered Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in ____________________ and in an Authorized Newspaper in the Place or Places of Payment (and, if required, in an Authorized Newspaper in any other place or places), and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of -------------------------------- any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental 78 indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject -------------------------------- to the provisions of Sections 6.1 and 6.2, may receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL ------------------------------------------------- INDENTURES. Securities of any series authenticated and delivered after the - ---------- execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding. ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE ----------------------------------------- SECTION 9.1 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. So --------------------------------------------------- long as any securities are Outstanding, the Issuer shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any other Person to consolidate with or merge into the Issuer or convey, transfer or lease its properties and assets substantially as an entirety to the Issuer, unless: (a) in case the Issuer shall consolidate with or merge into another corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Issuer is merged or the Person which acquires by conveyance or transfer, or which 79 leases, the properties and assets of the Issuer substantially as an entirety shall be a corporation organized and existing in corporate form under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest, if any, on all the Securities and the performance of every covenant of this Indenture on the part of the Issuer to be performed or observed; (b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer or a Subsidiary as a result of such transaction as having been incurred by the Issuer or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (c) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Issuer would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Issuer or such successor corporation or Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and (d) the Issuer has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 9.2 SUCCESSOR CORPORATION SUBSTITUTED. The successor --------------------------------- corporation formed by such consolidation or into which the Issuer is merged or to which such transfer or lease is made shall succeed to and be substituted for, and may 80 exercise every right and power of, the Issuer under this Indenture with the same effect as if such successor corporation had been named as the Issuer herein, and thereafter (except in the case of a lease to another Person) the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Securities and, in the event of such conveyance or transfer, any such predecessor corporation may be dissolved and liquidated. SECTION 9.3 RESTRICTIONS ON DISPOSITIONS OF HECO SHARES. As long as ------------------------------------------- any Securities are Outstanding, the Issuer will not sell, transfer or otherwise dispose of, or permit Hawaiian Electric Company, Inc. ("HECO") to issue, sell, transfer or otherwise dispose of, other than to the Issuer or to a direct or indirect wholly-owned Subsidiary, Voting Shares of the Issuer; provided, -------- however, that this covenant shall not restrict (i) sales, transfers or other - ------- dispositions by HECO of any securities, including capital stock, of its subsidiaries, (ii) consolidations or mergers of HECO with or into the Issuer or any of its direct or indirect wholly-owned Subsidiaries, or (iii) consolidations or mergers of HECO with or into any other corporation if the corporation formed by such consolidation or merger is a direct or indirect wholly-owned Subsidiary. ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS -------------------------------------- SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. (A) If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities of any series Outstanding hereunder and all unmatured Coupons appertaining thereto (other than Securities of such series and Coupons appertaining thereto which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons appertaining thereto (other than any Securities of such series and Coupons appertaining thereto which shall have been destroyed, lost or stolen and which shall have been replaced or 81 paid as provided in Section 2.9) or (c) in the case of any series of Securities where the exact amount (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (ii) below, (i) all the Securities of such series and all unmatured Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4) or, in the case of any series of Securities the payments on which may only be made in Dollars, direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government Obligations"), maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium, if any,) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal, premium or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such Series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of temporary, mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so 82 deposited with the Trustee payable to all or any of them, and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; PROVIDED, -------- that the rights of Holders of the Securities and Coupons to receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. (B) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of the Indenture pursuant to the next preceding paragraph, in the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (a) below, the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series and the Coupons appertaining thereto on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series and Coupons appertaining thereto shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of temporary, mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and 83 Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if (a) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium on, if any) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal, premium or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound; (c) the Issuer has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, 84 as would have been the case if such deposit, defeasance and discharge had not occurred; (d) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with; and (e) not Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit or, insofar as Sections 5.1(e) and (f) are 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 deemed satisfied until the expiration of such period). (C) The Issuer shall be released from its obligations under Sections 3.6, 3.7, 3.8, 3.9, 3.10, 9.1 and 9.3 with respect to the Securities of any series, and any Coupons appertaining thereto, Outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of any series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1, but the remainder of this Indenture and such Securities and Coupons shall be unaffected thereby. The following shall be the conditions to application of this subsection C of this Section 10.1: (a) The Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of any series of Securities 85 the payments on which may only be made in Dollars, U.S. Government Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium, if any) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal of, premium on or interest is due and payable and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as Sections 5.1(e) and (f) are 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 deemed satisfied until the expiration of such period); (c) Such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 6.8 and for purposes of the Trust Indenture Act of 1939 with respect to any securities of the Issuer; (d) Such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound; (e) Such covenant defeasance shall not cause any Securities then listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, to be delisted; (f) The Issuer shall have delivered to the Trustee an Officer's Certificate and Opinion of Counsel to the effect that the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner 86 and at the same times as would have been the case if such covenant defeasance had not occurred; and (g) The Issuer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with. SECTION 10.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF -------------------------------------------------------- SECURITIES. Subject to Section 10.4, all moneys deposited with the Trustee (or - ---------- other trustee) pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series and of Coupons appertaining thereto for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 10.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection ---------------------------------------- with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 10.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT ------------------------------------------------- UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or - ----------------------- any paying agent for the payment of the principal of or interest on any Security of any series or Coupons attached thereto and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Securities of such series and of any Coupons appertaining thereto shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or 87 unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; PROVIDED, -------- HOWEVER, that the Trustee or such paying agent, before being required to make - ------- any such repayment with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first-class mail to Holders of such Securities at their addresses as they shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to be published once, in an Authorized Newspaper in _______________________ and once in an Authorized Newspaper in the Place or Places of Payment (and if required, once in an Authorized Newspaper in any other place or places), notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. SECTION 10.5 INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The Issuer ----------------------------------------- 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 10.1 or the principal or interest received in respect of such obligations. ARTICLE ELEVEN MISCELLANEOUS PROVISIONS ------------------------ SECTION 11.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF ------------------------------------------------------ ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any - --------------------------------------- obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the 88 Securities and the Coupons appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto. SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES ------------------------------------------------------- AND HOLDERS OF SECURITIES AND COUPONS. Nothing in this Indenture, in the - ------------------------------------- Securities or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the Holders of the Securities or Coupons, if any, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities or Coupons, if any. SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. --------------------------------------------------- The Issuer shall have the right at all times to assign any of its rights and obligations under this Indenture to a direct or indirect wholly-owned Subsidiary, provided that, in the event of any such assignment, the Issuer will remain liable for all such obligations. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND HOLDERS OF ----------------------------------------------------- SECURITIES AND COUPONS. Any notice or demand which by any provision of this - ---------------------- Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities or Coupons to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Hawaiian Electric Industries, Inc. 900 Richards Street, Honolulu, Hawaii 96813, Attention: Treasurer. Any notice, direction, request or demand by the Issuer or any Holder of Securities or Coupons to or upon the Trustee shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee with the Issuer) to ____________________________, ______________________________, Attention: ________________. 89 Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 11.5 OFFICER'S CERTIFICATES AND OPINIONS OF COUNSEL; ----------------------------------------------- STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the - ---------------------------------- Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making 90 such certificate or opinion 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 certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent. 91 SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the ----------------------------------------------- date of maturity of interest on or principal of the Securities of any series or any Coupons appertaining thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 11.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST ------------------------------------------------- INDENTURE ACT OF 1939. If and to the extent that any provision of this - --------------------- Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318, inclusive, of the Trust Indenture Act of 1939, such imposed duties or incorporated provision shall control. SECTION 11.8 NEW YORK LAW TO GOVERN. This Indenture and each ---------------------- Security and Coupon shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any ------------ number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings ------------------ herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.11 SECURITIES IN A FOREIGN CURRENCY OR IN ECU. Unless ------------------------------------------ otherwise specified in an Officer's Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are 92 denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; PROVIDED, HOWEVER, in the case of ECUs, -------- ------- Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities (such publication or any successor publication, the "Journal"). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of the ECU shall be Brussels, Belgium, or such other quotations or, in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture including without limitation any determination contemplated in Section 5.1(g). All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Issuer and all Holders. SECTION 11.12 JUDGMENT CURRENCY. The Issuer agrees, to the fullest ----------------- extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of 93 any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close. SECTION 11.13 SEPARABILITY CLAUSE. In case any provision in this ------------------- Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired thereby. ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS ------------------------------------------ 94 SECTION 12.1 APPLICABILITY OF ARTICLE. The provisions of this ------------------------ Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice of ----------------------------------------- redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other Holders of Unregistered Securities shall be published in an Authorized Newspaper in ________________________ and in an Authorized Newspaper in the Place or Places of Payment (and, if required, in an Authorized Newspaper in any other place or places), in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. The notice of redemption to each such Holder shall specify, the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of 95 payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. On or before the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. The Issuer will deliver to the Trustee at least 70 days prior to the date fixed for redemption an Officer's Certificate stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer's Certificate stating that such restriction has been complied with. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such Series to be redeemed in whole or in part. Securities may be redeemed in 96 part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice ------------------------------------------- of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; PROVIDED that -------- payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the Holders of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holders of such Registered Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.3 and 2.7 hereof. 97 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security. If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR ---------------------------------------------------- SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for - ------------------------ selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. SECTION 12.5 MANDATORY AND OPTIONAL SINKING FUNDS. The minimum ------------------------------------ amount of any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". 98 In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (which need not contain the statements required by Section 11.5) (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or 99 before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or a lesser sum in Dollars (or the equivalent thereof in any Foreign Currency or ECU) if the Issuer shall so request with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the equivalent thereof in any Foreign Currency or ECU) is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such Officer's Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall 100 cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. 101 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of __________________. HAWAIIAN ELECTRIC INDUSTRIES, INC. By: ----------------------------------- Title: By: ----------------------------------- Title: [CORPORATE SEAL] Attest: By: ------------------------ Title ---------------------------------------- _______________, as Trustee By: ----------------------------------- Title: [CORPORATE SEAL] Attest: By: ------------------------ Title: 102 STATE OF HAWAII ) ) ss. COUNTY OF HONOLULU ) On this _____ of ________________ before me personally came ___________________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ___________________________ that he is the ____________________ of Hawaiian Electric Industries, Inc., one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public STATE OF HAWAII ) ) ss. COUNTY OF HONOLULU ) On this _____ of ________________ before me personally came ___________________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ___________________________ that he is the ____________________ of Hawaiian Electric Industries, Inc., one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public 103 STATE OF ___________ ) ) ss. COUNTY OF __________ ) On this _____ of ________________ before me personally came ___________________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ________________________ that he is a [_____________________] of ___________________________________, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public 104 EX-4.(H) 8 FORM OF SENIOR SUBORDINATED INDENTURE Exhibit 4(h) ------------ ============================================================ HAWAIIAN ELECTRIC INDUSTRIES, INC. AND ____________________________, Trustee Senior Subordinated Indenture Dated as of _______________, ____ __________ ============================================================= CROSS REFERENCE SHEET(*) Between Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of ________ __, 1997 between HAWAIIAN ELECTRIC INDUSTRIES, INC. and ________________________, Trustee: Section of the Act Section of Indenture - ------------------ -------------------- 310(a)(1) and (2)....................... 6.9 310(a)(3) and (4)....................... Inapplicable 310(b).................................. 6.8 and 6.10(a), (b) and (d) 310(c).................................. Inapplicable 311(a).................................. 6.13 311(b).................................. 6.13 311(c).................................. Inapplicable 312(a).................................. 4.1 and 4.2 312(b).................................. 4.2 312(c).................................. 4.2 313(a).................................. 4.4 313(b)(1)............................... Inapplicable 313(b)(2)............................... 4.4 313(c).................................. 4.4, 5.11, 6.10, 6.11, 8.2 and 12.2 313(d).................................. 4.4 314(a).................................. 3.5 and 4.3 314(b).................................. Inapplicable 314(c)(1) and (2)....................... 11.5 314(c)(3)............................... Inapplicable 314(d).................................. Inapplicable 314(e).................................. 11.5 314(f).................................. Inapplicable 315(a), (c) and (d)..................... 6.1 315(b).................................. 5.11 315(e).................................. 5.12 316(a)(1)............................... 5.9 and 5.10 316(a)(2)............................... Not required 316(a) (last sentence).................. 7.4 316(b).................................. 5.7 317(a).................................. 5.2 317(b).................................. 3.4(a) and (b) 318(a).................................. 11.7 (*) This Cross Reference Sheet is not part of the Indenture. TABLE OF CONTENTS __________ Page PARTIES................................................. RECITALS................................................ Authorization of Indenture......................... Compliance with Legal Requirements................. Purpose of and Consideration for Indenture......... ARTICLE ONE DEFINITIONS SECTION 1.1 Certain Terms Defined................. ARTICLE TWO SECURITIES SECTION 2.1 Forms Generally....................... SECTION 2.2 Form of Trustee's Certificate of Authentication........................ SECTION 2.3 Amount Unlimited; Issuable in Series.. SECTION 2.4 Authentication and Delivery of Securities............................ SECTION 2.5 Execution of Securities............... SECTION 2.6 Certificate of Authentication......... SECTION 2.7 Denomination and Date of Securities; Payments of Interest.................. SECTION 2.8 Registration, Transfer and Exchange... SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities................. SECTION 2.10 Cancellation of Securities; Destruction Thereof................... SECTION 2.11 Temporary Securities.................. SECTION 2.12 Computation of Interest............... ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1 Payment of Principal and Interest..... SECTION 3.2 Offices for Payments, etc............. SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee..................... SECTION 3.4 Paying Agents......................... SECTION 3.5 Written Statement to Trustee.......... SECTION 3.6 Corporate Existence................... SECTION 3.7 Maintenance of Properties............. SECTION 3.8 Payment of Taxes and Other Claims..... SECTION 3.9 This Section left intentionally blank. SECTION 3.10 SEC Reports........................... ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders....................... SECTION 4.2 Preservation and Disclosure of Securityholders Lists................. SECTION 4.3 Reports by the Issuer................. SECTION 4.4 Reports by the Trustee................ ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default........ SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt................ SECTION 5.3 Application of Proceeds............... SECTION 5.4 Suits for Enforcement................. SECTION 5.5 Restoration of Rights on Abandonment of Proceedings........................ SECTION 5.6 Limitations on Suits by Securityholders....................... SECTION 5.7 Unconditional Right of Securityholders to Institute Certain Suits............ SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default..... SECTION 5.9 Control by Holders of Securities...... SECTION 5.10 Waiver of Past Defaults............... SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances......................... SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs.............. ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default............................... SECTION 6.2 Certain Rights of the Trustee......... SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof....... SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; Collections, etc.......... SECTION 6.5 Moneys Held by Trustee................ SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim........... SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, etc...................... SECTION 6.8 Indentures Not Creating Potential Conflicting Interests for the Trustee............................... SECTION 6.9 Persons Eligible for Appointment as Trustee............................... SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee.................. SECTION 6.11 Acceptance of Appointment by Successor Trustee..................... SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee..... SECTION 6.13 Preferential Collection of Claims Against Issuer........................ SECTION 6.14 Appointment of Authenticating Agent... ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1 Evidence of Action Taken by Securityholders....................... SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.............. SECTION 7.3 Holders to be Treated as Owners....... SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding....................... SECTION 7.5 Right of Revocation of Action Taken... ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1 Supplemental Indentures Without Consent of Securityholders............ SECTION 8.2 Supplemental Indentures With Consent of Securityholders.................... SECTION 8.3 Effect of Supplemental Indenture...... SECTION 8.4 Documents to Be Given to Trustee...... SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures............... SECTION 8.6 Subordination Unimpaired.............. ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Issuer May Consolidate, Etc., Only on Certain Terms...................... SECTION 9.2 Successor Corporation Substituted..... ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 10.1 Satisfaction and Discharge of Indenture............................. SECTION 10.2 Application by Trustee of Funds Deposited for Payment of Securities... SECTION 10.3 Repayment of Moneys Held by Paying Agent................................. SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years.. SECTION 10.5 Indemnity for U.S. Government Obligations........................... ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability.................. SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities and Coupons................ SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture.................... SECTION 11.4 Notices and Demands on Issuer, Trustee and Holders of Securities and Coupons........................... SECTION 11.5 Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein..................... SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.......................... SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act of 1939...... SECTION 11.8 New York Law to Govern................ SECTION 11.9 Counterparts.......................... SECTION 11.10 Effect of Headings.................... SECTION 11.11 Securities in a Foreign Currency or in ECU............................. SECTION 11.12 Judgment Currency..................... SECTION 11.13 Separability Clause................... ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1 Applicability of Article.............. SECTION 12.2 Notice of Redemption; Partial Redemptions........................... SECTION 12.3 Payment of Securities Called for Redemption............................ SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption........................ SECTION 12.5 Mandatory and Optional Sinking Funds.. ARTICLE THIRTEEN SUBORDINATION SECTION 13.1 Agreement to Subordinate.............. SECTION 13.2 Rights of Senior Indebtedness in the Event of Insolvency, etc., of the Issuer................................ SECTION 13.3 Payment Over of Proceeds Received on Securities............................ SECTION 13.4 Payments to Holders................... SECTION 13.5 Holders of Securities Authorize Trustee to Effectuate Subordination of Securities......................... SECTION 13.6 Notice to Trustee..................... SECTION 13.7 Trustee May Hold Senior Indebtedness.. SECTION 13.8 Applicability of Article 13 to Paying Agents...................... ARTICLE FOURTEEN CONVERSION OF SECURITIES SECTION 14.1 Applicability of Article.............. SECTION 14.2 Conversion............................ SECTION 14.3 Exercise of Conversion................ SECTION 14.4 Fractional Interests.................. SECTION 14.5 Conversion Price...................... SECTION 14.6 Continuation of Conversion in Case of Reclassification, Change, Merger, Consolidation or Sale of Assets....... SECTION 14.7 Notice of Certain Events.............. SECTION 14.8 Taxes on Conversion................... SECTION 14.9 Issuer to Provide Stock............... SECTION 14.10 Disclaimer of Responsibility for Certain Matters....................... SECTION 14.11 Return of Funds Deposited for Redemption of Converted Securities............... TESTIMONIUM.............................................. SIGNATURES............................................... THIS INDENTURE, dated as of _________ __, 1997 between HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation (the "Issuer"), and ___________________________, a __________________________________, as trustee (the "Trustee"), W I T N E S S E T H : WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture; WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the coupons, if any, appertaining thereto as follows: ARTICLE ONE DEFINITIONS SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939, including terms defined therein by reference to the Securities Act of 1933 (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. "Authenticating Agent" shall have the meaning set forth in Section 6.14. "Authorized Newspaper" means a newspaper (which, in the case of the City of ________________, will, if practicable, be The Wall Street Journal (Eastern Edition)) published in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in the City of ______________ or in any other city or country as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice. "Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act on its behalf. "Board Resolution" means a copy of one or more resolutions, certified by the secretary or an assistant secretary of the Issuer to have been duly adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. "Business Day" means, with respect to any Security, a day that in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, is not a day on which banking institutions are authorized or required by law or regulation to close. 2 "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Consolidated Total Assets" means, in respect of the Issuer as of any date of determination, the amount of total assets shown on the consolidated balance sheet of the Issuer and its consolidated subsidiaries contained in the most recent annual or quarterly report filed with the Commission, or if the Issuer is not then subject to the Securities Exchange Act of 1934, the most recent annual or quarterly report to stockholders and, in respect of any Subsidiary as of any date of determination, the amount of total assets of such Subsidiary and its consolidated subsidiaries from which such consolidated balance sheet of the Issuer and its consolidated Subsidiaries was derived. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located in the County of ______________, the City of _________________. "Coupon" means any interest coupon appertaining to an Unregistered Security. "Covenant defeasance" shall have the meaning set forth in Section 10.1(C). "Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Company pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the 3 Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series. "Dollar" means the 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. "ECU" means the European Currency Unit as defined and revised from time to time by the Council of European Communities. "Event of Default" means any event or condition specified as such in Section 5.1. "Foreign Currency" means a currency issued by the government of a country other than the United States. "Holder", "Holder of Securities", "Securityholder" or other similar terms mean (a) in the case of any Registered Security, the person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security, or any Coupon appertaining thereto, as the case may be. "Indebtedness" shall have the meaning set forth in Section 5.1. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder. "Issuer" means (except as otherwise provided in Article Six) Hawaiian Electric Industries, Inc., a Hawaii corporation and, subject to Article Nine, its successors and assigns. "Issuer Order" means a written statement, request or order of the Issuer signed in its name by the president, any vice president or the treasurer or controller of the Issuer. "Judgment Currency" shall have the meaning set forth in Section 11.12. 4 "Officer's Certificate" means a certificate signed by the president, any vice president or the treasurer or controller of the Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "Opinion of Counsel" means an opinion in writing signed by the General Counsel of the Issuer or by such other legal counsel who may be an employee of or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act of 1939 and include the statements provided for in Section 11.5. "Original issue date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Outstanding" when used with reference to Securities, shall, subject to the provisions of Section 7.4, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for the payment or redemption of which moneys or U.S. Government Obligations (as provided for in Section 10.1(A) and (B)) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own paying agent), provided that if such Securities, or portions thereof, are to 5 be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities which shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer) or Securities converted pursuant hereto or Securities not deemed outstanding pursuant to Section 12.2. In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1. "Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment," when used with respect to the Securities of any series, means the place or places where the principal of and interest on the Securities of that series are payable as specified as contemplated by Section 2.3. 6 "principal" whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include "and premium, if any". "Record date" shall have the meaning set forth in Section 2.7. "Registered Global Security", means a Security evidencing all or a part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4. "Registered Security" means any Security registered on the Security register of the Issuer. "Required Currency" shall have the meaning set forth in Section 11.12. "Responsible Officer" when used with respect to the Trustee means the chairman of the board of directors, any vice chairman of the board of directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president, (whether or not designated by numbers or words added before or after the title "vice president") the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. 7 "Security" or "Securities" (except as otherwise provided in Section 7.4) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture. "Senior Indebtedness" means the principal of and premium, if any, and interest on (a) all indebtedness of the Issuer, whether outstanding on the date of this Indenture or thereafter created, (i) for money borrowed by the Issuer, (ii) for money borrowed by, or obligations of, others and either assumed or guaranteed, directly or indirectly, by the Issuer, (iii) in respect of letters of credit and acceptances issued or made by banks, or (iv) constituting purchase money indebtedness, or indebtedness secured by property included in the property, plant and equipment accounts of the Issuer at the time of the acquisition of such property by the Issuer, for the payment of which the Issuer is directly liable, and (b) all deferrals, renewals, extensions and refundings of, and amendments, modifications and supplements to, any such indebtedness. As used in the preceding sentence the term "purchase money indebtedness" means indebtedness evidenced by a note, debenture, bond or other instrument (whether or not secured by any lien or other security interest) issued or assumed as all or a part of the consideration for the acquisition of property, whether by purchase, merger, consolidation or otherwise, unless by its terms such indebtedness is subordinate to other indebtedness of the Issuer. Notwithstanding anything to the contrary in this Indenture or the Securities, Senior Indebtedness shall not include (i) any indebtedness of the Issuer which, by its terms or the terms of the instrument creating or evidencing it, is subordinate in right of payment to or pari passu with the Securities or (ii) any indebtedness of the Issuer to a Subsidiary. "Subsidiary" means any corporation, partnership or other entity of which at the time of determination the Issuer owns or controls directly or indirectly more than 50% of the shares of voting stock. "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act 8 of 1939 as in force at the date as of which this Indenture was originally executed. "Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article Six, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series. "Unregistered Security" means any Security other than a Registered Security. "U.S. Government Obligations" shall have the meaning set forth in Section 10.1(A). "Yield to Maturity" means the yield to maturity on a series of securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice. ARTICLE TWO SECURITIES SECTION 2.1 FORMS GENERALLY. The Securities of each series and the Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and 9 Coupons, if any, as evidenced by their execution of such Securities and Coupons. The definitive Securities and Coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons, if any. SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Securities shall be in substantially the following form: "This is one of the Securities referred to in the within-mentioned Subordinated Indenture. ______________________, as Trustee By_____________________ Authorized Signatory" If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Trustee's Certificate of Authentication to be borne by the Securities of each such series shall be substantially as follows: "This is one of the Securities referred to in the within-mentioned Subordinated Indenture. ______________________, as Authenticating Agent By_____________________ Authorized Signatory" SECTION 2.3 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. 10 The Securities may be issued in one or more series and each such series shall rank equally and pari passu with the Securities of each other series, but all Securities issued hereunder and any Coupons and the payment of principal of and interest on any Securities and of any Coupons shall be subordinate and junior in right of payment, to the extent and in the manner set forth in Article Thirteen, to all Senior Indebtedness. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to rather than set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, (1) the designation of the Securities of the series, which shall distinguish the Securities of the Series from the Securities of all other series; (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5, 12.3 or 14.3); (3) if other than Dollars, the coin or currency in which the Securities of that series are denominated (including, but not limited to, any Foreign Currency or ECU); (4) the date or dates on which the principal of the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined; 11 (6) the place or places where the principal of and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2); (7) the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise; (8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder there of and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, the denominations in which Securities of the series shall be issuable; (10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof; (11) if other than the coin or currency in which the Securities of that series are denominated, the coin or currency in which payment of the principal of or interest on the Securities of such series shall be payable; (12) if the principal of or interest on the Securities of such series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may be made; 12 (13) if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined; (14) whether the Securities of the series will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa; (15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts; (16) if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (17) any trustees, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series; (18) any other events of default or covenants with respect to the Securities of such series in addition to the Events of Default or covenants set forth herein; (19) if the Securities of such series are to be convertible into any cash, securities or property, at the 13 option of the Holder or the Issuer or upon the happening of some event or otherwise, all terms relating to such convertibility, including without limitation any term inconsistent with the provisions of this Indenture relating to conversion; and (20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series and Coupons, if any, appertaining thereto, shall be substantially identical, except in the case of Registered Securities as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any such indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any such indenture supplemental hereto. SECTION 2.4 AUTHENTICATION AND DELIVERY OF SECURITIES. The Issuer may deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereupon authenticate and deliver such Securities to or upon the order of the Issuer (contained in the Issuer Order referred to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series and Coupons, if any, appertaining thereto shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral instructions from the Issuer or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs 2, 3 and 4 below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such 14 series) and (subject to Section 6.1) shall be fully protected in relying upon, unless and until such documents have been superseded or revoked: (1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities and Coupons, if any, are not to be delivered to the Issuer, provided that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order, (c) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by an Issuer Order or pursuant to such procedures and (d) if provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing; (2) any Board Resolution, Officer's Certificate and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities and Coupons, if any, were established; (3) an Officer's Certificate setting forth the form or forms and terms of the Securities and Coupons, if any, stating that the form or forms and terms of the Securities and Coupons, if any, have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and (4) at the option of the Issuer, either one or more Opinions of Counsel, or a letter addressed to the 15 Trustee permitting it to rely on one or more Opinions of Counsel, substantially to the effect that: (a) the forms of the Securities and Coupons, if any, have been duly authorized and established in conformity with the provisions of this Indenture; (b) in the case of an underwritten offering, the terms of the Securities have been duly authorized and established in conformity with the provisions of this Indenture, and, in the case of an offering that is not underwritten, certain terms of the Securities have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; (c) when the Securities and Coupons, if any, have been executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, they will have been duly issued under this Indenture, will be entitled to the benefits of this Indenture, and will be valid and binding obligations of the Issuer, enforceable in accordance with their respective terms except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and (ii) rights of acceleration, if any, and the availability of equitable remedies may be limited by equitable principles of general applicability; and (d) the execution and delivery by the Issuer of, and the performance by the Issuer of its obligations under, the Securities and 16 Coupons, if any, will not contravene any provision of any material applicable law or the certificate of incorporation or bylaws of the Issuer or any agreement or other instrument binding upon the Issuer or any of its "significant subsidiaries" (as defined in Article 1 of Regulation S-X under the Securities Act of 1933) that is material to the Issuer and its subsidiaries, taken as a whole, or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Issuer or any "significant subsidiary" (as defined above), and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Issuer of its obligations under the Securities and Coupons, if any, except such as are specified and have been obtained and such as may be required by the securities or blue sky laws of the various states in connection with the offer and sale of the Securities and Coupons, if any. In rendering such opinions, any counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and other similar laws affecting the rights and remedies of creditors and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely upon opinions of other counsel (copies of which shall be delivered to the Trustee), who shall be counsel reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes he and the Trustee are entitled so to rely. Such counsel may also state that, insofar as such opinion involves factual matters, he has relied, to the extent he deems proper, upon certificates of officers of the Issuer and its subsidiaries and certificates of public officials. The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the 17 Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise. If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the Issuer Order with respect to such series, authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued and not yet cancelled, (ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 2.5 EXECUTION OF SECURITIES. The Securities and, if applicable, each Coupon appertaining thereto shall be signed on behalf of the Issuer by its President or any Vice President and by its Treasurer, its Controller, its Secretary or an Assistant Treasurer or Assistant Secretary, under its corporate seal (except in the case of Coupons) which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a 18 facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee. In case any officer of the Issuer who shall have signed any of the Securities or Coupons, if any, shall cease to be such officer before the Security or Coupon so signed (or the Security to which the Coupon so signed appertains) shall be authenticated and delivered by the Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer. SECTION 2.6 CERTIFICATE OF AUTHENTICATION. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid and obligatory for any purpose until the certificate of authentication on the Security to which such Coupon appertains shall have been duly executed by the Trustee. The execution of such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. SECTION 2.7 DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF INTEREST. The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, with respect to the Registered Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. If denominations of Unregistered Securities 19 of any series are not so established, such Securities shall be issuable in denominations of $1,000 and $5,000. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof. Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in the resolution or resolutions of the Board of Directors of the Issuer referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3. The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date (but subject to Section 14.3 in the case of any conversion during such period), except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Issuer to the Holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the next preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such 20 calendar month, whether or not such record date is a Business Day. SECTION 2.8 REGISTRATION, TRANSFER AND EXCHANGE. The Issuer will keep at each office or agency to be maintained for the purpose as provided in Section 3.2 for each series of Securities a register or registers in which, subject to such reasonable regulations as it may prescribe, it will provide for the registration of Registered Securities of such series and the registration of transfer of Registered Securities of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee. Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series, maturity date, interest rate and original issue date in authorized denominations for a like aggregate principal amount. Unregistered Securities (except for any temporary global Unregistered Securities) and Coupons (except for Coupons attached to any temporary global Unregistered Securities) shall be transferable by delivery. At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, except as otherwise specified pursuant to Section 2.3, at the option of the Holder thereof, Unregistered Securities of any series may be exchanged for Registered Securities of such series having 21 authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer has received from the Internal Revenue Service a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that the inclusion of terms permitting Registered Securities to be exchanged for Unregistered Securities would result in no adverse Federal income tax effect to the Issuer or to any Holder. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities and Coupons surrendered upon any exchange or transfer provided for in this Indenture shall be promptly cancelled and disposed of by the Trustee and the Trustee will deliver a certificate of disposition thereof to the Issuer. All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of 22 transfer in form satisfactory to the Issuer and the Trustee duly executed by the Holder or his attorney duly authorized in writing. The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction. The Issuer shall not be required to exchange or register a transfer of (a) any Securities of any series for a period of 15 days next preceding the first mailing of notice of redemption of Securities of such series to be redeemed or (b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed. Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred or exchanged except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. If at any time the Depositary for any Registered Securities of a series represented by one or more Registered Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Registered Securities or if at any time the Depositary for such Registered Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary eligible under Section 2.4 with respect to such Registered Securities. If a successor Depositary eligible under Section 2.4 for such Registered Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Registered Securities be represented by one or more Registered Global Securities shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of an 23 Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities in exchange for such Registered Global Security or Securities. The Issuer may at any time and in its sole discretion determine that the Registered Securities of any series issued in the form of one or more Registered Global Securities shall no longer be represented by a Registered Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities, in exchange for such Registered Global Security or Securities. If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge, (i) to the Person specified by such Depositary a new Registered Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and (ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities 24 authenticated and delivered pursuant to clause (i) above. Upon the exchange of a Registered Global Security for Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Security shall be cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form without coupons issued in exchange for a Registered Global Security pursuant to this Section 2.8 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered. All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Notwithstanding anything herein or in the terms of any series of Securities to the contrary, none of the Issuer, the Trustee or any agent of the Issuer or the Trustee (any of which, other than the Issuer, shall rely on an Officer's Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in adverse Federal income tax consequences to the Issuer (such as, for example, the inability of the Issuer to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws. SECTION 2.9 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES. In case any temporary or definitive Security or any Coupon appertaining to any Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in its discretion may execute, and upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver a new Security of the same series, maturity date, interest rate and original issue date, bearing a 25 number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Securities so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof and in the case of mutilation or defacement shall surrender the Security and related Coupons to the Trustee or such agent. Upon the issuance of any substitute Security or Coupon, the Issuer 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) or its agent connected therewith. In case any Security or Coupon which has matured or is about to mature, has been called for redemption in full or is being converted in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Security, pay or authorize the payment or conversion of the same or the payment of the relevant Coupon (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof. Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or 26 stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities and Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and Coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10 CANCELLATION OF SECURITIES; DESTRUCTION THEREOF. All Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange, conversion or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall dispose of cancelled Securities and Coupons held by it and deliver a certificate of disposition to the Issuer. If the Issuer or its agent shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities or Coupons unless and until the same are delivered to the Trustee or its agent for cancellation. SECTION 2.11 TEMPORARY SECURITIES. Pending the preparation of definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, or as Unregistered Securities with or without coupons attached thereto, of any authorized denomination, and 27 substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at any agency maintained by the Issuer for such purpose as specified pursuant to Section 2.3, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency located outside the United States and the procedures pursuant to which definitive or global Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security). SECTION 2.12 COMPUTATION OF INTEREST. Except as otherwise specified as contemplated by Section 2.3 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. 28 ARTICLE THREE COVENANTS OF THE ISSUER SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities of such series (together with any additional amounts payable pursuant to the terms of such Securities) at the place or places, at the respective times and in the manner provided in such Securities and in the Coupons, if any, appertaining thereto and in this Indenture. The interest on Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. If any temporary Unregistered Security provides that interest thereon may be paid while such Security is in temporary form, the interest on any such temporary Unregistered Security (together with any additional amounts payable pursuant to the terms of such Security) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest, in each case subject to any restrictions that may be established pursuant to Section 2.3. The interest on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at the option of the Issuer, may be paid by wire transfer or by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the registry books of the Issuer. SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any Registered Securities are authorized for issuance pursuant to this Indenture or are outstanding hereunder, the Issuer will maintain in the Place or Places of Payment for a particular series pursuant to Section 2.3, an office or agency where the Registered Securities of each series may be presented for payment, where the Securities of each series may be presented for exchange or conversion as is provided in this Indenture 29 and, if applicable, pursuant to Section 2.3 where the Registered Securities of each series may be presented for registration of transfer as in this Indenture provided. If provided for pursuant to Section 2.3, the Issuer will maintain one or more offices or agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) as a Place of Payment where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect such payment can be made without adverse tax consequences to the Issuer. Notwithstanding the foregoing, payments in Dollars of Unregistered Securities of any series and Coupons appertaining thereto which are payable in Dollars may be made at an agency of the Issuer maintained in a Place of Payment within the United States if such payment in Dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions. The Issuer will maintain in _______________________, Places of Payment or at such other place or places as provided pursuant to Section 2.3, an office or agency where notices and demands to or upon the Issuer in respect of the Securities of any series, the Coupons appertaining thereto or this Indenture may be served. The Issuer will give to the Trustee prompt written notice of the location of each such office or agency and of any change of location thereof. In case the Issuer shall fail to maintain any agency required by this Section to be located in the Places of Payment, or shall fail to give such notice of the location or of any change in the location of any of the above agencies, presentations, surrenders, notices and demands may be made and notices may be served at the Corporate Trust Office of the Trustee, and the Issuer hereby appoints the Trustee as its 30 agent to receive all such presentations, surrenders, notices and demands. The Issuer may from time to time designate one or more additional offices or agencies where the Securities of a series and any Coupons appertaining thereto may be presented for payment, where the Securities of that series may be presented for exchange or conversion as provided in this Indenture and pursuant to Section 2.3 and where the Registered Securities of that series may be presented for registration of transfer as in this Indenture provided, and the Issuer may from time to time rescind any such designation, as the Issuer may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain the agencies provided for in this Section. The Issuer will give to the Trustee prompt written notice of any such designation or rescission thereof. SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder. SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a paying agent other than the Issuer or the Trustee with respect to the Securities of any series, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the Holders of the Securities of such series or of the Trustee until such sums shall be paid or otherwise disposed of as provided herein, (b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the 31 principal of or interest on the Securities of such series when the same shall be due and payable, and (c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in clause (b) above. The Issuer will, on or prior to each due date of the principal of or interest on the Securities of such series, deposit with any and all paying agents a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of its action or any failure to take such action. If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of its action or any failure to take such action. Anything in this Section to the contrary notwithstanding, but subject to Section 10.1, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4. SECTION 3.5 WRITTEN STATEMENT TO TRUSTEE. The Issuer will furnish to the Trustee, within 120 days after the end of each fiscal year of the Issuer ending after the date hereof, a brief certificate (which need not comply with Section 11.5) from the principal executive, financial or 32 accounting officer of the Issuer stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance of all conditions and covenants under the Indenture. SECTION 3.6 CORPORATE EXISTENCE. Subject to Article Nine, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory) and franchises of the Issuer and its Subsidiaries; provided, however, that the Issuer shall not be required to preserve any such right or franchise, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Subsidiaries taken as a whole and the loss thereof is not disadvantageous in any material respect to the Securityholders. SECTION 3.7 MAINTENANCE OF PROPERTIES. The Issuer will cause all material properties used in or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all time except to the extent that the Issuer may be prevented from so doing by circumstances beyond its control; provided, however, that nothing in this Section shall prevent the Issuer from discontinuing or from causing or permitting a Subsidiary to continue the operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Issuer, desirable in the conduct of the business of the Issuer or any Subsidiary and not disadvantageous in any material respect to the Securityholders. SECTION 3.8 PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer will pay or discharge or cause to be paid or discharged, before the same shall become delinquent: (a) all taxes, assessments and governmental charges levied or imposed upon the Issuer or any Subsidiary or upon the income, profits or property of the Issuer or any Subsidiary that are material to the Issuer and its Subsidiaries taken as a whole; and (b) all lawful claims for labor, materials, and supplies, which, if 33 unpaid, might by law become a lien upon the property of the Issuer or any Subsidiary and that are material to the Issuer and its Subsidiaries taken as a whole; provided, however, that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and provided further that the Issuer shall not be required to cause to be paid or discharged any such tax, assessment, charge or claim if the Issuer shall determine that such payment is not advantageous to the conduct of the business of the Issuer and its Subsidiaries taken as a whole and that the failure so to pay or discharge is not disadvantageous in any material respect to the Securityholders. SECTION 3.9 This Section left intentionally blank. SECTION 3.10 SEC REPORTS. The Issuer shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the Commission, 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 Commission may by rules and regulations prescribe) which the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES OF SECURITYHOLDERS. If and so long as the Trustee shall not be the Security registrar for the Securities of any series, the Issuer and any other obligor on the Securities will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Registered Securities of such series pursuant to Section 312 of the Trust Indenture Act of 1939 (a) semiannually not more than 5 days after each record date for the payment of interest on such Registered Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to Section 2.3 for non-interest bearing Registered Securities in 34 each year, and (b) at such other times as the Trustee may request in writing, within thirty days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished. SECTION 4.2 PRESERVATION AND DISCLOSURE OF SECURITYHOLDERS LISTS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses the Holders contained in the most recent list furnished to the Trustee as provided in Section 4.1 and the names and addresses of Holders received by the Trustee in its capacity, if any, as Security registrar. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) If three or more Holders (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanies by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 4.2(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 4.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, 35 upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 4.2(a) copies of the form of proxy or other communication which is specified in the request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, of the reasonable expenses of such mailing, unless within five days after such tender, the Trustee shall mail to such applicants, and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be a violation of applicable law. Such statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 4.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 4.2(b). SECTION 4.3 REPORTS BY THE ISSUER. The Issuer covenants to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports that the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the 36 Securities Exchange Act of 1934 or pursuant to Section 314 of the Trust Indenture Act of 1939. SECTION 4.4 REPORTS BY THE TRUSTEE. Any Trustee's report required under Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on or before ________ in each year beginning _____________, as provided in Section 313(c) of the Trust Indenture Act of 1939, so long as any Securities are Outstanding hereunder, and shall be dated as of a date convenient to the Trustee no more than 60 days prior thereto. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Issuer. The Issuer will notify the Trustee when any Securities are listed on any stock exchange. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER OF DEFAULT. "Event of Default" with respect to Securities of any series wherever used herein, means each one of the following events which shall have occurred and be continuing (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): (a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise, and continuance of such default for a period of three business days; or 37 (c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of the Securities of such series, and continuance of such default for a period of three business days; or (d) failure on the part of the Issuer duly to observe or perform any other of the covenants or agreements on the part of the Issuer in the Securities of such series (other than a covenant or agreement in respect of the Securities of such series a default in the performance or breach of which is elsewhere in this Section specifically dealt with) or contained in this Indenture (other than a covenant or agreement included in this Indenture solely for the benefit of a series of Securities other than such series) for a period of 60 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Issuer remedy the same, shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Securities of all series affected thereby; or (e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or of any Restricted Subsidiary for any substantial part of its or their property or ordering the winding up or liquidation of its or their affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an 38 order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its or their property, or make any general assignment for the benefit of creditors; or (g) an event of default, as defined in any one or more mortgages, indentures, instruments, bonds, debentures, notes or other similar instruments under which there may be issued, or by which there may be secured or evidenced, any indebtedness (other than the Securities of such series or nonrecourse obligations) ("Indebtedness") in excess in aggregate principal amount of $10,000,000 for money borrowed by the Issuer shall occur, if such event of default shall result in the acceleration of such Indebtedness prior to its expressed maturity under the terms of the instrument under which such indebtedness is issued or secured unless such Indebtedness is discharged or such acceleration is cured, waived, rescinded or annulled within 10 days after written notice thereof shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities (treated as one class) which notice shall state that it is a "Notice of Default" hereunder; or (h) any other Event of Default provided in the supplemental indenture under which such series of Securities is issued or in the form of Security for such series; provided that if any such default or acceleration referred to in clause (g) above shall cease or be cured, waived, rescinded or annulled, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon cured. If an Event of Default described in clause (a), (b), (d) or (h) (if the Event of Default under clause (d) or (h), as the case may be, is with respect to less than all series of Securities then Outstanding) occurs and is continuing, then, and in each and every such case, except for any series of 39 Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of each such affected series then Outstanding hereunder (voting as a single class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration, the same shall become immediately due and payable. If an Event of Default described in clause (d) or (h) (if the Event of Default under clause (d) or (h), as the case may be, is with respect to all series of Securities then Outstanding), (e) or (f) occurs and is continuing, then and in each and every such case, unless the principal of all the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all the Securities then Outstanding hereunder (treated as one class), by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if any Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of all the Securities then Outstanding, and interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. The foregoing provisions, however, are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of such series (or of all the Securities, as the case may be) and the principal of any and all Securities of each such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that 40 payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and if any and all Events of Default under the Indenture, other than the non-payment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the Holders of a majority in aggregate principal amount of all the Securities of each such series, or of all the Securities, in each case voting as a single class, then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities. SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE DEBT. The Issuer covenants that (a) in case default shall be made in the payment of any installment of 41 interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise -- then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series, and such Coupons, for principal or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of its negligence or bad faith. Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered holders, whether or not the Securities of such Series be overdue. In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon the Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Securities, wherever situated the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under 42 Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, 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 reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, (b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and 43 (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities of such series or Coupons appertaining to such Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision 44 of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Securities or Coupons appertaining to such Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings. SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall, subject to the subordination provisions hereof, be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities and Coupons appertaining to such Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses applicable to such series in respect of which monies have been collected, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith; SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; 45 THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto. SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or 46 shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken. SECTION 5.6 LIMITATIONS ON SUITS BY SECURITYHOLDERS. No Holder of any Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, against the Issuer unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of each affected series then Outstanding (treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other such Holder of Securities or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable series and Coupons appertaining to such Securities. For the protection and enforcement of the provisions of this Section, each and 47 every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE CERTAIN SUITS. Notwithstanding any other provision in this Indenture and any provision of any Security, the right of any Holder of any Security or Coupon to receive payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon, or to institute suit for the enforcement of any such payment on or after such respective dates, or the right to convert such Security, if any, or to institute suit therefor shall not be impaired or affected without the consent of such Holder. SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER OF DEFAULT. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities or Coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of Securities or Coupons to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 5.6, every power and remedy given by this Indenture or by law to the Trustee or to the Holders of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders of Securities or Coupons. SECTION 5.9 CONTROL BY HOLDERS OF SECURITIES. The Holders of a majority in aggregate principal amount of the Securities of each series affected (with all such series voting as a single class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or 48 exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided further that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all series so affected not joining in the giving of said direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders. SECTION 5.10 WAIVER OF PAST DEFAULTS. Prior to the acceleration of the maturity of any Securities as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding with respect to which an event of default shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past default or Event of Default described in Section 5.1 and its consequences, except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 49 Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN CERTAIN CIRCUMSTANCES. The Trustee shall, within ninety days after the occurrence of a default with respect to the Securities of any series, give notice of all defaults with respect to that series known to the Trustee (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in _________________________ and in an Authorized Newspaper in each of the Places of Payment (and, if required, at least once in an Authorized Newspaper in any other place or places) and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act of 1939, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term "defaults" for the purpose of this Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, or in the payment of any sinking or purchase fund installment on such series, the 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 trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series. SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each Holder of any Security or Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its 50 discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series, or, in the case of any suit relating to or arising under clause (d) or (h) of Section 5.1 (if the suit relates to Securities of more than one but less than all series), 10% in aggregate principal amount of Securities then Outstanding and affected thereby, or in the case of any suit relating to or arising under clause (d) or (h) (if the suit under clause (d) or (h) relates to all the Securities then Outstanding), (e), (f) or (g) of Section 5.1, 10% in aggregate principal amount of all Securities then Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security or any date fixed for redemption. ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT; PRIOR TO DEFAULT. With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Securities of a series has occurred (which has not been cured or waived) the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent 51 action, its own negligent failure to act or its own wilful misconduct, except that (a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred: (i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the 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 pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. 52 None of the provisions contained in this Indenture shall require the 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 there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The provisions of this Section 6.1 are in furtherance of and subject to Section 315 of the Trust Indenture Act of 1939. SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. In furtherance of and subject to the Trust Indenture Act of 1939, and subject to Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer; (c) the Trustee may consult with counsel and any written advice or any Opinion of Counsel 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 reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by 53 this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the 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, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Issuer upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the 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. 54 SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof. SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES OR COUPONS; COLLECTIONS, ETC. The Trustee or any agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent. SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, 55 disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or Coupons, and the Securities are hereby subordinated to such senior claim. SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICER'S CERTIFICATE, ETC. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 6.8 INDENTURES NOT CREATING POTENTIAL CONFLICTING INTERESTS FOR THE TRUSTEE. The following indentures are hereby specifically described for the purposes of Section 310(b)(1) of the Trust Indenture Act of 1939; this Indenture with respect to the Securities of any other series. SECTION 6.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee for each series of Securities hereunder shall at all times be a corporation or banking association organized and doing business under the laws of the United 56 States of America or of any State or the District of Columbia having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, State or District of Columbia authority. Such corporation or banking association shall have a place of business in __________________________ and each of the Places of Payment if there be such a corporation in such location willing to act upon reasonable and customary terms and conditions. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, 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. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. The provisions of this Section 6.9 are in furtherance of and subject to Section 310(a) of the Trust Indenture Act of 1939. SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in ________________________________ and in an Authorized Newspaper in each of the Places of Payment (and, if required, at least once in an Authorized Newspaper in any other place or places), (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 at such addresses as were so furnished to the Trustee and (iii) by mailing notice of such resignation to the Holders of then Outstanding 57 Registered Securities of each series affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act of 1939 with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.9 and Section 310(a) of the Trust Indenture Act of 1939 and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or (iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its 58 property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act of 1939, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders. (d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11. SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor trustee appointed as provided in Section 6.10 shall execute and deliver to the Issuer and to its 59 predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.6. If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor Trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture 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 supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures. No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under Section 310(b) of 60 the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in ________________________________ and in an Authorized Newspaper in each of the Places of Payment (and, if required, at least once in an Authorized Newspaper in any other place or places), (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) to the Holders of Registered Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer. SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under Section 310(b) of the Trust Indenture Act of 1939 and eligible under the provisions of Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of 61 the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities of any series in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. (a) Subject to Section 6.13(b), if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Issuer of the Securities within three months prior to a default, as defined in Section 6.13(c), or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually and the Holders of the Securities and the holders of other indenture securities, as defined in Section 6.13(c): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three months' period and valid as against the Issuer and their other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Issuer upon the date of such default; and (2) all property received by the Trustee in respect of any claims as such creditor, either as security therefor, or in satisfaction or composition 62 thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Issuer and their other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Issuer) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default, as defined in Section 6.13(c), would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, 63 to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre- existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Issuer of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Issuer in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, whether such distribution is made in cash, securities or other property, 64 but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee, the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such three months' period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. 65 In any case commenced under the Bankruptcy Act of July 1, 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months contained in this Section 6.13(a) shall be deemed to be references to periods of four months. (b) There shall be excluded from the operation of Subsection (a) of this Section 6.13 a creditor relationship arising from: (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction, as defined in Subsection (c) of this Section 6.13; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Issuer; and 66 (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper, as defined in Subsection (c) of this Section 6.13. (c) For the purposes of this Section 6.13 only: (1) the term "default" means any failure to make payment in full of the principal of or interest on any of the Securities or upon the other indenture securities when and as such principal or interest becomes due and payable; (2) the term "other indenture securities" means securities upon which the Issuer is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which is qualified under the Trust Indenture Act of 1939, (iii) which contains provisions substantially similar to the provisions of this Section 6.13, and (iv) under which a default exists at the time of the apportionment of the funds and property held in such special account; (3) the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Issuer for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise 67 previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Issuer arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; (5) the term "Issuer" means the Issuer and any other obligor upon the Securities; and (6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or Title 11 of the United States Code. SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. As long as any Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent") which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a Certificate of Authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000 (determined as provided in Section 6.9 with respect to the Trustee) and subject to supervision or examination by Federal or State authority. Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent 68 shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.14 with respect to one or more series of Securities, the Trustee shall upon receipt of an Issuer Order appoint a successor Authenticating Agent and the Issuer shall provide notice of such appointment to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee. Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any Authenticating Agent. ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, 69 such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article. SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in the following manner: (a) The fact and date of the execution by any Holder of any instrument may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the person executing such instruments acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute sufficient proof of the authority of the person executing the same. The fact of the holding by any Holder of an Unregistered Security of any series, and the identifying number of such Security and the date of his holding the same, may be proved by the production of such Security or by a certificate executed by any trust company, bank, banker or recognized securities dealer wherever situated satisfactory to the Trustee, if such certificate shall be deemed by the Trustee to be satisfactory. Each such certificate shall be dated and shall state that on the date thereof a Security of such series bearing a specified identifying number was deposited with or exhibited to such trust company, bank, banker or recognized securities dealer by the person named in such certificate. Any such certificate may be issued in respect of one or more Unregistered Securities of one or more series specified therein. The holding by the person named in any such certificate of any Unregistered Securities of any series specified therein shall be presumed to 70 continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (1) another certificate bearing a later date issued in respect of the same Securities shall be produced, or (2) the Security of such series specified in such certificate shall be produced by some other person, or (3) the Security of such series specified in such certificate shall have ceased to be Outstanding. Subject to Sections 6.1 and 6.2, the fact and date of the execution of any such instrument and the amount and numbers of Securities of any series held by the person so executing such instrument and the amount and numbers of any Security or Securities for such series may also be proven in accordance with such reasonable rules and regulations as may be prescribed by the Trustee for such series or in any other manner which the Trustee for such series may deem sufficient. (b) In the case of Registered Securities, the ownership of such Securities shall be proved by the Security register or by a certificate of the Security registrar. The Issuer may set a record date for purposes of determining the identity of Holders of Registered Securities of any series entitled to vote or consent to any action referred to in Section 7.1, which record date may be set at any time or from time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than 60 days nor less than five days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, with respect to Registered Securities of any series, only Holders of Registered Securities of such series of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent. SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the 71 provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Unregistered Security or Coupon. SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officer's Certificate listing and identifying all Securities, 72 if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action. ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS. The Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, which 73 comply with the Trust Indenture Act of 1939, as then in effect, for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets; (b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article Nine and to provide for the adjustment of conversion rights pursuant to Section 14.6; (c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as the Issuer and the Trustee shall consider to be for the protection of the Holders of Securities or Coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; (d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make any other provisions as the Issuer may deem necessary or desirable, provided that no such action shall 74 adversely affect the interests of the Holders of the Securities or Coupons; (e) to establish the forms or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; (f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.11; and (g) to add any provision hereto or remove or change any provision hereof relating to the conversion of any Securities, whether at the option of the Holders or the Issuer or upon the happening of some event or otherwise, provided that no such action shall adversely affect the interest of the Holders of outstanding Securities. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 8.2. SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Article Seven) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time 75 Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto, which comply with the Trust Indenture Act of 1939, as then in effect, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series or of the Coupons appertaining to such Securities; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof, or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities and Coupons or in accordance with the terms thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or 11.12 or impair or affect the right of any Securityholder to institute suit for the payment or conversion (if applicable) thereof or, if the Securities provide therefor, any right of repayment at the option of the Securityholder and any right to convert, in each case without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series, or of Coupons appertaining to such Securities, with respect to such covenant or provision, shall be deemed not to affect the rights under 76 this Indenture of the Holders of Securities of any other series or of the Coupons appertaining to such Securities. Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give notice thereof (i) to the Holders of then Outstanding Registered Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in _________________________________ and in an Authorized Newspaper in each of the Places of Payment (and, if required, at least once in an Authorized Newspaper in any other place or places), and in each case such notice shall set forth in 77 general terms the substance of such supplemental indenture. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture. SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL INDENTURES. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding. SECTION 8.6 SUBORDINATION UNIMPAIRED. This Indenture may not be amended to alter the subordination of any of the Outstanding Securities without the written consent of each holder of Senior Indebtedness then outstanding that would be adversely affected thereby. 78 ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. So long as any securities are outstanding, Issuer shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any other Person to consolidate with or merge into the Issuer or convey, transfer or lease its properties and assets substantially as an entirety to the Issuer, unless: (a) in case the Issuer shall consolidate with or merge into another corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Issuer is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Issuer substantially as an entirety shall be a corporation organized and existing in corporate form under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Issuer to be performed or observed; (b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer or a Subsidiary as a result of such transaction as having been incurred by the Issuer or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (c) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Issuer would become subject to a mortgage, pledge, lien, security interest or other 79 encumbrance which would not be permitted by this Indenture, the Issuer or such successor corporation or Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and (d) the Issuer has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 9.2 SUCCESSOR CORPORATION SUBSTITUTED. The successor corporation formed by a consolidation or into which the Issuer is merged or to which such transfer or lease is made shall succeed to and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such successor corporation had been named as the Issuer herein, subject to Section 14.6, and thereafter (except in the case of a lease to another Person) the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Securities and, in the event of such conveyance or transfer, any such predecessor corporation may be dissolved and liquidated. ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE. (A) If at any time (a) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities of any series Outstanding hereunder and all unmatured Coupons appertaining thereto (other than Securities of such series and Coupons appertaining thereto which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (b) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons 80 appertaining thereto (other than any Securities of such series and Coupons appertaining thereto which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (c) in the case of any series of Securities where the exact amount (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (ii) below, (i) all the Securities of such series and all unmatured Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4) or, in the case of any series of Securities the payments on which may only be made in Dollars, direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government Obligations"), maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium on, if any,) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal, premium or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such Series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of temporary, mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and 81 immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided, that the rights of Holders of the Securities and Coupons to receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series. (B) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of the Indenture pursuant to the next preceding paragraph, in the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (a) below, the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series and the Coupons appertaining thereto on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series and Coupons appertaining thereto shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of temporary, mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive 82 mandatory sinking fund payments, if any, (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi) the obligations of the Issuer under Section 3.2) and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if (a) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium, if any) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal, premium or interest is due and payable and (B) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound; (c) the Issuer has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling (and such ruling shall accompany such Opinion of Counsel) or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case 83 to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; (d) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with; (e) no event or condition shall exist that, pursuant to the provisions of Section 13.2, would prevent the Issuer from making payments of the principal of or interest on the Securities of such series and Coupons appertaining thereto 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); and (f) no Default or Event of Default or event which with the notice or lapse of time or both would become an Event of Default with respect to the Securites of such series shal have occurred and be continuing on the date of such deposit or, insofar as Section 5.1(e) and (f) are 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 deemed satisfied until the expiration of such period). (C) The Issuer shall be released from its obligations under Sections 3.6, 3.7, 3.8 and 9.1 with respect to the Securities of any series, and any Coupons appertaining thereto, Outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of any series, the Issuer 84 may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1, but the remainder of this Indenture and such Securities and Coupons shall be unaffected thereby. The following shall be the conditions to application of this subsection (C) of this Section 10.1: (a) The Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal of (and premium, if any) and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal, premium or interest is due and payable and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (b) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (c) Such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 6.8 and for purposes of the Trust 85 Indenture Act of 1939 with respect to any securities of the Issuer; (d) Such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound; (e) Such covenant defeasance shall not cause any Securities then listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, to be delisted; (f) No event or condition shall exist that, pursuant to the provisions of Section 13.2, would prevent the Issuer from making payments of the principal of (and premium, if any) or interest on the Securities of such series and Coupons appertaining thereto on the date of such deposit or at any time during the period ending on the 91st day after the date of such deposit or, insofar as Sections 5.1(e) and (f) are 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 deemed satisfied until the expiration of such period); (g) The Issuer shall have delivered to the Trustee an Officer's Certificate and Opinion of Counsel to the effect that the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (h) The Issuer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with. 86 SECTION 10.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF SECURITIES. Subject to Section 10.4, all moneys deposited with the Trustee (or other trustee) pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series and of Coupons appertaining thereto for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 10.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. SECTION 10.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series or Coupons attached thereto and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Securities of such series and of any Coupons appertaining thereto shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, however, that the Trustee or such paying agent, before being required to make any such repayment with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first-class mail to Holders of such Securities at their addresses as they 87 shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to be published once, in an Authorized Newspaper in _____________________________ and in an Authorized Newspaper in each of the Places of Payment (and, if required, once in an Authorized Newspaper in any other place or places), notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. SECTION 10.5 INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The Issuer 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 10.1 or the principal or interest received in respect of such obligations. ARTICLE ELEVEN MISCELLANEOUS PROVISIONS SECTION 11.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the Coupons appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto. SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND HOLDERS OF SECURITIES AND COUPONS. Nothing in this Indenture, in the Securities or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and their successors and the holders of 88 Senior Indebtedness and the Holders of the Securities or Coupons, if any, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors, the holders of the Senior Indebtedness and the Holders of the Securities or Coupons, if any. SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. The Issuer shall have the right at all times to assign any of its rights and obligations under this Indenture to a direct or indirect wholly-owned Subsidiary, provided that, in the event of any such assignment, the Issuer will remain liable for all such obligations. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not. SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND HOLDERS OF SECURITIES AND COUPONS. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities or Coupons to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to Hawaiian Electric Industries, Inc., 900 Richards Street, Honolulu, Hawaii 96813, Attention: Secretary. Any notice, direction, request or demand by the Issuer or any Holder of Securities or Coupons to or upon the Trustee shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee with the Issuer) to ____________________________________, Attention: ______________________. Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall 89 affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. SECTION 11.5 OFFICER'S CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion 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 certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a 90 statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, upon information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer or officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent. SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the date of maturity of interest on or principal of the Securities of any series or any Coupons appertaining thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the 91 date fixed for redemption, and no interest shall accrue for the period after such date. SECTION 11.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE ACT OF 1939. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318, inclusive, of the Trust Indenture Act of 1939, such imposed duties or incorporated provision shall control. SECTION 11.8 NEW YORK LAW TO GOVERN. This Indenture and each Security and Coupon shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such State, except as may otherwise be required by mandatory provisions of law. SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.11 SECURITIES IN A FOREIGN CURRENCY OR IN ECU. Unless otherwise specified in an Officer's Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve 92 Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities (such publication or any successor publication, the "Journal"). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of the ECU shall be Brussels, Belgium, or such other quotations or, in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture including without limitation any determination contemplated in Section 5.1(g). All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Issuer and all Holders. SECTION 11.12 JUDGMENT CURRENCY. The Issuer agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, to the extent permitted by applicable law, the rate of exchange 93 used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close. SECTION 11.13 SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired thereby. ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS SECTION 12.1 APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice of redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of 94 such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939 shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other Holders of Unregistered Securities shall be published in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in each of the Places of Payment (and, if required, in an Authorized Newspaper), in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such series. Any notice of redemption mailed to each such Holder as provided hereinabove shall specify, the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue and will specify any conversion price then in effect and when any right to convert such Security on part 95 thereof to be redeemed will expire. In case any Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued. The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. On or before the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption (other than those, if any, theretofore surrendered for conversion) at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If any Security called for redemption is converted pursuant hereto, any money deposited with the Trustee or any paying agent or so segregated and held in trust for the redemption of such Security shall be paid to the Issuer upon the Issuer's request, or, if then held by the Issuer, shall be discharged from such trust. The Issuer will deliver to the Trustee at least 70 days prior to the date fixed for redemption an Officer's Certificate stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer's Certificate stating that such restriction has been complied with. If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such Series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the 96 Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If any Security selected for partial redemption is surrendered for conversion after such selection, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Upon any redemption of less than all the Securities of any series, the Issuer and the Trustee may treat as outstanding any Securities of such series surrendered for conversion during the period of 15 days next preceding the mailing of a notice of redemption, and need not treat as outstanding any Security authenticated and delivered during such period in exchange for the unconverted portion of any Security of such series converted in part during such period. SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be convertible or entitled to any other benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with 97 interest accrued thereon to the date fixed for redemption; provided that payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the Holders of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holders of such Registered Securities registered as such on the relevant record date subject to the terms and provisions of Sections 2.3 and 2.7 hereof. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security and such Security shall remain convertible in accordance with its terms until paid or duly provided for. If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless. Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented. SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such written statement as 98 directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. SECTION 12.5 MANDATORY AND OPTIONAL SINKING FUNDS. The minimum amount of any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment". The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date". In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer or converted and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities. On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (which need not contain the statements required by Section 11.5) (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund 99 payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section. If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or a lesser sum in Dollars (or the equivalent thereof in any Foreign Currency or ECU) if the Issuer shall so request with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the equivalent thereof in any Foreign Currency or ECU) is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested 100 in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an entity specifically identified in such Officer's Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity. The Issuer's obligation to make a mandatory or optional sinking fund payment shall automatically be reduced by an amount equal to the sinking fund redemption price allocable to any Securities or portions thereof called for redemption pursuant to the preceding paragraph on any sinking fund payment date and converted; provided, that if the Trustee is not the conversion agent for the Securities, the Issuer or such conversion agent shall give the Trustee written notice prior to the date fixed for redemption of the principal amount of Securities or portions thereof so converted. On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date. 101 The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities. ARTICLE THIRTEEN SUBORDINATION SECTION 13.1 AGREEMENT TO SUBORDINATE. The Issuer, for itself, its successors and assigns, covenants and agrees, and each Holder of a Security or Coupon, by its acceptance thereof, likewise covenants and agrees, that the payment of the principal of and interest on, each and all of the Securities and any Coupons is hereby expressly subordinated, to the extent and in the manner hereinafter in this Article 13 set forth, in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 13.2 RIGHTS OF SENIOR INDEBTEDNESS IN THE EVENT OF INSOLVENCY, ETC., OF THE ISSUER. (a) In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to the Issuer or to its creditors, as such, or to its property, and in 102 the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Issuer, whether or not involving insolvency or bankruptcy, and in the event of any execution sale, then the holders of Senior Indebtedness shall be entitled to receive payment in full of principal thereof and premium thereon, if any, and interest due thereon (including without limitation, except to the extent, if any, prohibited by mandatory provisions of law, post-petition interest in any such proceedings) in money or money's worth of all Senior Indebtedness before the Holders are entitled to receive any payment on account of the principal of or premium on, if any, or interest on the indebtedness evidenced by the Securities or of the Coupons, and to that end the holders of Senior Indebtedness shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in connection with any such proceedings or sale in respect of the principal of or interest on the Securities or Coupons other than securities of the Issuer as reorganized or readjusted or securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article 13 with respect to the Securities or Coupons, to the payment of all indebtedness of the nature of Senior Indebtedness, provided that the rights of the holders of the Senior Indebtedness are not altered by such reorganization or readjustment; (b) In the event and during the continuation of any default in payment of any Senior Indebtedness or if any event of default, as therein defined, shall exist under any Senior Indebtedness or any agreement pursuant to which any Senior Indebtedness is issued, no payment of the principal of or interest on the Securities or Coupons shall be made and the Issuer covenants that it will, upon ascertaining any such default or event of default, provide written notice to the Trustee of such default or event of default; (c) In the event that the Securities of any series are declared due and payable before their 103 expressed maturity because of the occurrence of an Event of Default (under circumstances when the provisions of subsection (a) of this Section 13.2 shall not be applicable), the holders of all Senior Indebtedness shall be entitled to receive payment in full in money or money's worth of such Senior Indebtedness before such Holders are entitled to receive any payment on account of the principal of or interest on the Securities or Coupons; and (d) No holder of Senior Indebtedness shall be prejudiced in his right to enforce subordination of the Securities or Coupons by any act or failure to act on the part of the Issuer. SECTION 13.3 PAYMENT OVER OF PROCEEDS RECEIVED ON SECURITIES. In the event that, notwithstanding the provisions of Section 13.2, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities (other than securities of the Issuer as reorganized or readjusted or securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article 13 with respect to the Securities or Coupons, to the payment of all indebtedness of the nature of Senior Indebtedness, provided that the rights of the holders of the Senior Indebtedness are not altered by such reorganization or readjustment) shall be received by the Holders or by the Trustee for their benefit in connection with any proceedings or sale referred to in subsection (a) of Section 13.2 before all Senior Indebtedness is paid in full in money or money's worth, such payment or distribution shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full in money or money's worth, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. 104 From and after the payment in full in money or money's worth of all Senior Indebtedness, the Holders (together with the holders of any other indebtedness of the Issuer which is subordinate in right of payment to the payment in full of all Senior Indebtedness, which is not subordinate in right of payment to the Securities or Coupons and which by its terms grants such right of subrogation to the holder thereof) shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets or securities of the Issuer applicable to the Senior Indebtedness until the Securities and any Coupons shall be paid in full, and, for the purposes of such subrogation, no such payments or distributions to the holders of Senior Indebtedness of assets or securities, which otherwise would have been payable or distributable to Holders, shall, as between the Issuer, its creditors other than the holders of Senior Indebtedness, and the Holders, be deemed to be a payment by the Issuer to or on account of the Senior Indebtedness, it being understood that the provisions of this Article 13 are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness, on the other hand, and nothing contained in this Article 13 or elsewhere in this Indenture or in the Securities or Coupons is intended to or shall impair as between the Issuer, its creditors other than the holders of Senior Indebtedness, and the Holders, the obligation of the Issuer, which is unconditional and absolute, to pay to the Holders the principal of and interest on the Securities or Coupons as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the Holders and creditors of the Issuer other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Security or Coupon from exercising all remedies otherwise permitted by applicable law upon default under this Indenture subject to the rights of the holders of Senior Indebtedness, under Section 13.2, to receive cash, property or securities of the Issuer otherwise payable or deliverable to the holders of the Securities or Coupons. Upon any distribution or payment in connection with any proceedings or sale referred to in subsection (a) of Section 13.2, the Trustee, subject as between the Trustee and the Holders to the provisions of Sections 6.1 and 6.2 hereof, shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution or 105 payment to the Trustee for the purpose of ascertaining the holders of Senior Indebtedness entitled to participate in such payment or distribution, the amount of such Senior Indebtedness or the amount payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 13. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Section 13.3, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, as to the extent to which such person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such person under this Section 13.3, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. The Trustee, however, 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 it shall in good faith pay over or distribute to Holders or the Issuer or any other person moneys or assets to which any holders of Senior Indebtedness shall be entitled by virtue of Article 13 of this Indenture or otherwise. SECTION 13.4 PAYMENTS TO HOLDERS. Nothing contained in this Article 13 or elsewhere in this Indenture, or in any of the Securities or in any Coupon, shall prevent at any time, (a) the Issuer from making payments at any time of principal of or interest on the Securities or Coupons, except under the conditions described in Section 13.2 or during the pendency of any proceedings or sale therein referred to, provided, however, that payments of principal of or interest on the Securities or Coupons shall only be made by the Issuer within three business days of the due dates for such payments or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of or interest on the Securities or Coupons, if at the time of such deposit the Trustee did not have written notice in accordance with Section 13.6 of any event prohibiting the making of such deposit by the Issuer or if in the event of redemption, the Trustee did not have such written notice prior to the time that the notice of redemption pursuant to Section 12.2 was given (which notice of 106 redemption shall in no event be given more than 60 days prior to the date fixed for redemption). SECTION 13.5 HOLDERS OF SECURITIES AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES. Each Holder by his acceptance of a Security or Coupon authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination as provided in this Article 13 and appoints the Trustee as attorney-in-fact for any and all such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Issuer, the immediate filing of a claim for the unpaid balance of such Holder's Securities or Coupons in the form required in said proceedings and cause said claim to be approved. SECTION 13.6 NOTICE TO TRUSTEE. Notwithstanding the provisions of this Article 13 or any other provisions of this Indenture, the Trustee shall not be charged with the knowledge of the existence of any facts which would prohibit the making of any payment of moneys to the Trustee, unless and until the Trustee shall have received written notice thereof from the Issuer or from the holder or the representative of any class of Senior Indebtedness; provided, however, that if at least two Business Days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of either the cash amount payable at maturity or interest on any Security or Coupon) the Trustee shall not have received with respect to such monies the notice provided for in this Section 13.6, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such two Business Days prior to such date. SECTION 13.7 TRUSTEE MAY HOLD SENIOR INDEBTEDNESS. Subject to the provisions of Section 6.13, the Trustee shall be entitled to all the rights set forth in this Article 13 with respect to any Senior Indebtedness which may at any time be 107 held by it, to the same extent as any other holder of Senior Indebtedness. SECTION 13.8 APPLICABILITY OF ARTICLE 13 TO PAYING AGENTS. In case at any time any paying agent other than the Trustee shall be appointed by the Issuer and be then acting hereunder, the term "Trustee" as used in this Article 13 shall in such case (unless the context shall otherwise require) be construed as extending to and including such paying agent within its meaning as fully for all intents and purposes as if such paying agent were named in this Article 13 in place of the Trustee. ARTICLE FOURTEEN CONVERSION OF SECURITIES SECTION 14.1. APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to the Securities of any series which are convertible before their maturity except as otherwise specified as contemplated by Section 2.3 for Securities of such series. SECTION 14.2. CONVERSION. Subject to and upon compliance with the provisions of this Article, any Security which by its terms specified as contemplated by Section 2.3 is convertible into any cash, securities or property ("Conversion Proceeds") may, at any time until and including but not after the close of business on the date of maturity of such Security, or in case such Security or some portion thereof shall be called for redemption prior to such date, then, with respect to such Security or such portion thereof as is so called, until and including but (if no default is made in making due provision for the payment of the redemption price) not after the close of business on the date fixed for redemption, be converted, in whole, or in part in multiples of $1,000 principal amount, at 100% of the principal amount of such Security (or portion thereof), into the Conversion Proceeds issuable upon conversion of such Security, at the conversion price in effect at the Date of Conversion (as hereinafter defined). SECTION 14.3 EXERCISE OF CONVERSION. In order to convert, the Holder of any Security to be converted shall surrender such Security to the Issuer at any time during usual 108 business hours at its office or agency maintained for the purpose as provided in this Indenture, accompanied by a fully executed written notice, in substantially the form set forth on the reverse of the Security, that the Holder elects to convert such Security or a stated portion thereof constituting a multiple of $1,000 principal amount, and, if such Security is surrendered for conversion during the period between the close of business on any record date and the opening of business on the following interest payment date and has not been called for redemption on a redemption date within such period (or on such interest payment date), accompanied also by payment of an amount equal to the interest payable on such interest payment date on the principal amount of the Security being surrendered for conversion. Such notice shall also state the name or names (with address) in which any certificate or certificates for Conversion Proceeds constituting securities shall be issued. Securities surrendered for conversion shall (if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer duly executed by, the Holder or his attorney duly authorized in writing. As promptly as practicable after the receipt of such notice and the surrender of such Security as aforesaid, the Issuer shall, subject to the provisions of this Article Fourteen, deliver the Conversion Proceeds thereof at such office or agency to such Holder, or on his written order. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date (herein called the "Date of Conversion") on which such notice shall have been received by the Issuer and such Security shall have been surrendered as aforesaid, and the person or persons in whose name or names any certificate or certificates for Conversion Proceeds constituting securities shall be issuable upon such conversion shall be deemed to have become on the Date of Conversion the holder or holders of record of the securities represented thereby; provided, however, that any such surrender on any date when the stock transfer books for such securities shall be closed shall constitute the person or persons in whose name or names the certificate or certificates are to be issued as the recordholder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open but such conversion shall nevertheless be at the conversion price in effect at the close of business on the date when such Security shall have been so surrendered with the conversion notice. In the case of conversion of a portion, but less than all, of a Security, the 109 Issuer shall execute, and the Trustee shall authenticate and deliver to the holder thereof, at the expense of the Issuer, a Security or Securities in the aggregate principal amount of the unconverted portion of the Security surrendered. Except as otherwise expressly provided in this Indenture, no payment or adjustment shall be made for interest accrued on any Security (or portion thereof) converted or for dividends or distributions on any security issued upon conversion of any Security. SECTION 14.4 FRACTIONAL INTERESTS. No fractions of any security or scrip representing fractions thereof shall be issued upon conversion of Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full securities which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities so surrendered. If any fraction of any security would, except for the provisions of this Section, be issuable on the conversion of any Security or Securities, the Issuer shall make payment in lieu thereof in an amount of United States dollars equal to the value of such fraction computed on the basis of the current market price of such security on the last business day prior to the Date of Conversion. SECTION 14.5 CONVERSION PRICE. The conversion price ("Conversion Price") per unit of Conversion Proceeds issuable upon conversion of the Securities, if any, shall initially be the amount specified as contemplated in Section 2.3 for the Securities of any series and shall be subject to adjustment from time to time as specified as contemplated in Section 2.3 for the Securities of such series. Whenever the Conversion Price is adjusted as herein provided, the Issuer shall promptly (i) file with the Trustee and each conversion agent an Officers' Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) mail or cause to be mailed a notice of such adjustment to each Holder of Securities at his address as the same appears on the registry books of the Issuer. The Issuer shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to 110 purchase stock or securities, or distribution of other assets (other than cash dividends) hereafter made by the Issuer to its stockholders shall not be taxable. SECTION 14.6 CONTINUATION OF CONVERSION IN CASE OF RECLASSIFICATION, CHANGE, MERGER, CONSOLIDATION OR SALE OF ASSETS. If any of the following shall occur, namely: (a) any reclassification or change of outstanding securities issuable upon conversion of the Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (b) any consolidation or merger to which the Issuer is a party as a result of which the holders of such securities shall be entitled to receive stock, other securities or other assets with respect to or in exchange for such securities or (c) sale or conveyance of all or substantially all of the property or business of the Issuer as an entirety (if the Issuer is the issuer of such securities), then the Issuer, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, sale or conveyance, execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the amount of such securities issuable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments specified as contemplated by Section 2.3 for Securities of the series. If, in the case of any such consolidation, merger, sale or conveyance, the securities and property receivable thereupon by a holder of outstanding securities issuable upon conversion includes shares of stock or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section shall 111 similarly apply to successive consolidations, mergers, sales or conveyances. Notice of the execution of each such supplemental indenture shall be mailed to each Holder of Securities at his address as the same appears on the registry books of the Issuer. Neither the Trustee nor any conversion agent shall be under any responsibility to determine the correctness of any provisions contained in any such supplemental indenture relating either to the kind or amount of shares of stock or securities or property receivable by Holders of Securities upon the conversion of their Securities after any such reclassification, change, consolidation, merger, sale or conveyance or to any adjustment to be made with respect thereto, but, subject to the provisions of Sections 6.1 and 6.2, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Issuer shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. SECTION 14.7 NOTICE OF CERTAIN EVENTS. So long as any convertible Securities are outstanding, in case: (a) the Issuer shall declare a dividend (or any other distribution) payable to the holders of any securities constituting Conversion Proceeds otherwise than in cash; or (b) the Issuer shall authorize the granting to the holders of such securities of rights to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) the Issuer shall authorize any reclassification or change of such securities (other than a subdivision or combination of such securities), or any consolidation or merger to which the Issuer is a party and for which approval of any stockholders of the Issuer is required, or the sale or conveyance of all or substantially all the property or business of the Issuer; or 112 (d) there shall be proposed any voluntary or involuntary dissolution, liquidation or winding-up of the Issuer; then, the Issuer shall cause to be filed at the office or agency maintained for the purpose of conversion of the Securities as provided in Section 3.2, and shall cause to be mailed to each Holder of Securities, at his address as it shall appear on the registry books of the Issuer, at least 20 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified), a notice stating the date on which (1) a record is expected to be taken for the purpose of such dividend, distribution or rights, or if a record is not to be taken, the date as of which the holders of such securities of record to be entitled to such dividend, distribution or rights are to be determined, or (2) such reclassification, change, consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up is expected to become effective and the date, if any is to be fixed, as of which it is expected that holders of such securities of record shall be entitled to exchange their such securities for securities or other property deliverable upon such reclassification, change, consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up. SECTION 14.8 TAXES ON CONVERSION. The Issuer will pay any and all documentary, stamp or similar taxes payable to the United States of America or any political subdivision or taxing authority thereof or therein in respect of the issue or delivery of Conversion Proceeds on conversion of Securities pursuant thereto; provided, however, that the Issuer shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of Conversion Proceeds in a name other than that of the holder of the Securities to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Issuer the amount of any such tax or has established, to the satisfaction of the Issuer, that such tax has been paid. The Issuer extends no protection with respect to any other taxes imposed in connection with conversion of Securities. 113 SECTION 14.9 ISSUER TO PROVIDE STOCK. To the extent that any Securities are convertible into securities of the Issuer, the Issuer shall reserve, free from pre-emptive rights, out of its authorized but unissued securities, sufficient securities to provide for the conversion of the Securities from time to time as such Securities are presented for conversion, provided, that nothing contained herein shall be construed to preclude the Issuer from satisfying its obligations in respect of the conversion of Securities by delivery of repurchased Securities which are held in the treasury of the Issuer. If any securities to be reserved for the purpose of conversion of securities hereunder require registration with or approval of any governmental authority under any Federal or State law before such securities may be validly issued or delivered upon conversion, then the Issuer covenants that it will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be, provided, however, that nothing in this Section shall be deemed to affect in any way any obligation of the Issuer to convert Securities. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of such securities, the Issuer will take all corporate action which may, in the Opinion of Counsel, be necessary in order that the Issuer may validly and legally issue fully paid and non-assessable such securities at such adjusted Conversion Price. The Issuer covenants that all securities of the Issuer which may be issued upon conversion of Securities will upon issue be fully paid and non- assessable by the Issuer and free of pre-emptive rights. SECTION 14.10 DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS. Neither the Trustee nor any agent of the Trustee shall at any time be under any duty or responsibility to any holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the Officers' Certificate referred to in Section 14.5, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture as specified as contemplated in Section 2.3 provided to be 114 employed, in making the same. Neither the Trustee nor any agent of the Trustee shall be accountable with respect to the validity or value (or the kind or amount) of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any conversion agent makes any representation with respect thereto. Neither the Trustee nor any agent of the Trustee shall be responsible for any failure of the Issuer to issue, register the transfer of or deliver any securities or property upon the surrender of any Security for the purpose of conversion or, subject to Sections 6.1 and 6.2, to comply with any of the covenants of the Issuer contained in this Article or specified as contemplated in Section 2.3. SECTION 14.11 RETURN OF FUNDS DEPOSITED FOR REDEMPTION OF CONVERTED SECURITIES. Any funds which at any time shall have been deposited by the Issuer or on its behalf with the Trustee or any paying agent for the purpose of paying the principal of and interest on any of the Securities and which shall not be required for such purposes because of the conversion of such Securities, shall after such conversion be repaid to the Issuer by the Trustee or such other paying agent. 115 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of ____________________. HAWAIIAN ELECTRIC INDUSTRIES, INC. By _______________________________ Name: Title: [CORPORATE SEAL] Attest: By _________________________ Name: Title: ________________________________ __________, as Trustee By _____________________________ Name: Title: [CORPORATE SEAL] Attest: By _________________________ Name: Title: 116 STATE OF HAWAII ) ) ss. COUNTY OF HONOLULU ) On this _____ of ________________ before me personally came ___________________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ___________________________ that he is the ____________________ of Hawaiian Electric Industries, Inc., one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public STATE OF ___________ ) ) ss. COUNTY OF __________ ) On this _____ of ________________ before me personally came ___________________________, to me personally known, who, being by me duly sworn, did depose and say that he resides at ________________________ that he is a [_____________________] of ___________________________________, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] ______________________________ Notary Public EX-4.(I) 9 FORM OF JUNIOR INDENTURE Exhibit 4(i) ------------ HAWAIIAN ELECTRIC INDUSTRIES, INC. AND THE BANK OF NEW YORK, AS TRUSTEE __________________ INDENTURE Dated as of , 1997 ----------- ___________________ Junior Subordinated Debentures CROSS REFERENCE SHEET(*) Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of , 1997 between HAWAIIAN ELECTRIC INDUSTRIES, INC. and THE BANK OF ---------- NEW YORK, Trustee: Section of the Act Section of Indenture - ------------------ -------------------- 310(a)(1) and (2)....................... 7.09 310(a)(3) and (4)....................... Inapplicable 310(b).................................. 7.08, 7.10 and 7.11 310(c).................................. Inapplicable 311(a).................................. 7.13(a) 311(b).................................. 7.13(b) 311(c).................................. Inapplicable 312(a).................................. 5.01 and 5.02 312(b).................................. 5.02 312(c).................................. 5.02 313(a).................................. 5.04 313(b)(1)............................... Inapplicable 313(b)(2)............................... 5.04 313(c).................................. 5.04 313(d).................................. 5.04 314(a).................................. 5.03 314(b).................................. Inapplicable 314(c)(1) and (2)....................... 13.06 314(c)(3)............................... Inapplicable 314(d).................................. Inapplicable 314(e).................................. 13.06 314(f).................................. Inapplicable 315(a), (c) and (d)..................... 7.01 315(b).................................. 6.07 315(e).................................. 6.08 316(a)(1)............................... 6.06 316(a)(2)............................... Inapplicable 316(a) (last sentence).................. 8.04 316(b).................................. 6.04 317(a).................................. 6.02 317(b).................................. 4.03 318(a).................................. 13.08 (*) This Cross Reference Sheet is not part of the Indenture. TABLE OF CONTENTS(*) PARTIES..................................................... 1 RECITALS: Purpose of Indenture........................................ 1 Compliance with legal requirements.......................... 1 Purpose of and consideration for Indenture.................. 1 ARTICLE ONE Definitions SECTION 1.01. Definitions.................................. 2 Additional Interest.......................... 2 Affiliate.................................... 2 Authenticating Agent......................... 3 Board of Directors........................... 3 Board Resolution............................. 3 Business Day................................. 3 Certificate.................................. 3 Company...................................... 3 Corporate Trust Office....................... 3 Debenture or Debentures...................... 4 Debenture Register........................... 4 Debentureholder.............................. 4 Default...................................... 4 Defeasance Agent............................. 4 Depository................................... 4 Event of Default............................. 4 General Partner.............................. 5 Global Debenture............................. 5 Governmental Obligations..................... 5 Hawaiian Electric Industries Capital Trust... 5 Indenture.................................... 6 Interest Payment Date........................ 6 Limited Partnership Agreement................ 6 Officer's Certificate........................ 5 Opinion of Counsel........................... 6 Outstanding.................................. 6 Partnership.................................. 7 Partnership Guarantee........................ 7 Partnership Preferred Securities............. 7 Person....................................... 7 Place of Payment............................. 7 Predecessor Debenture........................ 7 Property Trustee............................. 8 Responsible Officer.......................... 8 Security..................................... 8 Security Exchange............................ 8 Senior Indebtedness.......................... 9 Subsidiary................................... 9 Trust Agreement.............................. 9 Trust Common Securities...................... 10 Trust Guarantee.............................. 10 Trust Indenture Act.......................... 10 Trust Preferred Securities................... 10 Trustee...................................... 10 ARTICLE TWO The Debentures SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery of Debentures................... 10 SECTION 2.02. Form of Debentures and Trustee's Certificate. 13 SECTION 2.03. Date and Denominations of Debentures; Payment of Principal, Premium and Interest........... 13 SECTION 2.04. Execution of Debentures...................... 16 SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Debentures................................... 17 SECTION 2.06. Temporary Debentures........................ 18 SECTION 2.07. Exchange of Debentures...................... 19 SECTION 2.08. Cancellation................................ 21 SECTION 2.09. Beneficiaries............................... 21 SECTION 2.10. Appointment of Authenticating Agent......... 21 SECTION 2.11. Global Debenture............................ 22 SECTION 2.12. CUSIP Numbers............................... 24 ARTICLE THREE Redemption of Debentures and Sinking Fund Provisions SECTION 3.01. Redemption of Debentures..................... 24 SECTION 3.02. Notice of Redemption; Selection by Trustee of Debentures to be Redeemed......... 24 SECTION 3.03. Debentures Payable on Redemption Date; Debentures Redeemed in Part.................. 26 SECTION 3.04. Sinking Fund for Debentures.................. 27 SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures................................... 27 SECTION 3.06. Redemption of Debentures for Sinking Fund.... 28 ARTICLE FOUR Particular Covenants of the Company SECTION 4.01. Payment of Principal, Premium and Interest... 28 SECTION 4.02. Maintenance of Office or Agency.............. 28 SECTION 4.03. Paying Agent; Money for Debenture Payments to be Held in Trust.......................... 29 SECTION 4.04. Appointment to Fill Vacancy.................. 31 SECTION 4.05. Payment of Additional Interest............... 31 SECTION 4.06. Maintenance of the Hawaiian Electric Industries Capital Trust and the Partnership.................................. 31 ARTICLE FIVE Debentureholders' Lists and Reports by the Company and the Trustee SECTION 5.01. Company to Furnish Trustee Names and Addresses of Debentureholders................ 32 SECTION 5.02. Preservation of Information; Communications to Holders................................... 33 SECTION 5.03. Reports by Company........................... 35 SECTION 5.04. Reports by Trustee........................... 36 ARTICLE SIX Remedies of the Trustee and Debentureholders on Event of Default SECTION 6.01. Event of Default............................. 38 SECTION 6.02. Acceleration of Maturity..................... 42 SECTION 6.03. Application of Moneys Collected.............. 44 SECTION 6.04. Limitation on Suits; Unconditional Right of Debentureholders to Insitute Certain Suits... 44 SECTION 6.05. Rights and Remedies Cumulative; Delay or Omission Not A Waiver........................ 46 SECTION 6.06. Control by Debentureholders; Waiver of Past Defaults................................ 46 SECTION 6.07. Notice of Defaults........................... 48 SECTION 6.08. Undertaking for Costs........................ 48 SECTION 6.09. Certain Additional Covenants................. 49 ARTICLE SEVEN Concerning the Trustee SECTION 7.01. Certain Duties and Responsibilities.......... 50 SECTION 7.02. Certain Rights of Trustee.................... 52 SECTION 7.03. Limitations of Liability..................... 53 SECTION 7.04. Ownership of Debentures...................... 54 SECTION 7.05. Moneys Held Without Interest................. 54 SECTION 7.06. Compensation and Reimbursement............... 54 SECTION 7.07. Reliance on Certificate of Officers of Company................................... 55 SECTION 7.08. Conflicts of Interest........................ 56 SECTION 7.09. Requirements for Eligibility................. 64 SECTION 7.10. Resignation and Removal...................... 64 SECTION 7.11. Successor Trustee............................ 67 SECTION 7.12. Successor to Trustee by Merger, Consolidation or Succession to Business...... 69 SECTION 7.13. Preferential Collection of Claims Against Issuer; Trustee as Creditor.................. 69 ARTICLE EIGHT Concerning the Debentureholders SECTION 8.01. Evidence of Action by Debentureholders....... 75 SECTION 8.02. Proof of Execution of Instruments and of Holding of Debentures........................ 76 SECTION 8.03. Persons Deemed Owners of Debentures.......... 76 SECTION 8.04. Debentures Owned by Company or Controlled or Controlling Companies Disregarded for Certain Purposes............................. 76 SECTION 8.05. Instruments Executed by Debentureholders Bind Future Holders.......................... 77 ARTICLE NINE Supplemental Indentures SECTION 9.01. Supplemental Indentures Without Consent of Debentureholders............................. 78 SECTION 9.02. Modification of Indenture With Consent of Debentureholders............................. 79 SECTION 9.03. Effect of Supplemental Indentures............ 81 SECTION 9.04. Debentures May Bear Notation of Changes by Supplemental Indentures...................... 81 SECTION 9.05. Opinion of Counsel........................... 82 ARTICLE TEN Consolidation, Merger, Sale or Conveyance SECTION 10.01. Company May Consolidate, Etc., Only on Certain Terms................................ 82 SECTION 10.02. Successor Corporation........................ 83 SECTION 10.03. Opinion of Counsel........................... 83 ARTICLE ELEVEN Satisfaction and Discharge of Indenture; Defeasance; Unclaimed Moneys SECTION 11.01. Satisfaction and Discharge of Indenture...... 83 SECTION 11.02. Application by Trustee of Funds Deposited for Payment of Debentures.................... 89 SECTION 11.03. Application by Trustee of Funds Deposited for Payment of Debentures.................... 89 SECTION 11.04. Repayment of Moneys Held by Paying Agent..... 90 SECTION 11.05. Repayment of Moneys Held by Trustee.......... 90 ARTICLE TWELVE Immunity of Incorporators, Stockholders, Officers and Directors SECTION 12.01. Immunity From Individual Liability........... 91 ARTICLE THIRTEEN Miscellaneous Provisions SECTION 13.01. Successors and Assigns....................... 92 SECTION 13.02. Acts of Board, Committee or Officer of Successor Company............................ 92 SECTION 13.03. Surrender of Powers of Company............... 92 SECTION 13.04. Required Notices or Demands Served by Mail... 92 SECTION 13.05. Governing Law................................ 93 SECTION 13.06. Officer's Certificates and Opinions of Counsel...................................... 93 SECTION 13.07. Payments Due on Saturdays, Sundays or Holidays.................................. 93 SECTION 13.08. Provisions Required by Trust Indenture Act... 94 SECTION 13.09. Indenture May be Executed in Counterparts.... 94 SECTION 13.10. Severability of Indenture Provisions......... 94 SECTION 13.11. Assignment by Company to Subsidiary.......... 94 SECTION 13.12. Holders of Trust Preferred Securities as Third Party Beneficiaries of this Indenture.. 95 ARTICLE FOURTEEN Subordination of Debentures SECTION 14.01. Agreement to Subordinate.................... 95 SECTION 14.02. Rights of Senior Indebtedness in the Event of Insolvency, Etc., of the Company......... 96 SECTION 14.03. Payment Over of Proceeds Received on Debentures.................................. 97 SECTION 14.04. Payment to Debentureholders................. 99 SECTION 14.05. Holders of Debentures Authorize Trustee to Effectuate Subordination of Debentures............................... 100 SECTION 14.06. Notice to Trustee........................... 100 SECTION 14.07. Trustees May Hold Senior Indebtedness....... 101 SECTION 14.08. Applicability of Article Fourteen to Paying Agents............................ 101 ACCEPTANCE OF TRUST BY TRUSTEE............................. TESTIMONIUM................................................ SIGNATURES AND SEALS....................................... ACKNOWLEDGMENTS............................................ THIS INDENTURE, is dated as of the _____ day of ______________, 1997, between HAWAIIAN ELECTRIC INDUSTRIES, INC., a corporation duly organized and existing under the laws of the State of Hawaii (hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW YORK, a New York banking corporation, as Trustee (hereinafter sometimes referred to as the "Trustee"): WHEREAS, for its lawful corporate purposes, the Company has fully authorized the execution and delivery of this Indenture to provide for the issuance of unsecured debentures (hereinafter referred to as the "Debentures"), in an unlimited aggregate principal amount to be issued from time to time in one or more series as in this Indenture provided, as registered Debentures without coupons, to be authenticated by the certificate of the Trustee; WHEREAS, to provide the terms and conditions upon which the Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; WHEREAS, the Debentures and the certificate of authentication to be borne by the Debentures (the "Certificate of Authentication") are to be substantially in such forms as may be approved by the Board of Directors (as defined below) or set forth in any indenture supplemental to this Indenture; AND WHEREAS, all acts and things necessary to make the Debentures issued pursuant hereto, when executed by the Company and authenticated and delivered by the Trustee as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid indenture and agreement according to its terms, have been done and performed or will be done and performed prior to the issuance of such Debentures, and the execution of this Indenture has been and the issuance hereunder of the Debentures has been or will be prior to issuance in all respects duly authorized, and the Company, in the exercise of the legal right and power in it vested, executes this Indenture and proposes to make, execute, issue and deliver the Debentures: 1 NOW, THEREFORE, THIS INDENTURE WITNESSETH: That in order to declare the terms and conditions upon which the Debentures are and are to be authenticated, issued and delivered, and in consideration of the premises and of the acquisition and acceptance of the Debentures by the holders thereof, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit (subject to the provisions of this Indenture) of the respective holders from time to time of the Debentures, without any discrimination, preference or priority of any one Debenture over any other by reason of priority in the time of issue, sale or negotiation thereof, or otherwise, except as provided herein, as follows: ARTICLE ONE Definitions SECTION 1.01. Definitions. ------------ The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture, any resolution of the Board of Directors of the Company and of any indenture supplemental hereof shall have the respective meanings specified in this Section. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended, or which are by reference in such Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of this instrument. Additional Interest: The term "Additional Interest" shall mean the additional interest as provided in Section 4.05. Affiliate: The term "Affiliate" of the Company shall mean any company at least a majority of whose outstanding voting stock shall at the time be owned by the Company, or by one or more direct or indirect subsidiaries of the Company or by the Company and one or more direct or indirect subsidiaries of the Company. For the purposes only of this definition of 2 the term "Affiliate", the term "voting stock", as applied to the stock of any company, shall mean stock of any class or classes having ordinary voting power for the election of a majority of the directors of such company, other than stock having such power only by reason of the occurrence of a contingency. Authenticating Agent: The term "Authenticating Agent" means an authenticating agent with respect to all or any of the series of Debentures, as the case may be, appointed with respect to all or any series of the Debentures, as the case may be, by the Trustee pursuant to Section 2.10. Board of Directors: The term "Board of Directors" shall mean the Board of Directors of the Company, or any committee of such Board duly authorized to act hereunder. Board Resolution: The term "Board Resolution" shall mean a copy of one or more resolutions, certified by the secretary or an assistant secretary of the Company to have been adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee. Business Day: The term "business day", with respect to any Place of Payment for a series of Debentures, shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in such Place of Payment are authorized or obligated by law or executive order to close. Certificate: The term "Certificate" shall mean a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company. The Certificate need not comply with the provisions of Section 13.06. Company: The term "Company" shall mean Hawaiian Electric Industries, Inc., a corporation duly organized and existing under the laws of the State of Hawaii, and, subject to the provisions of Article Ten, shall also include its successors and assigns. Corporate Trust Office: The term "Corporate Trust Office" shall mean the office of the Trustee at which at any particular time its corporate trust business shall be 3 principally administered, which office at the date of the execution of this Indenture is located at 101 Barclay Street, 21st Floor, New York, New York 10286, Attention: Corporate Trust Trustee Administration. Debenture or Debentures: The term "Debenture" or "Debentures" shall mean any Debenture or Debentures, as the case may be, authenticated and delivered under this Indenture. The term "Debenture" or "Debentures" also include unsecured notes and other evidences of indebtedness which may be issued pursuant to this Indenture. Debenture Register: The term "Debenture Register" shall mean the book in which the Company will keep and register, or cause to be kept and registered, a record of the name and addresses of the holder of record of each Debenture as provided in Section 2.07 and in accordance with the terms of this Indenture. Debentureholder: The term "Debentureholder", "holder of Debentures", "registered holder", or other similar term, shall mean the person or persons in whose name or names a particular Debenture shall be registered in the Debenture Register. Default: The term "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. Defeasance Agent: The term "Defeasance Agent" shall mean the Person, if any, selected by the Company and approved by the Trustee to receive the payments of money and any Governmental Obligations as provided in Section 11.01. Depository: The term "Depository" shall mean, with respect to Debentures of any series, for which the Company shall determine that such Debentures will be issued as a Global Debenture, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.11. Event of Default: The term "Event of Default" with respect to Debentures of a particular series shall mean any event specified in Section 6.01(a), continued for the period of time, if any, therein designated. 4 General Partner: The term "General Partner" means Hycap Management, Inc., a Delaware corporation and subsidiary of the Company, in its capacity as general partner of the Partnership, and its successors and assigns. Global Debenture: The term "Global Debenture" shall mean, with respect to any series of Debentures, a Debenture executed by the Company and delivered by the Trustee to the Depository or pursuant to the Depository's instruction, all in accordance with the Indenture, which shall be registered in the name of the Depository or its nominee. Governmental Obligations: The term, "Governmental Obligations" shall mean securities that are (i)direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii)obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depository receipt. Hawaiian Electric Industries Capital Trust: The term "Hawaiian Electric Industries Capital Trust" shall mean such statutory business trust created under the laws of the State of Delaware specified in the applicable Board Resolution or supplemental indenture establishing a particular series of Debentures pursuant to Section 2.01 hereof. 5 Indenture: The term "Indenture" shall mean this instrument as originally executed, or, if amended or supplemented as herein provided, as so amended or supplemented. Interest Payment Date: The term "Interest Payment Date" when used with respect to any installment of interest on a Debenture of a particular series shall mean the date specified in such Debenture or in a Board Resolution or in an indenture supplemental hereto with respect to such series as the fixed date on which an installment of interest with respect to Debentures of that series is due and payable. Limited Partnership Agreement: The term "Limited Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership, dated as of _________________, 1997, of the Partnership, as amended, modified or otherwise supplemented from time to time. Officer's Certificate: The term "Officer's Certificate" shall mean a certificate signed by the President, any Vice President, the Treasurer or the Controller of the Company. Each such certificate shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof. Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel, who may be an employee of or counsel for the Company or a Subsidiary and who shall be satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 13.06, if and to the extent required by the provisions thereof. Outstanding: The term "Outstanding", when used with reference to Debentures of any series, shall, subject to the provisions of Section 8.01, mean, as of any particular time, all Debentures of that series theretofore authenticated and delivered by the Trustee under this Indenture, except (a)Debentures theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation or which have previously been canceled; (b)Debentures or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have 6 been set aside and segregated in trust for the holders of such Debentures by the Company (if the Company shall act as its own paying agent); provided, however, that if such Debentures or portions of such Debentures are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article Three provided, or provision satisfactory to the Trustee shall have been made for giving such notice; (c) Debentures in lieu of or in substitution for which other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.07; and (d) Debentures paid pursuant to Section 2.05. Partnership: The term "Partnership" means HEI Preferred Funding, LP, a Delaware limited partnership, and any successor thereto. Partnership Guarantee: The term "Partnership Guarantee" shall mean the guarantee, if any, that the Company may enter into that operates directly or indirectly for the benefit of holders of Partnership Preferred Securities, if any, issued by the Partnership. Partnership Preferred Securities: The term "Partnership Preferred Securities" means the limited partnership interests, if any, issued pursuant to the Limited Partnership Agreement. Person: The term "Person" means any individual, corporation, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Place of Payment: The term "Place of Payment", when used with respect to the Debentures of any series, means the place or places where the principal of (and premium, if any) and interest on the Debentures of that series are payable as specified as contemplated by Section 2.01. Predecessor Debenture: The term "Predecessor Debenture" of any particular Debenture shall mean every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture; and, for the purposes of this definition, any Debenture authenticated and delivered under Section 2.05 in lieu of a lost, destroyed or 7 stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture. Property Trustee: The term "Property Trustee" means the entity performing the function of the Property Trustee under the applicable Trust Agreement of a Hawaiian Electric Industries Capital Trust. Responsible Officer: The term "Responsible Officer" when used with respect to the Trustee shall mean any vice president, the treasurer, any trust officer, any corporate trust officer or any other officer or assistant officer of the Corporate Trust Office of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. Security: Except as provided in Section 7.08, the word "security" or securities" as used in this Indenture shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. Security Exchange: "Security Exchange" when used with respect to the Debentures of any series that are held as trust assets of a Hawaiian Electric Industries Capital Trust pursuant to the Trust Agreement of such Hawaiian Electric Industries Capital Trust, means the distribution of the Debentures of such series by such Hawaiian Electric Industries Capital Trust in exchange for the Trust Preferred Securities and Trust Common Securities of such Hawaiian Electric Industries Capital Trust in dissolution of such Hawaiian Electric Industries Capital Trust pursuant to such Trust Agreement. 8 Senior Indebtedness: The term "Senior Indebtedness" means the principal of and premium, if any, and interest on (a)all indebtedness of the Company, whether outstanding on the date of this Indenture or thereafter created, (i)for money borrowed by the Company, (ii)for money borrowed by, or obligations of, others and either assumed or guaranteed, directly or indirectly, by the Company, (iii)in respect of letters of credit and acceptances issued or made by banks, or (iv)constituting purchase money indebtedness, or indebtedness secured by property included in the property, plant and equipment accounts of the Company at the time of the acquisition of such property by the Company, for the payment of which the Company is directly liable, and (b)all deferrals, renewals, extensions and refundings of, and amendments, modifications and supplements to, any such indebtedness. As used in the preceding sentence the term "purchase money indebtedness" means indebtedness evidenced by a note, debenture, bond or other instrument (whether or not secured by any lien or other security interest) issued or assumed as all or a part of the consideration for the acquisition of property, whether by purchase, merger, consolidation or otherwise, unless by its terms such indebtedness is subordinate to other indebtedness of the Company. Notwithstanding anything to the contrary in this Indenture or the Debentures, Senior Indebtedness shall not include (i)any indebtedness of the Company which, by its terms or the terms of the instrument creating or evidencing it, is subordinate in right of payment to or pari passu with the Debentures, as the case may be, or (ii)any indebtedness of the Company to a Subsidiary. Subsidiary: The term "Subsidiary" shall mean any corporation at least a majority of whose outstanding voting stock shall at the time be owned by the Company or by one or more subsidiaries or by the Company and one or more Subsidiaries. For the purposes only of this definition of the term "Subsidiary", the term "voting stock", as applied to the stock of any corporation, shall mean stock of any class or classes having ordinary voting power for the election of a majority of the directors of such corporation, other than stock having such power only by reason of the occurrence of a contingency. Trust Agreement: The term "Trust Agreement" shall mean the respective Trust Agreement of the Hawaiian Electric Industries Capital Trusts, if any, specified in the applicable 9 Board Resolution or supplemental indenture establishing a particular series of Debentures pursuant to Section 2.01 hereof. Trust Common Securities: The term "Trust Common Securities" shall mean the common undivided beneficial interests, if any, in the assets of the applicable Hawaiian Electric Industries Capital Trust or Trusts. Trust Guarantee: The term "Trust Guarantee" shall mean the guarantee, if any, that the Company may enter into that operates directly or indirectly for the benefit of holders of Trust Preferred Securities, if any, issued by a Hawaiian Electric Industries Capital Trust. Trust Indenture Act: The term "Trust Indenture Act", subject to the provisions of Sections 9.01 and 9.02, shall mean the Trust Indenture Act of 1939, as amended and in effect at the date of execution of this Indenture. Trust Preferred Securities: The term "Trust Preferred Securities" shall mean the preferred undivided beneficial interests, if any, in the assets of the applicable Hawaiian Electric Industries Capital Trust. Trustee: The term "Trustee" shall mean The Bank of New York and, subject to the provisions of Article Seven, shall also include its successors and assigns, and, if at any time there is more than one person acting in such capacity hereunder, "Trustee" shall mean each such person. The term "Trustee" as used with respect to a particular series of the Debentures shall mean the trustee with respect to that series. ARTICLE TWO The Debentures SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery of Debentures. The aggregate principal amount of Debentures which may be authenticated and delivered under this Indenture is unlimited. 10 The Debentures may be issued in one or more series up to the aggregate principal amount of Debentures of that series from time to time authorized by or pursuant to a Board Resolution or pursuant to one or more indentures supplemental hereto, prior to the initial issuance of Debentures of a particular series and shall rank pari passu with the Debentures of each other series. The Debentures of each series shall be junior and subordinate in right of payment to any securities issued pursuant to the Senior Subordinated Indenture of the Company. Prior to the initial issuance of Debentures of any series, there shall be established in or pursuant to a Board Resolution, and set forth in an Officer's Certificate, or established in one or more indentures supplemental hereto: (1) the title of the Debentures of the series (which shall distinguish the Debentures of the series from all other Debentures); (2) any limit upon the aggregate principal amount of the Debentures of that series which may be authenticated and delivered under this Indenture (except for Debentures authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Debentures of that series); (3) the date or dates on which the principal of the Debentures of the series is payable; (4) the rate or rates at which the Debentures of the series shall bear interest or the manner of calculation of such rate or rates, if any; (5) the place or places where the principal of (and premium, if any) and interest on Debentures of the series shall be payable or surrendered for registration of transfer or exchange; (6) the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest will be payable or the manner of determination of such Interest Payment Dates and the record dates for the determination of holders to whom interest is payable on any such Interest Payment Dates; (7) the right, if any, to extend the interest payment periods and the duration of such extension; (8) the period or periods, if any, within which, the price or prices at which, and the terms and conditions 11 upon which, Debentures of the series may be redeemed, in whole or in part, at the option of the Company; (9) the provisions, if any, for a sinking, purchase or other analogous fund and the obligation, if any, of the Company to redeem or purchase Debentures of the series pursuant to any sinking fund or analogous provisions (including payments made in cash in anticipation of future sinking fund obligations) or at the option of a holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Debentures of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (10) the form of the Debentures of the series including the form of the Certificate of Authentication for such series; (11) if other than denominations of $25 or any integral multiple thereof, the denominations in which the Debentures of the series shall be issuable; (12) whether the Debentures are issuable as a Global Debenture and, in such case, the identity of the Depository for such series; (13) if the Debentures of such series are to be deposited as trust assets in a Hawaiian Electric Industries Capital Trust, the name of the applicable Hawaiian Electric Industries Capital Trust (which shall distinguish such statutory business trust from all other Hawaiian Electric Industries Capital Trusts) into which the Debentures of such series are to be deposited as trust assets and the date of its Trust Agreement; (14) if the Debentures of such series are to be deposited as partnership assets in a limited partnership, such as the Partnership, the name of the applicable limited partnership (which shall distinguish such limited partnership from any other limited partnership of the Company) into which the Debentures of such series are to be deposited as partnership assets and the date of its limited partnership agreement; 12 (15) whether or not the Debentures are to be sold to Persons who are not directly or indirectly owned or controlled by the Company and who are not Affiliates of the Company; and (16) any and all other terms with respect to such series (which terms shall not be inconsistent with the terms of this Indenture). All Debentures of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to any such Board Resolution or in any indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officer's Certificate setting forth the terms of the series. SECTION 2.02. Form of Debentures and Trustee's Certificate. -------------------------------------------- The Debentures of any series and the Trustee's certificate of authentication to be borne by such Debentures shall be substantially of the tenor and purport as set forth in one or more indentures supplemental hereto or as provided in a Board Resolution and as set forth in an Officer's Certificate, and may have such letters, 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 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 stock exchange on which Debentures of that series may be listed, or to conform to usage. SECTION 2.03. Date and Denominations of Debentures; Payment of Principal, Premium and Interest. ------------------------------- The Debentures shall be issuable as registered Debentures and in the denominations of $25 or any integral multiple thereof, subject to Section 2.01(10). The Debentures of a particular series shall bear interest payable on the dates 13 and at the rate specified with respect to that series. The principal of and the interest on the Debentures of any series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in the coin or currency of the United States of America which at the time is legal tender for public and private debt, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York. Each Debenture shall be dated the date of its authentication. Interest on the Debentures shall be computed on the basis of a 360-day year composed of twelve 30-day months. For any period shorter than a full 90-day quarter, interest will be completed on the basis of the actual number of days elapsed in such 90-day quarter. The interest installment on any Debenture which is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Debentures of that series shall be paid to the person in whose name said Debenture (or one or more Predecessor Debentures) is registered on the Debenture Register at the close of business on the regular record date for such interest installment. In the event that any Debenture of a particular series or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Debenture will be paid upon presentation and surrender of such Debenture as provided in Section 3.03. Any interest on any Debenture which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Debentures of the same series (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below: (1) The Company may make payment of any Defaulted Interest on Debentures to the persons in whose names such 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 notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Debenture and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an 14 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 Trustee 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. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Debentureholder at his or her address as it appears in the Debenture Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names such Debentures (or their Predecessor Debentures) are registered on such special record date and shall be no longer payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on any 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 of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Unless otherwise set forth in a or pursuant to Board Resolution or one or more indentures supplemental hereto establishing the terms of any series of Debentures pursuant to Section 2.01 hereof, the term "regular record date" as used in this Section with respect to a series of Debentures with respect to any Interest Payment Date for such series shall mean either the fifteenth day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest 15 Payment Date is the first day of a month, or the last day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest Payment Date is the fifteenth day of a month, whether or not such date is a business day. Subject to the foregoing provisions of this Section, each Debenture of a series delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Debenture of such series shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debenture. SECTION 2.04. Execution of Debentures. -------------------------- The Debentures shall, subject to the provisions of Section 2.06, be printed on steel engraved borders or fully or partially engraved, or legibly typed, as the proper officers of the Company may determine, and shall be signed on behalf of the Company by its President or any Vice President and by its Treasurer, Controller or Secretary or an Assistant Treasurer or Assistant Secretary, under its corporate seal or a facsimile thereof reproduced thereon. The signature of any of these officers on the Debentures may be manual or facsimile. The seal of the Company may be in the form of a facsimile of the seal of the Company and may be impressed, affixed, imprinted or otherwise reproduced on the Debentures. 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 and did not hold such offices at the date of such Debentures. Only such Debentures as shall bear thereon a Certificate of Authentication substantially in the form established for such Debentures, executed manually by an authorized signatory of the Trustee, or by any Authenticating Agent with respect to such Debentures, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate executed by the Trustee, or by any Authenticating Agent appointed by the Trustee with respect to such Debentures, upon any Debenture executed by the Company 16 shall be conclusive evidence that the Debenture so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Debentures of any series executed by the Company to the Trustee for authentication, together with a written order of the Company for the authentication and delivery of such Debentures, signed by its President or any Vice President and by its Treasurer, Controller or Secretary or any Assistant Treasurer or Assistant Secretary, and the Trustee in accordance with such written order shall authenticate and make available such Debentures. In authenticating such Debentures and accepting the additional responsibilities under this Indenture in relation to such Debentures, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established in conformity with the provisions of this Indenture. The Trustee shall not be required to authenticate such Debentures if the issue of such Debentures pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Debentures and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Debentures. -------------------------------------------------- In case any temporary or definitive Debenture shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon its request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Debenture of the same series bearing a number not contemporaneously Outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost or stolen. In every case the applicant for a substituted Debenture shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or 17 theft of the applicant's Debenture and of the ownership thereof. The Trustee may authenticate any such substituted Debenture and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Debenture, 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) connected therewith. In case any Debenture which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debenture, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debenture) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as they may require to save them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Debenture and of the ownership thereof. Every Debenture issued pursuant to the provisions of this Section in substitution for any Debenture which is mutilated, destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Debenture shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures of the same series duly issued hereunder. All Debentures shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.06. Temporary Debentures. ----------------------- Pending the preparation of definitive Debentures of any series, the Company may execute, and the Trustee shall authenticate and deliver, temporary Debentures (printed, lithographed or typewritten) of any authorized denomination, and substantially in the form of the definitive Debentures in 18 lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Debentures, all as may be determined by the Company. Every temporary Debenture of any series shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Debentures of such series. Without unnecessary delay the Company will execute and will furnish definitive Debentures of such series and thereupon any or all temporary Debentures of such series may be surrendered in exchange therefor (without charge to the holders), at the office or agency of the Company designated for the purpose in a Place of Payment for that series, and the Trustee shall authenticate and such office or agency shall deliver in exchange for such temporary Debentures an equal aggregate principal amount of definitive Debentures of such series, unless the Company advises the Trustee to the effect that definitive Debentures need not be executed and furnished until further notice from the Company. Until so exchanged, the temporary Debentures of such series shall be entitled to the same benefits under this Indenture as definitive Debentures of such series authenticated and delivered hereunder. SECTION 2.07. Exchange of Debentures. ---------------------- (a) Debentures of any series may be exchanged upon presentation thereof at the office or agency of the Company in a Place of Payment for that series, for other Debentures of such series of authorized denominations, and for a like aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, all as provided in this Section. In respect of any Debentures so surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in exchange therefor the Debenture or Debentures of the same series which the Debentureholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously Outstanding. (b) The Company shall keep, or cause to be kept, at the Corporate Trust Office of the Trustee, or such other location designated by the Company in the Place of Payment, a register or registers (the "Debenture Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Debentures and the transfers of 19 Debentures as in this Article provided and which at all reasonable times shall be open for inspection by the Trustee. Unless otherwise provided by Board Resolution for a series of Debentures, the Trustee is hereby appointed as the registrar for the purpose of registering Debentures and transferring Debentures as herein provided (the "Debenture Registrar"). Upon surrender for transfer of any Debenture at the Corporate Trust Office of the Trustee or such other location designated by the Company, the Company shall execute, the Trustee shall authenticate and such office or agency shall make available for delivery in the name of the transferee or transferees a new Debenture or Debentures of the same series as the Debenture presented for a like aggregate principal amount. All Debentures presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied (if so required by the Company or the Debenture Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Debenture Registrar, duly executed by the registered holder or by his duly authorized attorney in writing. (c) No service charge shall be made for any exchange or registration of transfer of Debentures, or issue of new Debentures in case of partial redemption of any series, but the Company or Trustee may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than exchanges pursuant to Section 2.06, Section 3.03(b) and Section 9.04 not involving any transfer. (d) The Company shall not be required (i) to issue, exchange or register the transfer of any Debentures during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of less than all the Outstanding Debentures of the same series and ending at the close of business on the day of such mailing, nor (ii)to register the transfer of or exchange any Debentures of any series or portions thereof called for redemption. The provisions of this Section 2.07 are, with respect to any Global Debenture, subject to Section 2.11 hereof. 20 SECTION 2.08. Cancellation. --------------- All Debentures surrendered for the purpose of payment, redemption, exchange or registration of transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be canceled by it, and no Debentures shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture. On request of the Company, the Trustee shall deliver to the Company canceled Debentures held by the Trustee. In the absence of such request the Trustee may dispose of canceled Debentures in accordance with its standard procedures and deliver a certificate of disposition to the Company. If the Company shall otherwise acquire any of the Debentures, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debentures unless and until the same are delivered to the Trustee for cancellation. SECTION 2.09. Beneficiaries. --------------- Nothing in this Indenture or in the Debentures, express or implied, shall give or be construed to give to any person, firm or corporation, other than the parties hereto and the holders of the Debentures, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Debentures. SECTION 2.10. Appointment of Authenticating Agent. -------------------------------------- So long as any of the Debentures of any series remain Outstanding there may be an Authenticating Agent for any or all such series of Debentures which the Trustee shall have the right to appoint. Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Debentures of such series issued upon exchange, transfer or partial redemption thereof, and Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. All references in this Indenture to the authentication of Debentures by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series except for authentication upon original issuance or 21 pursuant to Section 2.05 hereof. Each Authenticating Agent shall be acceptable to the Company and shall be a corporation which has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and which is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or State authorities. If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto. SECTION 2.11. Global Debenture. ---------------- (a) If the Company shall establish pursuant to Section 2.01 that the Debentures of a particular series are to be issued in whole as one or more Global Debentures, then the Company shall execute and the Trustee shall, in accordance with Section 2.04, authenticate and deliver, one or more Global Debentures which (i)shall represent, and shall be denominated in an aggregate amount equal to the aggregate principal amount of, all of the Outstanding Debentures of such series, (ii)shall be registered in the name of the Depository or its nominee, (iii)shall be delivered by the Trustee to the Depository or pursuant to the Depository's instruction and (iv)shall bear a legend substantially to the following effect: "Except as otherwise provided in Section 2.11 of the 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." 22 (b) Notwithstanding the provisions of Section 2.07, unless and until it is exchanged in whole or in part for Debentures in definitive registered form the Global Debenture or Debentures of a series may be transferred, in whole but not in part and in the manner provided in Section 2.07, only to another nominee of the Depository for such series, or to a successor Depository for such series selected or approved by the Company or to a nominee of such successor Depository. (c) If at any time the Depository for a series of Debentures notifies the Company that it is unwilling or unable to continue as Depository for such series or if at any time the Depository for such series shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation and a successor Depository for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.11 shall no longer be applicable to the Debentures of such series and the Company will execute, and subject to Section 2.07, the Trustee will authenticate and deliver Debentures of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Debentures of such series in exchange for such Global Debenture. In addition, the Company may at any time determine that the Debentures of any series shall no longer be represented by one or more Global Debentures and that the provisions of this Section 2.11 shall no longer apply to the Debentures of such series. In such event the Company will execute and subject to Section 2.07, the Trustee, upon receipt of an Officer's Certificate evidencing such determination by the Company, will authenticate and make available for delivery Debentures of such series in definitive registered form without coupons, in authorized denominations, and in an 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 the Global Debentures for such Debentures in definitive registered form without coupons, in authorized denominations, the Global Debentures shall be canceled by the Trustee. Such Debentures in definitive registered form issued in exchange for the Global Debentures pursuant to this Section 2.11(c) 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 Depository for 23 delivery to the persons in whose names such Debentures are so registered. SECTION 2.12. CUSIP Numbers. -------------- The Company in issuing the 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 Debentureholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Debentures or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the 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 THREE Redemption of Debentures and Sinking Fund Provisions SECTION 3.01. Redemption of Debentures. --------------------------- The Company may redeem the Debentures of any series issued hereunder on and after the dates and in accordance with the terms established for such series pursuant to Section 2.01 hereof. SECTION 3.02. Notice of Redemption; Selection by Trustee of Debentures to be Redeemed. -------------------------- (a) In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Debentures of any series in accordance with the right reserved so to do, it shall give notice of such redemption to holders of the Debentures of such series to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 60 days before the date fixed for redemption of that series to such holders at their last addresses as they shall appear upon the Debenture Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the 24 notice. In any case, failure duly to give such notice to the holder of any Debenture of any series designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Debentures of such series or any other series. In the case of any redemption of Debentures prior to the expiration of any restriction on such redemption provided in the terms of such Debentures or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officer's Certificate evidencing compliance with any such restriction. Each such notice of redemption shall identify the Debentures to be redeemed (including "CUSIP" numbers) and shall specify the date fixed for redemption and the redemption price at which Debentures of that series are to be redeemed, and shall state the place or places where such Debentures are to be presented and surrendered for payment of the redemption price of such Debentures to be redeemed, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue and that the redemption is for a sinking fund, if such is the case. If less than all the Debentures of a series are to be redeemed, the notice to the holders of Debentures of that series to be redeemed in whole or in part shall specify the particular Debentures to be so redeemed. In case any Debenture is to be redeemed in part only, the notice which relates to such Debenture shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Debenture, a new Debenture or Debentures of such series in principal amount equal to the unredeemed portion thereof will be issued. (b) If the Debentures of a series are to be redeemed, the Company shall give the Trustee at least 45 days' notice in advance of the date fixed for redemption as to the aggregate principal amount of Debentures of the series to be redeemed, and thereupon the Trustee shall select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and which may provide for the selection of a portion or portions (equal to $25 or any integral multiple thereof) of the principal amount of such Debentures of a denomination larger than $25, the Debentures to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Debentures to be redeemed, in whole or in part. 25 The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its President, any Vice President or its Treasurer, Controller or Secretary, instruct the Trustee or any paying agent to call all or any part of the Debentures of a particular series for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or its own name as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Debenture Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section. SECTION 3.03. Debentures Payable on Redemption Date; Debentures Redeemed in Part. --------------------------------------- (a) If the giving of notice of redemption shall have been completed as above provided, the Debentures or portions of Debentures of the series to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption and interest on such Debentures or portions of Debentures shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such redemption price and accrued interest with respect to any such Debenture or portion thereof. On presentation and surrender of such Debentures on or after the date fixed for redemption at the place of payment specified in the notice, said Debentures shall be paid and redeemed at the applicable redemption price for such series, together with interest accrued thereon to the date fixed for redemption (but if the date fixed for redemption is an interest payment date, the interest installment payable on such date shall be payable to the registered holder at the close of business on the applicable record date pursuant to Section 2.03). (b) Upon presentation of any Debenture of such series which is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Debenture is presented shall make available 26 for delivery to the holder thereof, at the expense of the Company, a new Debenture or Debentures of the same series, of authorized denominations in principal amount equal to the unredeemed portion of the Debenture so presented. SECTION 3.04. Sinking Fund for Debentures. ----------------------------- The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement of Debentures of a series, except as otherwise specified as contemplated by Section 2.01 for Debentures of such series. The minimum amount of any sinking fund payment provided for by the terms of Debentures of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Debentures of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Debentures for any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 3.05. Each sinking fund payment shall be applied to the redemption of Debentures of any series as provided for by the terms of Debentures of such series. SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures. ------------------------------------------- The Company (i)may deliver Outstanding Debentures of a series (other than any previously called for redemption) and (ii)may apply as a credit Debentures of a series which have been redeemed either at the election of the Company pursuant to the terms of such Debentures or through the application of permitted optional sinking fund payments pursuant to the terms of such Debentures, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Debentures of such series required to be made pursuant to the terms of such Debentures as provided for by the terms of such series; provided that such Debentures have not been previously so credited. Such Debentures shall be received and credited for such purpose by the Trustee at the redemption price specified in such Debentures for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. 27 SECTION 3.06. Redemption of Debentures for Sinking Fund. -------------------------------------------- Not less than 45 days prior to each sinking fund payment date for any series of Debentures, the Company will deliver to the Trustee an Officer's Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms for that series, the portion thereof, if any, which is to be satisfied by delivering and crediting Debentures of that series pursuant to Section 3.05 and the basis for such credit and will, together with such Officer's Certificate, deliver to the Trustee any Debentures to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Debentures to be redeemed upon such sinking fund payment date in the manner specified in Section 3.02 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.02. Such notice having been duly given, the redemption of such Debentures shall be made upon the terms and in the manner stated in Section 3.03. ARTICLE FOUR Particular Covenants of the Company The Company covenants and agrees for each series of the Debentures as follows: SECTION 4.01. Payment of Principal, Premium and Interest. --------------------------------------------- The Company will duly and punctually pay or cause to be paid the principal of (and premium, if any) and interest on the Debentures of that series at the time and place and in the manner provided herein and established with respect to such Debentures. SECTION 4.02. Maintenance of Office or Agency. ---------------------------------- So long as any series of the Debentures remain Outstanding, the Company agrees to maintain an office or agency in the Borough of Manhattan, the City and State of New York, with respect to each such series and at such other location or locations as may be designated as provided in this Section 4.02, where (i)Debentures of that series may be presented for 28 payment, (ii)Debentures of that series may be presented as hereinabove authorized for registration of transfer and exchange, and (iii)notices and demands to or upon the Company in respect of the Debentures of that series and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its President, any Vice President or its Treasurer, Controller or Secretary and delivered to the Trustee, designate some other office or agency for such purposes or any of them. So long as any series of the Debentures remain Outstanding, such presentations, notices and demands may also be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. Notwithstanding anything else contained in this Indenture, payment of interest, if any, on Debentures that are not registered to a Hawaiian Electric Industries Capital Trust or the Partnership may be made at the option of the Company by check mailed to the address of the Person entitled thereto as it appears on the Debenture Register or by wire transfer to an account appropriately designated by the Person entitled thereto as it appears on the Debenture Register. SECTION 4.03. Paying Agent; Money for Debenture Payment to be Held in Trust. ------------------------------------------------ (a) If the Company shall appoint one or more paying agents for all or any series of the Debentures, other than the Trustee, the Company will cause each such paying agency to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section: (1) that it will hold all sums held by it as such agent for the payment of the principal of (and premium, if any) or interest on the Debentures of that series (whether such sums have been paid to it by the Company or by any other obligor of such Debentures) in trust for the benefit of the persons entitled thereto; (2) that it will give the Trustee notice of any failure by the Company (or by any other obligor of such Debentures) to make any payment of the principal of (and premium, if any) or interest on the Debentures of that series when the same shall be due and payable; 29 (3) that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(2) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and (4) that it will perform all other duties of paying agent as set forth in this Indenture. (b) If the Company shall act as its own paying agent with respect to any series of the Debentures, it will on or before each due date of the principal of (and premium, if any) or interest on Debentures of that series, set aside, segregate and hold in trust for the benefit of the persons entitled thereto a sum sufficient to pay such principal (and premium, if any) or interest so becoming due on Debentures of that series until such sums shall be paid to such persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor on such Debentures) to take such action. Whenever the Company shall have one or more paying agents for any series of Debentures, it will, prior to each due date of the principal of (and premium, if any) or interest on any Debentures of that series, deposit with the paying agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. (c) Anything in this Section to the contrary notwithstanding, (i)the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.05, and (ii)the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. 30 SECTION 4.04. Appointment to Fill Vacancy. --------------------------- The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 4.05. Payment of Additional Interest. ------------------------------ If, at any time while the Property Trustee is a Debentureholder of any Debentures issued to a Hawaiian Electric Industries Capital Trust or the Property Trustee is a holder of Partnership Preferred Securities in the Partnership which in turn is a Debentureholder of any Debentures, such Trust, the Property Trustee or the Partnership shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes or taxes or charges imposed by reason of the transfer of the Trust Preferred Securities or beneficial interests therein) imposed by the United States, or any other taxing authority, then, in any such case, the Company shall promptly pay as additional interest (the "Additional Interest") on the Debentures held by the Property Trustee or the Partnership, such additional amounts as shall be required so that the net amounts received and retained by such Trust and by the Property Trustee, or by the Partnership, whichever the case may be, after paying any such taxes, duties, assessments or other governmental charges will be equal to the amounts such Trust and the Property Trustee, or the Partnership, as the case may be, would have received had no such taxes, duties, assessments or other governmental charges been imposed. SECTION 4.06. Maintenance of the Hawaiian Electric Industries Capital Trust and the Partnership. --------------------------------- In the event any Debentures are issued to a Hawaiian Electric Industries Capital Trust, or a Trustee of such a Trust, or to the Partnership in connection with the issuance of Trust Preferred Securities of a Hawaiian Electric Industries Capital Trust or Partnership Preferred Securities of the Partnership, for so long as such Trust Preferred Securities or such Partnership Preferred Securities remain Outstanding, the Company will covenant (i) to directly or indirectly maintain 100 percent ownership of the Trust Common Securities of such Trust; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of such Trust Common 31 Securities, (ii) to use its reasonable efforts to cause such Trust (a) to remain a statutory business trust, except in connection with the distribution of the Debentures to the holders of Trust Preferred Securities and Trust Common Securities in liquidation of such Trust, the redemption of all of the Trust Preferred Securities and Trust Common Securities of such Trust, or the mergers, consolidations or amalgamations, each as permitted by the Trust Agreement of such Trust, and (b) to otherwise continue not to be treated as an association taxable as a corporation or a partnership for United States federal income tax purposes, and (iii) to use its reasonable efforts to cause each holder of Trust Common Securities and Trust Preferred Securities to be treated as owning an undivided beneficial interest in the Debentures. ARTICLE FIVE Debentureholders' Lists and Reports by the Company and the Trustee SECTION 5.01. Company to Furnish Trustee Names and Addresses of Debentureholders. ----------------------------------------------- The Company shall furnish or cause to be furnished to the Trustee (a) semiannually, not later than June 1 and December 1 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of each series of Debentures as of such regular record date and such a list shall not be furnished to the Trustee at intervals of more than six months, provided, that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b)at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, no such list need be furnished for any series for which the Trustee shall be the Debenture Registrar. 32 SECTION 5.02. Preservation of Information; Communications to Holders. ----------------------------------------------- (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Debentures contained in the most recent list furnished to it as provided in Section 5.01 and as to the names and addresses of holders of Debentures received by the Trustee in its capacity as Debenture Registrar (if acting in such capacity). (b) The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished. (c) In case three or more holders of Debentures of a series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Debenture for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Debentures of such series or holders of all Debentures with respect to their rights under this Indenture or under such Debentures, and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within five business days after the receipt of such application, at its election, either: (1) afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 5.02; or (2) inform such applicants as to the approximate number of holders of Debentures of such series or of all Debentures, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of subsection (a) of this Section 5.02, and as to the approximate cost of mailing to such Debentureholders the form of proxy or other communication, if any, specified in such application. 33 (d) If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each holder of such series or of all Debentures, as the case may be, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 5.02, a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Securities and Exchange Commission (the "Commission"), together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Debentures of such series or of all Debentures, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Debentureholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise, the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (e) Each and every holder of the Debentures, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any paying agent nor any Debenture Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Debentures in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b). 34 SECTION 5.03. Reports by Company. -------------------- (a) The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the Commission in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations. 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). (b) The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or reputable overnight delivery service which provides for evidence of receipt, to the Debentureholders, as their names and addresses appear upon the Debenture Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 35 (d) The Company covenants and agrees to furnish to the Trustee, within 120 days after the end of each fiscal year of the Company for each fiscal year in which any of the Debentures are Outstanding, or on or before such other day in each calendar year as the Company and the Trustee may from time to time agree upon, a Certificate as to the signing officer's best knowledge of the Company's compliance with the conditions and covenants under this Indenture requiring compliance by the Company. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. SECTION 5.04. Reports by Trustee. --------------------- (a) Within 60 days after August 15 of each year in which any of the Debentures are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register, a brief report with respect to any of the following events which may have occurred within the previous twelve months (but if no such event has occurred within such period no report need be transmitted): (1) any change to its eligibility under Section 7.09, and its qualifications under Section 7.08; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of subsection (c) of Section 7.08; (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debentures, on any property or funds held or collected by it as Trustee if such advances so remaining unpaid aggregate more than 1/2 of 1% of the principal amount of the Debentures Outstanding on the date of such report; (4) the amount, interest rate, and maturity date of all other indebtedness owing by the Company, or by any other obligor on the Debentures, to the Trustee in its 36 individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship arising in any manner described in paragraph (2), (3), (4), or (6) of subsection (b) of Section 7.13; (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (6) any change to any release, or release and substitution, of property, if any, subject to the lien of this Indenture (and the consideration thereof, if any) which it has not previously reported; (7) any additional issue of Debentures which the Trustee has not previously reported; and (8) any action taken by the Trustee in the performance of its duties under this Indenture which it has not previously reported and which in its opinion materially affects the Debentures or the Debentures of any series, except any action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 6.07. (b) The Trustee shall transmit by mail, first class postage prepaid, to the Debentureholders, as their names and addresses appear upon the Debenture Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee as such since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this Indenture), for the reimbursement of which it claims or may claim a lien or charge prior to that of the Debentures of any series on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this subsection if such advances remaining unpaid at any time aggregate more than 10% of the principal amount of Debentures of such series Outstanding at such time, such report to be transmitted within 90 days after such time. 37 (c) A copy of each such report shall, at the time of such transmission to Debentureholders, be filed by the Trustee with the Company, with each stock exchange upon which any Debentures are listed (if so listed) and also with the Commission. The Company agrees to promptly notify the Trustee when any Debentures become listed on any stock exchange. ARTICLE SIX Remedies of the Trustee and Debentureholders on Event of Default SECTION 6.01. Events of Default. ------------------ (a) Whenever used herein with respect to Debentures of a particular series, "Event of Default" means any one or more of the following events which has occurred and is continuing: (1) default in the payment of any installment of interest, including any Additional Interest in respect thereon, upon any of the Debentures of that series, as and when the same shall become due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company shall not constitute a default in the payment of interest for this purpose; (2) default in the payment of the principal of (or premium, if any, on) any of the Debentures of that series as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, provided, however, that a valid extension of the maturity of such Debentures shall not constitute a default for that purpose; (3) default in the performance by the Company of any other of the covenants or agreements on the part of the Company with respect to that series contained in such Debentures or otherwise established with respect to that series of Debentures pursuant to Section 2.01 hereof or contained in this Indenture (other than a covenant or agreement which has been expressly included in this Indenture solely for the benefit of one or more series of 38 Debentures other than such series), and the continuance of such default for a period of 90 days after the date on which written notice of such default, requiring the same to be remedied and stating that such notice is a "Notice of Default" hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Debentures of that series at the time Outstanding; (4) a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of the Company under the Federal Bankruptcy Code or any other similar applicable Federal or State law, and such decree or order shall have continued unvacated and unstayed for a period of 90 days; or an involuntary case shall be commenced under such Code in respect of the Company and shall continue undismissed for a period of 90 days or an order for relief in such case shall have been entered; or a decree or order of a court having jurisdiction in the premises shall have been entered for the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; (5) the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking liquidation or reorganization under the Federal Bankruptcy Code or any other similar applicable Federal or State law, or shall consent to the filing of any such petition, or shall consent to the appointment on the ground of insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors; or (6) in the event the Debentures are issued to a Hawaiian Electric Industries Capital Trust, a Property Trustee or to the 39 Partnership, in connection with the issuance of Trust Preferred Securities by such Trust, the voluntary or involuntary dissolution, winding-up or termination of such Trust, except in connection with the distribution of the Debentures to the holders of the Trust Preferred Securities and the Trust Common Securities in liquidation of such Trust, the redemption of all of the Trust Preferred Securities of such Trust, or the mergers, consolidations or amalgamations, each as permitted by the Trust Agreement of such Trust. (b) If an Event of Default with respect to the Debentures of any series at the time Outstanding occurs and is continuing, then, unless the principal of all the Debentures of that series shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debentures of that series then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Debentureholders), may declare the principal of all the Debentures of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything contained in this Indenture or in the Debentures of that series or established with respect to that series pursuant to Section 2.01 hereof to the contrary notwithstanding except for subsection (c) of this Section. (c) Section 6.01(b), however, is subject to the condition that if, at any time after the principal of the Debentures of that series shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debentures of that series and the principal of (and premium, if any, on) any and all Debentures of that series which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Debentures of that series to the date of such payment or deposit) and the amount payable to the Trustee under Section 7.06, and any and all defaults under the Indenture, other than the nonpayment of principal on Debentures of that series which shall not have 40 become due by their terms, shall have been remedied or waived as provided in Section 6.06 then and in every such case the holders of a majority in aggregate principal amount of the Debentures of that series then Outstanding (subject to, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust or as partnership assets of the Partnership and with respect to which a Security Exchange has not theretofore occurred, such consent of the holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust), by written notice to the Company and to the Trustee, may rescind and annul such declaration and its consequences with respect to that series of Debentures; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon. (d) In case the Trustee shall have proceeded to enforce any right with respect to Debentures of that series under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken. (e) If, prior to a Security Exchange with respect to the Debentures of any series, an Event of Default with respect to the Debentures of such series shall have occurred, the Company expressly acknowledges that under the circumstances set forth in the applicable Trust Agreement, any holder of Trust Preferred Securities of the applicable Hawaiian Electric Industries Capital Trust may enforce directly against the Company the applicable Property Trustee's rights hereunder. In furtherance of the foregoing and for the avoidance of any doubt, the Company acknowledges that, under the circumstances described in the applicable Trust Agreement, any such holder of Trust Preferred Securities, in its own name, in the name of the applicable Hawaiian Electric Industries Capital Trust or in the name of the holders of the Trust Preferred Securities issued by such Hawaiian Electric Industries Capital Trust, may institute or cause to be instituted a proceeding, including, without 41 limitation, any suit in equity, an action at law or other judicial or administrative proceeding, to enforce the applicable Property Trustee's rights hereunder directly against the Company as issuer of the applicable series of Debentures, and may prosecute such proceeding to judgment or final decree, and enforce the same against the Company. SECTION 6.02. Acceleration of Maturity. --------------------------- (a) The Company covenants that (1) in case default shall be made in the payment of any installment of interest on any of the Debentures of a series, or any payment required by any sinking or analogous fund established with respect to that series as and when the same shall have become due and payable, and such default shall have continued for a period of 30 days, or (2) in case default shall be made in the payment of the principal of (or premium, if any, on) any of the Debentures of a series when the same shall have become due and payable, whether upon maturity of the Debentures of a series or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Debentures of that series, the whole amount that then shall have become due and payable on all such Debentures for principal (and premium, if any) or interest, or both, as the case may be, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law and without duplication of any other amounts paid by the Company or the applicable Hawaiian Electric Industries Capital Trust in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Debentures of that series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 7.06. (b) In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Debentures of that series and collect in the manner provided by law out of the property of 42 the Company or other obligor upon the Debentures of that series wherever situated the moneys adjudged or decreed to be payable. (c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or other judicial proceedings affecting the Company, any other obligor on such Debentures, or the creditors or property of either, the Trustee shall have the power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the holders of Debentures of such series allowed for the entire amount due and payable by the Company or such other obligor under the Indenture at the date of institution of such proceedings and for any additional amount which may become due and payable by the Company or such other obligor after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of Debentures of such series to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Debentureholders, to pay to the Trustee any amount due it under Section 7.06. (d) All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Debentures of that series, may be enforced by the Trustee without the possession of any of such Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 7.06, be for the ratable benefit of the holders of the Debentures of such series. In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect 43 and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Debentureholder any plan of reorganization, arrangement, adjustment or composition affecting the Debentures of that series or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Debentureholder in any such proceeding. SECTION 6.03. Application of Moneys Collected. ---------------------------------- Any moneys collected by the Trustee pursuant to Section 6.02 with respect to a particular series of Debentures shall be applied in the order following, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the several Debentures of that series, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 7.06; and SECOND: To the payment of the amounts then due and unpaid upon Debentures of such series for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Debentures for principal (and premium, if any) and interest, respectively. SECTION 6.04. Limitation on Suits; Unconditional Right of Debentureholders to Institute Certain Suits. ---------------------------------------------- No holder of any Debenture of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or 44 for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to Debentures of such series specifying such Event of Default, as hereinbefore provided; (b) the holders of not less than 25% in aggregate principal amount of the Debentures of such series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (c) such holder or holders have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have failed to institute any such action, suit or proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the Outstanding Debentures of that series; it being understood and intended, and being expressly covenanted by the taker and holder of every Debenture of such series with every other such taker and holder and Trustee, that no one or more holders of Debentures of such series shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Debentures, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Debentures of such series. For the protection and enforcement of the provisions of this Section, each and every Debentureholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 45 Notwithstanding any other provisions of this Indenture, however, the right of any holder of any Debenture to receive payment of the principal of (and premium, if any) and interest on such Debenture, as therein provided, on or after the respective due dates expressed in such Debenture (or in the case of redemption, on the redemption date) as the same may be extended, or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder. SECTION 6.05. Rights and Remedies Cumulative; Delay or Omission Not A Waiver. ------------------------------------------- (a) All powers and remedies given by this Article to the Trustee or to the Debentureholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any others thereof or of any other powers and remedies available to the Trustee or the holders of the debentures, by judicial proceedings or otherwise, to enforce performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Debentures. (b) No delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 6.04, every power and remedy given by this Article or by law to the Trustee or to the Debentureholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Debentureholders. SECTION 6.06. Control by Debentureholders; Waiver of Past Defaults. ------------------------------ The holders of a majority in aggregate principal amount of the Debentures of any series at the time Outstanding, determined in accordance with Section 8.04 (with, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, such consent of holders of the Trust Preferred Securities and the Trust Common Securities of such 46 Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust), shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such series; provided that (1)such direction shall not be in conflict with any rule of law or with this Indenture or unduly prejudicial to the rights of holders of Debentures of any other series at the time Outstanding determined in accordance with Section 8.04, and (2)the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The holders of a majority in aggregate principal amount of the Debentures of any series at the time Outstanding affected thereby, determined in accordance with Section 8.04 (with, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust or as partnership assets of the Partnership and with respect to which a Security Exchange has not theretofore occurred, such consent of holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust), may on behalf of the holders of all of the Debentures of such series waive any past default in the performance of any of the covenants contained herein or established pursuant to Section 2.01 with respect to such series and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any of the Debentures of that series as and when the same shall become due by the terms of such Debentures otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal and any premium has been deposited with the Trustee (in accordance with Section 6.01(c)) or a call for redemption of Debentures of that series. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Debentures of such series shall be restored to their former positions and rights hereunder, respectively; but 47 no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 6.07. Notice of Defaults. --------------------- The Trustee shall, within 90 days after the occurrence of an Event of Default with respect to a particular series, transmit by mail, first class postage prepaid, to the holders of Debentures of that series, as their names and addresses appear upon the Debenture Register, notice of all defaults with respect to that series known to the Trustee, unless such defaults shall have been cured before the giving of such notice (defaults in this context shall not include any periods of grace provided for therein and shall be irrespective of the giving of notice provided for by subsection (3) of Section 6.01(a)); provided, that, except in the case of default in the payment of the principal of (or premium, if any) or interest on any of the Debentures of that series or in the payment of any sinking fund installment established with respect to that series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers, of the Trustee in good faith determine that the withholding of such notice is in the interests of the holders of Debentures of that series; provided further, that in the case of any default of the character specified in Section 6.01(a)(3) with respect to Debentures of such series no such notice to the holders of the Debentures of that series shall be given until at least 30 days after the occurrence thereof. The Trustee shall not be deemed to have knowledge of any default, except (i) a default under subsection (a)(1) or (a)(2) of Section 6.01 as long as the Trustee is acting as paying agent for such series of Debentures or (ii)any default as to which the Trustee shall have received written notice or a Responsible Officer charged with the administration of this Indenture shall have obtained written notice. SECTION 6.08. Undertaking for Costs. ------------------------ All parties to this Indenture agree, and each holder of any Debentures by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy 48 under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Debentureholder, or group of Debentureholders, holding more than 10% in aggregate principal amount of the Outstanding Debentures of any series, or to any suit instituted by any Debentureholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debenture of such series, on or after the respective due dates expressed in such Debenture or established pursuant to this Indenture. SECTION 6.09. Certain Additional Covenants. ------------------------------- If (i) there shall have occurred any Event of Default relating to any series of Debentures, (ii) the Company shall be in default with respect to its payments of any obligations under a related Trust Guarantee or Partnership Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on any series of Debentures by extending the interest payment period as provided in and permitted by a supplemental indenture to this Indenture, and such period, or any extension thereof, shall be continuing, then (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (except for dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, its common stock and other than (x)purchases or acquisitions of shares of the Company's common stock in connection with the satisfaction by the Company of its obligations under any employee benefit dividend reinvestment, stock purchase or other stock plans or any other contractual obligation of the Company (other than a contractual obligation ranking pari passu with or junior to the Debentures), (y)as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock, or (z)the purchase of fractional 49 interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock of the Company or the security being converted or exchanged), (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to such Debentures, provided that, if only the event referred to in clause (iii) above (and not the events referred to in clause (i) or (ii) has occurred), this restriction shall apply only to other series of Debentures or debt securities with equivalent deferral options, and (c) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Trust Guarantee, Partnership Guarantee or any other guarantee by the Company with respect to comparable securities). ARTICLE SEVEN Concerning the Trustee SECTION 7.01. Certain Duties and Responsibilities. -------------------------------------- (a) Except during the continuance of an Event of Default, the Trustee undertakes to perform with respect to Debentures of such series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default with respect to Debentures of a series has occurred (which has not been cured or waived), the Trustee shall exercise with respect to Debentures of that series such rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) prior to the occurrence of an Event of Default with respect to Debentures of a series and after the curing or waiving of all such Events of Default with respect to that series which may have occurred: 50 (i) the duties and obligations of the Trustee shall with respect to Debentures of such series be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to Debentures of such series except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may with respect to Debentures of such series 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 Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the 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 not less than a majority in principal amount of the Debentures of any series at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Debentures of that series; and (4) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability 51 in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it. SECTION 7.02. Certain Rights of Trustee. ---------------------------- Except as otherwise provided in Section 7.01: (a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be the genuine and to have been signed or presented by the proper party or parties; (b) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by its President, any Vice President or its Treasurer, Controller or Secretary (unless other evidence in respect thereof is specifically prescribed herein); (c) The Trustee may consult with counsel of its choice 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 or suffered or omitted hereunder in good faith and in reliance thereon; (d) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Debentureholders, pursuant to the provisions of this Indenture, unless such Debentureholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby; (e) The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; 52 (f) The 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, consent, order, approval, bond, security, or other papers or documents, unless requested in writing so to do by the holders of not less than a majority in principal amount of the Outstanding Debentures of the particular series affected thereby (determined as provided in Section 8.04); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; (g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the 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 and, (h) The trustee shall not be deemed to have notice of any event of default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Debentures and this Indenture. SECTION 7.03. Limitations of Liability. ------------------------- (a) The recitals contained herein and in the Debentures (other than the Certificate of Authentication on the Debentures) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debentures. 53 (c) The Trustee shall not be accountable for the use or application by the Company of any of the Debentures or of the proceeds of such Debentures, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture or established pursuant to Section 2.01, or for the use or application of any moneys received by any paying agent other than the Trustee. SECTION 7.04. Ownership of Debentures. -------------------------- The Trustee or any paying agent or Debenture Registrar, in its individual or any other capacity, may become the owner or pledgee of Debentures with the same rights it would have if it were not Trustee, paying agent or Debenture Registrar. SECTION 7.05. Moneys Held Without Interest. ------------------------------ Subject to the provisions of Section 11.05, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree in writing with the Company to pay thereon. SECTION 7.06. Compensation and Reimbursement. --------------------------------- (a) The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as the Company and the 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 Trustee, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (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 negligence or bad faith. The Company also covenants to indemnify the Trustee 54 (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability, damage, claim or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on the part of the Trustee and 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 of liability in the premises. (b) The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debentures. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(4) or Section 6.01(5), 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. The provisions of this Section shall survive the termination of this Indenture. SECTION 7.07. Reliance on Certificate of Officers of Company. ------------------------------------------------ Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof. 55 SECTION 7.08. Conflicts of Interest. ------------------------ (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, with respect to the Debentures of any series and if the Default to which such conflicting interest relates has not been cured, duly waived or otherwise eliminated, within 90 days after ascertaining that it has such conflicting interest, it shall either eliminate such conflicting interest or, except as otherwise provided herein, resign with respect to the Debentures of that series in the manner and with the effect specified in Section 7.10 and the Company shall promptly appoint a successor Trustee in the manner provided herein. (b) In the event that the Trustee shall fail to comply with the provisions of subsection (a) of this Section, with respect to the Debentures of any series the Trustee shall, within ten days after the expiration of such 90- day period, transmit notice of such failure by mail, first class postage prepaid, to the Debentureholders of that series as their names and addresses appear upon the registration books. Unless the Trustee's duty to resign is stayed as provided herein, any Debentureholder who has been a bona fide holder of Debentures for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee, and the appointment of a successor Trustee, if such Trustee fails, after written request thereof by such holder to comply with the provisions of subsection (a) of this Section. (c) For the purposes of this Section the Trustee shall be deemed to have a conflicting interest with respect to the Debentures of any series if a Default has occurred and is continuing and: (1) the Trustee is trustee under this Indenture with respect to the Outstanding Debentures of any series other than that series, or is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debentures issued under this Indenture; provided that there shall be excluded from the operation of this paragraph the 56 Debentures of any series other than that series and any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding if (i) this Indenture and such other indenture or indentures and all series of securities issuable thereunder are wholly unsecured and rank equally and such other indenture or indentures (and such series) are hereafter qualified under the Trust Indenture Act, unless the Commission shall have found and declared by order pursuant to subsection (b) of Section 305 or subsection (c) of Section 307 of the Trust Indenture Act, that differences exist between (A)the provisions of this Indenture with respect to Debentures of that series and with respect to one or more other series or (B)the provisions of this Indenture and the provisions of such other indenture or indentures (or such series), which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to the Debentures of that series and such other series or such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that the trusteeship under this Indenture with respect to Debentures of that series and such other series or such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to Debentures of that series and such other series or under such other indentures; (2) the Trustee or any of its directors or executive officers is an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or 57 of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (A)one individual may be a director and/or an executive officer of the Trustee and a director and/or an executive officer of the Company, but may not be at the same time an executive officer of both the Trustee and the Company; (B)if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director and/or an executive officer of the Trustee and a director of the Company; and (C)the Trustee may be designated by the Company or by an underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depository, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this subsection (c), to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner, or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), (A) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company, not including the Debentures issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (B) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly 58 or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection (c) defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; (9) the Trustee owns, on the date of Default upon the Debentures of any series or any anniversary of such Default while such Default upon the Debentures issued under this Indenture remains Outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflict interest under paragraph (6), (7), or (8) of this subsection (c). As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which includes them, the provisions of the preceding sentence shall not apply for a period of not more than two years from the date of such acquisition, to the extent that such securities in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Default upon the Debentures issued under this Indenture and annually in each succeeding year that the Debentures issued under this Indenture remain in Default, the Trustee shall make a check of its holding of such securities in any of the above-mentioned capacities as of such dates. If the Company fails to make payment in full of principal of or interest on any of the Debentures when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holding of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph (9), all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be 59 considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this subsection (c); or (10) except under the circumstances described in paragraph (1), (3), (4), (5) or (6) of subsection (b) of Section 7.13 the Trustee shall be or shall become a creditor of the Company. For purposes of paragraph (1) of this subsection (c), and of Section 6.06, the term "series of securities" or "securities" means a series, class or group of securities issuable under an indenture pursuant to whose terms holders of one such series may vote to direct the indenture trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided, that, "series of securities" or "series" shall not include any series of securities issuable under an indenture if all such series rank equally and are wholly secured. The specification of percentages in paragraphs (5) to (9), inclusive, of this subsection (c) shall not be construed as indicating that the ownership of such percentages of securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (3) or (7) of this subsection (c). For the purposes of paragraphs (6), (7), (8) and (9) of this subsection (c) only, (A)the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (B)an obligation shall be deemed to be in "default", when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (C)the Trustee shall not be deemed to be the owner or holder of (i)any security which it holds as collateral security (as trustee or otherwise) for any obligation which is not in default as defined in clause (B) above, or (ii)any security which it holds as collateral security under this Indenture, irrespective of any Default hereunder, or (iii)any security 60 which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. (d) For the purposes of this Section 7.08: (1) The term "underwriter" when used with reference to the Company shall mean every person, who, within one year prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" shall mean any member of the board of directors of a corporation or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" shall mean an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" shall mean any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (5) The term "Company" shall mean any obligor upon the Debentures. 61 (6) The term "executive officer" shall mean the chairman of the board of directors, president, every vice president, every assistant vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such 62 other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof, provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes; and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. (f) Except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Debentures issued under this Indenture, or in the payment of any sinking or analogous fund installment, the Trustee shall not be required to resign as provided by this Section 7.08 if such Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that (i)the default under the Indenture may be cured or waived during a reasonable period and under the procedures described in such application and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Debentureholders. The filing of such an application shall automatically stay the performance of the duty to resign until the Commission orders otherwise. 63 Any resignation of the Trustee shall become effective only upon the appointment of a successor trustee and such successor's acceptance of such an appointment. SECTION 7.09. Requirements for Eligibility. ----------------------------- There shall at all times be a Trustee with respect to the Debentures issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, 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. The Company may not, nor may any person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10. SECTION 7.10. Resignation and Removal. ------------------------ (a) The Trustee or any successor hereafter appointed, may at any time resign with respect to the Debentures of one or more series by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Debentureholders of such series, as their names and addresses appear upon the Debenture Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to Debentures of such series by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such 64 notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to Debentures of such series, or any Debentureholder of that series who has been a bona fide holder of a Debenture or Debentures for at least six months may, subject to the provisions of Section 6.08, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appointment a successor trustee. 65 (b) In case at any time any of the following shall occur: (1) the Trustee shall fail to comply with the provisions of subsection (a) of Section 7.08 after written request therefor by the Company or by any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six months; or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Debentureholder; or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee with respect to all Debentures and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.08, unless the Trustee's duty to resign is stated as provided herein, any Debentureholder who has been a bona fide holder of a Debenture or Debentures for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The holders of a majority in aggregate principal amount of the Debentures of any series at the time Outstanding may at any time remove the Trustee with respect to such series and appoint a successor trustee. (d) Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Debentures of a series pursuant to any of the provisions of 66 this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11. (e) Any successor trustee appointed pursuant to this Section may be appointed with respect to the Debentures of one or more series or all of such series, and at any time there shall be only one Trustee with respect to the Debentures of any particular series. SECTION 7.11. Successor Trustee. -------------------- (a) In case of the appointment hereunder of a successor trustee with respect to all Debentures, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and 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; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor trustee with respect to the Debentures of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee with respect to the Debentures of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which (1)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 with respect to the Debentures of that or those series to which the appointment of such successor trustee relates, (2)shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debentures of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3)shall add to or 67 change any of the provisions of this Indenture 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 supplemental indenture shall constitute such Trustees co-trustees of the same trust, 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 that no Trustee shall be responsible for any act or failure to act on the part of any other Trustee hereunder; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall with respect to the Debentures of that or those series to which the appointment of such successor trustee relates have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture, 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 with respect to the Debentures of that or those series to which the appointment of such successor trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Debentures of that or those series to which the appointment of such successor trustee relates. (c) Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, power and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) 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. (e) Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Debentureholders, as their 68 names and addresses appear upon the Debenture Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company. SECTION 7.12. Successor to Trustee by Merger, Consolidation or Succession to Business. ------------------------------------------------- Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Debentures shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Debentures. SECTION 7.13. Preferential Collection of Claims Against Issuer. ---------------------------------- (a) Subject to the provisions of subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within three months prior to a default, as defined in subsection (b) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the holders of the Debentures and the holders of other indenture securities (as defined in subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected 69 after the beginning of such three months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i)payments made on account of any such claim by any person (other than the Company) who is liable thereon, and (ii)the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii)distributions made in cash, securities, or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three months' period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a 70 default, as defined in subsection (c) of this Section, would occur within three months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in such paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such three months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Debentureholders and the holders of other indenture securities in such manner that the Trustee, the Debentureholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee, the Debentureholders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization 71 pursuant to the Federal Bankruptcy Code or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i)to apportion between the Trustee, the Debentureholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and the proceeds thereof, or (ii)in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee, the Debentureholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee who has resigned or been removed after the beginning of such three months' period shall be subject to the provisions of this subsection (a) as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three months' period, it shall be subject to the provisions of this subsection (a) if and only if the following conditions exist: (i) the receipt of property or reduction of claim which would have given rise to the obligation to account, if such Trustee had continued as trustee, occurred after the beginning of such three months' period; and (ii) such receipt of property or reduction of claim occurred within three months after such resignation or removal. In any case commenced under the Bankruptcy Act of July 1, 1898, or any amendment thereto enacted prior to November 6, 1978, all references to periods of three months in subsection (a) of this Section shall be deemed to be references to periods of four months. 72 (b) There shall be excluded from the operation of subsection (a) of this Section a creditor relationship arising from: (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien, if any, of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advance and of the circumstances surrounding the making thereof is given to the Debentureholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, subscription agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in subsection (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in subsection (c) of this Section. (c) As used in this Section: (1) The term "default" shall mean any failure to make payment in full of the principal of (or premium, if 73 any) or interest upon any of the Debenture or upon the other indenture securities when and as such principal (or premium, if any) or interest becomes due and payable. (2) The term "other indenture securities" shall mean securities upon which the Company is an obligor (as defined in the Trust Indenture Act) outstanding under any other indenture (A)under which the Trustee is also trustee, (B)which contains provisions substantially similar to the provisions of subsection (a) of this Section, and (C)under which a default exists at the time of the apportionment of the funds and property held in said special account. (3) The term "cash transaction" shall mean any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand. (4) The term "self-liquidating paper" shall mean any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacture, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company" shall mean any obligor upon any of the Debentures. 74 ARTICLE EIGHT Concerning the Debentureholders SECTION 8.01. Evidence of Action by Debentureholders. ----------------------------------------- Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Debentures of a particular series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action) the fact that at the time of taking any such action the holders of such majority or specified percentage of that series have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Debentures of that series in person or by agent or proxy appointed in writing. If the Company shall solicit from the Debentureholders of any series any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officer's Certificate, fix in advance a record date for such series for the determination of Debentureholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, 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 action may be given before or after the record date, but only the Debentureholders of record at the close of business on the record date shall be deemed to be Debentureholders for the purposes of determining whether Debentureholders of the requisite proportion of Outstanding Debentures of that series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Debentures of that series shall be computed as of the record date; provided that no such authorization, agreement or consent by such Debentureholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. 75 SECTION 8.02. Proof of Execution of Instruments and of Holding of Debentures. ------------------------------------------------- Subject to the provisions of Section 7.01, proof of the execution of any instrument by a Debentureholder or his agent or proxy and proof of the holding by any person of any of the Debentures shall be sufficient if made in the following manner: (a) The fact and date of the execution by any such person of any instrument may be proved in any reasonable manner acceptable to the Trustee. (b) The ownership of Debentures shall be proved by the Debenture Register of such Debentures or by a certificate of the Debenture Registrar thereof. (c) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. SECTION 8.03. Persons Deemed Owners of Debentures. -------------------------------------- Prior to the due presentment for registration of transfer of any Debenture, the Company, the Trustee, any paying agent and any Debenture Registrar may deem and treat the person in whose name such Debenture shall be registered upon the books of the Company as the absolute owner of such Debenture (whether or not such Debenture shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Debenture Registrar) for the purpose of receiving payment of or on account of the principal of, premium, if any, and (subject to Section 2.03) interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Debenture Registrar shall be affected by any notice to the contrary. SECTION 8.04. Debentures Owned by Company or Controlled or Controlling Companies Disregarded for Certain Purposes. ---------------------------------------------- In determining whether the holders of the requisite aggregate principal amount of Debentures of a particular series have concurred in any direction, consent or waiver under this Indenture, Debentures of that series which are owned by the 76 Company or any other obligor on the Debentures of that series or by any Subsidiary of the Company or of such other obligor on the Debentures of that series shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debentures of such series which the Trustee actually knows are so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debentures and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with or an Affiliate of the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. SECTION 8.05. Instruments Executed by Debentureholders Bind Future Holders. ---------------------------------------------- At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Debentures of a particular series specified in this Indenture in connection with such action, any holder of a Debenture of that series which is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Debenture. Except as aforesaid any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture, and of any Debenture issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Debenture. Any action taken by the holders of the majority or percentage in aggregate principal amount of the Debentures of a particular series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Debentures of that series. 77 ARTICLE NINE Supplemental Indentures SECTION 9.01. Supplemental Indentures Without Consent of_ Debentureholders. ------------------------------------------ In addition to any supplemental indenture otherwise authorized by this Indenture, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Debentureholders, for one or more of the following purposes: (a) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company contained herein or otherwise established with respect to the Debentures; or (b) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions for the protection of the holders of the Debentures of all or any series as the Board of Directors and the Trustee shall consider to be for the protection of the holders of Debentures of all or any series, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or provisions a default or an Event of Default with respect to such series permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default or may limit the right of the holders of a majority in aggregate principal amount of the Debentures of such series to waive such default; or (c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any 78 supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture as shall not be inconsistent with the provisions of this Indenture and shall not adversely affect the interests of the holders of the Debentures of any series; or (d) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Debenture Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Debentures at the time Outstanding, notwithstanding any of the provisions of Section 9.02. SECTION 9.02. Modification of Indenture With Consent of Debentureholders. ----------------- With the consent (evidenced as provided in Section 8.01) of the holders of not less than a majority in aggregate principal amount of the Debentures of each series affected at the time Outstanding (and, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, such consent of holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust), the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of 79 the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Debentures of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the holders of each Debenture (and, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, such consent of the holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust) then Outstanding and affected thereby, (i)extend the fixed maturity of any Debentures of any series, or reduce the principal amount thereof (including in the case of a discounted Debenture the amount payable thereon in the event of acceleration or the amount provable in bankruptcy) or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable upon the redemption thereof, or make the principal of or interest or premium, if any, on the Debentures payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Debentureholder to institute suit for the payment thereof or the right of prepayment, if any, at the option of the Debentureholder, (ii)reduce the aforesaid percentage of Debentures, the holders of which are required to consent to any such modification, or (iii) otherwise adversely affect the interest of the holders of any series of Debentures. Upon the request of the Company, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Debentureholders (and, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, such consent of holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust) required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such 80 supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. It shall not be necessary for the consent of the Debentureholders of any series affected thereby under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Debentureholders of all series affected thereby as their names and addresses appear upon the Debenture Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.03. Effect of Supplemental Indentures. ------------------------------------ Upon the execution of any supplemental indenture pursuant to the provisions of this Article or of Section 10.01, this Indenture shall, with respect to such series, be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures of the series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.04. Debentures May Bear Notation of Changes by Supplemental Indentures. ------------------------------------------- Debentures of any series, affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this 81 Article or of Section 10.01, may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which such series may be listed, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures of that series so modified as to conform, in the opinion of the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Debentures of that series then Outstanding. SECTION 9.05. Opinion of Counsel. ------------------- The Trustee, subject to the provisions of Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof. ARTICLE TEN Consolidation, Merger, Sale or Conveyance SECTION 10.01. Company May Consolidate, Etc., Only on Certain Terms. ----------------------------------------------------- The Company shall not consolidate with or merge into any other Person or convey or transfer its properties and assets substantially as an entirety to any Person unless: (a) either the Company shall be the continuing corporation, or the corporation (if other than the Company) formed by such consolidation or into which the Company is merged or to which the properties and assets of the Company substantially as an entity are transferred shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Debentures and this Indenture; and 82 (b) immediately after giving effect to such transaction no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. SECTION 10.02. Successor Corporation. ------------------------ The successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein, and thereafter the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Debentures and, in the event of such conveyance or transfer, any such predecessor corporation may be dissolved and liquidated. SECTION 10.03. Opinion of Counsel. --------------------- The Trustee, subject to the provisions of Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article. ARTICLE ELEVEN Satisfaction and Discharge of Indenture; Defeasance; Unclaimed Moneys SECTION 11.01. Satisfaction and Discharge of Indenture. ----------------------------------------- (a) If at any time (1)the Company shall have paid or caused to be paid the principal of and interest on all the Debentures of any series Outstanding hereunder (other than Debentures of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.05) as and when the same shall have become due and payable, or (2)the Company shall have delivered to the Trustee for cancellation all Debentures of any series theretofore authenticated (other than any Debentures of such series which shall have been destroyed, lost or stolen and which shall have 83 been replaced or paid as provided in Section 2.05) or (3) (i)all the Debentures of series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii)the Company shall have irrevocably deposited or caused to be deposited with the Trustee or any Defeasance Agent as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Company in accordance with Section 11.04) or Governmental Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or a combination thereof, sufficient in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A)the principal of, premium on, if any and interest on all Debentures of such series on each date that such principal or interest is due and payable and (B)any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Debentures of such series; and if, in any such case, the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i)rights of registration of transfer and exchange of Debentures of such series and the Company's right of optional redemption, if any, (ii)substitution of mutilated, defaced, destroyed, lost or stolen Debentures, (iii)rights of holders of Debentures to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Debentureholders to receive mandatory sinking fund payments, if any, (iv)the rights, obligations, duties and immunities of the Trustee hereunder, (v)the rights of the holders of Debentures of such series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vi)the obligations of the Company under Section 4.02) and the Trustee, on demand of the Company accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided, that the rights of Holders of the Debentures to receive amounts in respect of principal of and interest on the Debentures held by them shall not be delayed 84 longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Debentures are listed. The Company agrees to reimburse the Trustee or any Defeasance Agent for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee or any Defeasance Agent for any services thereafter reasonably and properly rendered by the Trustee or any Defeasance Agent, respectively, in connection with this Indenture or the Debentures of such series. (b) The following provisions shall apply to the Debentures of each series unless specifically otherwise provided in a Board Resolution or indenture supplemental hereto provided pursuant to Section 2.01. In addition to discharge of the Indenture pursuant to the next preceding paragraph, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Debentures of a series on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Debentures of such series shall no longer be in effect (except as to (i)rights of registration of transfer and exchange of Debentures of such series and the Company's right of optional redemption, if any, (ii)substitution of mutilated, defaced, destroyed, lost or stolen Debentures, (iii)rights of holders of Debentures to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the holders of Debentures to receive mandatory sinking fund payments, if any, (iv)the rights, obligations, duties and immunities of the Trustee hereunder, (v)the rights of the Holders of Debentures as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi)the obligations of the Company under Section 4.02) and the Trustee, at the expense of the Company, shall at the Company's request, execute proper instruments acknowledging the same, if (1) with reference to this provision the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee or any Defeasance 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 in an amount, or (ii)Governmental Obligations maturing as to principal and interest at such times and in such amounts as will insure 85 the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A)the principal of and premium on, if any, and interest on all Debentures of such series on each date that such principal or interest is due and payable and (B)any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Debentures of such series; (2) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound; (3) the Company has delivered to the Trustee and any Defeasance Agent an Opinion of Counsel to the effect that (x)the Company has received from, or there has been published by, the Internal Revenue Service a ruling pertaining to a comparable form of transaction (and such ruling shall accompany such Opinion of Counsel) or (y)since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and such opinion shall confirm that, the holders of the Debentures of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; (4) the Company has delivered to the Trustee and any Defeasance Agent an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with; (5) no event or condition shall exist that, pursuant to the provisions of Section 14.02 or 14.03, would prevent the Company from making payments of the principal of or interest on the Debentures of such series 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 86 understood that this condition shall not be deemed satisfied until the expiration of such period); (6) if the Debentures of such series are listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, the Company has delivered to the Trustee and any Defeasance Agent an Opinion of Counsel to the effect that said Debentures will not be delisted from such national securities exchange as a result of such deposit, defeasance and discharge; and (7) no Default or Event of Default with respect to the Debentures of such series shall have occurred and be continuing on the date of such deposit and no Event of Default under Section 6.01(a)(4) or Section 6.01(a)(5) shall have occurred and be continuing 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). (c) The Company shall be released from its obligations under Sections 4.06, 6.09 and 10.01 with respect to the Debentures of any series, Outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Debentures of any series, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 6.01, but the remainder of this Indenture and such Debentures shall be unaffected thereby. The following shall be the conditions to application of this subsection (C) of this Section 11.01: (1) the Company has irrevocably deposited or caused to be deposited with the Trustee or any Defeasance Agent as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Debentures of such series and coupons appertaining thereto, (i) cash in an amount, (ii) Governmental 87 Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and premium on, if any, and interest on all Debentures of such series and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Debentures of such series; (2) no Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Debentures shall have occurred and be continuing on the date of such deposit and no Event of Default under Section 6.01(a)(4) or Section 6.01(a)(5) shall have occurred and be continuing 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) such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 7.08 and for purposes of the Trust Indenture Act of 1939 with respect to any securities of the Company; (4) such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound; (5) if the Debentures of such series are listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, the Company shall have delivered to the Trustee and any Defeasance Agent an Opinion of Counsel to the effect that said Debentures will not be delisted from such national securities exchange as a result of such covenant defeasance; (6) no event or condition shall exist that, pursuant to the provisions of Section 14.02 or 14.03, would prevent the Company from making payments of the principal of or interest on the Debentures of such series on the date of such deposit or at any time during the period ending on 88 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); (7) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Debentures of such series will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (8) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with. SECTION 11.02. Application by Trustee of Funds Deposited for Payment of Debentures. ---------------------------------------------- Subject to Section 11.04, all moneys deposited with the Trustee (or other trustee) pursuant to Section 11.01 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 particular Debentures of such series for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law. SECTION 11.03. Application by Trustee of Funds Deposited for Payment of Debentures. ---------------------------------------------- In connection with the satisfaction and discharge of this Indenture with respect to Debentures of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Debentures shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys. 89 SECTION 11.04. Repayment of Moneys Held by Paying Agent. ------------------------------------------- Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Company and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Company by the Trustee for such series or such paying agent, and the Holder of the Debentures of such series 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 moneys shall thereupon cease; provided, however, that the Trustee or such paying agent, before being required to make any such repayment with respect to moneys deposited with it for any payment series, shall at the expense of the Company, mail by first-class mail to holders of such Debentures at their addresses as they shall appear on the Debenture Register, notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 11.05. Repayment of Moneys Held by Trustee. -------------------------------------- The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Governmental Obligations deposited pursuant to Section 11.01 or the principal or interest received in respect of such obligations. 90 ARTICLE TWELVE Immunity of Incorporators, Stockholders, Officers and Directors SECTION 12.01. Immunity From Individual Liability. ------------------------------------ No recourse under or upon any obligations, covenant or agreement of this Indenture, or of any Debenture, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such 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; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Debentures or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Debentures or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Debentures. 91 ARTICLE THIRTEEN Miscellaneous Provisions SECTION 13.01. Successors and Assigns. ------------------------- All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. SECTION 13.02. Acts of Board, Committee or Officer of Successor Company. ------------------------------------------------- Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. SECTION 13.03. Surrender of Powers of Company. --------------------------------- The Company by instrument in writing executed by authority of two- thirds of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation. SECTION 13.04. Required Notices or Demands Served by Mail. --------------------------------------------- Except as otherwise expressly provided herein any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Debentures to or on the Company may be given or served by being deposited first class postage prepaid in a post- office letter box addressed (until another address is filed in writing by the Company with the Trustee), as follows: Hawaiian Electric Industries, Inc., 900 Richards Street, Honolulu, Hawaii 96813, Attention: Treasurer. Any notice, election, request or demand by the Company or any Debentureholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee. 92 SECTION 13.05. Governing Law. ------------- This Indenture and each Debenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the internal laws of said State. SECTION 13.06. Officer's Certificates and Opinions of Counsel. ---------------------------------------------- (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. (b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture (other than the certificate provided pursuant to Section 5.03(d) of this Indenture) shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. SECTION 13.07. Payments Due on Saturdays, Sundays or Holidays. ---------------------------------------------- Except as provided pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth in an Officer's Certificate, or established in one or more indentures supplemental to the Indenture, in any case where the date of 93 maturity of interest or principal of any Debenture or the date of redemption of any Debenture shall not be a business day then payment of interest or principal (and premium, if any) may be made on the next succeeding business day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date. SECTION 13.08. Provisions Required by Trust Indenture Act. --------------------------------------------- If and to the extent that any provision of this Indenture 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 13.09. Indenture May be Executed in Counterparts. -------------------------------------------- This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 13.10. Severability of Indenture Provisions. -------------------------------------- In case any one or more of the provisions contained in this Indenture or in the Debentures of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Debentures, but this Indenture and such Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. SECTION 13.11. Assignment by Company to Subsidiary. -------------------------------------- The Company will have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company; provided that, in the event of any such assignment, the Company will remain jointly and severally liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto. 94 SECTION 13.12. Holders of Trust Preferred Securities as Third Party Beneficiaries of This Indenture. ----------------------------------------------- The Company hereby acknowledges that, to the extent specifically set forth herein, prior to a Security Exchange with respect to the Debentures of any series held as trust assets of a Hawaiian Electric Industries Capital Trust or as partnership assets of the Partnership, the holders of the Trust Preferred Securities of such Hawaiian Electric Industries Capital Trust shall expressly be third party beneficiaries of this Indenture. The Company further acknowledges that, prior to a Security Exchange with respect to Debentures of any series held as trust assets of a Hawaiian Electric Industries Capital Trust, if the Property Trustee of such Hawaiian Electric Industries Capital Trust fails to enforce its rights under this Indenture as the holder of the Debentures of a series held as trust assets of such Hawaiian Electric Industries Capital Trust or as the holder of the Partnership Preferred Securities with respect to such securities' rights, if any, regarding any Debentures of a series held as partnership assets of the Partnership, any holder of the Trust Preferred Securities of such Hawaiian Electric Industries Capital Trust may, after a period of 30 days has elapsed from such holder's written request to such Property Trustee to enforce such rights, institute legal proceedings directly against the Company to enforce such Property Trustee's rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other person or entity. ARTICLE FOURTEEN Subordination of Debentures SECTION 14.01. Agreement to Subordinate. --------------------------- The Company, for itself, its successors and assigns, covenants and agrees, and each holder of a Debenture, by its acceptance thereof, likewise covenants and agrees, that the payment of the principal of, premium, if any, and interest on, each and all of the Debentures is hereby expressly subordinated, to the extent and in the manner hereinafter in this Article Fourteen set forth, in right of payment to the prior payment in full of all Senior Indebtedness. 95 SECTION 14.02. Rights of Senior Indebtedness in the Event of Insolvency, Etc., of the Company. ---------------------------------------------- (a) In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to the Company or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy, and in the event of any execution sale, then the holders of Senior Indebtedness shall be entitled to receive payment in full of principal thereof and interest due thereon (including without limitation, except to the extent, if any, prohibited by mandatory provisions of law, post-petition interest in any such proceedings) in money of all Senior Indebtedness before the holders of Debentures are entitled to receive any payment on account of the principal of or interest on the indebtedness evidenced by the Debentures, and to that end the holders of Senior Indebtedness shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in connection with any such proceedings or sale in respect of the principal of or interest on the Debentures other than securities of the Company as reorganized or readjusted or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article Fourteen with respect to the Debentures, to the payment of all indebtedness of the nature of Senior Indebtedness, provided that the rights of the holders of the Senior Indebtedness are not altered by such reorganization or readjustment; (b) In the event and during the continuation of any default in payment of any Senior Indebtedness or if any event of default, as therein defined, shall exist under any Senior Indebtedness or any agreement pursuant to which any Senior Indebtedness is issued, no payment of the principal of, premium if any, or interest on the Debentures shall be made and the Company covenants that it will, upon ascertaining any such default or event of default, provide written notice to the Trustee of such default or event of default; 96 (c) In the event that the Debentures of any series are declared due and payable before their expressed maturity because of the occurrence of an Event of Default (under circumstances when the provisions of subsection (a) of this Section 14.02 shall not be applicable), the holders of all Senior Indebtedness shall be entitled to receive payment in full in money of such Senior Indebtedness before such holders of Debentures are entitled to receive any payment on account of the principal of or interest on the Debentures; and (d) No holder of Senior Indebtedness shall be prejudiced in his right to enforce subordination of the Debentures by any act or failure to act on the part of the Company. SECTION 14.03. Payment Over of Proceeds Received on Debentures. -------------------------------------------------- In the event that, notwithstanding the provisions of Section 14.02, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than securities of the Company as reorganized or readjusted or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article Fourteen with respect to the Debentures, to the payment of all indebtedness of the nature of Senior Indebtedness, provided that the rights of the holders of the Senior Indebtedness are not altered by such reorganization or readjustment) shall be received by the holders or by the Trustee for their benefit in connection with any proceedings or sale referred to in subsection (a) of Section 14.02 before all Senior Indebtedness is paid in full in money, such payment or distribution shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held or represented by each, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full in money, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. 97 From and after the payment in full in money of all Senior Indebtedness, the holders of Debentures (together with the holders of any other indebtedness of the Company which is subordinate in right of payment to the payment in full of all Senior Indebtedness, which is not subordinate in right of payment to the Debentures and which by its terms grants such right of subrogation to the holder thereof) shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets or securities of the Company applicable to the Senior Indebtedness until the Debentures shall be paid in full, and, for the purposes of such subrogation, no such payments or distributions to the holders of Senior Indebtedness of assets or securities, which otherwise would have been payable or distributable to holders of Debentures, shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders, be deemed to be a payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article Fourteen are and are intended solely for the purpose of defining the relative rights of the holders, on the one hand, and the holders of the Senior Indebtedness, on the other hand, and nothing contained in this Article Fourteen or elsewhere in this Indenture or in the Debentures is intended to or shall impair as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders, the obligation of the Company, which is unconditional and absolute, to pay to the holders the principal of and interest on the Debentures as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the holders and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture subject to the rights of the holders of Senior Indebtedness, under Section 14.02, to receive cash, property or securities of the Company otherwise payable or deliverable to the holders of the Debentures. Upon any distribution or payment in connection with any proceedings or sale referred to in subsection (a) of Section 14.02, the Trustee, subject as between the Trustee and the holders to the provisions of Sections 7.01 and 7.02 hereof, shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any distribution or payment to the Trustee for the purpose of ascertaining the 98 holders of Senior Indebtedness entitled to participate in such payment or distribution, the amount of such Senior Indebtedness or the amount payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fourteen. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Section 14.03, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, as to the extent to which such person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such person under this Section 14.03, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. The Trustee, however, 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 it shall in good faith pay over or distribute to holders of Debentures or the Company or any other person moneys or assets to which any holders of Senior Indebtedness shall be entitled by virtue of Article Fourteen of this Indenture 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 and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 14.04. Payment to Debentureholders. ------------------------------ Nothing contained in this Article Fourteen or elsewhere in this Indenture, or in any of the Debentures, shall prevent at any time, (a)the Company from making payments at any time of principal of or interest on the Debentures, except under the conditions described in Section 14.02 or during the pendency of any proceedings or sale therein referred to, provided, however, that payments of principal of or interest on the Debentures shall only be made by the Company within three business days of the due dates for such payments or (b)the application by the Trustee of any moneys deposited with it 99 hereunder to the payment of or on account of the principal of or interest on the Debentures, if at the time of such deposit the Trustee did not have written notice in accordance with Section 14.06 of any event prohibiting the making of such deposit by the Company or if in the event of redemption, the Trustee did not have such written notice prior to the time that the notice of redemption pursuant to Section 3.02 was given (which notice of redemption shall in no event be given more than 60 days prior to the date fixed for redemption). SECTION 14.05. Holders of Debentures Authorize Trustee to Effectuate Subordination of Debentures. ------------------------------------------- Each Debentureholder by his acceptance of a Debenture authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination as provided in this Article Fourteen and appoints the Trustee as attorney-in-fact for any and all such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of such Debentureholder's Debentures in the form required in said proceedings and cause said claim to be approved. SECTION 14.06. Notice to Trustee. -------------------- Notwithstanding the provisions of this Article Fourteen or any other provisions of this Indenture, the Trustee shall not be charged with the knowledge of the existence of any facts which would prohibit the making of any payment of moneys to the Trustee, unless and until the Trustee shall have received written notice thereof from the Company or from the holder or the representative of any class of Senior Indebtedness; provided, however, that if at least two business days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of either the cash amount payable at maturity or interest on any Debenture) the Trustee shall not have received with respect to such monies the notice provided for in this Section 14.06, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power 100 and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such two business days prior to such date. SECTION 14.07. Trustees May Hold Senior Indebtedness. --------------------------------------- The Trustee shall be entitled to all the rights set forth in this Article Fourteen with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness. Nothing in this Article Fourteen shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.06. SECTION 14.08. Applicability of Article Fourteen to Paying Agents. -------------------------------------------- In case at any time any paying agent other than the Trustee shall be appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article Fourteen shall in such case (unless the context shall otherwise require) be construed as extending to and including such paying agent within its meaning as fully for all intents and purposes as if such paying agent were named in this Article Fourteen in place of the Trustee. The Bank of New York, as Trustee, hereby accepts the trust in this Indenture declared and provided, upon the terms and conditions hereinabove set forth. 101 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. HAWAIIAN ELECTRIC INDUSTRIES, INC. By ________________________________ Name: Title: By ________________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By ________________________________ Name: Title: 102 EX-4.(J) 10 FORM OF OFFICERS' CERTIFICATE (SENIOR DEBT) Exhibit 4(j) ------------ HAWAIIAN ELECTRIC INDUSTRIES, INC. ---------------------------------- Officer's Certificate Pursuant to Sections 2.3 and 11.5 of the Indenture -------------------------------------- The undersigned hereby certifies, pursuant to the Senior Indenture, dated as of ____________, _____ (the "Indenture"), between Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), and ___________________, a ____________________, as Trustee (the "Trustee"), that: A. There has been established pursuant to resolutions duly adopted by the Board of Directors of the Company at its meeting held on ____________________ a series of Securities (as that term is defined in the Indenture) to be issued under the Indenture, which Securities shall be in the form and shall include the Certificate of Authentication attached hereto and shall have the following terms (capitalized terms defined in the Indenture but not herein shall have the meanings given to such terms in the Indenture): 1. [state the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series]; 2. [state any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture)]; 3. [if other than Dollars, state the coin or currency in which the Securities of that series are denominated (including, but not limited to, any Foreign Currency or ECU)]; 1 4. [state the date or dates on which the principal of the Securities of the series is payable]; 5. [state the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined]; 6. [state the place or places of payment where the principal of and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2 of the Indenture)]; 7. [state the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise]; 8. [state the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation]; 9. [if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, state the denominations in which Securities of the series shall be issuable]; 10. [if other than the principal amount thereof, state the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof]; 2 11. [if other than the coin or currency in which the Securities of that series are denominated, state the coin or currency in which payment of the principal of or interest on the Securities of such series shall be payable]; 12. [if the principal of or interest on the Securities of such series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, state the period or periods within which, and the terms and conditions upon which, such election may be made]; 13. [if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, state the manner in which such amounts shall be determined]; 14. [state whether the Securities of the series will be issuable as Registered Securities (and if so, state whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, state any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8 of the Indenture, state the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa]; 15. [state whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, state whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts]; 3 16. [if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, include the form and terms of such certificates, documents or conditions]; 17. [identify any trustees, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series]; 18. [describe any other events of default or covenants with respect to the Securities of such series in addition to the Events of Default or covenants set forth herein]; and 19. [state any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture)]. B. The undersigned has read the Indenture, including the provisions of Sections 2.3 and 11.5 and the definitions relating thereto, and the resolutions adopted by the Board of Directors of the Company referred to above. In the opinion of the undersigned, [he][she] has made such examination or investigation as is necessary to enable [him][her] to express an informed opinion as to whether or not all conditions precedent provided in the Indenture relating to the establishment of the title and terms of a series of Securities under the Indenture, designated as the _____________ in this Officer's Certificate, and to the authentication and delivery by the Trustee of such Securities, have been complied with. In the opinion of the undersigned, all such conditions precedent have been complied with. IN WITNESS WHEREOF, the undersigned has hereunto executed this Officer's Certificate as of the ____ day of __________, _____. ________________________________ Name: Title: 4 EX-4.(K) 11 FORM OF OFFICERS' CERTIFICATE (SUBORDINATED DEBT) Exhibit 4(k) ------------ HAWAIIAN ELECTRIC INDUSTRIES, INC. ---------------------------------- Officer's Certificate Pursuant to Sections 2.3 and 11.5 of the Indenture -------------------------------------- The undersigned hereby certifies, pursuant to the Senior Subordinated Indenture, dated as of ____________, _____ (the "Indenture"), between Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), and _____________________, a ______________________, as Trustee (the "Trustee"), that: A. There has been established pursuant to resolutions duly adopted by the Board of Directors of the Company at its meeting held on ____________________ a series of Securities (as that term is defined in the Indenture) to be issued under the Indenture, which Securities shall be in the form and shall include the Certificate of Authentication attached hereto and shall have the following terms (capitalized terms defined in the Indenture but not herein shall have the meanings given to such terms in the Indenture): 1. [state the designation of the Securities of the series, which shall distinguish the Securities of the Series from the Securities of all other series]; 2. [state any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5, 12.3 or 14.3 of the Indenture)]; 1 3. [if other than Dollars, state the coin or currency in which the Securities of that series are denominated (including, but not limited to, any Foreign Currency or ECU)]; 4. [state the date or dates on which the principal of the Securities of the series is payable]; 5. [state the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined]; 6. [state the place or places where the principal of and any interest on Securities of the series shall be payable (if other than as provided in Section 3.2 of the Indenture)]; 7. [state the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise]; 8. [state the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation]; 9. [if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, state the denominations in which Securities of the series shall be issuable]; 2 10. [if other than the principal amount thereof, state the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof]; 11. [if other than the coin or currency in which the Securities of that series are denominated, state the coin or currency in which payment of the principal of or interest on the Securities of such series shall be payable]; 12. [if the principal of or interest on the Securities of such series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than that in which the Securities are denominated, state the period or periods within which, and the terms and conditions upon which, such election may be made]; 13. [if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, state the manner in which such amounts shall be determined]; 14. [state whether the Securities of the series will be issuable as Registered Securities (and if so, state whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8 of the Indenture, state the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa]; 15. [state whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, state whether the Issuer will have the option to redeem such Securities rather than pay such additional amounts]; 3 16. [if the Securities of such series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, include the form and terms of such certificates, documents or conditions]; 17. [identify any trustees, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series]; 18. [state any other events of default or covenants with respect to the Securities of such series in addition to the Events of Default or covenants set forth herein]; 19. [if the Securities of such series are to be convertible into any cash, securities or property, at the option of the Holder or the Issuer or upon the happening of some event or otherwise, state all terms relating to such convertibility, including without limitation any term inconsistent with the provisions of this Indenture relating to conversion]; and 20. [state any other terms of the series (which terms shall not be inconsistent with the provisions of the Indenture)]. B. The undersigned has read the Indenture, including the provisions of Sections 2.3 and 11.5 and the definitions relating thereto, and the resolutions adopted by the Board of Directors of the Company referred to above. In the opinion of the undersigned, [he][she] has made such examination or investigation as is necessary to enable [him][her] to express an informed opinion as to whether or not all conditions precedent provided in the Indenture relating to the establishment of the title and terms of a series of Securities under the Indenture, designated as the _____________ in this Officer's Certificate, and to the authentication and delivery by the Trustee of such Securities, have been complied with. In the opinion of the undersigned, all such conditions precedent have been complied with. 4 IN WITNESS WHEREOF, the undersigned has hereunto executed this Officer's Certificate as of the ____ day of __________, _____. ________________________________ Name: Title: 5 EX-4.(L) 12 FORM OF OFFICERS' CERTIFICATE (JR. SUB. DEBEN.) Exhibit 4(l) ------------ HAWAIIAN ELECTRIC INDUSTRIES, INC. ---------------------------------- Officers' Certificate Pursuant to Sections 2.01 and 13.06 of the Indenture ---------------------------------------- The undersigned hereby certify, pursuant to the Indenture for Junior Subordinated Debentures, dated as of ____________, 1997 (the "Indenture"), between Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), and The Bank of New York, a New York banking corporation, as Trustee (the "Trustee"), that: A. There has been established pursuant to resolutions duly adopted by the Board of Directors of the Company at its meeting held on December 19, 1996, as supplemented by resolutions adopted by the Board of Directors at its meeting held on January 21, 1997, a series of Debentures (as that term is defined in the Indenture) to be issued under the Indenture, which Debentures shall be in the form and shall include the Certificate of Authentication attached hereto and shall have the following terms (capitalized terms defined in the Indenture but not herein shall have the meanings given to such terms in the Indenture): 1. The title of the Debentures of the series is "Junior Subordinated Debentures, Series A" (the "Series A Debentures"); 2. The limit upon the aggregate principal amount of the Series A Debentures which may be authenticated and delivered under this Indenture (except for Debentures authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debentures of that series) is $103,000,000; 1 3. The date on which the principal of each of the Series A Debentures is payable shall be ______________, 2017 (the "Stated Maturity"); 4. Each Debenture will bear interest at the rate of _____% per annum ("Interest Rate"); 5. The principal of (and premium, if any) and interest on the Series A Debentures shall be payable and the Series A Debentures shall be surrendered for registration of transfer or exchange at the offices and agencies of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York, or at such other location or locations selected by the Company, agreed to by the Trustee and consistent with the Indenture. Payment of the principal (and premium, if any) and interest due with respect to any Debenture at maturity will be made in immediately available funds upon surrender of the Debenture at the place or places provided hereinabove; provided that the Debenture is presented to the Paying Agent in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures. Payments of interest other than at maturity will be made at the place or places provided hereinabove; provided that payment of interest on Debentures that are not registered to a Hawaiian Electric Industries Capital Trust or the Partnership may be made at the option of the Company by check mailed to the address of the Person entitled thereto as it appears on the Debenture Register or by wire transfer to an account appropriately designated by the Person entitled thereto as it appears on the Debenture Register; 6. Interest shall accrue from the original date of issuance until the principal thereof becomes 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 Interest Rate, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each, an "Interest Payment Date"), commencing on March 31, 1997; 7. The Company shall have the right at any time during the term of the Series A Debentures, from time to time, to extend the interest payment period of 2 such Debenture for up to six consecutive quarters (an "Extension Period"), during which periods interest will compound quarterly and the Company shall have the right to make partial payments of interest on any Interest Payment Date, and at the end of which Extension Period the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent that payment of such interest is permitted by applicable law). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof shall not exceed six consecutive quarters or extend beyond the Stated Maturity of this Debenture. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due, the Company may select a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the holder of this Debenture and the Trustee written notice of its selection of an Extension Period at least one Business Day prior to the earlier of (i) the Interest Payment Date or (ii) the date Hawaiian Electric Industries Capital Trust I is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization or to holders of the Trust Preferred Securities of the record date or the date such distributions are payable, but in any event not less than one Business Day prior to such record date; 8. At any time on or after February ___, 2002, the Company shall have the right to redeem the Series A Debentures, in whole or in part, from time to time, at a redemption price equal to 100% of the principal amount of Debentures to be redeemed plus accrued but unpaid interest, including any Additional Interest, if any, to the redemption date. If, at any time, a Partnership Tax Event or a Partnership Investment Company Event, each a Partnership Special Event, shall occur and be continuing, the Company may, within 90 days following the occurrence of such Partnership Special Event, elect to redeem the Series A Debentures in whole (but not in part), upon not less than 30 or more than 60 days' notice at the redemption price, provided that, if at the time there is available 3 to the Company or the Partnership the opportunity to eliminate, within such 90-day period, the Partnership Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable such measure that in the sole judgment of the Company has or will cause no adverse effect on the Partnership, the Trust or the Company, the Company will pursue such measure in lieu of redemption; For the purposes of this Certificate: "Partnership Special Event" shall mean either a Partnership Investment Company Event or a Partnership Tax Event; "Partnership Investment Company Event", when used with respect to the Series A Debentures that are held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, shall mean that the General Partner shall have requested and received an opinion of nationally recognized independent legal counsel experienced in such matters to the effect that as a result of the occurrence, on or after the date of the prospectus supplement relating to the Trust Preferred Securities of such Hawaiian Electric Industries Capital Trust, of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Partnership is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940; "Partnership Tax Event" shall mean that the General Partner shall have requested and received an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that there has been a Tax Action resulting in there being more than an insubstantial risk that (a) the Partnership is, or will be, subject to United States federal income tax with respect to income accrued or received on the Affiliate Investment Instruments or the Eligible Debt Securities (each as defined in the Limited Partnership Agreement), (b) the Partnership is, or will be, subject to more than a de minimus amount of other taxes, duties or other 4 governmental charges, or (c) interest payable by one or more of the obligors with respect to the Affiliate Investment Instruments to the Partnership is not, or will not be, deductible by the Company for United States federal income tax purposes; "Tax Action", when used with respect to the Series A Debentures that are held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, shall mean that there has been (a) an amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) a judicial decision interpreting, applying or clarifying such laws or regulations, (c) an administrative pronouncement or action that represents an official position (including a clarification of any official position) of the governmental authority or regulatory body making such administrative pronouncement or taking such action, or (d) a threatened challenge asserted in connection with an audit of the Company or any of its Subsidiaries, the Partnership, or the Trust, or a threatened challenge asserted in writing in connection with any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Series A Debentures, the Partnership Preferred Securities, or the Trust Preferred Securities, which amendment or change is adopted or which decision or pronouncement is announced or which action, clarification or challenge occurs on or after the date of the prospectus supplement relating to the Trust Preferred Securities of such Hawaiian Electric Industries Capital Trust; 9. There is no obligation of the Company to redeem or purchase the Series A Debentures pursuant to any sinking fund or analogous provision, or at the option of the holder thereof; 10. The form of Series A Debenture, including the form of Certificate of Authentication, is attached hereto; 11. The Series A Debentures shall be issued in denominations of $25 or any integral multiple thereof; 5 12. The Series A Debentures will not be issued as a Global Debenture and there shall not be a Depository for any Global Debenture for the Series A Debentures; 13. The Series A Debentures will not be deposited as trust assets in a Hawaiian Electric Industries Capital Trust; 14. The Series A Debentures will be deposited as partnership assets in HEI Preferred Funding, LP, a limited partnership created by the Agreement of Limited Partnership dated as of December 23, 1996, as amended, modified or otherwise supplemented from time to time; 15. The Series A Debentures will not be sold to Persons who are not directly or indirectly owned or controlled by the Company and who are not Affiliates of the Company; and 16. In case of any conflict between this certificate and the Series A Debentures in the form attached hereto, or between the above- mentioned Board resolutions and the Series A Debentures in such forms, the Series A Debentures shall control. B. Each of the undersigned has read the Indenture, including the provisions of Sections 2.01 and 13.06 and the definitions relating thereto, and the resolutions adopted by the Board of Directors of the Company referred to above. In the opinion of each of the undersigned, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not all conditions precedent provided in the Indenture relating to the establishment of the title and terms of a series of Debentures under the Indenture, designated as the Series A Debentures in this Officers' Certificate, and to the authentication and delivery by the Trustee of such Debentures, have been complied with. In the opinion of the undersigned, all such conditions precedent have been complied with. 6 IN WITNESS WHEREOF, the undersigned has hereunto executed this Officers' Certificate as of the ____ day of __________, 1997. ________________________________ Name: Title: ________________________________ Name: Title: 7 (FORM OF FACE OF DEBENTURE) No. __________ HAWAIIAN ELECTRIC INDUSTRIES, INC. ______% JUNIOR SUBORDINATED DEBENTURE, SERIES A DUE 2017 $_____________ PRINCIPAL AMOUNT HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________ or registered assigns, the principal sum of ___________________ Dollars ($___________) on _________, _____ (the "Stated Maturity"), and to pay interest on said principal sum from the original date of issuance or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 of each year commencing March 31, 1997, at the rate of ______% per annum, plus Additional Interest, if any, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any. 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. For any period shorter than a full 90- day quarter, interest will be computed on the basis of the actual number of days elapsed in such 90-day quarter. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of 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, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Debenture (or one or more Predecessor Debentures, as defined in said Indenture) is registered at the close of business on the regular record date for such interest installment. Any interest on this Debenture which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Debentures of the same series (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below: (1) The Company may make payment of any Defaulted Interest on this Debenture to the person or persons in whose names this Debenture (or one or more 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 notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on this Debenture and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee 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 Trustee 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. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Debentureholder at his or her address as it appears in the Debenture Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the person or persons in whose names this Debenture (or one or more Predecessor Debentures) is 2 registered on such special record date and shall be no longer payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest on this Debenture in any other lawful manner not inconsistent with the requirements of any Securities Exchange on which this Debenture may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. The Company shall have the right at any time during the term of this Debenture, from time to time, to extend the interest payment period of this Debenture for up to six consecutive quarters (an "Extension Period"), during which periods interest will compound quarterly and the Company shall have the right to make partial payments of interest on any Interest Payment Date, and at the end of which Extension Period the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent that payment of such interest is permitted by applicable law). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof shall not exceed six consecutive quarters or extend beyond the Stated Maturity of this Debenture. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due, the Company may select a new Extension Period, subject to the foregoing requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the holder of this Debenture and the Trustee written notice of its selection of an Extension Period at least one Business Day prior to the earlier of (i) the Interest Payment Date or (ii) the date Hawaiian Electric Industries Capital Trust I is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization or to holders of the Trust Preferred Securities of the record date or the date such distributions are payable, but in any event not less than one Business Day prior to such record date. The principal of (and premium, if any) and interest on this Debenture shall be payable and this Debenture shall be surrendered for registration of transfer or exchange at 3 the offices and agencies of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York, or at such other location or locations selected by the Company, agreed to by the Trustee and consistent with the Indenture. Payment of the principal (and premium, if any) and interest due with respect to any Debenture at maturity will be made in immediately available funds upon surrender of the Debenture at the place or places provided hereinabove; provided that this Debenture is presented to the Paying Agent in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures. Payments of interest other than at maturity will be made at the place or places provided hereinabove; provided that payment of interest on this Debenture if not registered to a Hawaiian Electric Industries Capital Trust or the Partnership may be made at the option of the Company by check mailed to the address of the Person entitled thereto as it appears on the Debenture Register or by wire transfer to an account appropriately designated by the Person entitled thereto as it appears on the Debenture Register. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior 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 Indenture with respect thereto. Each 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 or her 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 or her attorney-in-fact for any and all such purposes. Each holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the 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 shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee by manual signature. The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall 4 for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated: HAWAIIAN ELECTRIC INDUSTRIES, INC. By: __________________________ Name: Title: By: __________________________ Name: Title: Attest: By: __________________________ Name: Title: (FORM OF REVERSE OF DEBENTURE) This Debenture is one of a duly authorized series of Debenture of the Company (herein sometimes referred to as the "Debenture"), limited in aggregate principal amount to $103,000,000, all issued or to be issued in one or more series under and pursuant to an Indenture dated as of _______________ (the "Indenture") duly executed and delivered between the Company and The Bank of New York, as Trustee (the "Trustee", which term includes any successor trustee under the Indenture), and pursuant to an Officers' Certificate dated as of ________________, (the "Officers' Certificate") duly executed by ______________, ________________, and ________________, ____________________, of the Company, to which Indenture and said Officers' Certificate thereto reference is hereby made for a description of the rights, limitations of rights, 5 obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debentures and of the terms upon which the Debentures are, and are to be, authenticated and delivered. By the terms of the Indenture, the Debentures are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. At any time on or after February ___, 2002, the Company shall have the right to redeem the Debentures, in whole or in part, from time to time, at a redemption price equal to 100% of the principal amount of Debentures to be redeemed plus accrued but unpaid interest, including any Additional Interest, if any, to the redemption date. If, at any time, a Partnership Tax Event or a Partnership Investment Company Event, each a Partnership Special Event, shall occur and be continuing, the Company may, within 90 days following the occurrence of such Partnership Special Event, elect to redeem the Debentures in whole (but not in part), upon not less than 30 or more than 60 days' notice at the redemption price, provided that, if at the time there is available to the Company or the Partnership the opportunity to eliminate, within such 90-day period, the Partnership Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable such measure that in the sole judgment of the Company has or will cause no adverse effect on the Partnership, the Trust or the Company, the Company will pursue such measure in lieu of redemption. For the purposes of this Debenture: "Partnership Special Event" shall mean either a Partnership Investment Company Event or a Partnership Tax Event; "Partnership Investment Company Event", if this Debenture is held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, shall mean that the General Partner shall have requested and received an opinion of nationally recognized independent legal counsel experienced in such matters to the effect that as a result of the occurrence, on or after the date of the prospectus supplement relating to the Trust Preferred Securities of such Hawaiian Electric Industries 6 Capital Trust, of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Partnership is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940; "Partnership Tax Event" shall mean that the General Partner shall have requested and received an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that there has been a Tax Action resulting in there being more than an insubstantial risk that (a) the Partnership is, or will be, subject to United States federal income tax with respect to income accrued or received on the Affiliate Investment Instruments or the Eligible Debt Securities (each as defined in the Limited Partnership Agreement), (b) the Partnership is, or will be, subject to more than a de minimus amount of other taxes, duties or other governmental charges, or (c) interest payable by one or more of the obligors with respect to the Affiliate Investment Instruments to the Partnership is not, or will not be, deductible by the Company for United States federal income tax purposes; and "Tax Action", if this Debenture is held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, shall mean that there has been (a) an amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, (b) a judicial decision interpreting, applying or clarifying such laws or regulations, (c) an administrative pronouncement or action that represents an official position (including a clarification of any official position) of the governmental authority or regulatory body making such administrative pronouncement or taking such action, or (d) a threatened challenge asserted in connection with an audit of the Company or any of its Subsidiaries, the Partnership, or the Trust, or a threatened challenge asserted in writing in connection with any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the Debentures, the Partnership Preferred Securities, or the Trust Preferred Securities, which amendment or change is adopted or which decision or pronouncement is announced or 7 which action, clarification or challenge occurs on or after the date of the prospectus supplement relating to the Trust Preferred Securities of such Hawaiian Electric Industries Capital Trust. In the event of redemption of this Debenture in part only, a new 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 this series of Debentures, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may 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 Indenture. The Indenture contains provisions for satisfaction and discharge at any time of the entire indebtedness of this Debenture upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debentures of each series affected at the time outstanding, as defined in the Indenture, to modify the Indenture in a manner affecting the rights of the holders of the Debentures; provided, however, that no such modification may, without the consent of the holder of each outstanding Debenture (and, in the case of any series of Debentures held as trust assets of a Hawaiian Electric Industries Capital Trust as to which a Security Exchange has not theretofore occurred or as partnership assets of the Partnership, such consent of the holders of the Trust Preferred Securities and the Trust Common Securities of such Hawaiian Electric Industries Capital Trust as may be required under the Trust Agreement of such Hawaiian Electric Industries Capital Trust), (i) extend the fixed maturity of any Debentures of any series, or reduce the principal amount thereof (including in the case of a discounted Debenture the amount payable thereon in the event of acceleration or the amount provable in bankruptcy) or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable upon the redemption thereof, or make the principal of or interest or premium, if any, on the Debentures payable in any coin or currency other than that provided in the Debentures, 8 or impair or affect the right of any Debentureholder to institute suit for the payment thereof or the right of prepayment, if any, at the option of the Debentureholder, (ii) reduce the aforesaid percentage of Debentures, the holders of which are required to consent to any such modification, or (iii) otherwise adversely affect the interest of the holders of any series of Debentures. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the currency herein prescribed, in accordance with the terms of the Indenture, this Debenture and the Officers' Certificate. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered holder hereof on the Debenture Register of the Company, upon surrender of this Debenture for registration of transfer at the office or agency provided by the Company for that purpose accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount and series 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, subject to certain limitations set forth in the Indenture. Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any Paying Agent and the Debenture Registrar may deem and treat the registered 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 Debenture Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Debenture Registrar shall be affected by any notice to the contrary. 9 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 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. The Debentures of this series are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations herein and therein set forth, Debentures of this series so issued are exchangeable for a like aggregate principal amount of Debentures of this series of a different authorized denomination, as requested by the holder surrendering the same. All terms used in this Debenture that are defined in the Indenture and the Officers' Certificate shall have the meanings assigned to them in the Indenture and the Officers' Certificate. THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. 10 (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Debentures of the series designated herein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By: __________________________ Authorized Officer EX-4.(O) 13 FORM OF TRUST PREFERRED SECURITIES GUARANTEE AGMT. Exhibit 4(o) ================================================================================ TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I DATED AS OF JANUARY [ ], 1997 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation......................... 2 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application....................... 7 SECTION 2.2 Lists of Holders of Securities......................... 7 SECTION 2.3 Reports by the Trust Guarantee Trustee................. 8 SECTION 2.4 Periodic Reports to the Trust Guarantee Trustee........ 8 SECTION 2.5 Evidence of Compliance with Conditions Precedent....... 8 SECTION 2.6 Events of Default; Waiver.............................. 8 SECTION 2.7 Event of Default; Notice............................... 9 SECTION 2.8 Conflicting Interests.................................. 9 ARTICLE III POWERS, DUTIES AND RIGHTS OF THE TRUST GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Trust Guarantee Trustee....... 9 SECTION 3.2 Certain Rights of the Trust Guarantee Trustee.......... 12 SECTION 3.3 Not Responsible for Recitals or Issuance of the Trust Preferred Securities Guarantee......................... 15 ARTICLE IV THE TRUST GUARANTEE TRUSTEE SECTION 4.1 The Trust Guarantee Trustee; Eligibility............... 15 SECTION 4.2 Appointment, Removal and Resignation of the Trust Guarantee Trustee...................................... 16 SECTION 4.3 Successor to the Trust Guarantee Trustee by Merger, Consolidation or Succession to Business................ 17 ARTICLE V THE TRUST PREFERRED SECURITIES GUARANTEE SECTION 5.1 Guarantee.............................................. 17 SECTION 5.2 Waiver of Notice and Demand............................ 17 SECTION 5.3 Obligations Not Affected............................... 17 SECTION 5.4 Rights of Holders...................................... 19 SECTION 5.5 Guarantee of Payment................................... 19 SECTION 5.6 Subrogation............................................ 19 SECTION 5.7 Independent Obligations................................ 20
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions............................. 20 SECTION 6.2 Ranking................................................ 11 ARTICLE VII TERMINATION SECTION 7.1 Termination............................................ 22 ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 Exculpation............................................ 22 SECTION 8.2 Indemnification........................................ 23 ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns................................. 23 SECTION 9.2 Amendments............................................. 23 SECTION 9.3 Merger of the Guarantor................................ 24 SECTION 9.4 Notices................................................ 24 SECTION 9.5 Benefit................................................ 25 SECTION 9.6 Governing Law.......................................... 25 CROSS-REFERENCE TABLE* SECTION OF SECTION OF TRUST INDENTURE ACT GUARANTEE OF 1939, AS AMENDED AGREEMENT - ------------------- ---------- 310(a)...................................................... 4.1(a) 310(b)...................................................... 4.1(c), 2.8 310(c)...................................................... Inapplicable 311(a)...................................................... 2.2(b) 311(b)...................................................... 2.2(b) 311(c)...................................................... Inapplicable 312(a)...................................................... 2.2(a) 312(b)...................................................... 2.2(b) 313......................................................... 2.3 314(a)...................................................... 2.4 314(b)...................................................... Inapplicable 314(c)...................................................... 2.5 314(d)...................................................... Inapplicable 314(e)...................................................... 1.1, 2.5, 3.2 314(f)...................................................... 2.1, 3.2 315(a)...................................................... 3.1(d) 315(b)...................................................... 2.7 315(c)...................................................... 3.1 315(d)...................................................... 3.1(d) 316(a)...................................................... 1.1, 2.6, 5.4 316(b)...................................................... 5.3 316(c)...................................................... 9.2 317(a)...................................................... Inapplicable 318(a)...................................................... Inapplicable 318(a)...................................................... 2.1(b) 318(b)...................................................... 2.1 318(c)...................................................... 2.1(a) - -------- * This Cross-Reference Table does not constitute part of this Trust Preference Securities Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.
Trust Preferred Securities Guarantee Agreement This TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Trust Preferred Securities Guarantee"), dated as of February __, 1997, is executed and delivered by Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Guarantor" or the "Company"), and 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 Hawaiian Electric Industries Capital Trust I, a Delaware statutory business trust (the "Trust"). WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of February __, 1997, among the trustees of the Trust named therein, Hawaiian Electric Industries, Inc., as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, the Trust is issuing on the date hereof 4,000,000 Trust Originated Preferred Securities, having an aggregate liquidation amount of $100,000,000, designated the % Trust Originated Preferred Securities (the "Trust Preferred Securities"); WHEREAS, as incentive for the Holders to purchase the Trust Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Trust Preferred Securities Guarantee, to pay to the Holders of the Trust Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein and; WHEREAS, the Guarantor is also executing and delivering a guarantee agreement (the "Trust Common Securities Guarantee") in substantially identical terms to this Trust Preferred Securities Guarantee for the benefit of the holders of the Trust Common Securities (as defined herein), except that if the Company is in default on any of its obligations under this Trust Preferred Securities Guarantee or the Partnership Guarantee or an Investment Event of Default (as defined herein) has occurred and is continuing and the Company is in default on any of its obligations with respect thereto under an applicable Investment Guarantee, the rights of holders of the Trust Common Securities to receive Guarantee Payments under the 1 Trust Common Securities Guarantee are subordinated to the rights of Holders of Trust Preferred Securities to receive Guarantee Payments under this Trust Preferred Securities Guarantee. 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 Preferred Securities Guarantee for the benefit of the Holders. ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation In this Trust Preferred Securities Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Trust Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) capitalized terms used in this Trust Preferred Securities Guarantee but not otherwise defined herein shall have the meanings assigned to them in the Trust Agreement or the Agreement of Limited Partnership, as the case may be; (c) a term defined anywhere in this Trust Preferred Securities Guarantee has the same meaning throughout; (d) all references to "this Trust Preferred Securities Guarantee" are to this Trust Preferred Securities Guarantee as modified, supplemented or amended from time to time; (e) all references in this Trust Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Trust Preferred Securities Guarantee, unless otherwise specified; (f) a term defined in the Trust Indenture Act has the same meaning when used in this Trust Preferred Securities Guarantee, unless otherwise defined in this Trust Preferred 2 Securities Guarantee or unless the context otherwise requires; and (g) a reference to the singular includes the plural and vice versa. "Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly controls or is controlled by, or is under 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. "Affiliate Investment Instruments" has the meaning set forth in the Agreement of Limited Partnership. "Agreement of Limited Partnership" means the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of February ____, 1997, among Hycap Management, Inc., a Delaware corporation, as general partner, Hawaiian Electric Industries Capital Trust I, a Delaware statutory business trust, as initial limited partner, and such other Persons who become limited partners as provided therein. "Business Day" means any day other than a day on which banking institutions in the City of New York, State of New York are authorized or required by any applicable law to close. "Comparable Equity Interest" shall mean any preferred security hereafter issued by any finance subsidiary of which the Company is the parent company and the principal purpose of which is to lend the proceeds of the sale thereof to the Company or to eligible affiliates of the Company. "Corporate Trust Office" means the principal trust office of the Trust Guarantee Trustee at which, at any particular time, its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, 21st Floor, New York, New York 10286, Attention: Corporate Trust Trustee Administration. 3 "Covered Person" means any Holder or beneficial owner of Trust Preferred Securities. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Trust Preferred Securities Guarantee. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Trust Preferred Securities, to the extent not paid or made by the Trust: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) that are required to be paid on such Trust Preferred Securities to the extent the Trust shall have funds available therefor, (ii) the redemption price, including all accumulated and unpaid Distributions to the date of redemption (the "Redemption Price") to the extent the Trust has funds available therefor, with respect to any Trust Preferred Securities called for redemption by the Trust, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Partnership Preferred Securities to the Holders as provided in the Trust Agreement or the redemption of all of the Trust Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid Distributions on the Trust Preferred Securities to the date of payment and (b) the amount of assets of the Trust, after satisfaction of all liabilities, remaining available for distribution to Holders in liquidation of the Trust (in either case, the "Liquidation Distribution"). "Holder" shall mean any and each holder, as registered on the books and records of the Trust of any Trust Preferred Securities; 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 or any Affiliate of the Guarantor. "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. 4 "Investment Affiliate" means the Company or any corporation, partnership, limited liability company or other entity (other than the Partnership, the general partner of the Partnership or the Trust) that is controlled by the Company and is not an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. "Investment Event of Default" means an event of default under any Affiliate Investment Instrument that is a debt instrument or the breach by an Investment Affiliate of its obligations under any Affiliate Investment Instrument that is an equity instrument. "Majority in liquidation amount of the Trust Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by Holders of Trust Preferred Securities, voting separately as a class, of more than 50% of the aggregate liquidation amount (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 Trust Preferred Securities. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Preferred Securities Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate 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 each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. 5 "Partnership" means HEI Preferred Funding, LP. "Partnership Preferred Securities" means those securities representing limited partner interests in the Partnership. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" means, with respect to the Trust Guarantee Trustee, any officer within the Corporate Trust Office of the Trust Guarantee Trustee, including any vice president, any assistant vice president, any assistant secretary, any assistant treasurer or other officer of the Trust Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Trust Guarantee Trustee" means a successor Trust Guarantee Trustee possessing the qualifications to act as Trust Guarantee Trustee under Section 4.1. "Trust Common Securities" means the securities representing common undivided beneficial interests in the assets of the Trust. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trust Guarantee Trustee" means The Bank of New York, a New York banking corporation, until a Successor Trust Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Trust Preferred Securities Guarantee and thereafter means each such Successor Trust Guarantee Trustee. "Trust Securities" means the Trust Common Securities together with the Trust Preferred Securities. 6 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application (a) This Trust Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Trust Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this Trust Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, the duties imposed by the Trust Indenture Act shall control. SECTION 2.2 Lists of Holders of Securities (a) The Trust Guarantee 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 Holders of Trust Preferred Securities. If the Trust Guarantee Trustee is not the Registrar, the Guarantor shall furnish (or cause to be furnished) to the Trust Guarantee Trustee semi-annually on or before the last day of June and December in each year, and at such other times as the Trust Guarantee Trustee may request in writing, a list, in such form and as of such date as the Trust Guarantee Trustee may reasonably require, containing all the information in the possession or control of the Registrar, the Guarantor or any of its Paying Agents other than the Trust Guarantee Trustee as to the names and addresses of Holders of Trust Preferred Securities. If there are unregistered securities outstanding, even if the Trust Guarantee Trustee is the Registrar, the Company shall furnish to the Trust Guarantee Trustee such a list containing such information with respect to Holders of such unregistered securities only. (b) The Trust Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. 7 SECTION 2.3 Reports by the Trust Guarantee Trustee Within 60 days after May 15 of each year, the Trust Guarantee Trustee shall provide to the Holders of the Trust Preferred Securities 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 2.4 Periodic Reports to the Trust Guarantee Trustee The Guarantor shall provide to the Trust Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 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 Trust Guarantee Trustee is for informational purposes only and the Trust Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein. SECTION 2.5 Evidence of Compliance with Conditions Precedent The Guarantor shall provide to the Trust Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver The Holders of a Majority in liquidation amount of Trust Preferred Securities may, by vote, on behalf of the Holders of all of the Trust Preferred Securities, 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 Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 8 SECTION 2.7 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 of the Trust Preferred Securities, notices of all Events of Default actually known to a Responsible Officer of the Trust Guarantee Trustee, unless such defaults have been cured before the giving of such notice; provided, however, that the Trust Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trust Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Trust Preferred Securities. (b) The Trust Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Trust Guarantee Trustee shall have received written notice, or of which a Responsible Officer of the Trust Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge. SECTION 2.8 Conflicting Interests The Trust Agreement shall be deemed to be specifically described in this Trust Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF THE TRUST GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Trust Guarantee Trustee (a) This Trust Preferred Securities Guarantee shall be held by the Trust Guarantee Trustee for the benefit of the Holders of the Trust Preferred Securities, and the Trust Guarantee Trustee shall not transfer this Trust Preferred Securities Guarantee to any Person except a Holder of Trust Preferred Securities exercising his or her rights pursuant to Section 5.4(b) or to a Successor Trust Guarantee Trustee on acceptance by such Successor Trust Guarantee Trustee of its appointment to act as Successor Trust Guarantee Trustee. The right, title and interest of the Trust Guarantee Trustee shall 9 automatically vest in any Successor Trust Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Trust Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Trust Guarantee Trustee has occurred and is continuing, the Trust Guarantee Trustee shall enforce this Trust Preferred Securities Guarantee for the benefit of the Holders of the Trust Preferred Securities. (c) The Trust Guarantee Trustee, during the period before the occurrence of any Event of Default and during the period after the curing or waiver of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Trust Preferred Securities Guarantee, and no implied covenants shall be read into this Trust Preferred Securities Guarantee against the Trust Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Trust Guarantee Trustee, the Trust Guarantee Trustee shall exercise such of the rights and powers vested in it by this Trust Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Trust Preferred Securities 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: (i) During the period prior to the occurrence of any Event of Default and during the period after the curing or waiving of any Events of Default that may occur: (A) the duties and obligations of the Trust Guarantee Trustee shall be determined solely by the express provisions of this Trust Preferred Securities 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 10 Trust Securities Guarantee, and no implied covenants or obligations shall be read into this Trust Securities Guarantee against the Trust Guarantee Trustee; 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 Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof 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 Preferred Securities Guarantee; (ii) 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; (iii) 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 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 Preferred Securities Guarantee; and (iv) No provision of this Trust Preferred Securities 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 11 liability is not reasonably assured to it under the terms of this Trust Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Trust Guarantee Trustee, against such risk or liability is not reasonably assured to it. SECTION 3.2 Certain Rights of the Trust Guarantee Trustee (a) Subject to the provisions of Section 3.1: (i) The Trust Guarantee Trustee may conclusively 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. (ii) Any direction or act of the Guarantor contemplated by this Trust Preferred Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Trust Preferred Securities Guarantee, the Trust Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting 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 conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Trust Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or registration thereof). (v) The Trust Guarantee Trustee may, at the expense of the Sponsor, consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or 12 omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Trust Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Trust Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Trust Guarantee Trustee such security and indemnity, reasonably satisfactory to the Trust Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Trust Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Trust Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) 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 Preferred Securities Guarantee. (vii) 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. (viii) The Trust Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Trust Guarantee 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. 13 (ix) Any action taken by the Trust Guarantee Trustee or its agents hereunder shall bind the Holders of the Trust Preferred Securities, and the signature of the Trust Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Trust Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Trust Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Trust Guarantee Trustee or its agent taking such action. (x) Whenever in the administration of this Trust Preferred Securities 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 of a Majority in liquidation amount of the Trust Preferred Securities, (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 conclusively relying on or acting in accordance with such instructions. (xi) 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 Preferred Securities Guarantee. (b) No provision of this Trust Preferred Securities 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. 14 SECTION 3.3 Not Responsible for Recitals or Issuance of the Trust Preferred Securities Guarantee The recitals contained in this Trust Preferred Securities 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 Preferred Securities Guarantee. ARTICLE IV THE TRUST GUARANTEE TRUSTEE SECTION 4.1 The Trust Guarantee Trustee; Eligibility (a) There shall at all times be a Trust Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), 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 4.1(a), the Trust Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). 15 (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. SECTION 4.2 Appointment, Removal and Resignation of the Trust Guarantee Trustee (a) Subject to Section 4.2(b), the Trust Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default. (b) The Trust Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Trust Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Trust Guarantee Trustee and delivered to the Guarantor. (c) The Trust Guarantee Trustee appointed to office shall hold office until a Successor Trust Guarantee Trustee shall have been appointed or until its removal or resignation. The Trust Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Trust Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Trust Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Trust Guarantee Trustee and delivered to the Guarantor and the resigning Trust Guarantee Trustee. (d) If no Successor Trust Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of removal or resignation, the Trust Guarantee Trustee resigning or being removed may petition 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 omissions to act of any Successor Trust Guarantee Trustee. 16 (f) Upon termination of this Trust Preferred Securities Guarantee or removal or resignation of the Trust Guarantee Trustee pursuant to this Section 4.2, and before the appointment of any Successor Trust Guarantee Trustee the Guarantor shall pay to the Trust Guarantee Trustee all amounts to which it is entitled to the date of such termination, removal or resignation. SECTION 4.3 Successor to the Trust Guarantee Trustee by Merger, Consolidation or Succession to Business. Any corporation into which the Trust Guarantee Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trust Guarantee Trustee, shall be the successor of the Trust Guarantee Trustee hereunder, provided such corporation shall be qualified and eligible under the provisions of Section 4.1(a), without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. ARTICLE V THE TRUST PREFERRED SECURITIES GUARANTEE SECTION 5.1 Guarantee The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Trust), if, as and when due, regardless of any defense, right of setoff or counterclaim that 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 5.2 Waiver of Notice and Demand The Guarantor hereby waives notice of acceptance of this Trust Preferred Securities 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 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 5.3 Obligations Not Affected The obligations, covenants, agreements and duties of the Guarantor under this Trust Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) 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 17 relating to the Trust Preferred Securities to be performed or observed by the Trust; (b) the extension of time for the payment by the Trust of all or any portion of the Distributions, 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 (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Partnership Preferred Securities or any extension of the maturity date of the Partnership Preferred Securities permitted by the Agreement of Limited Partnership); (c) 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; (d) 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; (e) any invalidity of, or defect or deficiency in, the Trust Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) 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 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. 18 SECTION 5.4 Rights of Holders (a) The Holders of a Majority in liquidation amount 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 Preferred Securities Guarantee or exercising any trust or power conferred upon the Trust Guarantee Trustee under this Trust Preferred Securities Guarantee. (b) If the Trust Guarantee Trustee fails to enforce its rights under the Trust Preferred Securities Guarantee after a Holder of Trust Preferred Securities has made a written request, such Holder of Trust Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce the Trust Guarantee Trustee's rights under this Trust Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Trust Guarantee Trustee or any other Person or entity. Notwithstanding the foregoing, if the Guarantor has failed to make a guarantee payment, a Holder of Trust Preferred Securities may directly institute a proceeding in such Holder's own name against the Guarantor for enforcement of the Trust Preferred Securities Guarantee for such payment. The Guarantor waives any right or remedy to require that any action be brought first against the Trust or any other Person or entity before proceeding directly against the Guarantor. SECTION 5.5 Guarantee of Payment This Trust Preferred Securities Guarantee creates a guarantee of payment and not of collection. SECTION 5.6 Subrogation The Guarantor shall be subrogated to all (if any) rights of the Holders of Trust Preferred Securities against the Trust in respect of any amounts paid to such Holders by the Guarantor under this Trust Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that 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 Preferred 19 Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Trust Preferred Securities 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 5.7 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 Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions So long as any Trust Preferred Securities remain outstanding, if (a) for any distribution period, full distributions on a cumulative basis on any Trust Preferred Securities have not been paid or declared and set apart for payment, (b) an Investment Event of Default by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and the Company has not performed its obligations with respect thereto under an applicable Investment Guarantee, or (c) the Company is in default of its obligations under this Trust Preferred Securities Guarantee, the Trust Common Securities Guarantee or the Partnership Guarantee, then, during such period (i) the Company shall not declare or pay any dividends on, make any distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to any of its capital stock (except for 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 other than (x) purchases or acquisitions of shares of its Common Stock in connection with the satisfaction by the Company of its 20 obligations under any employee benefit plans or any other contractual obligation of the Company (other than a contractual obligation ranking pari passu with or junior to an Affiliate Investment Instrument), (y) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock or (z) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), (ii) the Company shall not make any payment or cause any payment to be made that would result in, and shall take such action as shall be necessary to prevent, the payment of dividends on, any distribution with respect to, any redemption, purchase or other acquisition of, or any liquidation payment with respect to, any Comparable Equity Interest, and (iii) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to this Trust Preferred Securities Guarantee or any other guarantee by the Company with respect to any Comparable Equity Interest). SECTION 6.2 Ranking This Trust Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including, without limitation, the fees, charges, expenses and indemnities due to the Property Trustee or the Delaware Trustee in respect of the Trust Agreement, to the Partnership Guarantee Trustee in respect of the Partnership Guarantee, to the Investment Guarantee Trustee in respect of the Investment Guarantee and to the Trust Guarantee Trustee in respect of this Trust Guarantee, (ii) pari passu with (A) the most senior preferred or preference stock now or hereafter issued by the Guarantor, (B) each Investment Guarantee related to an Affiliate Investment Instrument, (C) the Partnership Guarantee, (D) any guarantee hereafter entered into by the Guarantor in respect of any preferred security (similar to the Trust Preferred Securities or the Partnership Preferred Securities) of the Guarantor or any Affiliate of the Guarantor, and (E) any other obligation of the Guarantor expressly stated to rank pari passu with this Trust Guarantee or any of the foregoing, and (iii) senior to the Guarantor's common stock. Any similar guarantee given 21 hereafter by the Company with respect to Trust Preferred Securities that is silent as to seniority will rank pari passu with this Trust Preferred Securities Agreement. ARTICLE VII TERMINATION SECTION 7.1 Termination This Trust Preferred Securities Guarantee shall terminate upon (i) full payment of the Redemption Price of all Trust Preferred Securities, (ii) upon the distribution of the Partnership Preferred Securities to the Holders of all of the Trust Preferred Securities or (iii) upon full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust. Notwithstanding the foregoing, this Trust Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Trust Preferred Securities must restore payment of any sums paid under the Trust Preferred Securities or under this Trust Preferred Securities Guarantee. ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 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 Trust Preferred Securities 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 Trust Preferred Securities 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 22 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 Distributions to Holders of Trust Preferred Securities might properly be paid. SECTION 8.2 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 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 8.2 shall survive the termination of this Trust Preferred Securities Guarantee or the earlier resignation or removal of the Trust Guarantee Trustee. ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns All guarantees and agreements contained in this Trust Preferred Securities 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. SECTION 9.2 Amendments Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Trust Preferred Securities 23 Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount of the Trust Preferred Securities. The provisions of Section 13.2 of the Trust Agreement with respect to meetings of Holders of the Trust Preferred Securities apply to the giving of such approval. SECTION 9.3 Merger of the Guarantor The Guarantor covenants that it will not merge or consolidate with any other corporation or other entity or sell or convey all or substantially all of its assets to any Person (other than such a sale or conveyance to a Subsidiary or any successor thereto (such a sale or conveyance being called an "Asset Drop- Down")), unless (i) either the Guarantor shall be the continuing corporation or the successor corporation or other entity or the Person which acquires by sale or conveyance substantially all the assets of the Guarantor shall expressly assume the obligations of the Guarantor hereunder, according to their tenor, and the due and punctual performance and observance of all of the covenants hereof to be performed or observed by the Guarantor, by instrument in form satisfactory to the Trust Guarantee Trustee, executed and delivered to the Trust Guarantee Trustee by such corporation or other entity, and (ii) the Guarantor or such successor corporation or other entity, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. In the event of any Asset Drop-Down after the date hereof, any subsequent sale or conveyance of assets by a Subsidiary to which assets were transferred in such Asset Drop- Down will be deemed to be a sale or conveyance of assets by the Company for purposes of this provision. SECTION 9.4 Notices All notices provided for in this Trust Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) If given to the Trust Guarantee Trustee, at the Trust Guarantee Trustee's mailing address set forth below: The Bank of New York 101 Barclay Street, 21st Floor 24 New York, New York 10286 Attention: Corporate Trust Trustee Administration Telecopy: (212)815-5915 (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Trust Preferred Securities): Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Attention: Treasurer Telecopy: (808) 543-7966 (c) If given to any Holder of Trust Preferred Securities, at the address set forth on the books and records of the Trust. All such notices 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 9.5 Benefit This Trust Preferred Securities Guarantee is solely for the benefit of the Holders of the Trust Preferred Securities and, subject to Section 3.1(a), is not separately transferable from the Trust Preferred Securities. SECTION 9.6 Governing Law THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. 25 THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. HAWAIIAN ELECTRIC INDUSTRIES, INC. as Guarantor By:___________________________________ Name: Title: By:___________________________________ Name: Title: THE BANK OF NEW YORK, as Trust Guarantee Trustee By:___________________________________ Name: Title: 26 EX-4.(P) 14 FORM OF PARTNERSHIP GUARANTEE AGREEMENT Exhibit 4(p) ------------ ============================================================================= PARTNERSHIP GUARANTEE AGREEMENT HEI PREFERRED FUNDING, LP DATED AS OF JANUARY [ ], 1997 ============================================================================= TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation.......................... 2 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application...................... 6 SECTION 2.2 Lists of Holders of Securities........................ 6 SECTION 2.3 Reports by the Partnership Guarantee Trustee.......... 7 SECTION 2.4 Periodic Reports to the Partnership Guarantee Trustee............................................... 7 SECTION 2.5 Evidence of Compliance with Conditions Precedent...... 7 SECTION 2.6 Events of Default; Waiver............................. 7 SECTION 2.7 Event of Default; Notice.............................. 8 SECTION 2.8 Conflicting Interests................................. 8 ARTICLE III POWERS, DUTIES AND RIGHTS OF THE PARTNERSHIP GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Partnership Guarantee Trustee 8 SECTION 3.2 Certain Rights of the Partnership Guarantee Trustee... 11 SECTION 3.3 Not Responsible for Recitals or Issuance of the Partnership Guarantee................................. 14 ARTICLE IV THE PARTNERSHIP GUARANTEE TRUSTEE SECTION 4.1 The Partnership Guarantee Trustee; Eligibility.......... 14 SECTION 4.2 Appointment, Removal and Resignation of Partnership Guarantee Trustee....................................... 15 SECTION 4.3 Successor to the Partnership Guarantee Trustee by Merger, Consolidation or Succession to Business......... 16
ARTICLE V THE PARTNERSHIP GUARANTEE SECTION 5.1 Guarantee............................................. 16 SECTION 5.2 Waiver of Notice and Demand........................... 17 SECTION 5.3 Obligations Not Affected.............................. 17 SECTION 5.4 Rights of Holders..................................... 18 SECTION 5.5 Guarantee of Payment.................................. 19 SECTION 5.6 Subrogation........................................... 19 SECTION 5.7 Independent Obligations............................... 19 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions............................ 19 SECTION 6.2 Ranking............................................... 20 ARTICLE VII TERMINATION SECTION 7.1 Termination........................................... 21 ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 Exculpation........................................... 22 SECTION 8.2 Indemnification....................................... 22 ARTICLE IX COVENANTS OF THE GUARANTOR SECTION 9.1 General Partner of the Partnership.................... 23 SECTION 9.2 Amendments............................................ 23 ARTICLE X MISCELLANEOUS SECTION 10.1 Successors and Assigns................................ 23 SECTION 10.2 Merger of the Guarantor............................... 23 SECTION 10.3 Notices............................................... 24 SECTION 10.4 Gender................................................ 25 SECTION 10.5 Benefit............................................... 25 SECTION 10.6 Governing Law......................................... 26
CROSS-REFERENCE TABLE*
Section of Section of Trust Indenture Act Guarantee of 1939, as amended Agreement - ------------------- ---------- 310(a) ........................................................ 4.1(a) 310(b) ........................................................ 4.1(c), 2.8 310(c) ........................................................ Inapplicable 311(a) ........................................................ 2.2(b) 311(b) ........................................................ 2.2(b) 311(c) ........................................................ Inapplicable 312(a) ........................................................ 2.2(a) 312(b) ........................................................ 2.2(b) 313 ........................................................ 2.3 314(a) ........................................................ 2.4 314(b) ........................................................ Inapplicable 314(c) ........................................................ 2.5 314(d) ........................................................ Inapplicable 314(e) ........................................................ 1.1, 2.5, 3.2 314(f) ........................................................ 2.1, 3.2 315(a) ........................................................ 3.1(d) 315(b) ........................................................ 2.7 315(c) ........................................................ 3.1 315(d) ........................................................ 3.1(d) 316(a) ........................................................ 1.1, 2.6, 5.4 316(b) ........................................................ 5.3 316(c) ........................................................ 9.2 317(a) ........................................................ Inapplicable 317(b) ........................................................ Inapplicable 318(a) ........................................................ 2.1(b) 318(b) ........................................................ 2.1 318(c) ........................................................ 2.1(a)
- ----------------- * This Cross-Reference Table does not constitute part of this Partnership Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. PARTNERSHIP GUARANTEE AGREEMENT This PARTNERSHIP GUARANTEE AGREEMENT (this "Partnership Guarantee"), dated as of February __, 1997, is executed and delivered by Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company" or the "Guarantor"), and The Bank of New York, a New York banking corporation, as trustee (the "Partnership Guarantee Trustee"), for the benefit of the holders from time to time of the Partnership Preferred Securities (as defined below). WHEREAS, pursuant to an Amended and Restated Agreement of Limited Partnership (the "Agreement of Limited Partnership"), dated as of the date hereof, of HEI Preferred Funding, LP, a Delaware limited partnership (the "Partnership"), the Partnership may issue a single series of limited partner interests in the Partnership (the "Partnership Preferred Securities"); WHEREAS, pursuant to the Agreement of Limited Partnership, the proceeds received by the Partnership from the issuance and sale of the Partnership Preferred Securities will be invested by the Partnership in the Affiliate Investment Instruments and Eligible Debt Securities (each as defined in the Agreement of Limited Partnership); and WHEREAS, the Guarantor, as incentive for the Holders (as defined herein) to purchase Partnership Preferred Securities, desires hereby 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 Partnership Preferred Securities, which purchase the Guarantor hereby agrees shall directly or indirectly provide material benefits to the Guarantor, the Guarantor executes and delivers this Partnership Guarantee for the benefit of the Holders. 1 ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation In this Partnership Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Partnership Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) capitalized terms used in this Partnership Guarantee but not otherwise defined herein shall have the meanings assigned to them in the Agreement of Limited Partnership or the Trust Agreement, as the case may be; (c) a term defined anywhere in this Partnership Guarantee has the same meaning throughout; (d) all references to "this Partnership Guarantee" are to this Partnership Guarantee as modified, supplemented or amended from time to time; (e) all references in this Partnership Guarantee to Articles and Sections are to Articles and Sections of this Partnership Guarantee, unless otherwise specified; (f) a term defined in the Trust Indenture Act has the same meaning when used in this Partnership Guarantee, unless otherwise defined in this Partnership Guarantee or unless the context otherwise requires; and (g) a reference to the singular includes the plural and vice versa. "Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly controls or is controlled by, or is under 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, 2 by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Affiliate Investment Instrument" shall have the meaning set forth in the Agreement of Limited Partnership. "Comparable Equity Interest" shall mean any preferred security hereafter issued by any finance subsidiary of which the Company is the parent company and the principal purpose of which is to lend the proceeds of the sale thereof to the Company or to eligible affiliates of the Company. "Corporate Trust Office" means the principal trust office of the Partnership Guarantee Trustee at which, at any particular time, its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, 21st Floor, New York, New York 10286, Attention: Corporate Trust Trustee Administration. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Partnership Guarantee. "Guarantee Payments" shall mean the following payments or distributions, without duplication, with respect to the Partnership Preferred Securities, to the extent not paid or made by the Partnership: (i) any accumulated and unpaid distributions that have theretofore been declared on the Partnership Preferred Securities out of funds legally available therefor, (ii) the redemption price, including all accumulated and unpaid Distributions to the date of redemption (the "Redemption Price"), payable out of funds legally available therefor, with respect to any Partnership Preferred Securities called for redemption by the Partnership, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Partnership, the lesser of (a) the aggregate of the liquidation preference and all accumulated and unpaid distributions on the Partnership Preferred Securities to the date of payment and (b) the amount of assets of the Partnership after satisfaction of all liabilities remaining available for distribution to Holders in liquidation of the Partnership (in either case, the "Liquidation Distribution"). "Holder" shall mean any holder, as registered on the books and records of the Partnership, of any Partnership Preferred 3 Securities; provided, however, that in determining whether the holders of the requisite percentage of Partnership Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any entity owned more than 50% by the Guarantor, either directly or indirectly. "Indemnified Person" means the Partnership Guarantee Trustee, any Affiliate of the Partnership Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Partnership Guarantee Trustee. "Investment Affiliate" means the Company or any corporation, partnership, limited liability company or other entity (other than the Partnership, the general partner of the Partnership or the Trust) that is controlled by the Company and is not an investment company by reason of Section 3(a) or 3(b) of the 1940 Act. "Investment Event of Default" means an event of default under any Affiliate Investment Instrument that is a debt instrument or the breach by an Investment Affiliate of its obligations under any Affiliate Investment Instrument that is an equity instrument. "Majority in liquidation preference of the Partnership Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by the Holders of Partnership Preferred Securities, voting separately as a class, 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 Partnership Preferred Securities. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Partnership Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definition relating thereto; 4 (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Partnership" means HEI Preferred Funding, L.P. "Partnership Guarantee Trustee" means The Bank of New York, a New York banking corporation, until a Successor Partnership Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Partnership Guarantee and thereafter means each such Successor Partnership Guarantee Trustee. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" means, with respect to the Partnership Guarantee Trustee, any officer within the Corporate Trust Office of the Partnership Guarantee Trustee, including any vice president, any assistant vice president, any assistant secretary, any assistant treasurer or other officer of the Trust Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Partnership Guarantee Trustee" means a successor Partnership Guarantee Trustee possessing the qualifications to act as Partnership Guarantee Trustee under Section 4.1. 5 "Trust" means Hawaiian Electric Industries Capital Trust I, a Delaware statutory business trust. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application (a) This Partnership Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Partnership Guarantee and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this Partnership Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, the duties imposed by the Trust Indenture Act shall control. SECTION 2.2 Lists of Holders of Securities (a) The Partnership Guarantee 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 Holders of Partnership Preferred Securities. If the Partnership Trustee is not the Registrar, the Guarantor shall furnish to the Partnership Guarantee Trustee semi-annually on or before the last day of June and December in each year, and at such other times as the Partnership Guarantee Trustee may request in writing, a list, in such form and as of such date as the Partnership Guarantee Trustee may reasonably require, containing all the information in the possession or control of the Registrar, the Guarantor or any of its Paying Agents other than the Partnership Guarantee Trustee as to the names and addresses of Holders of Partnership Preferred Securities. If there are unregistered securities outstanding, even if the Partnership Guarantee Trustee is the Registrar, the Company shall furnish to the Partnership Guarantee Trustee such a list containing such information with respect to Holders of such unregistered securities only. 6 (b) The Partnership Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 2.3 Reports by the Partnership Guarantee Trustee Within 60 days after May 15 of each year, the Partnership Guarantee Trustee shall provide to the Holders of the Partnership Preferred Securities 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 Partnership Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.4 Periodic Reports to the Partnership Guarantee Trustee The Guarantor shall provide to the Partnership Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 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 Partnership Guarantee Trustee is for informational purposes only and the Partnership Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein. SECTION 2.5 Evidence of Compliance with Conditions Precedent The Guarantor shall provide to the Partnership Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Partnership Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver The Holders of a Majority in liquidation amount of Partnership Preferred Securities may, by vote, on behalf of the Holders of all of the Partnership Preferred Securities, 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 Partnership Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 7 SECTION 2.7 Event of Default; Notice (a) The Partnership Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Partnership Preferred Securities, notices of all Events of Default actually known to a Responsible Officer of the Partnership Guarantee Trustee, unless such defaults have been cured before the giving of such notice; provided, however, that the Partnership Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Partnership Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Partnership Preferred Securities. (b) The Partnership Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Partnership Guarantee Trustee shall have received written notice, or of which a Responsible Officer of the Partnership Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge. SECTION 2.8 Conflicting Interests The Trust Agreement shall be deemed to be specifically described in this Partnership Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF THE PARTNERSHIP GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Partnership Guarantee Trustee (a) This Partnership Guarantee shall be held by the Partnership Guarantee Trustee for the benefit of the Holders of the Partnership Preferred Securities, and the Partnership Guarantee Trustee shall not transfer this Partnership Preferred Guarantee to any Person except a Holder of Partnership Preferred Securities exercising his or her rights pursuant to Section 5.4(b) or to a Successor Partnership Guarantee Trustee 8 on acceptance by such Successor Partnership Guarantee Trustee of its appointment to act as Successor Partnership Guarantee Trustee. The right, title and interest of the Partnership Guarantee Trustee shall automatically vest in any Successor Partnership Guarantee Trustee, 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 Partnership Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Partnership Guarantee Trustee has occurred and is continuing, the Partnership Guarantee Trustee shall enforce this Partnership Guarantee for the benefit of the Holders of the Partnership Preferred Securities. (c) The Partnership Guarantee Trustee, during the period before the occurrence of any Event of Default and during the period after the curing or waiver of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Partnership Guarantee, and no implied covenants shall be read into this Partnership Guarantee against the Partnership Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Partnership Guarantee Trustee, the Partnership Guarantee Trustee shall exercise such of the rights and powers vested in it by this Partnership Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Partnership Guarantee shall be construed to relieve the Partnership Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) During the period prior to the occurrence of any Event of Default and during the period after the curing or waiving of any Events of Default that may occur: (A) the duties and obligations of the Partnership Guarantee Trustee shall be determined solely by the express provisions of this Partnership Guarantee, and the Partnership Guarantee Trustee shall not be liable except for the performance of 9 such duties and obligations as are specifically set forth in this Partnership Guarantee, and no implied covenants or obligations shall be read into this Partnership Guarantee against the Partnership Guarantee Trustee; and (B) in the absence of bad faith on the part of the Partnership Guarantee Trustee, the Partnership 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 Partnership Guarantee Trustee and conforming to the requirements of this Partnership Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Partnership Guarantee Trustee, the Partnership Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Partnership Guarantee; (ii) The Partnership Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Partnership Guarantee Trustee, unless it shall be proved that the Partnership Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) The Partnership 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 Partnership Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Partnership 10 Guarantee Trustee, or exercising any trust or power conferred upon the Partnership Guarantee Trustee under this Partnership Guarantee; and (iv) No provision of this Partnership Guarantee shall require the Partnership 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 Partnership 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 Partnership Guarantee or indemnity, reasonably satisfactory to the Partnership Guarantee Trustee, against such risk or liability is not reasonably assured to it. SECTION 3.2 Certain Rights of the Partnership Guarantee Trustee (a) Subject to the provisions of Section 3.1: (i) The Partnership Guarantee Trustee may conclusively 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. (ii) Any direction or act of the Guarantor contemplated by this Partnership Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Partnership Guarantee, the Partnership Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Partnership Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. 11 (iv) The Partnership Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or registration thereof). (v) The Partnership Guarantee Trustee may, at the expense of the Sponsor, consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters 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 accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Partnership Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Partnership Guarantee from any court of competent jurisdiction. (vi) The Partnership Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Partnership Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Partnership Guarantee Trustee such security and indemnity, reasonably satisfactory to the Partnership Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Partnership Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Partnership Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Partnership Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Partnership Guarantee. (vii) The Partnership 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, 12 note, other evidence of indebtedness or other paper or document, but the Partnership Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (viii) The Partnership Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Partnership Guarantee 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. (ix) Any action taken by the Partnership Guarantee Trustee or its agents hereunder shall bind the Holders of the Partnership Preferred Securities, and the signature of the Partnership Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Partnership Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Partnership Guarantee, both of which shall be conclusively evidenced by the Partnership Guarantee Trustee or its agent taking such action. (x) Whenever in the administration of this Partnership Guarantee the Partnership Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Partnership Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Partnership Preferred Securities, (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 conclusively relying on or acting in accordance with such instructions. (xi) The Partnership 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 Partnership Guarantee. 13 (b) No provision of this Partnership Guarantee shall be deemed to impose any duty or obligation on the Partnership 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 Partnership 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 Partnership Guarantee Trustee shall be construed to be a duty. SECTION 3.3 Not Responsible for Recitals or Issuance of the Partnership Guarantee The recitals contained in this Partnership Guarantee shall be taken as the statements of the Guarantor, and the Partnership Guarantee Trustee does not assume any responsibility for their correctness. The Partnership Guarantee Trustee makes no representation as to the validity or sufficiency of this Partnership Guarantee. ARTICLE IV THE PARTNERSHIP GUARANTEE TRUSTEE SECTION 4.1 The Partnership Guarantee Trustee; Eligibility (a) There shall at all times be a Partnership Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the 14 requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), 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 Partnership Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Partnership Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Partnership Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Partnership Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2 Appointment, Removal and Resignation of the Partnership Guarantee Trustee (a) Subject to Section 4.2(b), the Partnership Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default. (b) The Partnership Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Partnership Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Partnership Guarantee Trustee and delivered to the Guarantor. (c) The Partnership Guarantee Trustee appointed to office shall hold office until a Successor Partnership Guarantee Trustee shall have been appointed or until its removal or resignation. The Partnership Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Partnership Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Partnership Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Partnership Guarantee Trustee and delivered to the Guarantor and the resigning Partnership Guarantee Trustee. 15 (d) If no Successor Partnership Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of removal or resignation, the Partnership Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Partnership Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Partnership Guarantee Trustee. (e) No Partnership Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Partnership Guarantee Trustee. (f) Upon termination of this Partnership Guarantee or removal or resignation of the Partnership Guarantee Trustee pursuant to this Section 4.2, and before the appointment of any Successor Partnership Guarantee Trustee the Guarantor shall pay to the Partnership Guarantee Trustee all amounts to which it is entitled to the date of such termination, removal or resignation. SECTION 4.3 Successor to the Partnership Guarantee Trustee by Merger, Consolidation or Succession to Business. Any corporation into which the Partnership Guarantee Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Partnership Guarantee Trustee, shall be the successor of the Partnership Guarantee Trustee hereunder, provided such corporation shall be qualified and eligible under the provisions of Section 4.1(a), without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. ARTICLE V THE PARTNERSHIP GUARANTEE SECTION 5.1 Guarantee. (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments, as and when due (without duplication of amounts theretofore paid by the Partnership), regardless of any defense, right of setoff or counterclaim which the Partnership 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 Partnership to pay such amounts to the Holders. (b) To the extent the same has not been paid by the General Partner, the Guarantor irrevocably and unconditionally agrees to pay in full, as and when due, without duplication of any amounts actually paid by the General Partner, all debts, obligations, liabilities or expenses which the General Partner is responsible for pursuant to the Agreement of Limited Partnership, including, without limitation, those debts, obligations, liabilities or expenses set forth in Sections 9.1, 9.2 and 11.3 thereof. 16 SECTION 5.2 Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Partnership 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 Partnership, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.3 Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Partnership Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Partnership of any express or implied agreement, covenant, term or condition relating to the Partnership Preferred Securities to be performed or observed by the Partnership; (b) the extension of time for the payment by the Partnership of all or any portion of the distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Partnership Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Partnership Preferred Securities; provided that nothing in this Partnership Guarantee shall affect or impair any valid extension of time for payment of such sums; (c) 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 Partnership Preferred Securities, or any action on the part of the Partnership granting indulgence or extension of any kind; (d) 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 17 debt of, or other similar proceedings affecting, the Partnership or any of the assets of the Partnership; (e) any invalidity of, or defect or deficiency in, the Partnership Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) 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 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4 Rights of Holders The Guarantor expressly acknowledges that (i) this Partnership Guarantee will be deposited with the General Partner to be held for the benefit of the Holders; (ii) in the event of the appointment of a Special Representative to, among other things, enforce this Partnership Guarantee, the Special Representative may take possession of this Partnership Guarantee for such purpose; (iii) if no Special Representative has been appointed, the General Partner has the right to enforce this Partnership Guarantee on behalf of the Holders; (iv) the Holders of not less than a Majority in liquidation preference of the Partnership Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available in respect of this Partnership Guarantee including the giving of directions to the General Partner or the Special Representative, as the case may be; and (v) if the General Partner or Special Representative fails to enforce this Partnership Guarantee as above provided, any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Partnership Guarantee, without first instituting a legal proceeding against the Partnership 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 against the Guarantor to 18 enforce such Guarantee Payment under this Partnership Guarantee. SECTION 5.5 Guarantee of Payment This Partnership Guarantee will constitute a guarantee of payment and not of collection. SECTION 5.6 Subrogation The Guarantor shall be subrogated to all (if any) rights of the Holders against the Partnership in respect of any amounts paid to the Holders by the Guarantor under this Partnership Guarantee; 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 Partnership Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Partnership 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 5.7 Independent Obligations The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Partnership with respect to the Partnership 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 Partnership Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions So long as any Partnership Preferred Securities remain outstanding, if (a) for any distribution period, full distributions on a cumulative basis on any Partnership 19 Preferred Securities have not been paid or declared and set apart for payment (b) an Investment Event of Default by any Investment Affiliate in respect of any Affiliate Investment Instrument has occurred and is continuing and the Guarantor has not performed its obligations with respect thereto under an applicable Investment Guarantee or (c) the Guarantor shall be in default with respect to its payment obligations under this Partnership Guarantee, the Trust Preferred Securities Guarantee or the Trust Common Securities Guarantee then, during such period (i) the Company shall not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to any of its capital stock (except for dividends or distributions in shares of its common stock and exchanges or conversions of common stock of one class for common stock of another class and other than (x) purchases or acquisitions of shares of its Common Stock in connection with the satisfaction by the Company of its obligations under any employee benefit plans or any other contractual obligation of the Company (other than a contractual obligation ranking pari passu with or junior to any Affiliate Investment Instrument), (y) as a result of a reclassification of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of the Company's capital stock or (z) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged), (ii) the Company shall not make any payment or cause any payment to be made that would result in and shall take such action as shall be necessary to prevent, the payment of dividends on, any distribution with respect to, any redemption, purchase or other acquisition of, or any liquidation payment with respect to, any Comparable Equity Interest, and (iii) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to this Partnership Guarantee or any other guarantee by the Company with respect to any Comparable Equity Interest). SECTION 6.2 Ranking This Partnership Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including, without limitation, the fees, charges, expenses and indemnities due to the Property Trustee or the 20 Delaware Trustee in respect of the Trust Agreement, to the Trust Guarantee Trustee in respect of the Trust Preferred Securities Guarantee, to the Investment Guarantee Trustee in respect of the Investment Guarantee and to the Partnership Guarantee Trustee in respect of this Partnership Guarantee, (ii) pari passu with (A) the most senior preferred or preference stock now or hereafter issued by the Guarantor, (B) each Investment Guarantee related to an Affiliate Investment Instrument, (C) the Trust Preferred Securities Guarantee, (D) any guarantee hereafter entered into by the Guarantor in respect of any preferred security (similar to the Trust Preferred Securities or the Partnership Preferred Securities) of the Guarantor or any Affiliate of the Guarantor, and (E) any other obligation of the Guarantor expressly stated to rank pari passu with this Partnership Guarantee or any of the foregoing, (iii) senior to the Guarantor's common stock. Any similar guarantee given hereafter by the Company with respect to Partnership Preferred Securities that is silent as to seniority will rank pari passu with this Partnership Guarantee. ARTICLE VII TERMINATION SECTION 7.1 Termination This Partnership Guarantee shall terminate and be of no further force and effect, as to the Partnership Preferred Securities, upon full payment of the Redemption Price of all Partnership Preferred Securities, and will terminate completely upon full payment of the amounts payable in accordance with the Agreement of Limited Partnership upon liquidation of the Partnership. This Partnership Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must, in accordance with Delaware Revised Uniform Limited Partnership Act, restore payment of any sums paid under any Partnership Preferred Securities or this Partnership Guarantee. 21 ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 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 Partnership 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 Partnership 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 Distributions to Holders of Partnership Preferred Securities might properly be paid. SECTION 8.2 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 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 22 obligation to indemnify as set forth in this Section 8.2 shall survive the termination of this Partnership Guarantee or the earlier resignation or removal of the Trust Guarantee Trustee. ARTICLE IX COVENANTS OF THE GUARANTOR SECTION 9.1 Owner of Interest in the Partnership For so long as the Partnership Preferred Securities remain outstanding, the Guarantor hereby covenants and agrees that it will, directly or indirectly, maintain 100% ownership of the General Partner's interest in the Partnership. SECTION 9.2 Merger of the Guarantor The Guarantor covenants that it will not merge or consolidate with any other corporation or other entity or sell or convey all or substantially all of its assets to any Person (other than such a sale or conveyance to a Subsidiary or any successor thereto (such a sale or conveyance being called an "Asset Drop- Down")), unless (i) either the Guarantor shall be the continuing corporation or the successor corporation or other entity or the Person which acquires by sale or conveyance substantially all the assets of the Guarantor shall expressly assume the obligations of the Guarantor hereunder, according to their tenor, and the due and punctual performance and observance of all of the covenants hereof to be performed or observed by the Guarantor, by instrument in form satisfactory to the General Partner, executed and delivered to the General Partner by such corporation or other entity, and (ii) the Guarantor or such successor corporation or other entity, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. In the event of any Asset Drop- Down after the date hereof, any subsequent sale or conveyance of assets by a Subsidiary to which assets were transferred in such Asset Drop-Down will be deemed to be a sale or conveyance of assets by the Company for purposes of this provision. ARTICLE X MISCELLANEOUS SECTION 10.1 Successors and Assigns All guarantees and agreements contained in this Partnership Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Partnership Preferred Securities then outstanding. SECTION 10.2 Amendments Except with respect to any changes which do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Partnership Guarantee may only be amended with the prior approval of the Holders of not less than a Majority in liquidation preference of the Partnership Preferred Securities. The provisions of Section 14.3 of the Agreement of Limited Partnership with respect to meetings of Holders of the Partnership Preferred Securities apply to the giving of such approval. 23 SECTION 10.3 Notices All notices provided for in this Partnership Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) If given to the Partnership Guarantee Trustee, at the Partnership Guarantee Trustee's mailing address set forth below: The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 Attention: Corporate Trust Trustee Administration Telecopy: (212)815-5915 (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Partnership Preferred Securities): Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Attention: Treasurer Telecopy: (808) 543-7966 (c) If given to any Holder of Partnership Preferred Securities, at the address set forth on the books and records of the Trust. All such notices 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 24 given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 10.4 Gender The masculine, feminine and neuter genders used herein shall include the masculine, feminine and neuter genders. SECTION 10.5 Benefit This Partnership Guarantee is solely for the benefit of the Holders and is not separately transferable from the Partnership Preferred Securities. 25 SECTION 10.6 Governing Law THIS PARTNERSHIP GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. THIS PARTNERSHIP GUARANTEE AGREEMENT is executed as of the day and year first above written. HAWAIIAN ELECTRIC INDUSTRIES, INC. By: ______________________________ Name: Title: By: ______________________________ Name: Title: THE BANK OF NEW YORK, as Partnership Guarantee Trustee By: _____________________________ Name: Title: 26 EX-4.(Q) 15 FORM OF AFFILIATE DEBENTURE GUARANTEE AGMT. Exhibit 4(q) =============================================================== AFFILIATE INVESTMENT INSTRUMENTS GUARANTEE AGREEMENT HAWAIIAN ELECTRIC INDUSTRIES, INC. DATED AS OF JANUARY __, 1997 =============================================================== TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation......................... 2 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application....................... 5 SECTION 2.2 Lists of Holders of Securities......................... 6 SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee....... 6 SECTION 2.4 Periodic Reports to the Trust Preferred Guarantee Trustee................................................ 6 SECTION 2.5 Evidence of Compliance with Conditions Precedent....... 7 SECTION 2.6 Events of Default; Waiver.............................. 7 SECTION 2.7 Event of Default; Notice............................... 7 SECTION 2.8 Conflicting Interests.................................. 8 ARTICLE III POWERS, DUTIES AND RIGHTS OF THE INVESTMENT GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Investment Guarantee Trustee.. 8 SECTION 3.2 Certain Rights of the Investment Guarantee Trustee..... 10 SECTION 3.3 Not Responsible for Recitals or Issuance of the Investment Guarantee................................... 13 ARTICLE IV THE INVESTMENT GUARANTEE TRUSTEE SECTION 4.1 The Investment Guarantee Trustee; Eligibility.......... 13 SECTION 4.2 Appointment, Removal and Resignation of the Investment Guarantee Trustee...................................... 14 SECTION 4.3 Successor to the Investment Guarantee Trustee by Merger, Consolidation or Successor to Business................. 15
ARTICLE V THE INVESTMENT GUARANTEE SECTION 5.1 Guarantee............................................. 15 SECTION 5.2 Waiver of Notice and Demand........................... 16 SECTION 5.3 Obligations Not Affected.............................. 16 SECTION 5.4 Rights of Holders..................................... 17 SECTION 5.5 Guarantee of Payment.................................. 18 SECTION 5.6 Subrogation........................................... 18 SECTION 5.7 Independent Obligations............................... 18 ARTICLE VI SUBORDINATION SECTION 6.1 Ranking............................................... 18 ARTICLE VII TERMINATION SECTION 7.1 Termination........................................... 19 ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 Exculpation........................................... 19 SECTION 8.2 Indemnification....................................... 20 ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns................................ 20 SECTION 9.2 Amendments............................................ 21 SECTION 9.3 Merger of the Guarantor............................... 21 SECTION 9.4 Notices............................................... 21 SECTION 9.5 Benefit............................................... 22 SECTION 9.6 Governing Law......................................... 23 CROSS-REFERENCE TABLE* SECTION OF SECTION OF TRUST INDENTURE ACT GUARANTEE OF 1939, AS AMENDED AGREEMENT ------------------- ---------- 310(a) 4.1(a) 310(b) 4.1(c), 2.8 310(c) Inapplicable 311(a) 2.2(b) 311(b) 2.2(b) 311(c) Inapplicable 312(a) 2.2(a) 312(b) 2.2(b) 313 2.3 314(a) 2.4 314(b) Inapplicable 314(c) 2.5 314(d) Inapplicable 314(e) 1.1, 2.5, 3.2 314(f) 2.1, 3.2 315(a) 3.1(d) 315(b) 2.7 315(c) 3.1 315(d) 3.1(d) 316(a) 1.1, 2.6, 5.4 316(b) 5.3 316(c) 9.2 317(a) Inapplicable 317(b) Inapplicable 318(a) 2.1(b) 318(b) 2.1 318(c) 2.1(a) - ---- * This Cross-Reference Table does not constitute part of this Affiliate Investment Instrument Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.
AFFILIATE INVESTMENT INSTRUMENTS GUARANTEE AGREEMENT This AFFILIATE INVESTMENT INSTRUMENTS GUARANTEE AGREEMENT (this "Investment Guarantee"), dated as of February __, 1997, is executed and delivered by Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Guarantor"), and The Bank of New York, a New York banking corporation, as trustee (the "Investment Guarantee Trustee"), for the benefit of the Holders (as defined herein) of the Affiliate Debentures (as defined herein) of [NAME OF ISSUER], a _______________ corporation (the "Issuer"). WHEREAS, pursuant to a Junior Subordinated Indenture (the "Affiliate Indenture"), dated as of February __, 1997, between the Issuer and The Bank of New York, as indenture trustee (in such capacity, the "Indenture Trustee"), the Issuer is issuing to the Holders on the date hereof its __% Junior Subordinated Debentures Due February __, 2017 (the "Affiliate Debentures"); WHEREAS, as incentive for the Holders to purchase the Affiliate Debentures, the Guarantor desires irrevocably and unconditionally to agree to make Guarantee Payments (as defined herein) to the Holders of the Affiliate Debentures on the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the purchase by the Holders of the Affiliate Debentures, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Investment Guarantee for the benefit of the Holders. 1 ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation In this Investment Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Investment Guarantee but not defined in the Preamble above have the respective meanings assigned to them in this Section 1.1; (b) capitalized terms used in this Investment Guarantee but not otherwise defined herein shall have the meanings assigned to them in the Affiliate Indenture; (c) a term defined anywhere in this Investment Guarantee has the same meaning throughout; (d) all references to "this Investment Guarantee" are to this Investment Guarantee as modified, supplemented or amended from time to time; (e) all references in this Investment Guarantee to Articles and Sections are to Articles and Sections of this Investment Guarantee, unless otherwise specified; (f) a term defined in the Trust Indenture Act has the same meaning when used in this Investment Guarantee, unless otherwise defined in this Investment Guarantee or unless the context otherwise requires; and (g) a reference to the singular includes the plural and vice versa. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 2 "Agreement of Limited Partnership" means the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of February __, 1997, among Hycap Management, Inc., a Delaware corporation, as general partner, Hawaiian Electric Industries Capital Trust I, a Delaware statutory business trust, as initial limited partner, and such other persons who become limited partners as provided therein. "Business Day" means a day other than a day on which banking institutions in the City of New York, State of New York are authorized or required by law to close. "Corporate Trust Office" means the office of the Investment Guarantee Trustee at which the corporate trust business of the Investment Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 101 Barclay Street, 21st Floor, New York, New York 10286. "Covered Person" means the Holder or any beneficial owner of the Affiliate Debentures. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Investment Guarantee. "Guarantee Payments" means, with respect to the Affiliate Debentures, to the extent not paid or made by the Issuer, the due and punctual payment of the principal of and premium, if any, and interest on the Affiliate Debentures, when and as the same shall become due and payable, whether at maturity or upon declaration of acceleration or otherwise, according to the terms of the Affiliate Debentures and of the Affiliate Indenture. "Holder" shall mean any and each holder, as registered on the books and records of the Issuer, of the Affiliate Debentures. The initial Holder of the Affiliate Debentures is the Partnership. "Indemnified Person" means the Investment Guarantee Trustee, any Affiliate of the Investment Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Investment Guarantee Trustee. 3 "Investment Guarantee Trustee" means The Bank of New York, a New York banking corporation, until a Successor Investment Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Investment Guarantee and thereafter means each such Successor Investment Guarantee Trustee. "Majority in principal amount of the Affiliate Debentures" means, except as provided by the Trust Indenture Act, a vote by Holders of the Affiliate Debentures, voting separately as a class, of more than 50% of the outstanding principal amount of the Affiliate Debentures plus accrued and unpaid interest to the date upon which the voting percentages are determined. "Officers' Certificate" means, with respect to any Person, a certificate signed by two authorized officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Investment Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate 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 each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition of covenant has been complied with. "Partnership" means HEI Preferred Funding, LP, a Delaware limited partnership. "Partnership Preferred Securities" means those securities representing limited partner interests in the Partnership. 4 "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" means, with respect to the Investment Guarantee Trustee, any officer within the Corporate Trust Office of the Investment Guarantee Trustee, including any vice president, any assistant vice president, any assistant secretary, any assistant treasurer or other officer of the Corporate Trust Office of the Investment Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Investment Guarantee Trustee" means a successor Investment Guarantee Trustee possessing the qualifications to act as Investment Guarantee Trustee under Section 4.1. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Investment Guarantee Trustee" means The Bank of New York, a New York banking corporation, until a Successor Investment Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Investment Guarantee and thereafter means each such Successor Investment Guarantee Trustee. ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application (a) This Investment Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Investment Guarantee and shall, to the extent applicable, be governed by such provisions. 5 (b) If and to the extent that any provision of this Investment Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, the duties imposed by the Trust Indenture Act shall control. SECTION 2.2 Lists of Holders of Securities (a) The Guarantor shall provide the Investment Guarantee Trustee with a list, in such form as the Investment Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the Affiliate Debentures ("List of Holders") as of such date, (i) within one (1) Business Day after January 1 and June 30 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Investment Guarantee Trustee; provided, however, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Investment Guarantee Trustee by the Guarantor. The Investment Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Investment Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 2.3 Reports by the Trust Preferred Guarantee Trustee Within 60 days after May 15 of each year, the Investment Guarantee Trustee shall provide to the Holders of the Affiliate Debentures 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 Investment Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.4 Periodic Reports to the Trust Preferred Guarantee Trustee The Guarantor shall provide to the Investment Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the 6 manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Investment Guarantee Trustee is for informational purposes only and the Investment Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein. SECTION 2.5 Evidence of Compliance with Conditions Precedent The Guarantor shall provide to the Investment Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Investment Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver The Holders of a Majority in liquidation amount of the Affiliate Debentures may, by vote, on behalf of the Holders of the Affiliate 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 Investment Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 2.7 Event of Default; Notice (a) The Investment Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Affiliate Debentures, notices of all Events of Default actually known to a Responsible Officer of the Investment Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, the Investment Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Investment Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Affiliate Debentures. (b) The Investment Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Investment Guarantee Trustee shall have received written notice, or of which a Responsible Officer of the Investment Guarantee Trustee 7 charged with the administration of the Affiliate Debentures shall have obtained actual knowledge. SECTION 2.8 Conflicting Interests The Affiliate Debentures shall be deemed to be specifically described in this Investment Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF THE INVESTMENT GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Investment Guarantee Trustee (a) This Investment Guarantee shall be held by the Investment Guarantee Trustee for the benefit of the Holders of the Affiliate Debentures, and the Investment Guarantee Trustee shall not transfer this Investment Guarantee to any Person except a Holder of the Affiliate Debentures exercising his or her rights pursuant to Section 5.4(b) or to a Successor Investment Guarantee Trustee on acceptance by such Successor Investment Guarantee Trustee of its appointment to act as Successor Investment Guarantee Trustee. The right, title and interest of the Investment Guarantee Trustee shall automatically vest in any Successor Investment Guarantee Trustee, 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 Investment Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Investment Guarantee Trustee has occurred and is continuing, the Investment Guarantee Trustee shall enforce this Investment Guarantee for the benefit of the Holders of the Affiliate Debentures. (c) The Investment Guarantee Trustee, during the period before the occurrence of any Event of Default and during the period after the curing or waiver of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Investment Guarantee, and no implied covenants shall be read into this Investment 8 Guarantee against the Investment Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Investment Guarantee Trustee, the Investment Guarantee Trustee shall exercise such of the rights and powers vested in it by this Investment Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Investment Guarantee shall be construed to relieve the Investment Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) 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 Investment Guarantee Trustee shall be determined solely by the express provisions of this Investment Guarantee, and the Investment Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Investment Guarantee, and no implied covenants or obligations shall be read into this Investment Guarantee against the Investment Guarantee Trustee; and (B) in the absence of bad faith on the part of the Investment Guarantee Trustee, the Investment 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 Investment Guarantee Trustee and conforming to the requirements of this Investment Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Investment Guarantee Trustee, the Investment Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Investment Guarantee; 9 (ii) the Investment Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Investment Guarantee Trustee, unless it shall be proved that the Investment Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Investment 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 the Affiliate Debentures relating to the time, method and place of conducting any proceeding for any remedy available to the Investment Guarantee Trustee, or exercising any trust or power conferred upon the Investment Guarantee Trustee under this Investment Guarantee; and (iv) no provision of this Investment Guarantee shall require the Investment 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 Investment 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 Investment Guarantee or indemnity, reasonably satisfactory to the Investment Guarantee Trustee, against such risk or liability is not reasonably assured to it. SECTION 3.2 Certain Rights of the Investment Guarantee Trustee (a) Subject to the provisions of Section 3.1: (i) The Investment Guarantee Trustee may conclusively 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. 10 (ii) Any direction or act of the Guarantor contemplated by this Investment Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Investment Guarantee, the Investment Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Investment Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Investment Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or reregistration thereof). (v) The Investment Guarantee Trustee may, at the expense of the Guarantor, consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters 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 accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Investment Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Investment Guarantee from any court of competent jurisdiction. (vi) The Investment Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Investment Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Investment Guarantee Trustee such security and indemnity, reasonably satisfactory to the Investment Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Investment Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including 11 such reasonable advances as may be requested by the Investment Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Investment Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Investment Guarantee. (vii) The Investment 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 Investment Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (viii) The Investment Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Investment Guarantee 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. (ix) Any action taken by the Investment Guarantee Trustee or its agents hereunder shall bind the Holders of the Affiliate Debentures, and the signature of the Investment Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Investment Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Investment Guarantee, both of which shall be conclusively evidenced by the Investment Guarantee Trustee or its agent taking such action. (x) Whenever in the administration of this Investment Guarantee the Investment Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Investment Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Affiliate 12 Debentures, (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 conclusively relying on or acting in accordance with such instructions. (xi) The Investment 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 Investment Guarantee. (b) No provision of this Investment Guarantee shall be deemed to impose any duty or obligation on the Investment 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 Investment 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 Investment Guarantee Trustee shall be construed to be a duty. SECTION 3.3 Not Responsible for Recitals or Issuance of the Investment Guarantee The recitals contained in this Investment Guarantee shall be taken as the statements of the Guarantor, and the Investment Guarantee Trustee does not assume any responsibility for their correctness. The Investment Guarantee Trustee makes no representation as to the validity or sufficiency of this Investment Guarantee. ARTICLE IV THE INVESTMENT GUARANTEE TRUSTEE SECTION 4.1 The Investment Guarantee Trustee; Eligibility (a) There shall at all times be an Investment Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, 13 or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), 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 Investment Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Investment Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Investment Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Investment Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2 Appointment, Removal and Resignation of the Investment Guarantee Trustee (a) Subject to Section 4.2(b), the Investment Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default. (b) The Investment Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Investment Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Investment Guarantee Trustee and delivered to the Guarantor. (c) The Investment Guarantee Trustee appointed to office shall hold office until a Successor Investment Guarantee Trustee shall have been appointed or until its removal or resignation. The Investment Guarantee Trustee may resign from 14 office (without need for prior or subsequent accounting) by an instrument in writing executed by the Investment Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Investment Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Investment Guarantee Trustee and delivered to the Guarantor and the resigning Investment Guarantee Trustee. (d) If no Successor Investment Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of removal or resignation, the Investment Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Investment Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Investment Guarantee Trustee. (e) No Investment Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Investment Guarantee Trustee. (f) Upon termination of this Investment Guarantee or removal or resignation of the Investment Guarantee Trustee pursuant to this Section 4.2 and before the appointment of any Successor Investment Guarantee Trustee, the Guarantor shall pay to the Investment Guarantee Trustee all amounts to which it is entitled to the date of such termination, removal or resignation. SECTION 4.3 Successor to the Investment Guarantee Trustee by Merger, Consolidation or Succession to Business Any corporation into which the Investment Guarantee Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Investment Guarantee Trustee, shall be the successor of the Investment Guarantee Trustee hereunder, provided such corporation shall be qualified and eligible under the provisions of Section 4.1(a), without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. ARTICLE V THE INVESTMENT GUARANTEE SECTION 5.1 Guarantee The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), if, as and when due (after taking a valid extension of an interest payment period by the Guarantor pursuant to the terms of the Affiliate Debentures), regardless of any defense, right of setoff or counterclaim that the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of 15 the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.2 Waiver of Notice and Demand The Guarantor hereby waives notice of acceptance of this Investment 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 Issuer 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 5.3 Obligations Not Affected The obligations, covenants, agreements and duties of the Guarantor under this Investment Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Affiliate Debentures to be performed or observed by the Issuer; (b) the extension of time for the payment by the Issuer of all or any portion of the interest, principal or premiums, if any, or any other sums payable under the terms of the Affiliate Debentures or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Affiliate Debentures (other than as provided in Section 5.1 with respect to an extension of time for payment of interest during an Extension Period); (c) 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 Affiliate Debentures, or any action on the part of the Holders granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, 16 reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Affiliate Debentures; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) 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 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4 Rights of Holders (a) The Holders of a Majority in principal amount of the Affiliate Debentures have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Investment Guarantee Trustee in respect of this Investment Guarantee or exercising any trust or power conferred upon the Investment Guarantee Trustee under this Investment Guarantee. (b) If the Investment Guarantee Trustee fails to enforce its rights under the Investment Guarantee after a Holder of the Affiliate Debentures has made a written request, such Holder of the Affiliate Debentures may institute a legal proceeding directly against the Guarantor to enforce the Investment Guarantee Trustee's rights under this Investment Guarantee, without first instituting a legal proceeding against the Issuer, the Investment Guarantee Trustee or any other Person. Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder of the Affiliate Debentures may directly institute a proceeding in such Holder's own name against the Guarantor for enforcement of the Investment Guarantee for such payment. The Guarantor waives any right or remedy to require that any action be brought first against the 17 Issuer or any other person or entity before proceeding directly against the Guarantor. SECTION 5.5 Guarantee of Payment This Investment Guarantee creates a guarantee of payment and not of collection. SECTION 5.6 Subrogation The Guarantor shall be subrogated to all (if any) rights of the Holders of Affiliate Debentures against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Investment Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Investment Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Investment 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 5.7 Independent Obligations The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Affiliate Debentures, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Investment Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI SUBORDINATION SECTION 6.1 Ranking This Investment Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including, without limitation, the fees, charges, expenses and indemnities due to the Property Trustee or the 18 Delaware Trustee in respect of the Trust Agreement, to the Trust Guarantee Trustee in respect of the Trust Preferred Securities Guarantee, to the Partnership Guarantee Trustee in resect of the Partnership Guarantee and to the Investment Guarantee Trustee in respect of this Investment Guarantee, (ii) pari passu with (A) the most senior preferred or preference stock now or hereafter issued by the Guarantor (B) the guarantee of any other Affiliate Investment Instrument, (C) the Trust Guarantee, (D) the Partnership Guarantee, (E) any guarantee hereafter entered into by the Guarantor in respect of any preferred security (similar to the Trust Preferred Securities or the Partnership Preferred Securities) of the Guarantor or any Affiliate of the Guarantor, and (F) any other obligation of the Guarantor expressly stated to rank pari passu with this Investment Guarantee or any of the foregoing, and (iii) senior to the Guarantor's common stock. ARTICLE VII TERMINATION SECTION 7.1 Termination This Investment Guarantee shall terminate upon the repayment in full (whether at maturity, upon redemption or otherwise) of all of the principal of, interest on (including all accrued and unpaid interest thereon) and any other amounts payable in respect of the Affiliate Debentures. Notwithstanding the foregoing, this Investment Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of the Affiliate Debentures must restore payment of any sums paid under the Affiliate Debentures or under this Investment Guarantee. ARTICLE VIII EXCULPATION AND INDEMNIFICATION SECTION 8.1 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 Investment Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority 19 conferred on such Indemnified Person by this Investment 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 of the Affiliate Debentures might properly be paid. SECTION 8.2 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 8.2 shall survive the termination of this Investment Guarantee or the earlier resignation or removal of the Investment Guarantee Trustee. ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns All guarantees and agreements contained in this Investment Guarantee shall bind the successors, assigns, receivers, 20 trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Affiliate Debentures then outstanding. SECTION 9.2 Amendments Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Investment Guarantee may only be amended with the prior approval of the holders of at least a majority in liquidation preference of the Partnership Preferred Securities. The provisions of Section 14.3 of the Agreement of Limited Partnership with respect to meetings of Holders of the Partnership Preferred Securities apply to the giving of such approval. SECTION 9.3 Merger of the Guarantor The Guarantor covenants that it will not merge or consolidate with any other corporation or other entity or sell or convey all or substantially all of its assets to any person (other than such a sale or conveyance to a Subsidiary or any successor thereto (such a sale or conveyance being called an "Asset Drop- Down")), unless (i) either the Guarantor shall be the continuing corporation or the successor corporation or other entity or the person which acquires by sale or conveyance substantially all the assets of the Guarantor shall expressly assume the obligations of the Guarantor hereunder, according to their tenor, and the due and punctual performance and observance of all of the covenants hereof to be performed or observed by the Guarantor, by instrument in form satisfactory to the Investment Guarantee Trustee, executed and delivered to the Investment Guarantee Trustee by such corporation or other entity, and (ii) the Guarantor or such successor corporation or other entity, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in default in the performance of any such covenant or condition. In the event of any Asset Drop-Down after the date hereof, any subsequent sale or conveyance of assets by a Subsidiary to which assets were transferred in such Asset Drop- Down will be deemed to be a sale or conveyance of assets by the Company for purposes of this provision. SECTION 9.4 Notices All notices provided for in this Investment Guarantee shall be in writing, duly signed by the party giving such 21 notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) If given to the Investment Guarantee Trustee, at the Investment Guarantee Trustee's mailing address set forth below (or such other address as the Investment Guarantee Trustee may give notice of to the Holders of the Affiliate Debentures): The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 Attention: Corporate Trust Trustee Administration Telecopy: (212) 815-5915 (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Affiliate Debentures): Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Attention: Treasurer Telecopy: (808) 543-7966 (c) If given to any Holder of Affiliate Debentures, at the address set forth on the books and records of the Issuer. All such notices 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 9.5 Benefit This Investment Guarantee is solely for the benefit of the Holders of the Affiliate Debentures and, subject to SectionE3.1(a), is not separately transferable from the Affiliate Debentures. 22 SECTION 9.6 Governing Law THIS INVESTMENT GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. This Investment Guarantee is executed as of the day and year first above written. HAWAIIAN ELECTRIC INDUSTRIES, INC., as Guarantor By: _____________________________ Name: Title: By: _____________________________ Name: Title: THE BANK OF NEW YORK, as Investment Guarantee Trustee By: _____________________________ Name: Title: 23 EX-5.(A) 16 OPINION OF GOODSILL ANDERSON QUINN & STIFEL Exhibit 5(a) ------------ [GOODSILL ANDERSON QUINN & STIFEL LETTERHEAD] January 23, 1997 HAWAIIAN ELECTRIC INDUSTRIES, INC. 900 Richards Street Honolulu, Hawaii 96813 HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III c/o The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 HEI PREFERRED FUNDING, LP c/o Hycap Management, Inc. 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19806 Ladies and Gentlemen: Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), Hawaiian Electric Industries Capital Trust I, a statutory business trust created under the laws of the State of Delaware ("Trust-I"), Hawaiian Electric Industries Capital Trust II, a statutory business trust created under the laws of the State of Delaware ("Trust-II"), Hawaiian Electric Industries Capital Trust III, a statutory business trust created under the laws of the State of Delaware ("Trust-III" and, together with Trust-I and Trust-II, the "Trusts"), Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I Hawaiian Electric Industries Capital Trust II Hawaiian Electric Industries Capital Trust III HEI Preferred Funding, LP Page 2 and HEI Preferred Funding, LP, a Delaware limited partnership (the "Partnership"), have filed a registration statement on Form S-3 under the Securities Act of 1933 (the "Act"), as amended by Amendment No. 1 thereto (as amended, the "Registration Statement"), covering: (i) 4,000,000 ___% Trust Originated Preferred Securities, stated liquidation preference amount $25 per trust preferred security, of Trust-I, (ii) an indeterminate number of Trust Originated Preferred Securities of Trust-II, (iii) an indeterminate number of Trust Originated Preferred Securities of Trust-III, (iv) an indeterminate amount of Senior Debt Securities, Senior Subordinated Debt Securities and Junior Subordinated Debt Securities of the Company, consisting of debentures, notes or other evidences of indebtedness, each in one or more series (collectively, the "Debentures"), (v) an indeterminate number of shares of Preferred Stock of the Company, without par value, in one or more series (the "Preferred Stock"), (vi) an indeterminate number of shares of Common Stock of the Company, without par value, in one or more series (the "Common Stock"), (vii) an indeterminate amount of Partnership Preferred Securities of the Partnership, and (viii) guarantees of the Company with respect to: (a) the Trust Originated Preferred Securities of the Trusts (collectively, the "Trust Guarantees"), (b) the Partnership Preferred Securities of the Partnership (the "Partnership Guarantee") and (c) certain debentures of wholly-owned subsidiaries of the Company (the "Subsidiary Guarantees" and, together with the Trust Guarantees and the Partnership Guarantee, the "Guarantees"). We have examined the Registration Statement and, for purposes of this opinion, we have assumed that it has become effective. We have also examined the Restated Articles of Incorporation of the Company, as amended (the "Articles"), and such appropriate records of the Company, certificates of public officials and other documents as we deem pertinent as a basis for the opinions hereinafter expressed. Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I Hawaiian Electric Industries Capital Trust II Hawaiian Electric Industries Capital Trust III HEI Preferred Funding, LP Page 3 Based on such examination, we are of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Hawaii 2. When the Debentures have been issued and sold in return for the consideration specified therefor and as contemplated in the Registration Statement and each prospectus supplement and amendment relating thereto, the Debentures will be duly authorized and issued and will be valid and binding obligations of the Company, except insofar as the binding effect thereof may be (a) limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar laws now or hereinafter in effect relating to or affecting the enforcement of creditors' rights generally and (b) affected by limitations on the availability of equitable remedies by reason of equitable principles of general applicability (regardless of whether considered in a proceeding at law or in equity). 3. When the relative rights and preferences, designations and limitations of a series of the Preferred Stock shall have been duly fixed by a resolution of the Board of Directors of the Company (the "Board") or by an amendment to the Articles, and when the issuance of the shares of such series shall have been duly authorized in a resolution in which the Board fixes the consideration to be received therefor (or the manner in which it shall be determined) and determines that such consideration is adequate, and when the shares of the series of the Preferred Stock thus established shall have been duly issued and sold in return for the consideration specified in such resolution and as contemplated in the Registration Statement and each prospectus supplement and amendment relating thereto, such shares of the Preferred Stock will be validly issued, fully paid and nonassessable. 4. When the shares of the Common Stock have been duly authorized for issuance by a resolution of the Board which Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I Hawaiian Electric Industries Capital Trust II Hawaiian Electric Industries Capital Trust III HEI Preferred Funding, LP Page 4 fixes the consideration to be received therefor (or the manner in which it shall be determined) and determines that such consideration is adequate, and when the shares of the Common Stock are issued and sold in return for the consideration specified in such resolution and as contemplated in the Registration Statement and each prospectus supplement and amendment relating thereto, the Common Stock will be validly issued, fully paid and nonassessable. 5. When the Guarantees have been duly executed and delivered so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental or regulatory body having jurisdiction over the Company, and when the respective conditions precedent for the obligations of the Company under the Guarantees to arise have been satisfied as contemplated in the Registration Statement and each prospectus supplement and amendment relating thereto, the Guarantees will constitute valid and binding obligations of the Company, except insofar as the binding effect thereof may be (a) limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar laws now or hereinafter in effect relating to or affecting the enforcement of creditors' rights generally and (b) affected by limitations on the availability of equitable remedies by reason of equitable principles of general applicability (regardless of whether considered in a proceeding at law or in equity). We are members of the Bar of the State of Hawaii, and we do not hold ourselves out as experts on the laws of any other jurisdiction. This opinion is limited in all respects to Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I Hawaiian Electric Industries Capital Trust II Hawaiian Electric Industries Capital Trust III HEI Preferred Funding, LP Page 5 matters governed by the laws of the State of Hawaii. We express no opinion concerning compliance with the laws or regulations of any other jurisdiction or jurisdictions, or as to the validity, meaning or effect of any act or document under the laws of any other jurisdiction or jurisdictions. As to matters governed by Delaware law, we are relying on the opinion of Richards, Layton & Finger submitted concurrently herewith as Exhibit 5(b) to the Registration Statement. As to the validity and binding effect of any document that is governed by the laws of a jurisdiction other than the State of Hawaii, to the extent that the validity and binding effect of such document is covered by or relates to this opinion, we have assumed that the laws of such other jurisdiction are identical in all material respects to the laws of the State of Hawaii. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) the legal capacity of natural persons who are signatories to the documents examined by us, (ii) that each of the parties to the documents examined by us has the power and authority to execute Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I Hawaiian Electric Industries Capital Trust II Hawaiian Electric Industries Capital Trust III HEI Preferred Funding, LP Page 6 and deliver, and to perform its obligations under, such documents, (iii) that all documents examined by us have been duly authorized, executed and delivered by all parties thereto (other than the Company). The opinions expressed herein are based on laws and regulations as in effect on the date hereof and facts as we understand them as of the date hereof. We are not assuming any obligation, and do not undertake, to revise, update or supplement this opinion after the date hereof notwithstanding any change in applicable law or regulation or interpretation thereof, any amendment, supplement, modification or rescission of any document examined or relied on in connection herewith, or any change in the facts, after the execution and delivery of this opinion on the date hereof. We hereby consent to the filing of this opinion as Exhibit 5 to the Registration Statement and to the references to our firm under the caption "Legal Matters." 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 EX-5.(B) 17 OPINION OF RICHARDS, LAYTON & FINGER EXHIBIT 5(b) [Letterhead of Richards, Layton & Finger] January 23, 1997 HEI Preferred Funding, LP Hawaiian Electric Industries Capital Trust I c/o Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Re: HEI Preferred Funding, LP and Hawaiian Electric Industries Capital Trust I ------------------------------------------------ Ladies and Gentlemen: We have acted as special Delaware counsel for Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), HEI Preferred Funding, LP, a Delaware limited partnership (the "Partnership"), and Hawaiian Electric Industries Capital Trust I, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Limited Partnership of the Partnership, dated as of December 23, 1996, as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on December 23, 1996; HEI Preferred Funding, LP Hawaiian Electric Industries Capital Trust I January 23, 1997 Page 2 (b) The Agreement of Limited Partnership of the Partnership, dated as of December 23, 1996; (c) The Amended and Restated Certificate of Limited Partnership of the Partnership, dated as of January 23, 1997 (the "Partnership Certificate"), as filed in the office of the Secretary of State on January 23, 1997; (d) The Assignment of General Partner Interest and Amendment to Agreement of Limited Partnership of the Partnership, dated as of January 23, 1997; (e) A form of Amended and Restated Agreement of Limited Partnership of the Partnership (including Annex A thereto) (the "Partnership Agreement"), to be entered into among Hycap Management, Inc., a Delaware corporation, as general partner, the Trust, as initial limited partner, and such other Persons who become limited partners of the Partnership, attached as an exhibit to the Registration Statement (as defined below); (f) The Certificate of Trust of the Trust, dated as of December 19, 1996 (the "Trust Certificate"), as filed in the office of the Secretary of State on December 23, 1996; (g) The Trust Agreement of the Trust, dated as of December 19, 1996, among the Company, and the trustees of the Trust named therein; (h) A form of Amended and Restated Trust Agreement of the Trust (including Exhibits A-1 and A-2 thereto) (the "Trust Agreement"), to be entered into among the Company, as sponsor, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust, attached as an exhibit to the Registration Statement; (i) Amendment No. 1 to the Registration Statement (the "Registration Statement") on Form S-3, including a related preliminary prospectus (the "Prospectus"), and a preliminary prospectus supplement, relating to the ___% Trust Originated Preferred Securities of the Trust representing preferred undivided beneficial interests in the assets of the Trust (each, a "Trust Preferred Security" and collectively, the "Trust Preferred Securities"), and the Partnership Preferred Securities of the Partnership representing limited partner interests in the Partnership (each, a "Partnership Preferred Security" and collectively, the "Partnership Preferred Securities"), as proposed to be filed by the Company, the Partnership, the Trust and others with the Securities and Exchange Commission on or about January 23, 1997; (j) A Certificate of Good Standing for the Partnership, dated January 23, 1997, obtained from the Secretary of State; and (k) A Certificate of Good Standing for the Trust, dated January 23, 1997, obtained from the Secretary of State. HEI Preferred Funding, LP Hawaiian Electric Industries Capital Trust I January 23, 1997 Page 3 Capitalized terms used herein and not otherwise defined are used as defined in the Partnership Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (k) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (k) 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 Partnership Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the admission of partners to, and the creation, operation and termination of, the Partnership, and that the Partnership Agreement and the Partnership Certificate are in full force and effect and have not been amended, (ii) that the Trust Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Agreement and the Trust Certificate are in full force and effect and have not been amended, (iii) except to the extent provided in paragraphs 1 and 5 below, the due creation or the 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 or organization or formation, (iv) the legal capacity of natural persons who are signatories to the documents examined by us, (v) 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, (vi) that all documents examined by us have been duly authorized, executed and delivered by all parties thereto, (vii) the receipt by each Person to whom a Partnership Preferred Security is to be issued by the Partnership (collectively, the "Partnership Preferred Security Holders") of an L.P. Certificate and the payment for the Partnership Preferred Security acquired by it, in accordance with the Partnership Agreement and the HEI Preferred Funding, LP Hawaiian Electric Industries Capital Trust I January 23, 1997 Page 4 Registration Statement, (viii) the receipt by each Person to whom a Trust Preferred Security is to be issued by the Trust (collectively, the "Trust Preferred Security Holders") of a Trust Preferred Security Certificate (as defined in the Trust Agreement) and the payment for the Trust Preferred Security acquired by it, in accordance with the Trust Agreement and the Registration Statement, (ix) that the books and records of the Partnership set forth all information required by the Partnership Agreement and the Delaware Revised Uniform Limited Partnership Act (6 Del. C. (S) 17-101, et seq.) (the ------- -- --- "Partnership Act"), including all information with respect to all Persons to be admitted as Partners and their contributions to the Partnership, (x) that the Partnership Preferred Securities are issued and sold to the Partnership Preferred Security Holders in accordance with the Registration Statement and the Partnership Agreement, and (xi) that the Trust Preferred Securities are issued and sold to the Trust Preferred Security Holders in accordance with the Registration Statement and the Trust Agreement. 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 that 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 Partnership has been duly formed and is validly existing in good standing as a limited partnership under the Partnership Act. 2. The Partnership Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable limited partner interests in the Partnership. 3. Assuming that the Partnership Preferred Security Holders, as limited partners of the Partnership, do not participate in the control of the business of the Partnership, the Partnership Preferred Security Holders, as limited partners of the Partnership, will have no liability in excess of their obligations to make payments provided for in the Partnership Agreement and their share of the Partnership's assets and HEI Preferred Funding, LP Hawaiian Electric Industries Capital Trust I January 23, 1997 Page 5 undistributed profits (subject to the obligation of a Partnership Preferred Security Holder to repay any funds wrongfully distributed to it). 4. There are no provisions in the Partnership Agreement the inclusion of which, subject to the terms and conditions therein, or, assuming that the Partnership Preferred Security Holders, as limited partners of the Partnership, take no action other than actions permitted by the Partnership Agreement, the exercise of which, in accordance with the terms and conditions therein, would cause the Partnership Preferred Security Holders, as limited partners of the Partnership, to be deemed to be participating in the control of the business of the Partnership. 5. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act (12 Del. C. ------- (S) 3801, et seq.). -- --- 6. The Trust Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 7 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 7. The Trust 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 Trust 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. We also consent to Goodsill Anderson Quinn & Stifel's relying as to matters of Delaware law upon this opinion in connection with an opinion to be rendered by it in connection with the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, BJK/jj EX-8 18 TAX OPINION OF GOODSILL ANDERSON QUINN & STIFEL Exhibit 8 --------- [Letterhead of Goodsill Anderson Quinn & Stifel] _______________, 1997 Hawaiian Electric Industries, Inc. 900 Richards Street Honolulu, Hawaii 96813 Hawaiian Electric Industries Capital Trust I c/o The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 HEI Preferred Funding, LP 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19801 Re: Hawaiian Electric Industries Capital Trust I's issuance and sale of Trust Originated Preferred Securities -------------------------------------- Ladies and Gentlemen: We have acted as counsel with respect to federal income tax matters to Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"), the Hawaiian Electric Industries Capital Trust I, a statutory business trust organized under the Business Trust Act of the State of Delaware (the "Trust"), and HEI Preferred Funding, LP, a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act (the "Partnership"), in connection with the preparation and filing by the Company, the Partnership and the Trust with the Securities and Exchange Commission of a Registration Statement on Form S-3 (Registration Nos. 333- 18809, Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I HEI Preferred Funding, LP Page 2 333-18809-01, 333-18809-02, 333-18809-03, 333-18809-04) (as amended, the "Registration Statement")/1/ under the Securities Act of 1933 with respect to (i) the issuance and sale of the Trust Preferred Securities, (ii) the issuance and sale of the Partnership Preferred Securities, (iii) the issuance and sale of the Debentures and (iv) the issuance and sale of the Trust Guarantees, the Partnership Guarantee and the Investment Guarantees. In rendering our opinions, we have reviewed and relied upon (i) the facts set forth in the Registration Statement, (ii) the forms of the Trust Agreement, the Limited Partnership Agreement, the Trust Securities, the Partnership Preferred Securities, the Debentures, the Partnership Guarantee, the Trust Guarantees and the Investment Guarantees, each filed as an exhibit to the Registration Statement, and (iii) certain representations made by officers of the Company and certain of its subsidiaries. On the basis of the foregoing, and assuming that the Partnership and the Trust are formed and will be maintained in compliance with the terms of the Limited Partnership Agreement and the Trust Agreement, respectively, we hereby confirm (i) our opinions set forth in the Registration Statement under the caption "Certain Federal Income Tax Considerations" and (ii) that, subject to the qualifications set forth therein, the discussion set forth in the Registration Statement under such caption is an accurate summary of the United States federal income tax matters described therein. We express no opinion with respect to the transactions described in the Registration Statement other than as expressly set forth herein. Moreover, we note that there is no authority directly on point dealing with securities such as the Trust Preferred Securities or transactions of the type described therein, and that our opinions are not binding on the Internal Revenue Service or the courts, either of which could - ------------------ /1/ Capitalized terms used but not defined herein have the meanings ascribed to them in the Registration Statement. Hawaiian Electric Industries, Inc. Hawaiian Electric Industries Capital Trust I HEI Preferred Funding, LP Page 3 take a contrary position. Nevertheless, we believe that if challenged, the opinions set forth in the Registration Statement would be sustained by a court with jurisdiction in a properly presented case. Our opinions are based upon the Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated thereunder, and other relevant authorities, all as in effect on the date hereof. Consequently, future changes in the law may cause the tax treatment of the transactions referred to herein to be materially different from that described in the Registration Statement. We hereby consent to the use of our name in the Registration Statement and to the filing of this letter as an exhibit to the Registration Statement. In giving this consent, however, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 and the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ GOODSILL ANDERSON QUINN & STIFEL EX-23.(A) 19 CONSENT OF KPMG PEAT MARWICK LLP [KPMG PEAT MARWICK LLP LETTERHEAD APPEARS HERE] Exhibit 23(a) The Board of Directors: Hawaiian Electric Industries, Inc.: We consent to incorporation by reference in the Registration Statement on Form S-3 of Hawaiian Electric Industries, Inc. of our report dated January 25, 1996, relating to the consolidated balance sheets of Hawaiian Electric Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, 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, 1995, which report is incorporated by reference in the December 31, 1995 annual report on Form 10-K/A of Hawaiian Electric Industries, Inc. We also consent to incorporation by reference of our report dated January 25, 1996 relating to the financial statement schedules of Hawaiian Electric Industries, Inc. in the aforementioned December 31, 1995 annual report on Form 10-K/A, which report appears in said Form 10-K/A. /s/ KPMG Peat Marwick LLP Honolulu, Hawaii January 23, 1997 EX-25.(A) 20 STMT OF ELIGIBILITY (HEI CAPITAL TRUST I) 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 (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Hawaii 99-0208097 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 900 Richards Street Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip code) ______________________ Guarantee of Trust Originated Preferred Securities of Hawaiian Electric Industries Capital Trust I (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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(B) 21 STMT OF ELIGIBILITY (HEI CAP TRUST II) 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 (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Hawaii 99-0208097 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 900 Richards Street Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip code) ---------------------- Guarantee of Trust Originated Preferred Securities of Hawaiian Electric Industries Capital Trust II (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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve....... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(C) 22 STMT OF ELIGIBILITY (HEI CAPITAL TRUST III) 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 (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Hawaii 99-0208097 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 900 Richards Street Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip code) ---------------------- Guarantee of Trust Originated Preferred Securities of Hawaiian Electric Industries 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(D) 23 STMT OF ELIGIBILITY (HEI CAPITAL TRUST I) 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 (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I (Exact name of obligor as specified in its charter) Delaware 52-6829385 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) c/o The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 (Address of principal executive offices) (Zip code) ______________________ Trust Originated 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve....... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(E) 24 STMT OF ELIGIBILITY (HEI CAPITAL TRUST II) 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 (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST II (Exact name of obligor as specified in its charter) Delaware 52-6829386 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) c/o The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 (Address of principal executive offices) (Zip code) ______________________ Trust Originated 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve...... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(F) 25 STMT OF ELIGIBILITY (HEI CAPITAL TRUST III) EXHIBIT 25(f) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST III (Exact name of obligor as specified in its charter) Delaware 52-6829387 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) c/o The Bank of New York 101 Barclay Street, 21st Floor New York, New York 10286 (Address of principal executive offices) (Zip code) ______________________ Trust Originated 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/VIVIAN GEORGES ---------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve....... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(G) 26 STMT OF ELIGIBILITY (JUNIOR INDENTURE) EXHIBIT 25(g) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Hawaii 99-0208097 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 900 Richards Street Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip code) ---------------------- Junior Subordinated Debt 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /s/VIVIAN GEORGES ---------------------------------- Name: VIVIAN GEORGES Title: ASSISTANT VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve....... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(H) 27 STMT OF ELIGIBILITY (PARTNERSHIP GUARANTEE) EXHIBIT 25(h) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HAWAIIAN ELECTRIC INDUSTRIES, INC. (Exact name of obligor as specified in its charter) Hawaii 99-0208097 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 900 Richards Street Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip code) ---------------------- Guarantee of Partnership 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/MARY JANE MORRISSEY -------------------------- Name: MARY JANE MORRISSEY Title: VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin.................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve....... 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-25.(I) 28 STMT OF ELIGIBILITY (PARTNERSHIP PREFERRED SECS.) EXHIBIT 25(i) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- HEI PREFERRED FUNDING, LP (Exact name of obligor as specified in its charter) Delaware 52-2007237 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 300 Delaware Avenue, Suite 1704 Wilmington, Delaware 19801 (Address of principal executive offices) (Zip code) ---------------------- Partnership 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 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (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. (See Note on page 3.) 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a- 29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 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. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- 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 21st day of January, 1997. THE BANK OF NEW YORK By: /S/MARY JANE MORRISSEY -------------------------- Name: MARY JANE MORRISSEY Title: VICE PRESIDENT -4- EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts in Thousands ASSETS Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin.................... $ 4,404,522 Interest-bearing balances.............. 732,833 Securities: Held-to-maturity securities............ 789,964 Available-for-sale securities.......... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold..................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income.....................28,728,602 LESS: Allowance for loan and lease losses..................584,525 LESS: Allocated transfer risk reserve...........................429 Loans and leases, net of unearned income, allowance, and reserve 28,143,648 Assets held in trading accounts.......... 1,004,242 Premises and fixed assets (including capitalized leases).................... 605,668 Other real estate owned.................. 41,238 Investments in unconsolidated subsidiaries and associated companies.............................. 205,031 Customers' liability to this bank on acceptances outstanding................ 949,154 Intangible assets........................ 490,524 Other assets............................. 1,305,839 ----------- Total assets............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices.................... $20,441,318 Noninterest-bearing...........8,158,472 Interest-bearing.............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs....... 11,710,903 Noninterest-bearing..............46,182 Interest-bearing.............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................ 1,565,288 Demand notes issued to the U.S. Treasury............................... 293,186 Trading liabilities...................... 826,856 Other borrowed money: With original maturity of one year or less.............................. 2,103,443 With original maturity of more than one year............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding.................. 951,116 Subordinated notes and debentures........ 1,020,400 Other liabilities........................ 1,522,884 ----------- Total liabilities........................ 40,456,160 ----------- EQUITY CAPITAL Common stock............................. 942,284 Surplus.................................. 525,666 Undivided profits and capital reserves... 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.......... ( 2,073) Cumulative foreign currency translation adjustments............................ ( 8,403) ----------- Total equity capital..................... 3,586,850 ----------- Total liabilities and equity capital................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----