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
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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
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/*/ "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
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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
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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.
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(a) Representations and Warranties by Company. The Company represents
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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
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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
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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,
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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
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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.
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(xv) Licenses, Franchises, Trademarks, Easements, etc. The
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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
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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.
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("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").
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(b) Officers' Certificates. Any certificate signed by any officer of
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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
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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
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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
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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
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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.
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(iv) Trust Preferred Securities. The Trust Preferred Securities
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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
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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
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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.
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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