Exhibit 1
$300,000,000
HAWAIIAN ELECTRIC INDUSTRIES, INC.
Medium-Term Notes, Series C
DISTRIBUTION AGREEMENT
----------------------
March [ ], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, SACHS & CO.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Hawaiian Electric Industries, Inc., a Hawaii corporation (the
"Company"), proposes to issue and sell from time to time its Medium-Term Notes,
Series C (the "Securities") in an aggregate amount of up to $300,000,000 and
confirms its agreement with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇, Sachs & Co. (individually, an "Agent"
and, collectively, together with any others who are subsequently appointed as
agents pursuant to Section 2(d) hereof, the "Agents") with respect to such
issuance and sale as set forth in this Agreement.
Subject to the terms and conditions stated herein and subject to the
reservation by the Company of the right to sell Securities directly on its own
behalf as provided in Section 2(b) hereof and to appoint additional Agents as
provided in Section 2(d) hereof, the Company hereby agrees that Securities shall
be sold exclusively to or through the Agents. This Agreement
provides for both the sale of Securities by the Company to the Agents as
principal for resale to investors and other purchasers and for the sale of
Securities by the Company directly to investors (as may from time to time be
agreed to by the Company and the Agents), in which case the Agents shall act as
agents of the Company in soliciting offers for the purchase of Securities,
subject to the Company's right to solicit, sell and accept offers to purchase
Securities directly on its own behalf as provided in Section 2(b) hereof. The
Agents shall not have any obligation to purchase Securities from the Company as
principal. Any such purchase of Securities as principal shall be made in
accordance with Section 2(a) hereof.
The Securities shall be issued under an indenture, dated as of October
15, 1988, between the Company and Citibank, N.A., as trustee (the "Trustee"), as
previously supplemented, and as to be further supplemented by a Second
Supplemental Indenture dated as of March 1, 1999 (such indenture, as so
supplemented, being hereinafter referred to as the "Indenture"). The Securities
shall have the maturity dates (between nine months and thirty years from date of
issue), interest rates, if any, redemption and repayment provisions and other
terms as set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Securities shall be issued, and the terms
and rights thereof established, from time to time by the Company in accordance
with the Indenture.
1. The Company represents and warrants to, and agrees with, each
Agent that as of the date hereof, as of the date of each acceptance by the
Company of an offer for the purchase of Securities (whether to such Agent as
principal or through such Agent as agent), as of the date of each delivery of
Securities (whether to such Agent as principal or through such Agent as agent)
(the date of each such delivery to such Agent as principal is referred to herein
as a "Time of Delivery"), and as of any time that the Registration Statements
(as hereinafter defined) or the Prospectus (as hereinafter defined) shall be
amended or supplemented (each of the times referenced above is referred to
herein as a "Representation Date"), except as may be disclosed in the Prospectus
(including any documents incorporated by reference therein and any supplements
thereto) or otherwise in writing by the Company to the Agents on or before a
Representation Date:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(Registration No. 33-58820), which registration statement, as amended (the
"1993 Registration Statement"), has been declared effective by the
Commission for the registration of various securities under the Securities
Act of 1933, as amended (the "Act"), of which $6,000,000 aggregate
principal amount remains unissued and unsold. The Company (and affiliated
entities) have also filed with the Commission a registration statement on
Form S-3 (Registration Nos. 33-18809, ▇▇-▇▇▇▇▇-▇▇, ▇▇-▇▇▇▇▇-▇▇, ▇▇-▇▇▇▇▇-▇▇
and 33-18809-04), which registration statement, as amended (the "1996
Registration Statement"), has been declared effective by the Commission,
for the registration of various securities under the Act, of which
$200,000,000 aggregate principal amount/offering price remains unissued and
unsold. The Company has also filed with the Commission a registration
statement on Form S-3 (Registration No. 333-_____) (the "1999 Registration
Statement") for the registration of $94,000,000 aggregate principal amount
of, and the redesignation of $206,000,000 aggregate principal
amount/offering price of securities remaining unissued and unsold under the
1993 Registration Statement and the 1996 Registration Statement as,
Securities under the Act and the offering thereof from time to time
pursuant to Rule 415
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promulgated by the Commission under the Act. The 1999 Registration
Statement has been declared effective by the Commission. The 1993
Registration Statement, the 1996 Registration Statement and the 1999
Registration Statement and the combined prospectus constituting a part of
the 1999 Registration Statement and relating, pursuant to Rule 429
promulgated by the Commission under the Act, to $300,000,000 aggregate
principal amount of Securities, and any Pricing Supplement relating to a
particular issuance of the Securities (each, a "Pricing Supplement"),
including all documents incorporated or deemed to be incorporated therein
by reference pursuant to Item 12 of Form S-3 under the Act, in each case,
as from time to time amended or supplemented, are referred to herein as the
"Registration Statements" and the "Prospectus," respectively, except that
if any revised prospectus is provided to the Agents by the Company for use
in connection with the offering of the Securities that is not required to
be filed by the Company pursuant to Rule 424(b) promulgated by the
Commission under the Act, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to an Agent for
such use. As used in this Agreement, the terms "amendment" or "supplement"
when applied to the Registration Statements or the Prospectus shall be
deemed to include the filing by the Company with the Commission of any
document under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date hereof that is or is deemed to be
incorporated therein by reference.
(b) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission under the Exchange Act, conformed and will conform in
all material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of such
documents contained or will contain at such time an untrue statement of a
material fact or omitted or will omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) No stop order suspending the effectiveness of any of the
Registration Statements has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. The Registration
Statements, as of the Effective Date, conformed or will conform in all
material respects to the requirements of the Act and the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission promulgated thereunder and, as of the
Effective Date, does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus, as of its original issue date, as of the date of any filing of
a Pricing Supplement thereto pursuant to Rule 424(b) promulgated by the
Commission under the Act and as of the date of any other amendment or
supplement thereto (each, an "Issue Date"), conforms or will conform in all
material respects to the requirements of the Act and the Trust Indenture
Act and the rules and regulations of the Commission promulgated thereunder
and, as of such respective dates, does not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation
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and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information
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furnished in writing to the Company by any Agent expressly for use in the
Prospectus (it being agreed that, for purposes of this subsection (c) and
Section 7 hereof, the only information so furnished by any Agent as of the
date hereof consists of the sixth, seventh and eighth paragraphs under
"Plan of Distribution" therein). As used herein, with respect to each of
the Registration Statements, the term "Effective Date" means, as of a
specified time, the later of (i) the date that such Registration Statement
or the most recent post-effective amendment thereto was or is declared
effective by the Commission under the Act and (ii) the date that the
Company's Annual Report on Form 10-K for its most recently completed fiscal
year is filed with the Commission under the Exchange Act.
(d) Otherwise than as set forth in or contemplated by the
Prospectus, neither the Company nor any Subsidiaries (as hereinafter
defined) has sustained since the date of the most recent audited financial
statements incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, which loss or interference
would have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole; and, since the respective dates as of which
information is given in the Registration Statements and the Prospectus,
there has not been any change in the capital stock of the Company or any
Significant Subsidiary (as hereinafter defined) (except for (i) issuances
of capital stock of the Company pursuant to dividend reinvestment, stock
purchase, stock option, director or employee benefit plans, (ii) issuances
of capital stock (x) by Hawaiian Electric Company, Inc. ("HECO") or its
subsidiaries that have been approved by the Public Utilities Commission of
the State of Hawaii, (y) by any other Significant Subsidiary to the Company
or any Subsidiary or (z) that have been disclosed in writing to the Agents
and (iii) redemptions by HECO, Hawaii Electric Light Company, Inc.
("HELCO") and Maui Electric Company, Limited ("MECO") of their respective
preferred stock in accordance with the terms thereof), or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole, otherwise than as set forth in or
contemplated by the Prospectus.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Hawaii, with corporate power and authority to own or lease its properties
and conduct its business as described in the Prospectus; the Company does
not itself conduct any business or own or lease any property in any
jurisdiction outside the State of Hawaii that would require it to qualify
to do business as a foreign corporation and where the failure to be so
qualified would subject the Company to any material liability or
disability. Each Significant Subsidiary of the Company, other than
American Savings Bank, F.S.B. ("ASB"), has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. As used in this Agreement, the term
"Subsidiary" means each corporation, at least a majority of the outstanding
voting stock of which is owned by the Company, by one or more Subsidiaries
or by the Company and one or more Subsidiaries.
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(f) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; all of the issued shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued and
are fully paid and non-assessable; and all of such shares, other than
shares of preferred stock (including the existing preferred stock of HECO
and its subsidiaries) are owned directly or indirectly by the Company, free
and clear of any liens, encumbrances or security interests, except as
described in the Prospectus.
(g) The Indenture has been duly authorized, executed and
delivered by the Company and qualified under the Trust Indenture Act and
constitutes a valid and binding instrument of the Company enforceable
against the Company in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights and by general equitable
principles (regardless of whether considered in a proceeding in equity or
at law); the Securities have been duly authorized by the Company for
issuance, offer and sale pursuant to this Agreement and, when duly
executed, authenticated, issued and delivered pursuant to the provisions of
this Agreement and the Indenture against payment of the consideration
therefor, the Securities will constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance
with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights and by general equitable principles
(regardless of whether considered in a proceeding in equity or at law); the
Securities and the Indenture will conform in all material respects to all
statements relating thereto contained in the Prospectus; and the Securities
will be entitled to the benefits provided by the Indenture.
(h) The issuance and sale of the Securities, the compliance by
the Company with all of the provisions of the Securities, the Indenture,
this Agreement, and the consummation of the transactions contemplated
herein and therein do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or result in the imposition of a lien or security interest under,
any material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Significant Subsidiary
is a party or by which the Company or any Significant Subsidiary is bound
or to which any of the property or assets used in the conduct of the
business of the Company or any Significant Subsidiary is subject, nor will
such action result in any violation of the provisions of the articles of
incorporation or the by-laws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any Significant Subsidiary or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture or in connection with the
issuance and sale of the Securities hereunder, except such as have been, or
will have been prior to the Commencement Date (as defined in Section 3
hereof), obtained under the Act, the Trust Indenture Act or otherwise and
such consents, approvals, authorizations,
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orders, registrations or qualifications as may be required under state
securities or blue sky laws, as the case may be.
(i) Other than as set forth in or contemplated by the
Prospectus, there are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any
Subsidiary is a party or to which any property of the Company or any
Subsidiary is the subject that is reasonably expected to have a material
adverse effect on the Company and the Subsidiaries taken as a whole.
(j) Immediately after any sale of Securities by the Company
hereunder, the aggregate amount of Securities that has been issued and sold
by the Company hereunder will not exceed the aggregate principal amount of
Securities registered under the 1999 Registration Statement (in this
regard, the Company acknowledges and agrees that the Agents shall have no
responsibility for maintaining records with respect to the aggregate
principal amount of Securities sold, or of otherwise monitoring the
availability of Securities for sale, under the 1999 Registration
Statement).
(k) ASB has been duly formed and is validly existing as a
federal savings bank duly chartered and in good standing under the laws of
the United States; and, since the respective dates as of which information
is given in the Prospectus, there have not been any increases in total non-
accruing loans or the provision for loan losses of ASB and its
subsidiaries, which increase or increases, individually or in the
aggregate, would have a material adverse effect on the consolidated
financial position, stockholders' equity or results of operations of the
Company and Subsidiaries taken as a whole.
(l) The Company and each of HECO, HELCO, MECO, and (to the
extent they are Subsidiaries of the Company at any time relevant
hereunder), HEI Diversified Inc., ASB and HEI Power Corp. (each, a
"Significant Subsidiary") have all requisite power and authority, and
possess all necessary authorizations, approvals, orders, licenses,
franchises, certificates and permits of and from, and to the extent
required by law are duly registered with, all governmental and regulatory
officials, commissions, departments and bodies in, and are in compliance
with all applicable laws, rules and regulations of or under, each
jurisdiction in which any of them owns properties or assets or conducts any
business as described in the Prospectus, where the failure to possess such
authorization, approval, order, license, franchise, certificate or permit,
or where the failure so to register or so to comply, would have a material
adverse effect on the consolidated financial position, stockholders' equity
or results of operations of the Company and the Subsidiaries taken as a
whole; each such authorization, approval, order, license, franchise,
certificate and permit is valid and in full force and effect, and there is
no proceeding pending or, to the Company's knowledge, threatened that may
lead to the revocation, termination, suspension or non-renewal of any such
authorization, approval, order, license, franchise, certificate or permit;
the Company and Significant Subsidiaries have taken appropriate action to
maintain in effect or renew each such authorization, approval, order,
license, franchise, certificate or permit; the Company and Significant
Subsidiaries own, or possess adequate rights to use, all patents,
trademarks, service marks and rights necessary for or material to the
conduct of their respective business as described in the Prospectus; and
the Company and Significant Subsidiaries possess
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adequate easements, rights-of-way and other rights to use of land not owned
by the Company and Significant Subsidiaries, with such exceptions and
defects as are described in the Prospectus or as do not materially
interfere with the use made of such land by the Company and Significant
Subsidiaries or as do not have a material adverse effect on the
consolidated financial position, stockholders' equity or results of
operations of the Company and the Subsidiaries taken as a whole.
(m) The Company and HECO are holding companies within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
however, by virtue of having filed an appropriate application under the
provisions of Section 3(a) of such Act, the Company and HECO are exempt
from all of the provisions of such Act, except Section 9(a)(2) thereof, and
will remain so exempt, subject to future timely filing of annual exemption
statements and such filings as are required by Section 33 of such Act with
respect to interests of the Company or any of the Subsidiaries in any
foreign utility company, unless and except insofar as the Commission finds
such exemption detrimental to the public interest or the interest of
investors or consumers.
(n) Neither the Company nor HEI Investment Corp. ("HEIIC") is an
"investment company", nor is either, nor upon issuance of the Securities
will either become, "controlled" by an "investment company", in each case
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
(o) This Agreement has been duly authorized, executed and
delivered by the Company.
(p) The accountants who have audited the consolidated financial
statements of the Company that are incorporated by reference into the
Prospectus are independent certified public accountants as required by the
Act and the rules and regulations of the Commission promulgated thereunder.
(q) The Medium-Term Note Program under which the Securities are
issued (the "Program") is rated Baa2 by ▇▇▇▇▇'▇ Investors Service, Inc.,
BBB by Standard & Poor's Ratings Service or such other rating as to which
the Company has most recently notified the Agents pursuant to Section 4(a)
hereof.
Any certificate signed by any officer of the Company and delivered to
one or more Agents or to counsel for the Agents in connection with an offering
of Securities to one or more Agents as principal or through an Agent as agent
shall be deemed a representation and warranty by the Company to such Agent or
Agents as to the matters covered thereby on the date of such certificate.
2. (a) If agreed to by an Agent and the Company, Securities shall be
purchased by such Agent as principal. Such purchases shall be made in
accordance with terms agreed upon by such Agent and the Company (which terms,
unless otherwise agreed to, shall, to the extent applicable, include those terms
specified in Annex I hereto and be agreed upon orally, with written confirmation
prepared by such Agent and delivered to the Company). Any Agent's commitment to
purchase Securities as principal shall be deemed to have been made on the basis
7
of the representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth. Unless the context
otherwise requires, references herein to "this Agreement" shall include the
applicable agreement of one or more Agents to purchase Notes from the Company as
principal. Each purchase of Securities by an Agent as principal, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Security equivalent to the applicable commission set forth in Schedule A hereto.
The Agents may engage the services of any broker or dealer in connection with
the resale of the Securities purchased as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers and dealers. At the time of each purchase of
Securities from the Company by one or more Agents as principal, such Agent or
Agents shall specify the requirements for the Stand-Off Agreement (as defined in
Section 4(f) hereof), officer's certificate, opinions of counsel and comfort
letter pursuant to Sections 4(f), 6(b), 6(c), 6(d) and 6(g) hereof.
If the Company and two or more Agents enter into an agreement pursuant to which
such Agents agree to purchase Securities from the Company as principal,
severally and not jointly as set forth in such agreement, and one or more of
such Agents fails at the Time of Delivery to purchase the Securities that it or
they are obligated to purchase (the "Defaulted Securities"), then the
nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; provided, however,
that if such arrangements have not been completed within such 24-hour period,
then:
(i) if the aggregate principal amount of Defaulted Securities does
not exceed 10% of the aggregate principal amount of Securities to be so
purchased by all of such Agents at the Time of Delivery, the nondefaulting
Agents shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective initial
underwriting obligations bear to the underwriting obligations of all
nondefaulting Agents; or
(ii) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of Securities to be so
purchased by all of such Agents at the Time of Delivery, such agreement
shall terminate without liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default pursuant to this Section 2(a). In the
event of any such default pursuant to this Section 2(a) that does not result in
a termination of such agreement, each of the nondefaulting Agents and the
Company shall have the right to postpone the Time of Delivery for a period not
exceeding seven days in order to effect any required changes in the Registration
Statements or the Prospectus or in any other documents or arrangements.
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, when agreed
by the Company and an Agent, such Agent, as agent of the Company, upon receipt
of instructions from the Company, shall use its reasonable efforts to solicit
offers for the purchase of Securities upon the terms set forth in the
Prospectus. Unless otherwise agreed upon by the Company and an Agent, all
Securities sold
8
through such Agent as agent shall be sold at 100% of their principal amount. The
Company reserves the right to sell, and may solicit and accept offers to
purchase, the Securities directly on its own behalf, and, in the case of any
such sale not resulting from a solicitation made by any Agent, no commission
shall be payable with respect to such sale.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents shall suspend solicitation of offers for the
purchase of Securities from the Company until such time as the Company has
advised the Agents that such solicitation may be resumed.
Each Agent, in soliciting offers for the purchase of Securities from
the Company as agent and in performing the other obligations of an Agent
hereunder, is acting solely as agent for the Company and not as principal. Such
Agent will communicate to the Company, orally, each offer for the purchase of
Securities solicited by it on an agency basis other than those offers rejected
by such Agent. Such Agent shall have the right, in its discretion reasonably
exercised, to reject any offer for the purchase of Securities, in whole or in
part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The Company may accept or reject any offer for the purchase
of Securities, in whole or in part. Each Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Securities from the Company was solicited by it on an agency basis and
has been accepted by the Company, but such Agent shall not have any liability to
the Company in the event such purchase is not consummated for any reason. If
the Company defaults on its obligation to deliver Securities to a purchaser
whose offer has been solicited by such Agent on an agency basis and accepted by
the Company, the Company shall (i) hold each Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company and
(ii) notwithstanding such default, pay to the Agent that solicited such offer
any commission to which it would otherwise be entitled absent such default.
The Company agrees to pay each Agent a commission (which may be in the
form of a discount), at the time of settlement of any sale of a Security by the
Company as a result of a solicitation made by such Agent, in an amount equal to
the applicable percentage of the principal amount of such Security sold as set
forth in Schedule A hereto.
(c) The purchase price, interest rate or formula, maturity date and
other terms of the Securities (as applicable) specified in Annex I hereto shall
be agreed upon by the Company and such Agent and set forth in the applicable
Pricing Supplement to be prepared in connection with each sale of Securities.
Except as may be otherwise provided in the applicable Pricing Supplement, the
Securities shall be issued in denominations of $1,000 or any larger amount that
is an integral multiple of $1,000.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers for the purchase of Securities and the payment in
each case therefor shall be as set forth in the Administrative Procedures
attached hereto as Annex II as they may be amended from time to time by written
agreement between the Agents and the Company (the "Administrative Procedures").
Each Agent and the Company agree to perform their respective duties and
9
obligations specifically provided to be performed by them in the Administrative
Procedures. The Company will furnish to the Trustee a copy of the
Administrative Procedures as from time to time in effect.
(d) The Company may appoint additional agents in connection with the
offering and sale of the Securities from time to time or in connection with a
single offering and sale of the Securities, whether as agent or principal,
provided that, in any such case, the Company gives the Agents at least five (5)
days' prior notice of such appointment and any such additional agent enters into
an agreement with the Company making such additional agent an Agent under this
Agreement with respect to such offering and sale of the Securities from time to
time or solely for the purpose of such single offering and sale of the
Securities, as the case may be.
3. The documents required to be delivered pursuant to Section 6
hereof on the Commencement Date (as defined below) shall be delivered to the
Agents at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. in New York, New York at 10:00
a.m., New York time, or at such other places or times as the parties agree, on
the date of this Agreement, which date and time of such delivery may be
postponed by agreement between the Agents and the Company but in no event shall
be later than the day prior to the date of any agreement by the Agents to
purchase Securities, as principal, or on which solicitation of offers for the
purchase of Securities is commenced by the Agents, as agents (such time and date
being referred to herein as the "Commencement Date").
4. The Company covenants and agrees with each Agent as follows:
(a)(i) To make no amendment or supplement to the Registration
Statements or the Prospectus (A) prior to the Commencement Date that is
reasonably disapproved by any Agent promptly after reasonable notice
thereof or (B) after the date of an agreement by an Agent to purchase
Securities as principal and prior to the related Time of Delivery that is
reasonably disapproved by any Agent so purchasing as principal promptly
after reasonable notice thereof; (ii) to prepare, with respect to any
Securities to be sold through or to such Agent pursuant to this Agreement,
a Pricing Supplement with respect to such Securities in a form previously
approved by such Agent and to file such Pricing Supplement pursuant to Rule
424(b) promulgated by the Commission under the Act within the time period
required thereby; (iii) to make no amendment or supplement to the
Registration Statements or the Prospectus (other than any Pricing
Supplement and any document filed under the Exchange Act (provided that the
Company furnishes such documents to the Agents at or before the time they
are filed with the Commission and, in the case of Current Reports on Form
8-K, the Company notifies the Agents (or Agents' counsel) a reasonable time
in advance of filing such documents with the Commission)) at any time prior
to having afforded each Agent a reasonable opportunity to review and
comment thereon; (iv) to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required under the Act
or under the blue sky or securities laws of any jurisdiction in connection
with the offering or sale of the Securities, and during such same period to
advise such Agent, promptly after the Company receives notice thereof, of
the time when any amendment to any of the Registration Statements has been
filed or has become
10
effective or any supplement to the Prospectus or any amended Prospectus
(other than any Pricing Supplement that relates to Securities not purchased
through or by such Agent) has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, of any request by the Commission for the amendment or
supplement of any of the Registration Statements or the Prospectus or for
additional information or of any change in the rating assigned by any
nationally recognized statistical rating organization to the Program or any
debt securities (including the Securities) of the Company, or the public
announcement by any nationally recognized statistical rating organization
that it has under surveillance or review, with possible negative
implications, its rating of the Program or any such debt securities, or the
withdrawal by any nationally recognized statistical rating organization of
its rating of the Program or any such debt securities; and (v) in the event
of the issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent may
reasonably request to cooperate with such Agent in the qualification of the
Securities for offering and sale under the blue sky or securities laws of
such jurisdictions within the United States of America and its territories
as such Agent may request and to use its best efforts to comply with such
laws so as to permit the continuance of sales and dealings therein for as
long as may be necessary to complete the distribution or sale of the
Securities; provided, however, that in connection therewith the Company
-------- -------
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) To furnish such Agent with copies of the Registration Statements
and each amendment thereto, and with copies of the Prospectus and each
amendment or supplement thereto other than any Pricing Supplement (except
as provided in the Administrative Procedures), in the form in which it is
filed with the Commission pursuant to the Act or Rule 424(b) promulgated by
the Commission under the Act, both in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a prospectus
is required under the Act or under the blue sky or securities laws of any
jurisdiction at any time in connection with the offering or sale of the
Securities (including Securities purchased from the Company by such Agent
as principal) and if at such time any event has occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it is necessary during such
same period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Act, the Exchange Act or the Trust Indenture Act,
to notify such Agent and request such Agent, in its capacity as agent of
the Company, to suspend solicitations of offers to purchase Securities from
the Company (and, if so notified, such Agent shall cease such
11
solicitations as soon as practicable, but in any event not later than one
business day later); and if the Company decides to amend or supplement any
of the Registration Statements or the Prospectus as then amended or
supplemented, to advise such Agent promptly by telephone (with confirmation
in writing) and to prepare and cause to be filed promptly with the
Commission an amendment or supplement to any of the Registration Statements
or the Prospectus as then amended or supplemented that will correct such
statement or omission or effect such compliance; provided, however, that if
-------- -------
during such same period such Agent continues to own Securities purchased
from the Company by such Agent as principal or such Agent is otherwise
required to deliver a prospectus in respect of transactions in the
Securities, the Company shall promptly prepare and file with the Commission
such an amendment or supplement;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the registration statement (as defined in Rule 158(c)
promulgated by the Commission under the Act), an earning statement of the
Company and the Subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the Commission
promulgated thereunder (including, the option of the Company to file
periodic reports in order to make generally available such earning
statement, to the extent that it is required to file such reports under
Section 13 or Section 15(d) of the Exchange Act, pursuant to Rule 158
promulgated by the Commission under the Act);
(e) So long as any Securities are outstanding, to furnish to such
Agent (in paper or electronic format) copies of all publicly available
reports or other communications (financial or other) furnished generally to
stockholders and filed with the Commission pursuant to the Exchange Act,
and deliver to such Agent (i) promptly after they are available, copies of
any publicly available reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
publicly available information concerning the business and financial
condition of the Company as such Agent may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its Subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
(f) That, if specified by an Agent in connection with a purchase
as principal, from the date of any agreement by such Agent to purchase
Securities as principal and continuing to and including the earlier of (i)
the termination of the trading restrictions for the Securities purchased
thereunder, as notified to the Company by such Agent and (ii) the related
Time of Delivery, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company that mature more than 9 months after
such Time of Delivery and are substantially similar to the Securities,
without the prior written consent of such Agent (each, a "Stand-Off
Agreement");
(g) That each acceptance by the Company of an offer for the
purchase of Securities and each delivery of Securities (including in each
case any purchase by such Agent as principal) shall be deemed to be (i) an
affirmation to such Agent that the representations and warranties of the
Company contained in or made pursuant to this
12
Agreement are true and correct as of the date of such acceptance or of such
delivery, as the case may be, as though made at and as of each such date,
except as may be disclosed in the Prospectus (including any documents
incorporated by reference therein and any supplements thereto) or otherwise
in writing by the Company to the Agents on or before said date of
acceptance or date of delivery, as the case may be, and (ii) an undertaking
that the Company will advise such Agent if any of such representations and
warranties will not be true and correct as of the settlement date for the
Securities relating to such acceptance or as of the date of such delivery
relating to such sale, as the case may be, as though made at and as of each
such date (except that such representations and warranties shall be deemed
to relate to the Registration Statements and the Prospectus as amended and
supplemented relating to such Securities);
(h) That reasonably in advance of each time that any of the
Registration Statements or the Prospectus is amended or supplemented (other
than by a Pricing Supplement or, unless reasonably requested by the Agents
within 30 days of the filing thereof with the Commission, a Current Report
on Form 8-K), including by means of an Annual Report on Form 10-K or a
Quarterly Report on Form 10-Q filed with the Commission under the Exchange
Act and incorporated or deemed to be incorporated by reference into the
Prospectus, except in either case during periods in which the Company has
suspended solicitation of offers pursuant to Section 2(b) hereof (it being
understood that the Company may not resume such solicitation until this
provision is complied with) or except as an Agent otherwise elects, and
each time the Company sells Securities to such Agent as principal pursuant
to an agreement to purchase Securities as principal and such agreement
specifies the delivery of an opinion or opinions by Winthrop, Stimson,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ (or other counsel selected by the Agents), counsel to the
Agents, as a condition to the purchase of Securities pursuant to such
agreement, the Company shall as soon as practicable thereafter furnish to
such counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred to in
Section 6(b) hereof;
(i) That each time any of the Registration Statements or the
Prospectus is amended or supplemented (other than by a Pricing Supplement
or, unless reasonably requested by the Agents within 30 days of the filing
thereof with the Commission, a Current Report on Form 8-K), including by
means of an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q
filed with the Commission under the Exchange Act and incorporated or deemed
to be incorporated by reference into the Prospectus, except in either case
during periods in which the Company has suspended solicitation of offers
pursuant to Section 2(b) hereof (it being understood that the Company may
not resume such solicitation until this provision is complied with) or
except as an Agent otherwise elects, and each time the Company sells
Securities to such Agent as principal pursuant to an agreement to purchase
Securities as principal and such agreement specifies the delivery of an
opinion under this Section 4(i) as a condition to the purchase of
Securities pursuant to such agreement, the Company shall as soon as
practicable thereafter furnish or cause to be furnished forthwith to such
Agent a written opinion of Goodsill ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ (or other
counsel satisfactory to the Agents), counsel for the Company, dated the
date of such amendment, supplement, incorporation or Time of Delivery
relating to such sale, as the case may be, in form
13
reasonably satisfactory to such Agent, to the effect that such Agent may
rely on the opinion of such counsel referred to in Section 6(c) hereof that
was last furnished to such Agent to the same extent as though it were dated
the date of such letter authorizing reliance (except that the statements in
such last opinion shall be deemed to relate to the Registration Statements
and the Prospectus as amended and supplemented to such date) or, in lieu of
such opinion, an opinion of the same tenor as the opinion of such counsel
referred to in Section 6(c) hereof but modified to relate to the
Registration Statements and the Prospectus as amended and supplemented to
such date;
(j) That each time any of the Registration Statements or the
Prospectus is amended or supplemented, including by means of an Annual
Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on
Form 8-K filed with the Commission under the Exchange Act and incorporated
or deemed to be incorporated by reference into the Prospectus, in either
case to set forth financial information included in or derived from the
Company's consolidated financial statements or accounting records, except
in either case during periods in which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof (it being understood
that the Company may not resume such solicitation until this provision is
complied with) or except as an Agent otherwise elects, and each time the
Company sells Securities to such Agent as principal pursuant to an
agreement to purchase Securities as principal and such agreement specifies
the delivery of a letter under this Section 4(j) as a condition to the
purchase of Securities pursuant to such agreement, the Company shall as
soon as practicable thereafter cause the independent certified public
accountants who have audited the financial statements of the Company and
its Subsidiaries included or incorporated by reference in the Registration
Statements forthwith to furnish to such Agent a letter, dated the date of
such amendment, supplement, incorporation or Time of Delivery relating to
such sale, as the case may be, in form reasonably satisfactory to such
Agent, of the same tenor as the letter referred to in Section 6(d) hereof
but modified to relate to the Registration Statements and the Prospectus as
amended or supplemented to the date of such letter, with such changes as
may be necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Company, to the
extent such financial statements and other information are available as of
a date not more than five business days prior to the date of such letter;
provided, however, that, with respect to any financial information or other
-------- -------
matter, such letter may reconfirm as true and correct at such date as
though made at and as of such date, rather than repeat, statements with
respect to such financial information or other matters made in the letter
referred to in Section 6(d) hereof that was last furnished to such Agent;
(k) That each time any of the Registration Statements or the
Prospectus is amended or supplemented (other than by a Pricing Supplement
or, unless reasonably requested by the Agents within 30 days of the filing
thereof with the Commission, a Current Report on Form 8-K), including by
means of an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q
filed with the Commission under the Exchange Act and incorporated or deemed
to be incorporated by reference into the Prospectus, except in either case
during periods in which the Company has suspended solicitation of offers
pursuant to Section 2(b) hereof (it being understood that the Company may
not resume such solicitation until this provision is complied with) or
14
except as an Agent otherwise elects, and each time the Company sells
Securities to such Agent as principal and the applicable agreement to
purchase Securities as principal specifies the delivery of a certificate
under this Section 4(k) as a condition to the purchase of Securities
pursuant to such agreement, the Company shall as soon as practicable
thereafter furnish or cause to be furnished forthwith to such Agent a
certificate, dated the date of such supplement, amendment, incorporation or
Time of Delivery relating to such sale, as the case may be, in such form
and executed by such officers of the Company as is reasonably satisfactory
to such Agent, to the effect that the statements contained in the
certificate referred to in Section 6(g) hereof that was last furnished to
such Agent are true and correct at such date as though made at and as of
such date (except that such statements shall be deemed to relate to the
Registration Statements and the Prospectus as amended and supplemented to
such date) or, in lieu of such certificate, certificates of the same tenor
as the certificates referred to in said Section 6(g) but modified to relate
to the Registration Statements and the Prospectus as amended and
supplemented to such date; and
(l) To offer to any person who has agreed to purchase Securities
as the result of an offer to purchase solicited by such Agent the right to
refuse to purchase and pay for such Securities if, on the related
settlement date fixed pursuant to the Administrative Procedures, any
condition set forth in Section 6(a), 6(e) or 6(f) hereof has not been
satisfied (it being understood that the judgment of such person with
respect to the impracticability or inadvisability of such purchase of
Securities shall be substituted, for purposes of this Section 4(l), for the
respective judgments referred to therein of an Agent with respect to
certain matters referred to in such Sections 6(a), 6(e) and 6(f), and that
such Agent shall have no duty or obligation whatsoever to exercise the
judgment permitted under such Sections 6(a), 6(e) and 6(f) on behalf of any
such person).
5. The Company covenants and agrees with each Agent that the Company
shall pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
preparation, printing and filing of the Registration Statements, the Prospectus
and any Pricing Supplements and all other amendments and supplements thereto and
the mailing and delivering of copies thereof to such Agent; (ii) the reasonable
fees, disbursements and expenses of counsel for the Agents in connection with
the establishment of the Program, any opinions to be rendered by such counsel
hereunder and ongoing services in connection with the transactions contemplated
hereunder including advice and services in connection with purchases by the
Agents or any Agent pursuant to Section 2(a) hereof; (iii) the cost of printing,
preparing by word processor or reproducing this Agreement, any other agreement
to purchase Securities as principal, the Indenture, any blue sky survey and any
other documents in connection with the offering, purchase, sale and delivery of
the Securities; (iv) all expenses (not to exceed an aggregate of $7,500 for all
sales hereunder) in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 4(b)
hereof, including the fees and disbursements of counsel for the Agents in
connection with such qualification and in connection with the blue sky survey;
(v) any fees charged by securities rating services for rating the Securities;
(vi) any filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vii)
the cost of preparing the Securities; (viii) the fees and expenses of any
Trustee and any agent of a Trustee and any transfer or paying agent of the
Company and the fees
15
and disbursements of counsel for any Trustee or such agent in connection with
the Indenture and the Securities; (ix) any advertising expenses connected with
the solicitation of offers to purchase and the sale of Securities so long as
such advertising expenses have been approved in advance by the Company; (x) the
Agents' reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated hereunder; (xi) the cost of providing any CUSIP or
other identification numbers for the Securities; (xii) the fees and expenses of
any depositary and any nominees thereof in connection with the Securities; and
(xiii) all other costs and expenses incident to the performance of the Company's
obligations hereunder that are not otherwise specifically provided for in this
Section. Except as provided in this Section 5 and in Sections 7 and 2(b) hereof,
each Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at any time
(each, a "Solicitation Time") to solicit offers to purchase Securities and the
obligation of any Agent to purchase Securities as principal, pursuant to any
agreement, shall in each case be subject, in such Agent's discretion, to the
condition that all representations and warranties and other statements of the
Company herein are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be, the condition that
prior to such Solicitation Time or Time of Delivery, as the case may be, the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the Prospectus
as amended and supplemented (including the Pricing Supplement) with respect
to such Securities shall have been filed with the Commission pursuant to
Rule 424(b) promulgated by the Commission under the Act within the
applicable time period prescribed for such filing by the rules and
regulations promulgated by the Commission under the Act and in accordance
with Section 4(a) hereof; (ii) no stop order suspending the effectiveness
of any of the Registration Statements shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and (iii) all requests for additional information on the part
of the Commission shall have been complied with to the reasonable
satisfaction of such Agent;
(b) Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Agents,
or other counsel selected by the Agents and reasonably satisfactory to the
Company, shall have furnished to such Agent (i) such opinion or opinions,
dated the Commencement Date, with respect to this Agreement, the validity
of the Indenture and the Securities, the Registration Statements, the
Prospectus as amended or supplemented, and other related matters as such
Agent may reasonably request, and (ii) if and to the extent requested by
such Agent, with respect to each applicable date referred to in Section
4(h) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, but excluding dates in periods in which the
Company has suspended solicitation of offers pursuant to Section 2(b)
hereof, an opinion or opinions, dated such applicable date, to the effect
that such Agent may rely on the opinion or opinions that were last
furnished to such Agent pursuant to this Section 6(b) to the same extent as
though it or they were dated the date of such letter authorizing reliance
(except that the statements in such last
16
opinion or opinions shall be deemed to relate to the Registration
Statements and the Prospectus as amended and supplemented to such date) or,
in any case, in lieu of such an opinion or opinions, an opinion or opinions
of the same tenor as the opinion or opinions referred to in clause (i) but
modified to relate to the Registration Statements and the Prospectus as
amended and supplemented to such date; and in each case such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Goodsill ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company, or
other counsel selected by the Company and reasonably satisfactory to the
Agents, shall have furnished to such Agent their written opinions, dated
the Commencement Date and each applicable date referred to in Section 4(i)
hereof that is on or prior to such Solicitation Time or Time of Delivery,
as the case may be, but excluding dates in periods in which the Company has
suspended solicitation of offers pursuant to Section 2(b) hereof, in form
and substance satisfactory to such Agent, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Hawaii, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus as amended or
supplemented;
(ii) the Company has an authorized equity capitalization as
set forth in the Prospectus as amended or supplemented and all of the
issued and outstanding shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable;
(iii) to such counsel's knowledge, the Company does not
itself conduct any business or own or lease any property in any
jurisdiction outside the State of Hawaii that would require it to
qualify to do business as a foreign corporation and where the failure
to be so qualified would subject the Company to any material liability
or disability;
(iv) each Significant Subsidiary, other than ASB, has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; ASB has
been duly formed and is duly chartered as a federal savings bank under
the laws of the Untied States; all of the issued and outstanding
shares of capital stock of each Significant Subsidiary have been duly
and validly authorized and issued and are fully paid and non-
assessable; and, to such counsel's knowledge, all of such shares,
other than shares of preferred stock (including the existing preferred
stock of HECO and its subsidiaries), are owned directly or indirectly
by the Company, free and clear of any perfected encumbrance or
security interest or any other encumbrance, claim or equity, and with
such exceptions as are described in the Prospectus as amended or
supplemented or as are otherwise disclosed to the Agents;
(v) the Company and HECO are holding companies within the
meaning of the Public Utility Holding Company Act of 1935; however, by
17
virtue of having filed an appropriate application under the provisions
of Section 3(a) of such Act, the Company and HECO are exempt from all
of the provisions of such Act except Section 9(a)(2) thereof, and will
remain so exempt, subject to the future timely filings of annual
exemption statements and such filings as are required by Section 33 of
such Act with respect to interests of the Company or Subsidiaries in
any foreign utility company, unless and except insofar as the
Commission finds such exemption detrimental to the public interest or
the interest of investors or consumers;
(vi) except as indicated in the Prospectus as amended or
supplemented, to such counsel's knowledge, (a) neither the Company nor
any Significant Subsidiary is engaged in, or threatened with, any
litigation, and (b) there are no proceedings, or any proceedings
threatened, with respect to the Company or any Significant Subsidiary
or their property, that, in the case of either clause (a) or (b)
above, such counsel (or other counsel as to litigation or proceedings
that are not principally handled by their firm) has concluded is
reasonably expected to have a material adverse effect on the Company
and Subsidiaries taken as a whole;
(vii) this Agreement has been duly authorized, executed
and delivered by the Company;
(viii) the Securities have been duly authorized by the
Company for issuance, offer and sale pursuant to the provisions of
this Agreement and, when duly executed, authenticated, issued and
delivered pursuant to the provisions of this Agreement and the
Indenture against payment of the consideration therefor, will
constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement
of mortgagees' and other creditors' rights and by general equitable
principles (regardless of whether considered in a proceeding in equity
or at law) and will be entitled to the benefits provided by the
Indenture; and the Indenture and the Securities conform to the
descriptions thereof in the Prospectus as amended or supplemented;
(ix) the Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the Trustee, constitutes a valid and legally binding
instrument of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights and by general equitable principles
(regardless of whether considered in a proceeding in equity or at
law); and the Indenture has been duly qualified under the Trust
Indenture Act;
(x) the issuance and sale of the Securities, the compliance
by the Company with all of the provisions of the Securities, the
Indenture, this Agreement and the consummation of the transactions
contemplated herein and
18
therein will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Company or any
Significant Subsidiary is a party or by which the Company or any
Significant Subsidiary is bound or to which any of the material
property or assets of the Company or any Significant Subsidiary is
subject, nor will such action result in any violation of the
provisions of the charter or the by-laws of the Company or any statute
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its properties, except that such counsel need not express an
opinion with respect to compliance with state securities or blue sky
laws in connection with the solicitation by the Agents of offers for
the purchase of Securities from the Company, with any resulting
purchases of Securities and with any purchases of Securities by an
Agent as principal, as the case may be, in each case in the manner
contemplated hereby;
(xi) no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the solicitation of offers to purchase
Securities, the issuance and sale of the Securities or the
consummation by the Company of the other transactions contemplated by
this Agreement or the Indenture, except such as have been obtained or
made under the Act and the Trust Indenture Act or otherwise and such
consent, approvals, authorizations, registrations, or qualifications
as may be required under state securities or blue sky laws in
connection with the solicitation by the Agents of offers for the
purchase of Securities from the Company, with any resulting purchases
of securities and with any purchases of Securities by an Agent as
principal, as the case may be, in each case in the manner contemplated
hereby;
(xii) neither the Company nor HEIIC is an "investment
company", nor is either "controlled" by an "investment company", in
each case within the meaning of the 1940 Act;
(xiii) the documents incorporated by reference in the
Prospectus as amended or supplemented, when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act, and the rules and regulations of the
Commission promulgated thereunder; and nothing has come to the
attention of such counsel that causes them to believe that any of such
documents, when they were so filed, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when the documents were so filed, not
misleading; and
(xiv) the Registration Statements, as of the Effective
Date, and the Prospectus, as of its Issue Date, comply as to form in
all material respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the Commission
promulgated thereunder; to such counsel's knowledge, each of the
Registration Statements has been declared, and as of the date
19
of such opinion is, effective under the Act and no proceedings for a
stop order with respect thereto are threatened or pending under
Section 8 of the Act; nothing has come to the attention of such
counsel that causes them to believe that the Registration Statements,
as of the Effective Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that,
as of its Issue Date and as of the date of such opinion, the
Prospectus (as most recently amended and supplemented), contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do
not know of any contracts or other documents of a character required
to be filed as an exhibit to any of the Registration Statements or
required to be incorporated by reference into the Prospectus as
amended or supplemented or required to be described in any of the
Registration Statements or the Prospectus as amended or supplemented
that are not filed or incorporated by reference or described as
required.
In rendering such opinion, (A) such counsel may state that it is
expressing an opinion only as to the federal laws of the United States and
the laws of the State of Hawaii, (B) such counsel may rely, as to matters
involving the application of the laws of the State of New York, upon the
opinion or opinions of counsel for the Agents, (C) such counsel may rely,
as to matters of good standing and valid existence and as to matters of
fact, upon certificates of government officials (provided that copies of
such certificates will be furnished to counsel for the Agents), (D) such
counsel may rely, as to matters of fact, upon certificates and
representations of officers and employees of the Company (provided that
copies of such certificates will be furnished to counsel for the Agents
upon its reasonable request), (E) such counsel may rely, with respect to
matters involving litigation or proceedings not principally handled by such
counsel's firm, upon opinions and information upon which such counsel has
been permitted to rely by other counsel representing the Company in such
litigation or proceedings (provided that copies of such opinions are
delivered to counsel for the Agents, other than opinions of counsel who do
not consent to such delivery if, in such case, the Company makes such
counsel reasonably available to discuss such litigation or proceedings with
counsel for the Agents), (F) for purposes of the opinion expressed in
paragraph (vi) above, "material" shall mean $15,000,000, (G) such counsel
may state that it has not been requested to, and does not, express any
opinion with respect to the financial statements and notes thereto and the
schedules and other financial and statistical data and information included
or incorporated by reference in the Registration Statements and the
Prospectus, (H) such counsel may state, with respect to the matters set
forth in paragraphs (xiii) and (xiv) above, that they have not
independently verified and assume no responsibility for the accuracy,
completeness or fairness of the statements in the Prospectus or in any
document incorporated by reference therein, except insofar as such
statements relate to such counsel or as set forth in paragraph (viii)
above, (I) such counsel may state that, whenever such opinion is qualified
by the phrases "known to such counsel," "to the best of our knowledge," "to
our knowledge" or "nothing has come to our attention," or other phrases of
similar import, such phrases are intended to mean the actual knowledge of
information by the lawyers in such counsel's firm who have been principally
involved in drafting the Prospectus and supervising the issuance, sale and
delivery of the Securities and
20
preparing the pertinent documents and the lawyers having supervisory
responsibility for the client relationship with the Company and general
transaction representation, but does not include other information that
might be revealed if there were to be undertaken a canvass of all lawyers
in such counsel's firm, a general search of all files or any other type of
independent investigation (other than, with respect to the matters set
forth in paragraph (vi) above, such review of internal litigation files or
inquiries of other counsel as such counsel deems necessary), and (J) such
counsel may include therein such other customary qualifications reasonably
acceptable to the Agents and counsel for the Agents;
(d) Not later than 10:00 A.M., New York City time, on the
Commencement Date, and not later than 10:00 A.M., New York City time, on
each applicable date referred to in Section 4(j) hereof that is on or prior
to such Solicitation Time or Time of Delivery, as the case may be, but
excluding dates in periods during which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof, the independent
certified public accountants who have audited the financial statements of
the Company and its Subsidiaries included or incorporated by reference in
the Registration Statements shall have furnished to such Agent a letter,
dated the Commencement Date or such applicable date, as the case may be, in
form and substance satisfactory to such Agent, to the effect set forth in
Annex III hereto;
(e) (i) Neither the Company nor any Subsidiary shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended or
supplemented any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus as amended or
supplemented and (ii) since the respective dates as of which information is
given in the Prospectus as amended or supplemented or since the date of any
agreement of any Agent to purchase Securities as principal there shall not
have been any change in the capital stock of the Company or any Subsidiary
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of such Agent so
material and adverse as to make it impracticable or inadvisable to proceed
with the solicitation by such Agent of offers for the purchase of
Securities from the Company or the purchase by such Agent of such
Securities from the Company as principal, as the case may be;
(f) There shall not have occurred (and be continuing in the case
of occurrences under clause (i) and (ii) below) any of the following: (i)
a suspension or material limitation in trading in securities of the Company
or in securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York or Hawaii declared
by either federal or New York or Hawaii State authorities; (iii) after an
Agent has agreed to purchase Securities from the Company as principal, any
material adverse change in the financial markets in the United States, any
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or any
change or development involving a
21
prospective change in national or international political, financial or
economic conditions, if the effect of any such event specified in this
clause (iii) in the judgment of such Agent makes it impracticable or
inadvisable to proceed with the purchase of such Securities from the
Company as principal; or (iv) after an Agent has agreed to purchase
Securities from the Company as principal, any downgrading in the rating
accorded the Program or the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) promulgated under the Act, or any
public announcement by any such organization that it has under surveillance
or review, with possible negative implications, its rating of the Program
or any of the Company's debt securities; and
(g) The Company shall have furnished or caused to be furnished to
such Agent certificates of officers of the Company dated the Commencement
Date and each applicable date referred to in Section 4(k) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be,
but excluding dates in periods during which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof, in such form and
executed by such officers of the Company as are reasonably satisfactory to
such Agent, as to the accuracy of the representations and warranties of the
Company herein at and as of the Commencement Date or such applicable date,
as the case may be, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to the Commencement Date
or such applicable date, as the case may be, as to the matters set forth in
subsections (a) and (e) of this Section 6, and as to such other matters as
such Agent may reasonably request.
7. (a) The Company shall indemnify and hold harmless each Agent and
each person, if any, who controls each Agent within the meaning of Section 15 of
the Act and Section 20 of the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Agent or such person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
of the Registration Statements, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to the
extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided that
(subject to Section 7(d) hereof) any such settlement is effected with the
written consent of the Company, and shall reimburse such Agent or such person
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
-------- -------
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of the Registration Statements, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and provided, further, that the Company shall not be
-------- -------
required to
22
reimburse any Agent or such person for fees and expenses of counsel other than
one counsel for all Agents and one counsel for all Agents in each jurisdiction
in which proceedings are or are threatened to be brought or of which matters of
law are or may be at issue, unless and to the extent that there are actual or
potential conflicts of interest between or among Agents or defenses available to
one or more Agents that are not available to other Agents; and provided,
--------
further, that the indemnification contained in this Section 7(a) with respect to
-------
the Prospectus shall not inure to the benefit of any Agent (or to the benefit of
any person controlling such Agent) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Securities, or arrangement
thereof, by such Agent to any person if the Company has established that a copy
of the most recent Prospectus (excluding documents incorporated by reference)
has not been delivered or sent to such person within the time required by the
Act and the rules and regulations of the Commission promulgated thereunder,
provided that the Company has delivered such Prospectus to such Agent in
requisite quantity on a timely basis to permit such delivery or sending.
(b) Each Agent shall indemnify and hold harmless the Company, each of
the directors and each of the officers of the Company who signed any of the
Registration Statements, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors, such officers or such persons may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
of the Registration Statements, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to the
extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided that
(subject to Section 7(d) hereof) any such settlement is effected with the
written consent of such Agent, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any of the Registration Statements, the Prospectus,
the Prospectus as amended or supplemented or any other prospectus relating to
the Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and shall reimburse the Company, such directors, such
officers or such persons for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under Section 7(a)
or (b) hereof of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under Section 7(a) or (b) hereof, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability that it may have to
any indemnified party unless and only to the extent that such indemnifying party
is prejudiced by such omission nor relieve it from any liability that it may
have to any indemnified party otherwise than under Section 7(a) or (b) hereof.
In case any such action is brought against any indemnified party and such
indemnified party notifies the indemnifying party of the commencement thereof,
the
23
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under Section
7(a) or (b) hereof for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party has requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a) or Section 7(b) hereof, as the case may be,
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party has received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party has not reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the offering of the Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under Section
7(c) above and such indemnifying party was prejudiced by such omission, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
each Agent on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
sale of Securities (before deducting expenses) received by the Company bear to
the total commissions or discounts received by such Agent in respect thereof.
The relative fault shall be determined by reference to, among other things,
whether the untrue
24
statement of a material fact or the omission or alleged omission to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this Section 7(e) were determined
by per capita allocation (even if all Agents were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above in this Section 7(e). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
7(e) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e), an Agent
shall not be required to contribute any amount in excess of the amount by which
the total public offering price at which the Securities purchased by or through
it were sold exceeds the amount of any damages that such Agent has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of each of the Agents under this Section 7(e)
to contribute are several in proportion to the respective purchases made by or
through it to which such loss, claim, damage or liability (or action in respect
thereof) relates and are not joint. The obligations of the Company and the
Agents under this Section 7 shall be in addition to any liability that the
Company and the Agents may otherwise have. For purposes of this Section 7(e),
each person, if any, who controls an Agent within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such agent, and each director of the Company, each officer of
the Company who signed any of the Registration Statements, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company.
8. The respective indemnities, agreements, representations,
warranties and other statements by any Agent and the Company set forth in or
made pursuant to this Agreement shall remain in full force and effect regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Agent or any controlling person of any Agent or the Company, or
any officer or director or any controlling person of the Company, and shall
survive each delivery of and payment for any of the Securities.
9. The provisions of the Agreement relating to the solicitation of
offers for the purchase of Securities from the Company may be suspended or
terminated at any time by the Company as to any Agent or by any Agent as to such
Agent upon the giving of written notice of such suspension or termination to
such Agent or the Company, as the case may be. In the event of such suspension
or termination with respect to any Agent, (a) this Agreement shall remain in
full force and effect with respect to any Agent as to which such suspension or
termination has not occurred, (b) this Agreement shall remain in full force and
effect with respect to the rights and obligations of any party that have
previously accrued or that relate to Securities that have already been issued or
agreed to be issued or are the subject of a pending offer at the time of such
suspension or termination and (c) in any event, this Agreement shall remain in
full force and effect insofar as the third and fourth paragraphs of Section
2(b), Section 4(d), Section 4(e),
25
Section 5, Section 7 and Section 8 hereof are concerned.
10. Except as otherwise specifically provided herein or in the
Administrative Procedures, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. shall be sufficient in all respects when delivered
or sent by facsimile transmission or registered mail to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, World Financial Center,
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Facsimile Transmission
No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management, and if to ▇▇▇▇▇▇▇, Sachs
& Co. shall be sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Credit Department, and if to the Company shall be sufficient in all respects
when delivered or sent by facsimile transmission or registered mail to ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile Transmission No. (808) 543-
7966, Attention: Treasurer.
11. This Agreement shall be binding upon, and inure solely to the
benefit of, each Agent and the Company, and to the extent provided in Section 7
and Section 8 hereof, the officers and directors of the Company and any person
who controls any Agent or the Company, and their respective personal
representatives, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities through or from any Agent hereunder shall be deemed a successor or
assign by reason of such purchase.
12. Time shall be of the essence of this Agreement. As used herein,
except as otherwise noted the term "business day" shall mean any day when the
office of the Commission in Washington, D.C. is normally open for business.
13. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York.
14. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be an original, but
all of such respective counterparts shall together constitute one and the same
instrument.
26
If the foregoing is in accordance with the Agents' understanding,
please sign and return to the Company all counterparts hereof, whereupon this
letter and the acceptance by each of you thereof shall constitute a binding
agreement between the Company and each of you in accordance with its terms.
Very truly yours,
HAWAIIAN ELECTRIC INDUSTRIES, INC.
By: _______________________________
Title:
By: _______________________________
Title:
Accepted in New York, New York,
as of the date hereof:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: ___________________________
Title:
_______________________________
(▇▇▇▇▇▇▇, SACHS & CO.)
27
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the applicable Agent, on a discount basis, a commission for the sale of each
Security equal to the principal amount of such Security multiplied by the
appropriate percentage set forth below:
----------------------------------------------------------------------------
PERCENT OF PRINCIPAL
MATURITY RANGES AMOUNT
============================================================================
From 9 months to less than 1 year .125%
----------------------------------------------------------------------------
From 1 year to less than 18 months .150
----------------------------------------------------------------------------
From 18 months to less than 2 years .200
----------------------------------------------------------------------------
From 2 years to less than 3 years .250
----------------------------------------------------------------------------
From 3 years to less than 4 years .350
----------------------------------------------------------------------------
From 4 years to less than 5 years .450
----------------------------------------------------------------------------
From 5 years to less than 6 years .500
----------------------------------------------------------------------------
From 6 years to less than 7 years .550
----------------------------------------------------------------------------
From 7 years to less than 10 years .600
----------------------------------------------------------------------------
From 10 years to less than 15 years .625
----------------------------------------------------------------------------
From 15 years to less than 20 years .700
----------------------------------------------------------------------------
From 20 years to 30 years .750
----------------------------------------------------------------------------
28
ANNEX I
The following terms, to the extent applicable, shall be agreed to by the
applicable Agent and the Company in connection with each sale of Securities:
Name of Agent: _____________________
Acting as principal [_]
Acting as agent for the Company [_]
Principal Amount: $______________________
Price to Public: ___% of the principal amount, plus accrued interest, if
any, from ______
Commission (or Discount): ___% of the principal amount
Purchase Price: ____%, plus accrued interest, if any, from _________
Interest Rate:
If Fixed Rate Note:
Interest Rate:
Interest Payment Date(s):
If Floating Rate Note:
Base Rate:
If LIBOR:
LIBOR Reuters Page:
LIBOR Telerate Page:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Initial Interest Reset Date:
Interest Reset Date(s):
Interest Payment Date(s):
Interest Determination Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Original Issue Discount Note, terms:
If Redeemable:
Redemption Commencement Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Repayment Provisions, if any:
29
Original Issue Date:
Stated Maturity Date:
Settlement Date and Time:
Additional Terms:
Also, in connection with the purchase of Securities by one or more Agents
as principal, agreement as to whether the following will be required:
Officer's Certificate pursuant to Section 6(g) of the Distribution
Agreement.
Legal Opinions pursuant to Sections 6(b) and (c) of the Distribution
Agreement.
Comfort Letter pursuant to Section 6(d) of the Distribution Agreement.
Stand-Off Agreement pursuant to Section 4(f) of the Distribution Agreement.
30
ANNEX II
Hawaiian Electric Industries, Inc.
ADMINISTRATIVE PROCEDURES
for Fixed Rate and Floating Rate Medium-Term Notes, Series C
Due From Nine Months to 30 Years From Date of Issue
(Dated as of March ___, 1999)
Medium-Term Notes, Series C Due From Nine Months to 30 Years From Date of
Issue (the "Notes") are to be offered on a continuous basis by Hawaiian Electric
Industries, Inc., a Hawaii corporation (the "Company"), to or through ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇,
Sachs & Co., and any other agent or agents appointed by the Company from time to
time (each, an "Agent" and, collectively, the "Agents"), pursuant to a
Distribution Agreement, dated March __, 1999 (the "Distribution Agreement"), by
and among the Company and the Agents. The Distribution Agreement provides both
for the sale of Notes by the Company to one or more of the Agents as principal
for resale to investors and other purchasers and for the sale of Notes by the
Company directly to investors (as may from time to time be agreed to by the
Company and the related Agent or Agents), in which case each such Agent will act
as an agent of the Company in soliciting purchases of Notes.
If agreed upon by the related Agent or Agents and the Company, Notes shall
be purchased by such Agent or Agents as principal. Such purchases will be made
in accordance with terms agreed upon by the related Agent or Agents and the
Company (which terms, unless otherwise agreed to, shall, to the extent
applicable, include those terms specified in Annex I to the Distribution
Agreement, and be agreed upon orally, with written confirmation prepared by such
Agent or Agents and mailed or sent by facsimile transmission to the Company).
If agreed upon by any Agent or Agents and the Company, the Agent or Agents,
acting solely as agent or agents for the Company, and not as principal, will use
reasonable efforts to solicit offers to purchase the Notes. Only those
provisions in these Administrative Procedures that are applicable to the
particular role to be performed by the related Agent or Agents shall apply to
the offer and sale of the relevant Notes.
The Notes will be issued under an Indenture, dated as of October 15, 1998,
as amended, supplemented or modified from time to time, including by a Second
Supplemental Indenture thereto dated as of March 1, 1999 relating to the Notes
(collectively, the "Indenture"), between the Company and Citibank, N.A., as
trustee (the "Trustee"). The Company has filed Registration Statements (as
defined in the Distribution Agreement) with the Securities and Exchange
Commission (the "Commission") registering the Notes. A pricing supplement to
the Prospectus (as defined in the Distribution Agreement) setting forth the
purchase price, interest rate or formula, maturity date and other terms of any
Notes (as applicable) is herein referred to as a "Pricing Supplement."
The Notes will either be issued (a) in book-entry form (each, a "Book-Entry
Note") and represented by one or more fully registered Notes without coupons
(each, a "Global Note")
delivered to the Trustee, as agent for The Depository Trust Company, New York,
New York ("DTC"), and recorded in the book-entry system maintained by DTC, or
(b) in certificated form (each, a "Certificated Note") delivered to the investor
or other purchaser thereof or a person designated by such investor or other
purchaser. Except in the limited circumstances described in the Prospectus or a
Pricing Supplement, owners of beneficial interests in Book-Entry Notes will not
be entitled to physical delivery of Certificated Notes equal in principal amount
to their respective beneficial interests.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Book-Entry Notes will be issued in accordance with the procedures
set forth in Part II hereof and Certificated Notes will be issued in accordance
with the procedures set forth in Part III hereof. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Prospectus, the Indenture or the Notes, as the case may be.
PART I: PROCEDURES OF GENERAL APPLICABILITY
Date of Issuance/Authentication: Each Note will be dated as of the date of its
authentication by the Trustee. Each Note
shall also bear an original issue date (the
"Original Issue Date"). The Original Issue
Date shall remain the same for all Notes
subsequently issued upon transfer, exchange or
substitution of an original Note regardless of
their dates of authentication.
Maturities: Each Note will mature on a date selected by
the purchaser and agreed to by the Company
that is not less than nine months nor more
than thirty years from its Original Issue Date
(the "Stated Maturity Date").
Currency/Denominations: Notes will be denominated in, and payments of
principal, premium, if any, and interest, if
any, in respect thereof will be made in, U.S.
dollars and the Notes will be issued in
denominations of $1,000 and integral multiples
thereof.
Registration: The Notes will be issued only in fully
registered form.
Base Rates Applicable to Unless otherwise provided in the applicable
Floating Rate Notes: Pricing Supplement, Floating Rate Notes will
bear interest at a rate or rates determined by
reference to the CD Rate, the Commercial
2
Paper Rate, the Federal Funds Rate, LIBOR, the
Prime Rate, the Treasury Rate, or such other
interest rate basis or formula as may be set forth
in the applicable Pricing Supplement, or by
reference to two or more such rates, as adjusted
by the Spread and/or Spread Multiplier, if any,
applicable to such Floating Rate Notes.
Redemption/Repayment: The Notes will be subject to redemption by the
Company on and after their respective
Redemption Commencement Dates, if any.
Redemption Commencement Dates, if any, will be
fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the
applicable Note. If no Redemption
Commencement Dates are indicated with respect
to a Note, such Note will not be redeemable at
the option of the Company prior to its Stated
Maturity Date.
The Notes will be subject to repayment at the
option of the Holders thereof in accordance
with the terms of the Notes on their
respective Optional Repayment Dates, if any.
Optional Repayment Dates, if any, will be
fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the
applicable Note. If no Optional Repayment
Dates are indicated with respect to a Note,
such Note will not be repayable at the option
of the Holder prior to its Stated Maturity
Date.
Calculation of Interest: In the case of Fixed Rate Notes, interest
(including payments for partial periods) will
be calculated and paid on the basis of a
360-day year of twelve 30-day months.
The interest rate on each Floating Rate Note
will be calculated by reference to the
specified Base Rate or Rates plus or minus the
applicable Spread, if any, and/or multiplied
by the applicable Spread Multiplier, if any.
3
Unless otherwise provided in the applicable
Pricing Supplement, accrued interest on each
Floating Rate Note will be calculated by
multiplying its principal amount by an accrued
interest factor. Such accrued interest factor
is computed by adding the interest factors
calculated for each day in the period for
which accrued interest is being calculated.
Unless otherwise provided in the applicable
Pricing Supplement, the interest factor for
each such day is computed by dividing the
interest rate applicable to such day by 360 if
the CD Rate, Commercial Paper Rate, Federal
Funds Rate, LIBOR or Prime Rate is an
applicable Base Rate, or by the actual number
of days in the year if the Treasury Rate is an
applicable Base Rate. The interest factor for
Floating Rate Notes for which the interest
rate is calculated with reference to two or
more Base Rates will be calculated in each
period in the same manner as if only the
lowest, highest or average of the applicable
Base Rates applied as specified in the
applicable Pricing Supplement.
Interest: General. Each Note will bear interest in
-------
accordance with its terms. Unless otherwise
provided in the applicable Pricing Supplement,
interest on each Note will accrue from and
including the Original Issue Date of such Note
for the first interest period or from and
including the most recent Interest Payment
Date to which interest has been paid or duly
made available for payment for all subsequent
interest periods, to but excluding the
applicable Interest Payment Date or the Stated
Maturity Date, Redemption Date or Optional
Repayment Date (each Stated Maturity Date,
Redemption Date or Optional Repayment Date is
referred to herein as a "Maturity"). Interest
on Notes will be payable in arrears to the
Holders of such Notes as of the Regular Record
Date for each Interest Payment Date and at
Maturity to the Person to whom the
4
principal of such Notes is payable.
If an Interest Payment Date or the Maturity
with respect to any Fixed Rate Note falls on a
day that is not a Business Day, the required
payment to be made on such day need not be
made on such day, but may be made on the next
succeeding Business Day with the same force
and effect as if made on such day and no
interest shall accrue on such payment for the
period from and after such day to the next
succeeding Business Day. If an Interest
Payment Date (other than at Maturity) with
respect to any Floating Rate Note would
otherwise fall on a day that is not a Business
Day, such Interest Payment Date will be
postponed to the next succeeding Business Day,
except that in the case of a LIBOR Note, if
such next succeeding Business Day falls in the
next succeeding calendar month, such Interest
Payment Date will be the immediately preceding
Business Day. If the Maturity of a Floating
Rate Note falls on a day that is not a
Business Day, the required payment need not be
made on such day, but may be made on the next
succeeding Business Day as if made on the date
such payment was due, and no interest on such
payment shall accrue for the period from and
after such Maturity to the date of such
payment on the next succeeding Business Day.
Regular Record Dates. Unless otherwise
--------------------
specified in an applicable Pricing Supplement,
the Regular Record Date with respect to any
Interest Payment Date for any Note shall be
the date 15 calendar days (whether or not a
Business Day) preceding such Interest Payment
Date.
Interest Payment Dates. Interest payments
----------------------
will be made at Maturity and on each Interest
Payment Date commencing with the first
Interest Payment Date following the Original
Issue Date; provided, however, the first
-------- -------
5
payment of interest on any Note originally
issued between a Regular Record Date and an
Interest Payment Date will occur on the
Interest Payment Date following the next
succeeding Regular Record Date.
6
Fixed Rate Notes. Interest payments on Fixed
----------------
Rate Notes (other than Original Issue Discount
Notes) will be made semiannually on April 10th
and October 10th of each year and at Maturity.
Floating Rate Notes. Interest payments on
-------------------
Floating Rate Notes will be made as specified
in the Floating Rate Note.
Acceptance and Rejection of Offers If agreed upon by any Agent and the Company,
from Solicitations as Agents: then such Agent acting solely as agent for the
Company and not as principal will solicit
purchases of the Notes. Each Agent will
communicate to the Company, orally or in
writing, each reasonable offer to purchase
Notes solicited by such Agent on an agency
basis, other than those offers rejected by
such Agent. Each Agent has the right, in its
discretion reasonably exercised, to reject any
proposed purchase of Notes, as a whole or in
part, and any such rejection shall not be a
breach of such Agent's agreement contained in
the Distribution Agreement. The Company has
the sole right to accept or reject any
proposed purchase of Notes, in whole or in
part, and any such rejection shall not be a
breach of the Company's agreement contained in
the Distribution Agreement. Each Agent has
agreed to make reasonable efforts to assist
the Company in obtaining performance by each
purchaser whose offer to purchase Notes has
been solicited by such Agent and accepted by
the Company.
Preparation of Pricing Supplement: If any offer to purchase a Note is accepted by
the Company, the Company will promptly prepare
a Pricing Supplement reflecting the terms of
such Note. Information to be included in the
Pricing Supplement shall include:
1. the name of the Company;
7
2. the title of the Notes;
3. the date of the Pricing Supplement and the
date of the Prospectus to which the Pricing
Supplement relates;
4. the name of the Presenting Agent (as
defined below);
5. whether such Notes are being sold to the
Presenting Agent as principal or to an
investor or other purchaser through the
Presenting Agent acting as agent for the
Company;
6. with respect to Notes sold to the
Presenting Agent as principal, whether such
Notes will be resold by the Presenting Agent
to investors and other purchasers at (i) a
fixed public offering price of a specified
percentage of their principal amount or (ii)
at varying prices related to prevailing market
prices at the time of resale to be determined
by the Presenting Agent;
7. with respect to Notes sold to an investor
or other purchaser through the Presenting
Agent acting as agent for the Company, whether
such Notes will be sold at (i) 100% of their
principal amount or (ii) a specified
percentage of their principal amount;
8. the Presenting Agent's discount or
commission;
9. net proceeds to the Company;
10. the information with respect to the terms
of the Notes set forth below (whether or not
the applicable Note is a Book-Entry Note)
under "Procedures for Book-Entry Notes
Settlement Procedures," items (ii), (iii),
(vii), (viii) and (ix); and
11. any other terms of the Notes material to
8
investors or other purchasers of the Notes not
otherwise specified in the Prospectus.
The Company shall use its reasonable best
efforts to send such Pricing Supplement by
electronic mail, telecopy or overnight express
(for delivery by the close of business on the
applicable trade date, but in no event later
than noon, New York City time, on the Business
Day next following the trade date) to the
Agent that made or presented the offer to
purchase the applicable Note (the "Presenting
Agent") at the following address:
If to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.:
Tritech Services
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Prospectus Operations/▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇/5/6
also, for record keeping purposes, please send
a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: MTN Product Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇_▇▇▇▇@▇▇.▇▇▇
with a copy to:
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
9
If to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
27th Floor
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
In each instance that a Pricing Supplement is
prepared, the Presenting Agent will provide a
copy of such Pricing Supplement to each
investor or purchaser of the relevant Notes or
its agent. Pursuant to Rule 434 ("Rule 434")
of the Securities Act of 1933, as amended, the
Pricing Supplement may be delivered separately
from the Prospectus. Outdated Pricing
Supplements (other than those retained for
files) will be destroyed.
Settlement: The receipt of immediately available funds by
the Company in payment for a Note and the
authentication and delivery of such Note
shall, with respect to such Note, constitute
"settlement." Offers accepted by the Company
will be settled in three Business Days, or at
such time as the purchaser, the applicable
Agent and the Company shall agree, pursuant to
the timetable for settlement set forth in
Parts II and III hereof under "Settlement
Procedures" with respect to Book-Entry Notes
and Certificated Notes, respectively (each
such date fixed for settlement is hereinafter
referred to as a "Settlement Date"). If
procedures A and B of the applicable
Settlement Procedures with respect to a
particular offer are not completed on or
before the time set forth under the
"Settlement Procedures Timetable," such offer
shall not be settled until the Business Day
following the completion of Settlement
Procedures A and B or such later date as the
purchaser and the Company shall agree.
10
In the event of a purchase of Notes by an
Agent as principal, appropriate settlement
details will be pursuant to the timetable for
settlement set forth in Parts II and III
hereof under "Settlement Procedures" with
respect to Book-Entry Notes and Certificated
Notes, respectively, or otherwise as agreed
between the Agent and the Company.
Procedure for Changing Rates or When a decision has been reached to change the
Other Variable Terms: interest rate or any other variable term on
any Notes being sold by the Company, the
Company will promptly advise the Agents by
facsimile transmission and such Agents will
forthwith suspend solicitation of offers to
purchase such Notes. The Agent or Agents will
telephone the Company with recommendations as
to the changed interest rates or other
variable terms. At such time as the Company
advises the Agents of the new interest rates
or other variable terms, such Agents may
resume solicitation of offers to purchase such
Notes. Until such time only "indications of
interest" may be recorded. Immediately after
acceptance by the Company of an offer to
purchase Notes at a new interest rate or new
variable term, the Company, the Presenting
Agent and the Trustee shall follow the
procedures set forth under the "Settlement
Procedures."
Suspension of Solicitation; Amendment or The Company may instruct the Agents to suspend
Supplement: solicitation of offers to purchase Notes at
any time. Each Agent receiving such
instructions will forthwith suspend
solicitation of offers to purchase Notes from
the Company until such time as the Company has
advised the Agents that solicitation of offers
to purchase may be resumed. If the Company
decides to amend or supplement any of the
Registration Statements (including
incorporating any documents by reference
therein) or the Prospectus (other than to
change interest rates or other variable terms
with respect to the
11
offering of the Notes), it will promptly advise
each Agent and will furnish each Agent and
counsel to the Agents with copies of the proposed
amendment or supplement (including any document
proposed to be incorporated by reference therein but
excluding any Pricing Supplements unless
otherwise provided herein). One copy of such
filed document, along with a copy of the cover
letter sent to the Commission, will be
delivered, mailed, telecopied or e-mailed to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. at MTN Product Management,
North Tower, World Financial Center, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, E-Mail Address:
▇▇▇▇_▇▇▇▇@▇▇.▇▇▇ and to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
at Credit Department, Credit Control-Medium
Term Notes, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇. For
record keeping purposes, one copy of each such
amendment or supplement shall also be
delivered, mailed, telecopied or e-mailed to
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇, E-Mail Address:
▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇.
In the event that at the time the solicitation
of offers to purchase Notes from the Company
is suspended (other than to change interest
rates or other variable terms) there are any
offers to purchase Notes that have been
accepted by the Company that have not been
settled, the Company will promptly advise the
Agents and the Trustee whether such offers may
be settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of the
suspension may be delivered in connection with
the settlement of such offers. The Company
will have the sole responsibility for such
decision and for any arrangements that may be
made in the event that the Company determines
that such offers may not be settled or that
copies of such
12
Prospectus may not be so delivered.
Delivery of Prospectus and Applicable A copy of the most recent Prospectus and the
Pricing Supplement: applicable Pricing Supplement, which pursuant
to Rule 434 may be delivered separately from
the Prospectus, must accompany or precede the
earlier of (a) the written confirmation of a
sale sent to an investor or other purchaser or
his agent and (b) the delivery of Notes to an
investor or other purchaser or his agent.
Authenticity of Signatures: The Agents will have no obligation or
liability to the Company or the Trustee in
respect of the authenticity of the signature
of any officer, employee or agent of the
Company or the Trustee on any Note.
Documents Incorporated by Reference: The Company shall supply the Agents with an
adequate supply of all documents incorporated
by reference in the Registration Statements
and the Prospectus.
Business Day: "Business Day" means, unless otherwise
specified in the applicable Pricing
Supplement, any day other than a Saturday or
Sunday, or any other day on which banks in The
City of New York (and, with respect to LIBOR
Notes, is also a London Business Day), are
generally required or authorized by law or
executive order to close. "London Business
Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the
London interbank market.
PART II: PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representations from the
Company and the Trustee to DTC, dated February [ ], 1999, and a Medium-Term
Note Certificate Agreement, dated June 11, 1993, between the Trustee and DTC
(the "Certificate Agreement"), and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
13
Issuance: All Fixed Rate Notes issued as Book-Entry
Notes having the same Original Issue Date,
interest rate, Stated Maturity Date and
redemption and/or repayment terms
(collectively, the "Fixed Rate Terms") will be
represented initially by a single Global Note
and all Floating Rate Notes issued as
Book-Entry Notes having the same Original
Issue Date, Base Rate (which may be the
Commercial Paper Rate, the Treasury Rate,
LIBOR, the CD Rate, the Federal Funds Rate,
the Prime Rate or any other rate set forth in
the applicable Pricing Supplement by the
Company), Initial Interest Rate, Index
Maturity, Spread or Spread Multiplier, if any,
Minimum Interest Rate, if any, Maximum
Interest Rate, if any, Stated Maturity Date,
redemption and/or repayment terms, if any,
Initial Interest Reset Date, Interest Reset
Date(s) and Interest Determination Date(s)
(collectively, the "Floating Rate Terms") will
be represented initially by a single Global
Note.
For other variable terms with respect to the
Fixed Rate Notes and Floating Rate Notes, see
the Prospectus and the applicable Pricing
Supplement.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's (the
"CUSIP Service Bureau") for the reservation of
one series of CUSIP numbers, which series
consists of approximately 900 CUSIP numbers
which have been reserved for and relating to
Book-Entry Notes and the Company has delivered
to the Trustee and DTC such list of such CUSIP
numbers. The Company will assign CUSIP
numbers to Book-Entry Notes as described below
under Settlement Procedure B. DTC will notify
the CUSIP Service Bureau periodically of the
CUSIP numbers that the Company has assigned to
Book-Entry Notes. The Trustee will notify the
Company at any
14
time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Book-Entry
Notes, and, if it deems necessary, the Company
will reserve additional CUSIP numbers for
assignment to Book-Entry Notes. Upon
obtaining such additional CUSIP numbers,
the Company will deliver a list of such
additional numbers to the Trustee and DTC.
Book-Entry Notes having an aggregate principal
amount in excess of $200,000,000 and otherwise
required to be represented by the same Global
Note will instead be represented by two or
more Global Notes that shall all be assigned
the same CUSIP number.
Registration: Each Global Note will be registered in the
name of Cede & Co., as nominee for DTC, on the
register maintained by the Trustee under the
Indenture. The beneficial owner of a
Book-Entry Note (i.e., an owner of a
----
beneficial interest in a Global Note) (or one
or more indirect participants in DTC
designated by such owner) will designate one
or more participants in DTC (with respect to
such Book-Entry Note, the "Participants") to
act as agent for such beneficial owner in
connection with the book-entry system
maintained by DTC, and DTC will record in
book-entry form, in accordance with
instructions provided by such Participants, a
credit balance with respect to such Book-Entry
Note in the account of such Participants. The
ownership interest of such beneficial owner in
such Book-Entry Note will be recorded through
the records of such Participants or through
the separate records of such Participants and
one or more indirect participants in DTC.
Transfers: Transfers of beneficial interests in a Global
Note will be accomplished by book entries made
by DTC and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees of such
15
Global Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP
Service Bureau at any time a written notice
specifying (a) the CUSIP numbers of two or
more Global Notes outstanding on such date
that represent Book-Entry Notes having the
same Fixed Rate Terms or Floating Rate Terms,
as the case may be (but not the same Original
Issue Dates), and for which interest has been
paid to the same date; (b) a date, occurring
at least 30 days after such written notice is
delivered and at least 30 days before the next
Interest Payment Date for the related
Book-Entry Notes, on which such Global Notes
shall be exchanged for a single replacement
Global Note; and (c) a new CUSIP number,
obtained from the Company, to be assigned to
such replacement Global Note. Upon receipt of
such a notice, DTC will send to its
Participants (including the Trustee) a written
reorganization notice to the effect that such
exchange will occur on such date. Prior to
the specified exchange date, the Trustee will
deliver to the CUSIP Service Bureau written
notice setting forth such exchange date and
the new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of the
Global Notes to be exchanged will no longer be
valid. On the specified exchange date, the
Trustee will exchange such Global Notes for a
single Global Note bearing the new CUSIP
number and the CUSIP numbers of the exchanged
Global Notes will, in accordance with CUSIP
Service Bureau procedures, be cancelled and
not immediately reassigned. Notwithstanding
the foregoing, if the Global Notes to be
exchanged exceed $200,000,000 in aggregate
principal amount, one replacement Global Note
will be authenticated and issued to represent
$200,000,000 in aggregate principal amount of
the exchanged Global Notes and an additional
Global Note or Notes will be authenticated and
issued to represent any remaining principal
amount of such Global
16
Notes (see "Denominations" below).
Denominations: Book-Entry Notes will be issued in
denominations of $1,000 and integral multiples
in excess thereof of $1,000 unless otherwise
set forth in the applicable Prospectus
Supplement. Global Notes will be denominated
in principal amounts not in excess of
$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess
of $200,000,000 would, but for the preceding
sentence, be represented by a single Global
Note, then one Global Note will be issued to
represent $200,000,000 principal amount of
such Book-Entry Note or Notes and an
additional Global Note or Notes will be issued
to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a
case, each of the Global Notes representing
such Book-Entry Note or Notes shall be
assigned the same CUSIP number.
Payments of Principal, Premium, Payments of Interest Only. Promptly after
-------------------------
if any, and Interest: each Regular Record Date, the Trustee will
deliver to the Company and DTC a written
notice specifying by CUSIP number the amount
of interest to be paid on each Book-Entry Note
on the following Interest Payment Date (other
than an Interest Payment Date coinciding with
Maturity) and the total of such amounts. DTC
will confirm the amount payable on each
Book-Entry Note on such Interest Payment Date
by reference to the daily bond reports
published by Standard & Poor's. On such
Interest Payment Date, the Company will pay to
the Trustee in immediately available funds,
and the Trustee in turn will pay to DTC, such
total amount of interest due (other than at
Maturity), at the times and in the manner set
forth below under "Manner of Payment."
Notice of Interest Rates. Promptly after each
------------------------
Interest Determination Date for Floating Rate
17
Notes issued as Book-Entry Notes, the
Calculation Agent will notify each of ▇▇▇▇▇'▇
Investors Service, Inc. and Standard & Poor's
of the interest rates determined as of such
Interest Determination Date.
Payments at Maturity. On or about the first
--------------------
Business Day of each month, the Trustee will
deliver to the Company and DTC a written list
of principal, interest and premium, if any, to
be paid on each Book-Entry Note maturing or
otherwise becoming due in the following month.
The Trustee, the Company and DTC will confirm
the amounts of such principal, premium and
interest payments with respect to a Book-Entry
Note on or about the fifth Business Day
preceding the Maturity of such Book-Entry
Note. At such Maturity, the Company will pay
to the Trustee in immediately available funds,
and the Trustee in turn will pay to DTC, the
principal amount of such Note, together with
interest and premium, if any, due at such
Maturity, at the times and in the manner set
forth below under "Manner of Payment."
Promptly after payment to DTC of the
principal, interest and premium, if any, due
at the Maturity of such Book-Entry Note, the
Trustee will cancel the Global Note
representing such Book-Entry Note and deliver
it to the Company with an appropriate debit
advice. On the first Business Day of each
month, the Trustee will deliver to the Company
a written statement indicating the total
principal amount of outstanding Book-Entry
Notes as of the immediately preceding Business
Day.
Manner of Payment. The total amount of any
-----------------
principal, premium, if any, and interest due
on Book-Entry Notes on any Interest Payment
Date or at Maturity shall be paid by the
Company to the Trustee in funds available for
use by the Trustee no later than noon, New
York City time, on such date. The Company
will make such payment on such Book-Entry
18
Notes by instructing the Trustee to withdraw
funds from an account maintained by the
Company at the Trustee or by making such
payment to an account specified by the
Trustee. The Company will confirm such
instructions in writing to the Trustee. As
soon as possible thereafter, the Trustee will
pay by separate wire transfer (using Fedwire
message entry instructions in a form
previously specified by DTC) to an account at
the Federal Reserve Bank of New York
previously specified by DTC, in funds
available for immediate use by DTC, each
payment of interest, principal and premium, if
any, due on a Book-Entry Note on such date.
Thereafter on such date, DTC will pay, in
accordance with its SDFS operating procedures
then in effect, such amounts in funds
available for immediate use to the respective
Participants in whose names such Book-Entry
Notes are recorded in the book-entry system
maintained by DTC. Neither the Company nor
the Trustee shall have any responsibility or
liability for the payment by DTC of the
principal of, premium, if any, or interest on,
the Book-Entry Notes to such Participants.
Withholding Taxes. The amount of any taxes
-----------------
required under applicable law to be withheld
from any interest payment on a Book-Entry Note
will be determined and withheld by the
Participant, indirect participant in DTC or
other Person responsible for forwarding
payments and materials directly to the
beneficial owner of such Book-Entry Note.
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note sold by an Agent, as agent of
the Company, or purchased by an Agent, as
principal, will be as follows:
A. The Presenting Agent will advise the
Company by telephone, confirmed by facsimile,
of the following settlement information:
19
1. Taxpayer identification number of the
purchaser.
2. Principal amount.
3. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates; and
(c) whether such Fixed Rate Note is being
issued as an Original Issue Discount Note and,
if so, the terms thereof.
Floating Rate Notes:
(a) base rate;
(b) initial interest rate;
(c) spread or spread multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) index maturity;
(i) calculation agent;
(j) maximum interest rate, if any;
(k) minimum interest rate, if any;
(l) calculation date;
(m) interest determination dates; and
(n) whether such Floating Rate Note is being
issued as an Original Issue
20
Discount Note and, if so, the terms
thereof.
4. Price to public of such Book-Entry Note
(or whether such Note is being offered at
varying prices relating to prevailing market
prices at time of resale as determined by the
Presenting Agent).
5. Trade Date.
6. Settlement Date (Original Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if any,
including:Redemption Commencement Date,
Initial Redemption Percentage and Annual
Redemption Percentage Reduction.
9. Optional Repayment Date(s) and repayment
provisions, if any.
10. Net proceeds to the Company.
11. Presenting Agent's discount or commission
(determined in accordance
with Schedule A to the Distribution
Agreement).
12. Name of Presenting Agent (and whether
such Note is being sold to the Presenting
Agent as principal or to an investor or other
purchaser through the Presenting Agent acting
as agent for the Company).
13. Such other information specified with
respect to such Note (whether by Addendum or
otherwise).
B. The Company will assign a CUSIP number to
the Global Note representing such Book-Entry
Note and then advise the
21
Trustee by facsimile transmission or other
electronic transmission of the above settlement
information received from the Presenting Agent,
such CUSIP number and the name of the
Presenting Agent.
C. The Trustee will communicate to DTC and
the Presenting Agent through DTC's Participant
Terminal System, a pending deposit message
specifying the following settlement
information:
1. The information set forth in Settlement
Procedure A.
2. Identification numbers of the participant
accounts maintained by DTC on behalf of the
Trustee and the Presenting Agent.
3. Identification of the Global Note as a
Fixed Rate Note or Floating Rate Note.
4. Initial Interest Payment Date for such
Global Note, number of days by which such date
succeeds the related record date for DTC
purposes (or, in the case of Floating Rate
Notes which reset daily or weekly, the date
five calendar days preceding the Interest
Payment Date) and, if then calculable, the
amount of interest payable on such Interest
Payment Date (which amount shall have been
confirmed by the Trustee).
5. CUSIP number of the Global Note
representing such Book-Entry Note.
6. Whether such Global Note represents any
other Book-Entry Notes.
7. The Company or the Trustee will advise the
Presenting Agent by telephone of the CUSIP
number of the Global Note representing such
Book-
22
Entry Note.
DTC will arrange for each pending deposit
message described above to be transmitted to
Standard & Poor's, which will use the
information in the message to include certain
terms of the related Book-Entry Note in the
appropriate daily bond report published by
Standard & Poor's.
D. The Company will complete and deliver to
the Trustee a Global Note representing such
Book-Entry Note in a form that has been
approved by authorized officers of the Company
pursuant to the Indenture, the Agents and the
Trustee.
E. The Trustee will authenticate the Global
Note representing such Book-Entry Note.
F. DTC will credit such Book-Entry Note to
the participant account of the Trustee
maintained by DTC.
G. The Trustee will enter an SDFS deliver
order through DTC's Participant Terminal
System instructing DTC (i) to debit such
Book-Entry Note to the Trustee's participant
account and credit such Book-Entry Note to the
participant account of the Presenting Agent
maintained by DTC and (ii) to debit the
settlement account of the Presenting Agent and
credit the settlement account of the Trustee
maintained by DTC, in an amount equal to the
price of such Book-Entry Note less such
Presenting Agent's discount or commission.
Any entry of such a deliver order shall be
deemed to constitute a representation and
warranty by the Trustee to DTC that (i) the
Global Note representing such Book-Entry Note
has been issued and authenticated and (ii) the
Trustee is holding such Global Note pursuant
to the Certificate Agreement.
23
H. In the case of Book-Entry Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will enter an SDFS deliver
order through DTC's Participant Terminal
System instructing DTC (i) to debit such
Book-Entry Note to the Presenting Agent's
participant account and credit such Book-Entry
Note to the participant account of the
Participants maintained by DTC and (ii) to
debit the settlement accounts of such
Participants and credit the settlement account
of the Presenting Agent maintained by DTC in
an amount equal to the initial public offering
price of such Book-Entry Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures G and H will be settled in
accordance with SDFS operating procedures in
effect on the Settlement Date.
J. Upon receipt of such funds, the Trustee
will credit to an account of the Company
maintained at the Trustee or pay to an account
otherwise specified by the Company funds
available for immediate use in the amount
transferred to the Trustee in accordance with
Settlement Procedure G.
K. The Trustee will send a copy of the Global
Note by first class mail to the Company
together with a statement setting forth the
total principal amount of Notes of each series
that have been issued under the Indenture
(whether or not Outstanding) as of the related
Settlement Date, the principal amount of Notes
Outstanding as of the related Settlement Date
after giving effect to such transaction and
all other offers to purchase Notes of which
the Company has advised the Trustee but that
24
have not yet been settled.
L. In the case of Book-Entry Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will confirm the purchase of
such Book-Entry Note to the investor or other
purchaser either by transmitting to the
Participant with respect to such Book-Entry
Note a confirmation order through DTC's
Participant Terminal System or by mailing a
written confirmation to such investor or other
purchaser.
Settlement Procedures Timetable: For offers to purchase Book-Entry Notes
accepted by the Company, Settlement Procedures
"A" through "L" set forth above shall be
completed as soon as possible but not later
than the respective times (New York City time)
set forth below:
Settlement
Procedure Time
--------- ------
A 11:00 a.m. on the trade
date or within one
hour following the trade
B 12:00 noon on the trade
date or within one
hour following the trade
C No later than the close
of business on the
trade date
D 3:00 p.m. on the Business
Day before the
Settlement Date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H No later than 2:00 p.m. on
Settlement Date
I 4:00 p.m. on Settlement Date
▇-▇ 5:00 p.m. on Settlement Date
25
If a sale is to be settled more than one
Business Day after the trade date, Settlement
Procedures A, B, and C may, if necessary, be
completed at any time prior to the specified
times on the first Business Day after such
trade date. In connection with a sale that is
to be settled more than one Business Day after
the trade date, if the Initial Interest Rate
for a Floating Rate Note is not known at the
time that Settlement Procedure A is completed,
Settlement Procedures B and C shall be
completed as soon as such rates have been
determined, but no later than noon and 2:00
p.m., New York City time, respectively, on the
second Business Day before the Settlement
Date. Settlement Procedure I is subject to
extension in accordance with any extension of
Fedwire closing deadlines and in the other
events specified in the SDFS operating
procedures in effect on the Settlement Date.
If settlement of a Book-Entry Note is
rescheduled or cancelled, the Trustee will
deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to
such effect by no later than 5:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled Settlement
Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver
order with respect to a Book-Entry Note
pursuant to Settlement Procedure G, the
Trustee may deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message instructing
DTC to debit such Book-Entry Note to the
participant account of the Trustee maintained
at DTC. DTC will process the withdrawal
message, provided that such participant
account contains a principal amount of the
Global Note representing such Book-Entry Note
that is at least equal to the principal amount
to be debited. If withdrawal messages
26
are processed with respect to all the Book-Entry
Notes represented by a Global Note, the
Trustee will ▇▇▇▇ such Global Note
"cancelled", make appropriate entries in its
records and send such cancelled Global Note to
the Company. The CUSIP number assigned to
such Global Note shall, in accordance with
CUSIP Service Bureau procedures, be cancelled
and not immediately reassigned. If withdrawal
messages are processed with respect to a
portion of the Book-Entry Notes represented by
a Global Note, the Trustee will exchange such
Global Note for two Global Notes, one of which
shall represent the Book-Entry Notes for which
withdrawal messages are processed and shall be
cancelled immediately after issuance, and the
other of which shall represent the other
Book-Entry Notes previously represented by the
surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note.
In the case of any Book-Entry Note sold
through the Presenting Agent, as agent, if the
purchase price for any Book-Entry Note is not
timely paid to the Participants with respect
to such Book-Entry Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in
turn, the related Presenting Agent may enter
SDFS deliver orders through DTC's Participant
Terminal System reversing the orders entered
pursuant to Settlement Procedures G and H,
respectively. Thereafter, the Trustee will
deliver the withdrawal message and take the
related actions described in the preceding
paragraph. If such failure has occurred for
any reason other than default by the
applicable Presenting Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Presenting Agent on an
equitable basis for its loss of the use of
funds during the period when the funds were
credited to the account of the
27
Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Book-Entry
Note, DTC may take any actions in accordance
with its SDFS operating procedures then in
effect. In the event of a failure to settle
with respect to a Book-Entry Note that was to
have been represented by a Global Note also
representing other Book-Entry Notes, the
Trustee will provide, in accordance with
Settlement Procedures D and E, for the
authentication and issuance of a Global Note
representing such remaining Book-Entry Notes
and will make appropriate entries in its
records.
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Certificated Notes will be issued in
denominations of $1,000 and integral multiples
of $1,000 in excess thereof unless otherwise
indicated in the applicable Pricing Supplement.
Payments of Principal, Premium, Upon presentment and delivery of the
if any, and Interest: Certificated Note, the Trustee upon receipt of
immediately available funds from the Company
will pay the principal amount of each
Certificated Note at Maturity and premium, if
any, and the final installment of interest in
immediately available funds. All interest
payments on a Certificated Note, other than
interest due at Maturity, will be made at the
Corporate Trust Office; provided, however,
that such payment of interest may be made, at
the option of the Company by check to the
address of the person entitled thereto as such
address shall appear in the Security Register.
Notwithstanding the foregoing, holders of ten
million dollars or more in aggregate principal
amount of Certificated Notes having the same
Interest Payment Dates shall, at the option of
the Company, be entitled to receive payments
of interest (other than at Maturity) by wire
28
transfer of immediately available funds if
appropriate wire transfer instructions have
been received in writing by the Trustee not
less than 15 days prior to the applicable
Interest Payment Date (any such wire transfer
instructions received by the Trustee shall
remain in effect until revoked by such Holder).
The Trustee will provide monthly to the
Company a list of the principal, premium, if
any, and interest to be paid on Certificated
Notes maturing in the next succeeding month.
The Trustee will be responsible for
withholding taxes on interest paid as required
by applicable law, but shall be relieved from
any such responsibility if it acts in good
faith and in reliance upon an opinion of
counsel.
Certificated Notes presented to the Trustee at
Maturity for payment will be cancelled by the
Trustee. All cancelled Certificated Notes
held by the Trustee shall be destroyed, and
the Trustee shall furnish to the Company a
certificate with respect to such destruction.
Settlement Procedures: Settlement Procedures with regard to each
Certificated Note purchased by an Agent, as
principal, or through an Agent, as agent,
shall be as follows:
A. The Presenting Agent will advise the
Company by telephone, confirmed by facsimile,
of the following settlement information with
regard to each Certificated Note:
1. Exact name in which the Certificated
Note(s) is (are) to be registered (the
"Registered Owner").
2. Exact address or addresses of the
Registered Owner for delivery, notices and
payments of principal, premium, if any, and
interest.
29
3. Taxpayer identification number of the
Registered Owner.
4. Principal amount.
5. Authorized denomination.
6. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates; and
(c) whether such Fixed Rate Note is being
issued as an Original Issue Discount Note,
if so, the terms thereof.
Floating Rate Notes:
(a) base rate;
(b) initial interest rate;
(c) spread or spread multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) index maturity;
(i) calculation agent;
(j) maximum interest rate, if any;
(k) minimum interest rate, if any;
(l) calculation date;
(m) interest determination dates; and
(n) whether such Floating Rate Note
30
is being issued as an Original Issue Discount
Note and, if so, the terms thereof.
7. Price to public of such Certificated Note
(or whether such Note is being offered at
varying prices relating to prevailing market
prices at time of resale as determined by the
Presenting Agent).
8. Trade Date.
9. Settlement Date (Original Issue Date).
10. Stated Maturity Date.
11. Net proceeds to the Company.
12. Presenting Agent's discount or commission
(determined in accordance with Schedule A to
the Distribution Agreement).
13. Redemption provisions, if any, including:
Redemption Commencement Date, Initial
Redemption Percentage and Annual Redemption
Percentage Reduction.
14. Optional Repayment Date(s) and repayment
provisions, if any.
15. Name of Presenting Agent (and whether
such Note is being sold to the Presenting
Agent as principal or to an investor or other
purchaser through the Presenting Agent acting
as agent for the Company).
16. Such other information specified with
respect to such Note (whether by Addendum or
otherwise).
B. After receiving such settlement
information from the Presenting Agent, the
Company
31
will advise the Trustee of the above
settlement information by facsimile
transmission confirmed by telephone. The
Company will cause the Trustee to issue,
authenticate and deliver the Certificated
Notes.
C. The Trustee will complete the preprinted
4-ply Certificated Note packet containing the
following documents in forms approved by the
Company, the Presenting Agent and the Trustee
consistent with the Indenture, and will make
three copies thereof (herein called "Stub 1,"
"Stub 2" and "Stub 3"):
1. Certificated Note with the Presenting
Agent's confirmation, if traded on a principal
basis, or the Presenting Agent's customer
confirmation, if traded on an agency basis.
2. Stub 1 - for Trustee.
3. Stub 2 - for Presenting Agent.
4. Stub 3 - for the Company.
D. With respect to each trade, the Trustee
will deliver the Certificated Notes and Stub 2
thereof to the Presenting Agent at the
following applicable address: If to ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co. to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Money
Markets Clearance, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇.▇.▇.▇. Window, New York, New York
10041, Attention: ▇▇ ▇▇▇▇▇▇▇▇, and if to
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. to ▇▇▇▇▇▇▇, Sachs & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 6th Floor. The Trustee will
keep Stub 1. The Presenting Agent will
acknowledge receipt of the Certificated Note
through a broker's receipt and will keep Stub
2. Delivery of the Certificated Note will be
made only against such
32
acknowledgment of receipt. Upon determination
that the Certificated Note has been authorized,
delivered and completed as aforementioned, the
Presenting Agent will wire the net proceeds of
the Certificated Note after deduction of its
applicable discount or commission to the
Company pursuant to standard wire instructions
given by the Company.
E. In the case of Certificated Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will deliver the Certificated
Note (with confirmations), as well as a copy
of the Prospectus and the applicable Pricing
Supplement or Supplements received from the
Trustee to the purchaser against payment in
immediately available funds.
33
F. The Trustee will send Stub 3 to the
Company.
Settlement Procedures Timetable: For offers to purchase Certificated Notes
accepted by the Company, Settlement Procedures
"A" through "F" set forth above shall be
completed as soon as possible following the
trade but not later than the respective times
(New York City time) set forth below:
Settlement
Procedure Time
--------- ------
A 11:00 a.m. on the trade date or
within one hour following the trade
B 12:00 noon on the trade date or
within one hour following the trade
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the case of Certificated Notes sold through
the Presenting Agent, as agent, in the event
that a purchaser of a Certificated Note from
the Company either fails to accept delivery of
or make payment for a Certificated Note on the
Settlement Date, the Presenting Agent will
forthwith notify the Trustee and the Company
by telephone, confirmed in writing, and return
such Certificated Note and related stub to the
Trustee.
The Trustee, upon receipt of the Certificated
Note and related stub from the Presenting
Agent, will immediately advise the Company
34
and the Company will promptly arrange to credit
the account of the Presenting Agent in an
amount of immediately available funds equal to
the amount previously paid by such Presenting
Agent in settlement for such Certificated
Note. Such credits will be made on the
Settlement Date if possible, and in any event
not later than the Business Day following the
Settlement Date; provided that the Company has
received notice on the same day. If such
failure has occurred for any reason other than
failure by such Presenting Agent to perform
its obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Presenting Agent on an
equitable basis for its loss of the use of
funds during the period when the funds were
credited to the account of the Company.
Immediately upon receipt of the Certificated
Note in respect of which the failure occurred,
the Trustee will cancel and destroy the
Certificated Note (and related stubs), make
appropriate entries in its records to reflect
the fact that the Certificated Note was never
issued, and accordingly notify in writing the
Company.
35
ANNEX III
Accountants' Letter
-------------------
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder.
(ii) In their opinion, the consolidated financial statements and financial
statement schedules audited by them and incorporated by reference in the
Registration Statements or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations thereunder.
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus, inquiries of officials of the
Company and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or that any material
modifications should be made for them to be in conformity with generally
accepted accounting principles;
(B) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(C) as of the date of the latest available financial statements
of the Company and at a subsequent date not more than five business days
prior to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock under the
Company's Dividend Reinvestment and Stock Purchase Plan, Employee Stock
Ownership Plan, Retirement Savings Plan, Stock Option and Incentive Plans
or other similar plans, and the incurrence of capital stock issuance
expenses) of the Company or in the preferred stock or other securities of
the Company's subsidiaries, or any increase in the consolidated long-term
debt of the Company and its subsidiaries or any decreases in consolidated
net assets of the Company and its subsidiaries or other items specified by
the Agents, or any increases in any items specified by the Agents, in each
case as compared with the amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in each
case for changes, increases or decreases that the Prospectus discloses have
occurred or may occur or that are described in such letter; and
(D) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus ending
as of the date of the latest available financial statements of the Company
and at a subsequent date referred to in clause (C) there were any decreases
in consolidated revenues or operating profit or basic per share amounts of
consolidated net income of the Company or other items specified by the
Agents, or any increases in any items specified by the Agents, in each case
as compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Agents, except in
each case for increases or decreases that the Prospectus discloses have
occurred or may occur or that are described in such letter;
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Agents that are derived from the general accounting
records of the Company and its subsidiaries, that appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, any of the Registration Statements specified by the
Agents or in documents incorporated by reference in the Prospectus specified by
the Agents, and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Distribution Agreement as of the Commencement Date
referred to in Section 6(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein) as of
the date of the amendment, supplement, incorporation or the Time of Delivery
2
relating to an agreement to purchase Securities as principal requiring the
delivery of such letter under Section 4(j) thereof.
3