Exhibit 4(e)
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEI PREFERRED FUNDING, LP
TABLE OF CONTENTS
PAGE
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ARTICLE I--DEFINED TERMS
1.1 DEFINITIONS.................................. 2
ARTICLE II--CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PARTNERSHIP PREFERRED
SECURITIES HOLDERS
2.1 CONTINUATION OF THE PARTNERSHIP.............. 13
2.2 NAME......................................... 13
2.3 PURPOSES OF THE PARTNERSHIP.................. 13
2.4 TERM......................................... 14
2.5 REGISTERED AGENT AND OFFICE.................. 14
2.6 PRINCIPAL PLACE OF ACTIVITY.................. 14
2.7 NAME AND ADDRESS OF GENERAL PARTNER.......... 14
2.8 QUALIFICATION TO CONDUCT ACTIVITIES.......... 14
2.9 ADMISSION OF HOLDERS OF PARTNERSHIP
PREFERRED SECURITIES......................... 15
ARTICLE III--CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S
INTEREST; CAPITAL ACCOUNTS
3.1 CAPITAL CONTRIBUTIONS........................ 15
3.2 PARTNERSHIP PREFERRED SECURITY
HOLDER'S INTEREST REPRESENTED BY
PARTNERSHIP PREFERRED SECURITIES............. 16
3.3 CAPITAL ACCOUNTS............................. 16
3.4 INTEREST ON CAPITAL CONTRIBUTIONS............ 17
3.5 WITHDRAWAL AND RETURN OF CAPITAL
CONTRIBUTIONS................................ 17
ARTICLE IV--ALLOCATIONS
4.1 PROFITS AND LOSSES......................... 17
4.2 SPECIAL ALLOCATION......................... 19
4.3 WITHHOLDING................................ 20
ARTICLE V--DISTRIBUTIONS
5.1 DISTRIBUTIONS.............................. 20
5.2 LIMITATIONS ON DISTRIBUTIONS............... 22
ARTICLE VI--ISSUANCE OF PARTNERSHIP
PREFERRED SECURITIES
6.1 GENERAL PROVISIONS REGARDING
PARTNERSHIP PREFERRED SECURITIES........... 22
6.2 PARTNERSHIP PREFERRED SECURITIES........... 23
ARTICLE VII--PARTNERSHIP INVESTMENTS
7.1 AFFILIATE INVESTMENT INSTRUMENTS;
ELIGIBLE DEBT SECURITIES................... 36
7.2 REINVESTMENT OF PAYMENTS RECEIVED
BY THE PARTNERSHIP......................... 37
7.3 ASSUMPTION OF OBLIGATIONS AND
RELEASE OF INVESTMENT AFFILIATE............ 38
ARTICLE VIII--BOOKS OF ACCOUNT, RECORDS AND REPORTS
8.1 BOOKS AND RECORDS.......................... 39
8.2 ACCOUNTING METHOD.......................... 40
ARTICLE IX--PAYMENT OF EXPENSES
9.1 PAYMENT OF TRUST EXPENSES AND
PARTNERSHIP TAXES.......................... 40
9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES...... 41
ARTICLE X--POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
10.1 LIMITATIONS................................ 41
10.2 LIABILITY.................................. 42
10.3 PRIORITY................................... 42
ARTICLE XI--POWERS, RIGHTS, DUTIES AND COVENANTS
OF THE GENERAL PARTNER
11.1 AUTHORITY.................................. 42
11.2 POWERS AND DUTIES OF GENERAL PARTNER....... 43
11.3 OBLIGATIONS AND EXPENSES PAYABLE BY AND
COVENANTS OF THE GENERAL PARTNER........... 45
11.4 LIABILITY.................................. 46
11.5 OUTSIDE ACTIVITIES......................... 46
11.6 LIMITS ON GENERAL PARTNER'S POWERS......... 46
11.7 EXCULPATION................................ 48
11.8 FIDUCIARY DUTY............................. 48
11.9 INDEMNIFICATION............................ 49
11.10 TAX MATTERS................................ 50
11.11 CONSOLIDATION, AMALGAMATION, MERGER,
CONVERSION OR SALE OF ASSETS............... 51
ARTICLE XII--TRANSFERS OF INTERESTS BY PARTNERS
12.1 TRANSFER OF INTERESTS...................... 52
12.2 TRANSFER OF L.P. CERTIFICATES.............. 54
12.3 DEFINITIVE L.P. CERTIFICATES;
PERSONS DEEMED PARTNERSHIP
PREFERRED SECURITY HOLDERS................. 54
12.4 BOOK-ENTRY PROVISIONS...................... 55
12.5 REGISTRAR, TRANSFER AGENT AND
PAYING AGENT............................... 58
ARTICLE XIII--WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION
OF ASSETS
13.1 WITHDRAWAL OF PARTNERS..................... 59
13.2 DISSOLUTION OF THE PARTNERSHIP............. 59
13.3 LIQUIDATION................................ 60
13.4 DISTRIBUTION IN LIQUIDATION................ 61
13.5 RIGHTS OF LIMITED PARTNERS................. 62
13.6 TERMINATION................................ 62
ARTICLE XIV--AMENDMENTS AND MEETINGS
14.1 AMENDMENTS................................. 62
14.2 AMENDMENT OF CERTIFICATE................... 63
14.3 MEETINGS OF PARTNERS....................... 63
ARTICLE XV--MISCELLANEOUS
15.1 NOTICES.................................... 65
15.2 POWER OF ATTORNEY.......................... 66
15.3 ENTIRE AGREEMENT........................... 66
15.4 GOVERNING LAW.............................. 67
15.5 EFFECT..................................... 67
15.6 PRONOUNS AND NUMBER........................ 67
15.7 CAPTIONS................................... 67
15.8 PARTIAL ENFORCEABILITY..................... 67
15.9 COUNTERPARTS............................... 67
15.10 WAIVER OF PARTITION........................ 67
15.11 REMEDIES................................... 68
SCHEDULE 1 LIST OF PARTNERS
ANNEX A FORM OF L.P. CERTIFICATE
Exhibit 4(e)
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HEI PREFERRED FUNDING, LP
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HEI PREFERRED
FUNDING, LP, a Delaware limited partnership (the "PARTNERSHIP"), dated as of
_____________, 1997, among HYCAP MANAGEMENT, INC., a Delaware corporation (the
"COMPANY"), as the general partner, HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST
I, a Delaware statutory business trust, as the initial limited partner (the
"INITIAL LIMITED PARTNER"), and such other Persons (as defined herein) who
become Limited Partners (as defined herein) as provided herein.
WHEREAS, HAWAIIAN ELECTRIC INDUSTRIES, INC., a Hawaii corporation
("HEI"), and the Initial Limited Partner entered into an Agreement of Limited
Partnership, dated as of December 23, 1996 (the "ORIGINAL PARTNERSHIP
AGREEMENT");
WHEREAS, the Certificate of Limited Partnership of the Partnership was
filed with the Office of the Secretary of State of the State of Delaware on
December 23, 1996;
WHEREAS, pursuant to that certain Assignment of General Partner
Interest and Amendment of Agreement of Limited Partnership dated as of January
23, 1997 (the "Amendment"), HEI assigned its general partner interest in the
Partnership to the Company, which is a wholly-owned subsidiary of HEI;
WHEREAS, the Partners (as defined herein) desire to continue the
Partnership under the Act (as defined herein) and to amend and restate the
Original Partnership Agreement, as amended by the Amendment, in its entirety;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and
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valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend and restate the Original
Partnership Agreement, as amended by the Amendments, in its entirety as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. Terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to such terms in the Trust
Agreement.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, Del.
Code Xxx. tit. 6, Section 17-101 et seq., as amended from time to time, and any
successor statute thereto.
"AFFILIATE" has the meaning set forth in Section 1.1 of the Trust
Agreement.
"AFFILIATE INVESTMENT INSTRUMENTS" has the meaning set forth in
Section 7.1 of this Agreement.
"AGREEMENT" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended or supplemented from time to time.
"ASSUMING INVESTMENT AFFILIATE" has the meaning set forth in Section
7.3 of this Agreement.
"BENEFICIARIES" has the meaning set forth in Section 11.3 of this
Agreement.
"BOOK-ENTRY INTEREST" means a beneficial interest in the L.P.
Certificates, ownership and transfers of which shall be maintained and made
through book-entries of a Depository as set forth in Section 12.4 of this
Agreement.
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"BUSINESS DAY" means a day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"CAPITAL ACCOUNT" has the meaning set forth in Section 3.3(a) of this
Agreement.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
December 23, 1996, as it may be amended and/or restated from time to time.
"CHANGE IN 1940 ACT LAW" has the meaning set forth in Section 1.1 of
the Trust Agreement.
"CLOSING DATE" has the meaning set forth in Section 1.1 of the Trust
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"COMPANY" means HYCAP MANAGEMENT, INC., a Delaware corporation.
"COMPOUNDED DISTRIBUTIONS" has the meaning set forth in Section 6.2(b)
of this Agreement.
"DEFINITIVE L.P. CERTIFICATES" has the meaning set forth in Section
12.4(a) of this Agreement.
"DELAWARE TRUSTEE" has the meaning set forth in Section 6.2 of the
Trust Agreement.
"DEPOSITORY" means the DTC, another clearing agency, or any successor
registered as a clearing agency under the Securities Exchange Act of 1934, as
amended, or other applicable statute or regulation.
"DISTRIBUTION PAYMENT DATE" has the meaning set forth in Section
6.2(b) of this Agreement.
"DISTRIBUTIONS" means the right to receive the amount of the
cumulative cash distributions payable by the Partnership with respect to the
Interests represented by the Partnership Preferred Securities, which amounts
will accrue on the $25 stated liquidation preference of each Partnership
Preferred
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Security from the Closing Date and are payable quarterly in arrears in
accordance with Sections 5.1 and 6.2(b) of this Agreement.
"DTC" means The Depository Trust Company, the initial Depository.
"ELIGIBLE DEBT SECURITIES" means cash or book-entry securities,
negotiable instruments, or other securities of entities not affiliated with HEI
or the Company represented by instruments in registered form which evidence any
of the following: (a) any security issued or guaranteed as to principal or
interest by the United States, or by a Person controlled or supervised by and
acting as an instrumentality of the Government of the United States pursuant to
authority granted by the Congress of the United States, or any certificate of
deposit for any of the foregoing; (b) commercial paper issued pursuant to
Section 3(a)(3) of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and having, at the time of the investment or contractual commitment to
invest therein, a rating from each of S&P and Moody's in the highest rating
category granted by such rating agency and having a maturity not in excess of
nine months; (c) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC; (d) repurchase obligations with respect to
any security that is a direct obligation of, or fully guaranteed by, the
Government of the United States of America or any agency or instrumentality
thereof, the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company which is an Eligible Institution and the deposits
of which are insured by the FDIC; and (e) any other security which is identified
as a permitted investment of a finance subsidiary pursuant to Rule 3a-5 under
the 1940 Act at the time it is acquired by the Partnership.
"ELIGIBLE INSTITUTION" means a depository institution organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), (1)(i) which
has either (A) a long-term unsecured debt rating of AA or better by S&P and Aa
or better by Moody's or (B) a short-term unsecured debt rating
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or a certificate of deposit rating of A-1+ or better by S&P and P-1 or better by
Moody's and (ii) whose deposits are insured by the FDIC or (2)(i) the parent of
which has a long-term or short-term unsecured debt rating which signifies
investment grade and (ii) whose deposits are insured by the FDIC.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FISCAL PERIOD" means each calendar quarter.
"FISCAL YEAR" means (i) the period commencing upon the formation of
the Partnership and ending on December 31, 1996 and (ii) any subsequent calendar
year.
"GENERAL PARTNER" means the Company in its capacity as the general
partner of the Partnership, its permitted successors, or any successor general
partner in the Partnership admitted as such pursuant to the terms of this
Agreement.
"GENERAL PARTNER CAPITAL CONTRIBUTION" means the contribution by the
General Partner to the Partnership made contemporaneously with the issuance of
the Partnership Preferred Securities in an amount that will establish its
initial capital account at a level equal to at least 15% of the total capital of
the Partnership.
"GENERAL PARTNER INTEREST" means the Interest of the General Partner
in the Partnership.
"HOLDER" or "PARTNERSHIP PREFERRED SECURITY HOLDER" means a Limited
Partner in whose name an L.P. Certificate representing Partnership Preferred
Securities is registered.
"INDENTURES" means those certain Indentures between HEI or certain of
its subsidiaries, as the case may be, and The Bank of New York, as Indenture
Trustee, each dated as of ____________, 1997.
"INDEPENDENT FINANCIAL ADVISER" shall mean (i) Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated or (ii) such
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other nationally recognized investment banking firm which shall be designated by
the Company and which firm does not (and whose directors, officers, employees
and affiliates do not) have a direct or indirect material equity interest in the
Company or any of its subsidiaries or (iii) another entity which is an
investment banking, accounting or financial services firm selected by the
Company and approved by the Holders of a Majority in Liquidation Preference of
Partnership Preferred Securities.
"INITIAL AFFILIATE DEBENTURES" has the meaning set forth in Section
7.1(b) of this Agreement.
"INITIAL HEI DEBENTURES" has the meaning set forth in Section 7.1(b)
of this Agreement.
"INITIAL DEBENTURES" means collectively, the Initial HEI Debentures
and the Initial Affiliate Debentures.
"INITIAL LIMITED PARTNER" means HAWAIIAN ELECTRIC INDUSTRIES CAPITAL
TRUST I, a Delaware statutory business trust, in its capacity as a limited
partner of the Partnership.
"INITIAL PARTNERSHIP PROCEEDS" means the aggregate proceeds received
by the Partnership from the sale of the Partnership Preferred Securities and the
General Partner Capital Contribution.
"INTEREST" means the entire ownership interest of a Partner in the
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, and losses of, and distributions from, the Partnership.
"INVESTMENT AFFILIATE" means HEI or any corporation, partnership,
limited liability company or other entity (other than the Partnership or the
Trust) that is controlled by HEI and is not an investment company by reason of
Section 3(a) or 3(b) of the 1940 Act.
"INVESTMENT EVENT OF DEFAULT" means an event of default under any
Affiliate Investment Instrument that is a debt instrument or the breach by an
Investment Affiliate of its
6
obligations under any Affiliate Investment Instrument that is an equity
instrument.
"INVESTMENT GUARANTEE" has the meaning specified in Section 1.1 of the
Trust Agreement.
"INVESTMENT OFFER" has the meaning specified in Section 7.2(b) of this
Agreement.
"LIMITED PARTNER" means any Person who is admitted to the Partnership
as a limited partner pursuant to the terms of this Agreement, in such Person's
capacity as a limited partner of the Partnership.
"LIQUIDATOR" has the meaning specified in Section 13.3 of this
Agreement.
"L.P. CERTIFICATE" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Partnership Preferred Securities held
by a Limited Partner.
"MAJORITY IN LIQUIDATION PREFERENCE" means Holders of the Partnership
Preferred Securities, voting as a single class, representing more than 50% of
the aggregate liquidation preference (including for this purpose the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all Partnership Preferred Securities then
outstanding.
"MOODY'S" means Xxxxx'x Investors Service, Inc. or any successor
thereto.
"NET INCOME" and "NET LOSS", respectively, for any Fiscal Period mean
the income and loss, respectively, of the Partnership for such Fiscal Period as
determined in accordance with the method of accounting followed by the
Partnership for United States federal income tax purposes, including, for all
purposes, the net income, if any, from the Affiliate Investment Instruments,
Eligible Debt Securities and any income exempt from tax and any noncapital,
nondeductible expenditures of the Partnership which are described in the Code.
7
"1940 ACT" has the meaning set forth in Section 1.1 of the Trust
Agreement.
"ORIGINAL PARTNERSHIP AGREEMENT" has the meaning set forth in the
recitals to this Agreement.
"PARTNERS" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used.
"PARTNERSHIP COVERED PERSON" means any Partner, any Affiliate of a
Partner or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or its respective Affiliates, or any
employee or agent of the Partnership or its Affiliates or any Special
Representative.
"PARTNERSHIP ENFORCEMENT EVENT" has the meaning set forth in Section
6.2(h) of this Agreement.
"PARTNERSHIP GUARANTEE" means the Partnership Guarantee Agreement
between HEI and the Bank of New York, as trustee, dated as of ______________,
1997 by HEI in favor of the Partnership Preferred Security Holders with respect
to the Partnership Preferred Securities, as amended or supplemented from time to
time.
"PARTNERSHIP INDEMNIFIED PERSON" means the General Partner, any
Special Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partner or any Special
Representative, or any of their respective Affiliates, or any employee or agent
of the Partnership or its Affiliates.
"PARTNERSHIP INVESTMENT COMPANY EVENT" means that the General Partner
shall have requested and received an opinion of independent legal counsel
experienced in such matters to the effect that, as a result of the occurrence on
or after the date of the prospectus supplement relating to the Trust Preferred
Securities of a Change in 1940 Act Law, there is more than an
8
insubstantial risk that the Partnership is or will be considered an "investment
company" which is required to be registered under the 1940 Act.
"PARTNERSHIP LIQUIDATION DISTRIBUTION" has the meaning set forth in
Section 6.2(g) of this Agreement.
"PARTNERSHIP PREFERRED SECURITIES" represent the Interests of Limited
Partners and have the stated liquidation preference and designation set forth in
Section 6.2(a) of this Agreement.
"PARTNERSHIP PREFERRED SECURITY BENEFICIAL OWNER" means, with respect
to a Book-Entry Interest, a Person who is the beneficial owner of such Book-
Entry Interest as reflected on the books of DTC, or on the books of a Person
maintaining an account with DTC (directly as a participant or as an indirect
participant, in each case in accordance with the rules of DTC or such
participant).
"PARTNERSHIP SPECIAL EVENT" means either a Partnership Tax Event or a
Partnership Investment Company Event.
"PARTNERSHIP SUCCESSOR SECURITIES" has the meaning set forth in
Section 11.11 of this Agreement.
"PARTNERSHIP TAX EVENT" means that the General Partner shall have
requested and received an opinion of independent tax counsel experienced in such
matters to the effect that there has been a Tax Action that results in there
being more than an insubstantial risk that (i) the Partnership is, or will be,
subject to United States federal income tax with respect to income accrued or
received on the Affiliate Investment Instruments or the Eligible Debt
Securities, (ii) the Partnership is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by an Investment Affiliate with respect to any Affiliate
Investment Instrument that is a debt security issued by such Investment
Affiliate to the Partnership is not, or will not be, deductible for United
States federal income tax purposes.
9
"PAYING AGENT" shall have the meaning set forth in Section 12.5 of
this Agreement.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"POWER OF ATTORNEY" means the Power of Attorney granted pursuant to
Section 15.2 of this Agreement.
"PROPERTY TRUSTEE" has the meaning set forth in Section 1.1 of the
Trust Agreement.
"RECORD DATE" means (i) as long as the Trust Preferred Securities
remain (or, in the event that the Trust is liquidated in connection with a Trust
Special Event and Partnership Preferred Securities are distributed to holders of
the Trust Preferred Securities, as long as the Partnership Preferred Securities
remain) in book-entry only form, one Business Day prior to the relevant payment
dates and (ii) in the event that the Trust Preferred Securities (or in the event
that the Trust is liquidated in connection with a Trust Special Event and
Partnership Preferred Securities are distributed to holders of the Trust
Preferred Securities, the Partnership Preferred Securities) shall not continue
to remain in book-entry only form, the 15th day of the month of the relevant
payment date.
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"REDEMPTION NOTICE" has the meaning set forth in Section 6.2(e) of
this Agreement.
"REDEMPTION PRICE" has the meaning set forth in Section 6.2(c) of this
Agreement.
"REGISTRAR" has the meaning set forth in Section 12.5 of this
Agreement.
"REGULAR TRUSTEES" has the meaning set forth in Section 6.1 of the
Trust Agreement.
"REINVESTMENT CRITERIA" has the meaning specified in Section 7.2(d) of
this Agreement.
"RELEASED INVESTMENT AFFILIATE" has the meaning set forth in Section
7.3 of this Agreement.
"S&P" means Standard & Poor's or any successor thereof.
"66-2/3% IN LIQUIDATION PREFERENCE" means Holders of the Partnership
Preferred Securities, voting together as a single class, representing 66-2/3% or
more of the aggregate liquidation preference (including for this purpose the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all Partnership Preferred Securities then
outstanding.
"SPECIAL REPRESENTATIVE" has the meaning set forth in Section 6.2(h)
of this Agreement.
"TAX ACTION" has the meaning set forth in Section 1.1 of the Trust
Agreement.
"TAX MATTERS PARTNER" means the General Partner designated as such in
Section 11.10 of this Agreement.
"10% IN LIQUIDATION PREFERENCE" means Holders of the Partnership
Preferred Securities, voting together as a single class, representing 10% or
more of the aggregate liquidation
11
preference (including for this purpose the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Partnership
Preferred Securities then outstanding.
"TREASURY REGULATIONS" has the meaning set forth in Section 1.1 of the
Trust Agreement.
"TRUST" means HAWAIIAN ELECTRIC INDUSTRIES CAPITAL TRUST I, a Delaware
business trust, created and continued under the Trust Agreement.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement by
and among HEI, as Sponsor, the Delaware Trustee, the Property Trustee, the
Regular Trustees and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust dated as of _____________, 1997 as it may
be amended or supplemented from time to time.
"TRUST COMMON SECURITIES" has the meaning specified in Section 8.1 of
the Trust Agreement.
"TRUST COMMON SECURITIES GUARANTEE" means the Trust Common Securities
Guarantee Agreement dated as of ____________, 1997, entered into by HEI, as
Guarantor, for the benefit of the holders of the Trust Common Securities, as it
may be amended or supplemented from time to time.
"TRUST PREFERRED SECURITIES" has the meaning specified in Section 8.1
of the Trust Agreement.
"TRUST PREFERRED SECURITIES GUARANTEE" means the Trust Preferred
Securities Guarantee Agreement dated as of _____________, 1997, entered into by
HEI, as Guarantor, with The Bank of New York, as trustee, for the benefit of the
holders of the Trust Preferred Securities, as it may be amended or supplemented
from time to time.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated
_____________, 1997 among HEI, the Trust, the Partnership and Xxxxxxx Xxxxx &
Co., Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, Xxxxxxx, Sachs & Co.,
Xxxx Xxxxxx Xxxxxxxx Inc., X.X. Xxxxxxx & Sons, Inc., Xxxx Xxxxx Xxxx Xxxxxx
Incorporated and Xxxxxx X. Xxxxx & Co. Incorporated, as representatives of the
other underwriters named in Schedule A thereto.
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ARTICLE II
CONTINUATION OF THE PARTNERSHIP; ADMISSION
OF PARTNERSHIP PREFERRED SECURITIES HOLDERS
SECTION 2.1 CONTINUATION OF THE PARTNERSHIP. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct activities. The rights and duties of the Partners shall be as provided
herein and, subject to the terms hereof, under the Act.
SECTION 2.2 NAME. The name of the Partnership is "HEI PREFERRED
FUNDING, LP", as such name may be modified from time to time by the General
Partner following written notice to the Limited Partners.
SECTION 2.3 PURPOSES OF THE PARTNERSHIP. The Partnership will be
managed by the General Partner and the sole purposes of the Partnership are (a)
to issue limited partner interests in the Partnership in the form of Partnership
Preferred Securities, (b) to receive the General Partner Capital Contribution,
(c) to use substantially all of the Initial Partnership Proceeds to purchase, as
an investment, the Initial Debentures, (d) to invest, at all times, an amount
equal to at least 1% of the Initial Partnership Proceeds in Eligible Debt
Securities, (e) to receive interest and other payments on the Affiliate
Investment Instruments and the Eligible Debt Securities held by the Partnership
from time to time, (f) to make Distributions on the Partnership Preferred
Securities and distributions on the General Partner Interest if, as and when
declared by the General Partner in its sole discretion, (g) subject to the
restrictions and conditions contained in this Agreement, to make additional
investments in
13
Affiliate Investment Instruments and Eligible Debt Securities and to dispose of
any such investments and (h) except as otherwise limited herein, to enter into,
make and perform all contracts and other undertakings, and engage in those
activities and transactions as the General Partner may reasonably deem necessary
or advisable for the carrying out of the foregoing purposes of the Partnership.
The Partnership may not engage in any other activities or operations except as
contemplated by the preceding sentence.
SECTION 2.4 TERM. The term of the Partnership commenced upon the
filing of the Certificate in the Office of the Secretary of State of the State
of Delaware and shall continue until the Partnership is dissolved in accordance
with the provisions of this Agreement.
SECTION 2.5 REGISTERED AGENT AND OFFICE. The Partnership's
registered agent and office in Delaware shall be c/o RL&F Service Corp., One
Xxxxxx Square, 10th Floor, Tenth and Xxxx Xxxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000. At any time, the General Partner may designate another
registered agent and/or registered office.
SECTION 2.6 PRINCIPAL PLACE OF ACTIVITY. The principal place of
activity of the Partnership shall be 000 Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx 00000. Upon ten days' written notice to the Partners, the
General Partner may change the location of the Partnership's principal place of
activity, provided that such change has no material adverse effect upon any
Partner.
SECTION 2.7 NAME AND ADDRESS OF GENERAL PARTNER. The name and
address of the General Partner are as follows:
HYCAP MANAGEMENT, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
The General Partner may change its name or address from time to time, in which
event the General Partner shall promptly notify the Limited Partners of any such
change.
SECTION 2.8 QUALIFICATION TO CONDUCT ACTIVITIES. The General Partner
shall cause the Partnership to become
14
qualified, formed or registered under the applicable qualification, fictitious
name or similar laws of any jurisdiction in which the Partnership conducts
activities.
SECTION 2.9 ADMISSION OF HOLDERS OF PARTNERSHIP PREFERRED SECURITIES.
(a) Without execution of this Agreement, upon the receipt of an L.P.
Certificate by a Person, whether by purchase, gift, devise or other valid
transfer, which receipt shall be deemed to constitute a request by such Person
that the books and records of the Partnership reflect such Person's admission as
a Limited Partner, such Person shall be admitted to the Partnership as a Limited
Partner and shall become bound by this Agreement.
(b) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner shall be required
to update the books and records from time to time as necessary to accurately
reflect such information.
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST;
CAPITAL ACCOUNTS
SECTION 3.1 CAPITAL CONTRIBUTIONS.
(a) Contemporaneous with the issuance of the Partnership Preferred
Securities, the General Partner shall make the General Partner Capital
Contribution. The General Partner shall, from time to time, make such
additional capital contributions as are necessary to maintain at all times a
positive Capital Account balance equal to at least one percent (1%) of the
aggregate positive Capital Account balances of all Partners at the end of such
period.
15
(b) On the Closing Date, the Trust shall, in exchange for a definitive
L.P. Certificate, contribute to the capital of the Partnership on behalf of the
Trust an amount in cash equal to the gross proceeds from the sale of the Trust
Preferred Securities and the Trust Common Securities (such amount being a
capital contribution to the Partnership). On such date, the Trust shall
continue to be the sole Limited Partner.
(c) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be required
by law.
SECTION 3.2 PARTNERSHIP PREFERRED SECURITY HOLDER'S INTEREST
REPRESENTED BY PARTNERSHIP PREFERRED SECURITIES. A Partnership Preferred
Security Holder's Interest shall be represented by the Partnership Preferred
Securities held by or on behalf of such Partner. Each Partnership Preferred
Security Holder's respective ownership of Partnership Preferred Securities shall
be set forth on the books and records of the Partnership. Each Partner hereby
agrees that its Interest in the Partnership shall for all purposes be personal
property. No Partner shall have an interest in specific Partnership property.
SECTION 3.3 CAPITAL ACCOUNTS.
(a) ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS. The
Partnership shall establish and maintain a separate account (the "CAPITAL
ACCOUNT") for each Partner. The initial balance of the Capital Account for each
Partner shall be the amount as set out opposite the name of each of the Partners
on Schedule 1 attached hereto. The Capital Account of each Partner shall be
increased by (i) the dollar amount of any additional contributions made by such
Partner and (ii) allocations to such Partner of income and gain (including
income exempt from tax). The Capital Account of each Partner shall be decreased
by (i) the dollar amount of any distributions made to such Partner, and (ii)
allocations to such Partner of loss and deduction (including noncapital,
nondeductible expenditures not deductible in computing the
16
Partnership's income or loss for United States federal income tax purposes).
(b) COMPLIANCE WITH REGULATIONS. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of Section 3.3(a) hereof
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the Treasury Regulations promulgated under section 704 of the Code. The
General Partner, in its sole discretion, is authorized to modify such provisions
to the minimum extent necessary to comply with such Treasury Regulations.
SECTION 3.4 INTEREST ON CAPITAL CONTRIBUTIONS. Except as provided
herein, no Partner shall be entitled to interest on, or with respect to, any
capital contribution to the Partnership.
SECTION 3.5 WITHDRAWAL AND RETURN OF CAPITAL CONTRIBUTIONS. No
Partner shall be entitled to withdraw any part of such Partner's capital
contribution to the Partnership. No Partner shall be entitled to receive any
distributions from the Partnership, except as provided in this Agreement.
ARTICLE IV
ALLOCATIONS
SECTION 4.1 PROFITS AND LOSSES. After giving effect to the special
allocation provisions set forth in Section 4.2, which special allocations shall
take precedence over any allocations made pursuant to this Section 4.1:
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder of a Partnership Preferred Security in an
amount equal to the excess, if any, of (x) all Net Losses, if any, allocated to
each such Holder from the date of issuance of the Partnership Preferred Security
through and including the close of such Fiscal Period pursuant to Section
4.1(b)(ii) below over (y) the amount of Net Income,
17
if any, allocated to each such Holder pursuant to this Section 4.1(a)(i) in all
prior Fiscal Periods.
(ii) Second, to the Holders of the Partnership Preferred
Securities, an amount of Net Income equal to the excess, if any, of (x) the
Distributions accrued on the Partnership Preferred Securities from the date of
their issuance through and including the last day of such Fiscal Period,
including any Compounded Distributions payable with respect thereto, over (y)
the amount of Net Income allocated to the Holders of the Partnership Preferred
Securities pursuant to this Section 4.1(a)(ii) in all prior Fiscal Periods.
Amounts allocated to all Partnership Preferred Security Holders shall be
allocated among such Holders in proportion to the number of Partnership
Preferred Securities held by such Holders.
(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the General
Partner's Capital Account is reduced to zero, provided, however, that the
aggregate amount of Net Losses allocated to the General Partner pursuant to this
Section 4.1(b)(i) shall not exceed the sum of 14% of the total capital
contributions of all Partners plus the aggregate Net Income allocated to the
General Partner pursuant to this Section 4.1.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of such
Holders are reduced to zero.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) DAILY DETERMINATION. For purposes of determining the profits,
losses or any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily basis, unless the General Partner
18
determines that another method is permissible under Section 704 of the Code and
the Treasury Regulations promulgated thereunder. Unless otherwise specified,
such profits, losses or other items shall be determined for each Fiscal Period.
SECTION 4.2 SPECIAL ALLOCATION.
(a) All expenditures that are (i) incurred by, or on behalf of, the
Partnership and (ii) paid, or otherwise reimbursed, by the General Partner out
of its own funds (or by HEI pursuant to the Partnership Guarantee) shall be
allocated entirely to the General Partner.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of the Partnership's Net Income shall be
specially allocated to such Partner in a manner sufficient to eliminate the
deficit, if any, in the balance of the Capital Account of such Partner as
quickly as possible. The foregoing is intended to be a "QUALIFIED INCOME
OFFSET" provision as described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in
accordance with such Treasury Regulation.
(c) SECTION 704 COMPLIANCE. While this Agreement does not
specifically provide for certain provisions required by Treasury Regulation
Sections 1.704-1(b) and 1.704-2 because those provisions apply to transactions
that are not expected to occur as regards the Partnership, the Partners intend
that the allocations under Section 4.1 conform to Treasury Regulations Sections
1.704-1(b) and 1.704-2 (including, without limitation, the minimum gain
chargeback, chargeback of partner nonrecourse debt minimum gain and partner
nonrecourse debt provisions of such Treasury Regulations), and, to the extent
necessary due to the occurrence of unexpected events, the General Partner shall
make such changes in the allocations under Section 4.1 as it believes are
reasonably necessary to meet the requirements of such Treasury Regulations.
(d) ADJUSTMENT OF ALLOCATIONS. If the allocations set forth in this
Article IV are adjusted by the Internal
19
Revenue Service and the Tax Matters Partner agrees to such adjustments, such
allocations shall be amended to the minimum extent necessary to conform with
such adjustments.
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
the final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Losses (and other tax items) under
this Article IV, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Article XIII, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain, and other tax items, for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
respective Capital Account balances so that the final distribution will occur to
the fullest extent possible in the same manner as a distribution under Section
13.4.
(f) GENERAL PARTNER ALLOCATIONS. Notwithstanding any provision of
this Agreement to the contrary, the interest of the General Partner in each item
of Partnership income, gain, loss, deduction, or credit shall, at all times
during the existence of the Partnership, be equal to at least (A) at any time
that the aggregate capital contributions to the Partnership are equal to or less
than $50,000,000, one percent (1%) of each such item and (B) at any time that
the aggregate capital contributions to the Partnership are greater than
$50,000,000, at least a percentage equal to the product of (i) one percent (1%)
and (ii) a fraction (not exceeding 1 and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of (x) the
aggregate Capital Account balances of the Capital Accounts of all Partners at
such time and (y) the aggregate capital contributions to the Partnership of all
Partners at such time.
SECTION 4.3 WITHHOLDING. The Partnership shall comply with
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that the
20
Partnership is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Partner, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Partner. In the event of any claimed over-withholding, Partners shall be limited
to an action against the applicable jurisdiction. If the amount withheld was not
withheld from actual distributions, the Partnership may reduce subsequent
distributions by the amount of such withholding. Each Partner agrees to furnish
the Partnership with any representations and forms as shall reasonably be
requested by the Partnership to assist it in determining the extent of, and in
fulfilling, its withholding obligations.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 DISTRIBUTIONS. Limited Partners shall receive periodic
Distributions and Compounded Distributions, if any, redemption payments and
liquidation distributions in accordance with the terms of the Partnership
Preferred Securities set forth in Article VI. The General Partner shall in its
sole discretion determine whether and when Distributions shall be payable;
provided, however, that if the General Partner shall determine a Distribution
will not be paid on a scheduled Distribution Payment Date, the General Partner
shall give notice of its determination not to pay such Distribution to Limited
Partners of record as of the Record Date for the payment of such Distribution;
provided, further, however, that the General Partner shall not declare
distributions, and no distributions shall be payable by the Partnership to the
General Partner in respect of its General Partner Interest, unless all
accumulated and unpaid Distributions, including any Compounded Distributions,
have been paid in full for all prior Fiscal Periods. Subject to the immediately
preceding sentence, to the extent that the aggregate payments of interest (or
dividends) received by the Partnership in respect of Affiliate Investment
Instruments and Eligible Debt Securities for each Fiscal Period exceed the
amount of Distributions, including any Compounded Distributions, paid on the
Partnership Preferred
21
Securities for such Fiscal Period, the General Partner, in its sole discretion,
may declare and distribute such excess funds to the General Partner in respect
of its General Partner Interest.
SECTION 5.2 LIMITATIONS ON DISTRIBUTIONS. The Partnership shall not
make a Distribution to any Partner on account of such Partner's Interest if such
Distribution would violate Section 17-607 of the Act or other applicable law.
ARTICLE VI
ISSUANCE OF PARTNERSHIP PREFERRED SECURITIES
SECTION 6.1 GENERAL PROVISIONS REGARDING PARTNERSHIP PREFERRED
SECURITIES.
(a) There is hereby authorized for issuance and sale Partnership
Preferred Securities having an aggregate liquidation preference not greater than
$103,093,000 and having the designation, annual distribution rate, liquidation
preference, redemption terms, and other powers, preferences and special rights
and limitations set forth in this Article VI.
(b) The payment of Distributions (including payments of distributions
by the Partnership in liquidation or in redemption in respect of Partnership
Preferred Securities) shall be guaranteed by HEI pursuant to and to the extent
set forth in the Partnership Guarantee. The Partnership Preferred Security
Holders hereby authorize the General Partner to hold the Guarantee on behalf of
the Partnership Preferred Security Holders. In the event of an appointment of a
Special Representative pursuant to Section 6.2(h)(i), among other things, to
enforce the Partnership Guarantee, the Special Representative may take
possession of the Partnership Guarantee for such purpose. If no Special
Representative has been appointed to enforce the Partnership Guarantee, the
General Partner has the right to enforce the Partnership Guarantee on behalf of
the Partnership Preferred Security Holders. The Partnership Preferred Security
Holders, by acceptance of such Partnership Preferred Securities, acknowledge and
agree to the
22
subordination provisions in, and other terms of, the Partnership Guarantee.
(c) The Partnership may not issue any interests in the Partnership
other than the Partnership Preferred Securities and the General Partner
Interest, provided that the Partnership may accept consideration for additional
capital contributions from the General Partner with respect to the General
Partner Interest. All Partnership Preferred Securities shall rank senior to all
other Interests in the Partnership in respect of the right to receive
Distributions. All Partnership Preferred Securities redeemed, purchased or
otherwise acquired by the Partnership shall be canceled. The Partnership
Preferred Securities will be issued in registered form only.
(d) No Holder shall be entitled as a matter of right to subscribe for
or purchase, or have any preemptive or similar right with respect to, any part
of any new or additional limited partner interests, or of securities convertible
into any Partnership Preferred Securities or other limited partner interests,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of a distribution.
SECTION 6.2 PARTNERSHIP PREFERRED SECURITIES.
(a) DESIGNATION. A total of 4,123,720 Partnership Preferred
Securities, stated liquidation preference $25 per Partnership Preferred
Security, are hereby designated as "____% PARTNERSHIP PREFERRED SECURITIES".
(b) DISTRIBUTIONS.
(i) Partnership Preferred Security Holders shall be entitled to
receive cumulative Distributions and Compounded Distributions (as defined below)
(if any), if, as and when declared by the General Partner, in its sole
discretion, out of the assets of the Partnership legally available therefor, at
a rate per annum of ____% of the stated liquidation preference of $25 per
Partnership Preferred Security, calculated on the basis of a 360-day year
consisting of twelve 30-day months. For any period shorter than a full
23
90-day quarter, Distributions will be computed on the basis of the actual number
of days elapsed in such 90-day quarter. Such Distributions shall, from the date
of original issue, accumulate and be cumulative and shall be payable quarterly,
when, if, and as declared by the General Partner on the dates specified in
Section 6.2(b)(ii) below. Distributions and Compounded Distributions (as defined
below) (if any) on the Partnership Preferred Securities shall be cumulative from
the Closing Date. Distributions not paid on the scheduled Distribution Payment
Date will accumulate and compound quarterly at the rate of ____% per annum
("COMPOUNDED DISTRIBUTIONS"). In the event that any date on which Distributions
are payable on the Partnership Preferred Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day (without any reduction in interest or other amounts in
respect of such early payment), in each case with the same force and effect as
if made on such date.
(ii) Distributions on the Partnership Preferred Securities will be
payable quarterly in arrears if, as and when, declared by the General Partner on
March 31, June 30, September 30 and December 31 of each year, commencing on
March 31, 1997 (each a "DISTRIBUTION PAYMENT DATE").
Distributions will be payable to the Holders as they appear on the
books and records of the Partnership on the relevant Record Date.
If the Trust or the Property Trustee is the Holder of the Partnership
Preferred Securities, all Distributions shall be made by wire transfer of same
day funds to such Holder by 10:00 a.m., New York City time, on the applicable
Distribution Payment Date. Distributions payable on any Partnership Preferred
Securities that are not punctually paid on any Distribution Payment Date will
cease to be payable to the Person in whose name such Partnership Preferred
Securities are registered on the relevant record date, and such Distribution
24
will instead be payable to the Person in whose name such Partnership Preferred
Securities are registered on the record date for payment of such defaulted or
accumulated Distribution.
(c) OPTIONAL REDEMPTION. Partnership Preferred Securities shall be
redeemable at the option of the General Partner, in whole or in part, from time
to time, on or after January ____, 2002, upon not less than 30 nor more than 60
days' notice, at an amount per Partnership Preferred Security equal to $25 plus
accrued and unpaid Distributions thereon, including any Compounded
Distributions, by the date fixed for redemption (the "REDEMPTION PRICE"). The
Partnership may not redeem the Partnership Preferred Securities in part unless
all accumulated and unpaid Distributions, including any Compounded
Distributions, have been paid in full on all Partnership Preferred Securities
for all quarterly distribution periods terminating on or prior to the date of
redemption. If a partial redemption of the Partnership Preferred Securities
would result in the delisting of the Trust Preferred Securities (or, if the
Trust is liquidated in connection with a Trust Special Event, the delisting of
the Partnership Preferred Securities), the Partnership may only redeem the
Partnership Preferred Securities in whole but not in part.
(d) SPECIAL EVENT REDEMPTIONS. (i) If, at any time, a Partnership
Special Event shall occur and be continuing, the General Partner shall, within
90 days following the occurrence of such Partnership Special Event, elect to
either (i) redeem the Partnership Preferred Securities in whole (but not in
part), upon not less than 30 or more than 60 days' notice at the Redemption
Price, provided that if at the time there is available to the Partnership the
opportunity to eliminate, within such 90-day period, such Partnership Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that in the sole
judgment of the General Partner has or will cause no adverse effect on the
Partnership, the Trust, HEI or the Company, the General Partner will pursue such
measure in lieu of redemption; or (ii) cause the Partnership Preferred
Securities to remain outstanding, provided that in the case of this clause (ii),
the General Partner shall pay any and all
25
costs and expenses incurred by or payable by the Partnership which are
attributable to such Partnership Special Event.
(e) REDEMPTION PROCEDURES.
(i) Notice of any redemption of Partnership Preferred Securities (a
"REDEMPTION NOTICE") will be given by the General Partner on behalf of the
Partnership by mail to each Holder of Partnership Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption. For purposes of the calculation of the date of redemption and the
dates on which notices are given pursuant to this Section 6.2(e)(i), a
Redemption Notice shall be deemed to be given on the day such notice is first
mailed, by first-class mail, postage prepaid, to Holders of Partnership
Preferred Securities. Each Redemption Notice shall be addressed to the Holders
of Partnership Preferred Securities at the address of each such Holder appearing
in the books and records of the Partnership. No defect in the Redemption Notice
or in the mailing thereof with respect to any Holder shall affect the validity
of the redemption proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Partnership
Preferred Securities are to be redeemed, the Partnership Preferred Securities to
be redeemed shall be redeemed pro rata, provided, however, that in the event
Partnership Preferred Securities are registered in the name of and held of
record by DTC or its nominee (or any successor Depository or its nominee), DTC
will reduce, in accordance with DTC's customary procedures, the amount of the
interest of each Depository Participant in the Partnership Preferred Securities
to be redeemed.
(iii) If the Partnership gives a Redemption Notice (which notice
will be irrevocable), then by 12:00 noon, New York City time, on the redemption
date, the General Partner on behalf of the Partnership (A) if the Partnership
Preferred Securities are in book-entry only form with DTC, will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price and
will give DTC irrevocable instructions and authority to pay the Redemption Price
in respect of the
26
Partnership Preferred Securities held through DTC in book-entry only form or (B)
if the Partnership Preferred Securities are held in certificated form, will
deposit with the Paying Agent funds sufficient to pay the applicable Redemption
Price of the amount of any such Partnership Preferred Securities and will give
to the Paying Agent irrevocable instructions and authority to pay such amounts
to the Holders of Partnership Preferred Securities, upon surrender of their
certificates, by check, mailed to the address of the relevant Holder appearing
on the books and records of the Partnership on the redemption date; provided,
however, that for so long as the Trust or the Property Trustee shall hold the
Partnership Preferred Securities, payment of cash shall be made by wire in same
day funds to the Holder by 12:00 Noon, New York City time, on the redemption
date. For these purposes, the applicable Redemption Price shall not include
Distributions which are being paid to Holders who were Holders on a relevant
record date. Upon satisfaction of the foregoing conditions, then immediately
prior to the close of business on the date of such deposit or payment, all
rights of Holders of such Partnership Preferred Securities so called for
redemption will cease, except the right of the Holders to receive the Redemption
Price, but without interest on such Redemption Price, and from and after the
date fixed for redemption, such Partnership Preferred Securities will not accrue
Distributions or bear interest.
In the event that any date fixed for redemption of Partnership
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding Business Day (and
without any interest in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day (without any reduction in interest on other
amounts in respect of any such early payment), in each case with the same force
and effect as if made on the date fixed for redemption. In the event that
payment of the Redemption Price is improperly withheld or refused and not paid
by either the Partnership or HEI pursuant to the Partnership Guarantee,
Distributions on the Partnership Preferred Securities called for redemption will
continue to accumulate, to the extent that payment of such Distributions is
27
legally permissible, at the then applicable rate from the original redemption
date until the Redemption Price is actually paid, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
The Partnership shall not be required to register or cause to be
registered the transfer of any Partnership Preferred Securities which have been
called for redemption.
(f) COMPANY PURCHASES. Subject to the provisions of this Section 6.2
and applicable law (including, without limitation, Federal securities laws), if
Partnership Preferred Securities have been distributed to the Holders (as
defined in the Trust Agreement) of Trust Preferred Securities, HEI or any of its
subsidiaries, including the Company, may at any time and from time to time
purchase outstanding Partnership Preferred Securities by tender, in the open
market, or by private agreement.
(g) LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Partnership, the Holders of Partnership Preferred Securities at the time
outstanding will be entitled to receive out of the assets of the Partnership
such amount as is determined in accordance with Section 13.4 (the "PARTNERSHIP
LIQUIDATION DISTRIBUTION") payable in cash.
(h) VOTING RIGHTS.
(i) SPECIAL REPRESENTATIVE.
(1) If one or more of the following events shall occur and be
continuing (each a "PARTNERSHIP ENFORCEMENT EVENT"): (i) arrearages on
distributions on the Partnership Preferred Securities shall exist for six
consecutive quarterly distribution periods, (ii) HEI is in default on any of its
obligations under the Partnership Guarantee or (iii) an Investment Event of
Default on any Affiliate Investment Instrument and an HEI default on any of its
obligations with respect thereto under any applicable Investment Guarantee, the
Holders of the Partnership Preferred Securities, upon the affirmative vote of at
least a Majority in Liquidation Preference of the Partnership Preferred
Securities (or, for so
28
long as the Partnership Preferred Securities are held by the Property Trustee,
the Property Trustee as the Holder of the Partnership Preferred Securities),
shall have the right, to the exclusion of the General Partner, (a) to enforce
the terms of the Partnership Preferred Securities, including the right to
appoint and authorize a special representative of the Partnership and the
Limited Partners (a "SPECIAL REPRESENTATIVE") to enforce (1) to the fullest
extent permitted by applicable law, the Partnership's creditors' rights and
other rights with respect to the Affiliate Investment Instruments and the
Investment Guarantees, (2) the rights of the Holders of the Partnership
Preferred Securities under the Partnership Guarantee, and (3) the rights of the
Holders of the Partnership Preferred Securities to receive Distributions (only
if, and to the extent, declared by the General Partner, in its sole discretion,
out of funds legally available therefor) on the Partnership Preferred
Securities, and (b) under the Partnership Guarantee to enforce the terms of the
Partnership Guarantee, including the right to enforce the covenant restricting
certain payments and distributions by HEI. Under no circumstances, however,
shall the Special Representative have authority to cause the General Partner to
declare Distributions on the Partnership Preferred Securities or have any
authority concerning the selection of Partnership Investments. When the Special
Representative acts to enforce the Partnership's creditors' rights and other
rights with respect to the Affiliate Investment Instruments and the Investment
Guarantees, the Special Representative acts as an agent of the Partnership. When
the Special Representative acts to enforce the rights of the Holders of the
Partnership Preferred Securities under the Partnership Guarantee or their rights
to receive Distributions on the Partnership Preferred Securities, the Special
Representative acts as an agent of the Holders of the Partnership Preferred
Securities. In addition, the Special Representative shall not, by virtue of
acting in such capacity, be admitted as a general or limited partner in the
Partnership or otherwise be deemed to be a general or limited partner in the
Partnership and shall have no liability for the debts, obligations, or
liabilities of the Partnership.
(2) In furtherance of the foregoing, and without limiting the powers
of any Special Representative so
29
appointed and to avoid any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name, in the name of the
Partnership, in the name of the Limited Partners, or otherwise, may, to the
fullest extent permitted by law, institute, or cause to be instituted, a
proceeding, including, without limitation, any suit in equity, an action at law
or other judicial or administrative proceeding, to enforce on behalf of the
Partnership the Partnership's rights directly against HEI or any other obligor
(including the General Partner) in connection with its obligations to the
Partnership, and may prosecute such proceeding to judgment or final decree, and
enforce the same against HEI or any other obligor in connection with such
obligations and collect, out of the property, wherever situated, of HEI or any
such other obligor upon such obligations, the monies adjudged or decreed to be
payable in the manner provided by law. The General Partner agrees to execute and
deliver such documents as may be necessary, appropriate or convenient for the
Special Representative to enforce the foregoing rights and obligations on behalf
and in the name of the Partnership.
(3) If the Special Representative fails to enforce its rights on
behalf of the Partnership under any Affiliate Investment Instrument after a
holder of Partnership Preferred Securities has made a written request, such
holder of record of Partnership Preferred Securities may, to the fullest extent
permitted by law directly institute a legal proceeding against the applicable
Investment Affiliate to enforce the rights of the Special Representative and the
Partnership under Affiliate Investment Instruments without first instituting any
legal proceeding against the Special Representative, the Partnership or any
other Person. In any event, if a Partnership Enforcement Event has occurred and
is continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a holder of Partnership Preferred Securities may, to the
fullest extent permitted by law on behalf of the Partnership directly, institute
a proceeding against such Investment Affiliate with respect to such Affiliate
Investment Instrument for enforcement of payment. In addition, the Partnership
acknowledges that, for
30
so long as the Trust holds any Partnership Preferred Securities, if the Special
Representative fails to enforce its rights on behalf of the Partnership under
the Affiliate Investment Instruments after a holder of record of Trust
Securities has made a written request, such holder of Trust Securities may, to
the fullest extent permitted by law, on behalf of the Partnership, directly
institute a legal proceeding against the Investment Affiliates to enforce the
rights of the Special Representative and the Partnership under the Affiliate
Investment Instruments, without first instituting any legal proceeding against
the Property Trustee, the Trust, the Special Representative, the Partnership or
any other Person. In any event, for so long as the Trust is the holder of any
Partnership Preferred Securities, if a Trust Enforcement Event has occurred and
is continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument or the failure of HEI to make any required payment when due on any
Investment Guarantee, then the Partnership acknowledges that a holder of Trust
Securities may, to the fullest extent permitted by law on behalf of the
Partnership, directly institute a proceeding against such Investment Affiliate
with respect to such Affiliate Investment Instrument or against HEI with respect
to any such Investment Guarantee, in each case for enforcement of payment. Under
no circumstances shall the Special Representative, any holder of Partnership
Preferred Securities or any holder of Trust Preferred Securities have authority
to cause the General Partner to declare distributions on the Partnership
Preferred Securities.
(4) For purposes of determining whether the Partnership has deferred
payment of Distributions for six consecutive quarters, Distributions shall be
deemed to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative Distributions, including Compounded Distributions, have
been or contemporaneously are paid with respect to all quarterly Distribution
periods terminating on or prior to the date of payment of such full cumulative
Distributions. Not later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a meeting for election
of a Special Representative. If the General Partner fails to convene such
31
meeting within such 30-day period, the Holders of not less than 10% in
Liquidation Preference of the Outstanding Partnership Preferred Securities will
be entitled to convene such meeting. The provisions of Section 14.3 relating to
the convening and conduct of meetings of the Partners will apply with respect to
any such meeting. In the event that, at any such meeting, Holders of less than
a Majority in Liquidation Preference of Partnership Preferred Securities
entitled to vote for the appointment of a Special Representative vote for such
appointment, no Special Representative shall be appointed. Any Special
Representative appointed shall cease to be a Special Representative of the
Partnership and/or the Limited Partners if (x) the Partnership (or HEI pursuant
to the Partnership Guarantee) shall have paid in full all accumulated and unpaid
Distributions on the Partnership Preferred Securities, (y) the relevant
Investment Event of Default giving rise to the Partnership Enforcement Event
shall have been cured, and (z) HEI is in compliance with all its obligations
under the Partnership Guarantee, and the Company, in its capacity as the General
Partner, shall continue the activities of the Partnership without dissolution.
Notwithstanding the appointment of any such Special Representative, the Company
shall continue as General Partner and shall retain all rights under this
Agreement, including the right to determine whether to declare, in its sole
discretion, the payment of Distributions on the Partnership Preferred Securities
for which the failure of such declaration will not constitute a default
hereunder.
(ii) Certain Amendments; Waiver. (1) If any proposed amendment of
this Agreement provides for, or the General Partner otherwise proposes to
effect, (x) any action that would adversely affect the powers, preferences or
special rights of the Holders of the Partnership Preferred Securities, whether
by way of amendment of this Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited partner interests in
the Partnership ranking, as to participation in profits or distributions, or in
the assets of the Partnership, senior to the Partnership Preferred Securities);
or (y) the dissolution, winding-up or termination of the Partnership, other than
(1) in connection with the occurrence of a Partnership Special Event or (2) as
described
32
under Sections 11.11 and 13.2 of this Agreement, then the Holders of outstanding
Partnership Preferred Securities will be entitled to vote on such amendment or
proposal of the General Partner (but not on any other amendment or proposal) as
a class and such amendment or proposal shall not be effective except with the
approval of Holders of a Majority in Liquidation Preference of such outstanding
Partnership Preferred Securities having a right to vote on the matter; provided,
however, that if the Property Trustee on behalf of the Trust is the Holder of
the Partnership Preferred Securities, any such amendment or proposal not
excepted by clause (1) or (2) above shall not be effective without the prior or
concurrent approval of the Holders of a majority in liquidation amount of the
outstanding Trust Preferred Securities having a right to vote on such matters;
provided, further that no such approval shall be required if the dissolution,
winding-up or termination of the Partnership is proposed or initiated upon the
initiation of proceedings, or after proceedings have been initiated, for the
dissolution, winding-up, liquidation or termination of the Company.
(2) The Holders of a Majority in Liquidation Preference of Partnership
Preferred Securities may, by vote, on behalf of the Holders of all of the
Partnership Preferred Securities, waive any past Partnership Enforcement Event
with respect to the Partnership Preferred Securities and its consequences;
provided that, if the underlying Investment Event of Default:
(A) is not waivable under the related Affiliate Investment Instrument,
such Partnership Enforcement Event shall also not be waivable; or
(B) requires the consent or vote of the Holders of greater than a
majority in principal amount or liquidation preference of the Affiliate
Investment Instruments (a "SUPER MAJORITY") to be waived under the related
Affiliate Investment Instrument, the Partnership Enforcement Event may only be
waived by the vote of the Holders of the relevant Super Majority in liquidation
amount of the Partnership Preferred Securities.
33
Upon such waiver, any such Partnership Enforcement Event shall cease
to exist, and shall be deemed to have been cured, for every purpose of this
Agreement, but no such waiver shall extend to any subsequent or other
Partnership Enforcement Event or impair any right consequent thereon.
(3) A waiver of an Investment Event of Default by the Special
Representative, acting at the direction of the Holders of the Partnership
Preferred Securities, constitutes a waiver of the corresponding Partnership
Enforcement Event.
(iii) GENERAL VOTING. (1) Neither the General Partner nor the
Special Representative shall (i) direct the time, method and place of conducting
any proceeding for any remedy available, (ii) waive any Investment Event of
Default that is waivable under the Affiliate Investment Instruments, (iii)
exercise any right to rescind or annul a declaration that the principal of any
Affiliate Investment Instruments that are debt instruments shall be due and
payable, (iv) waive the breach of the covenant by HEI in the Partnership
Guarantee to restrict certain payments, or (v) consent to any amendment,
modification or termination of any Affiliate Investment Instrument, where such
consent shall be required from the holder thereof, without, in each case,
obtaining the prior approval of the Holders of at least a Majority in
Liquidation Preference of the Partnership Preferred Securities; provided,
however, that if the Property Trustee on behalf of the Trust is the Holder of
the Partnership Preferred Securities, such waiver, consent or amendment or other
action shall not be effective without the prior or concurrent approval of at
least a majority in liquidation amount of the outstanding Trust Preferred
Securities having a right to vote on such matters. The General Partner shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Partnership Preferred Securities. The General Partner shall notify all
Holders of the Partnership Preferred Securities of any notice of an Investment
Event of Default received with respect to any Affiliate Investment Instrument.
34
(2) Any required approval of Holders of Partnership Preferred
Securities may be given at a separate meeting of such Holders convened for such
purpose, at a meeting of all Partners, or pursuant to written consent. The
General Partner will cause a notice of any meeting at which Holders of
Partnership Preferred Securities are entitled to vote, or of any matter upon
which the action by written consent of such Holders is to be taken, to be mailed
to each Holder of record of Partnership Preferred Securities. Each such notice
will include a statement setting forth (x) the date of such meeting or the date
by which such action is to be taken, (y) a description of any matter proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matters upon which written consent is sought and (z) instructions for the
delivery of proxies or consents. No vote or consent of the Holders of
Partnership Preferred Securities will be required for the Partnership to redeem
and cancel Partnership Preferred Securities in accordance with this Agreement.
(3) Notwithstanding that Holders of Partnership Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Partnership Preferred Securities at such time that are owned by HEI
or by any entity more than 50% of which is owned by HEI, either directly or
indirectly, shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding; provided,
however, that Persons otherwise eligible to vote to whom HEI or any of its
subsidiaries have pledged Partnership Preferred Securities may vote or consent
with respect to such pledged Partnership Preferred Securities under any of the
circumstances described herein.
(4) Holders of the Partnership Preferred Securities shall
have no rights to remove or replace the General Partner.
(5) Holders of Partnership Preferred Securities shall have
no preemptive or similar rights.
35
ARTICLE VII
PARTNERSHIP INVESTMENTS
SECTION 7.1 AFFILIATE INVESTMENT INSTRUMENTS; ELIGIBLE DEBT
SECURITIES.
(a) All Partnership funds will be invested in the securities of
Investment Affiliates (the "AFFILIATE INVESTMENT INSTRUMENTS") and Eligible Debt
Securities. No more than 99% of the Initial Partnership Proceeds will be used
by the Partnership to purchase the Initial Debentures meeting the criteria set
forth in this Section 7.1. The remaining funds from the Initial Partnership
Proceeds will be used to purchase Eligible Debt Securities in accordance with
the terms of this Agreement.
(b) The Partnership shall apply approximately 99% of the Initial
Partnership Proceeds to purchase (1) junior subordinated debentures of HEI (the
"INITIAL HEI DEBENTURES") in the aggregate principal amount of $___________ and
(2) junior subordinated debentures of one or more United States subsidiaries of
HEI in an aggregate principal amount of $___________ (such debentures referred
to as the "INITIAL AFFILIATE DEBENTURES"). The Initial HEI Debentures and the
Initial Affiliate Debentures are collectively referred to as the "INITIAL
DEBENTURES". The Partnership may purchase the Initial Debentures only upon
receipt of an opinion of the Independent Financial Advisor to the effect that
(i) each Investment Affiliate will have the wherewithal to make the scheduled
payments of principal of and interest on the Initial Debentures as they come
due, (ii) each Investment Affiliate which is issuing the Initial
Affiliate Debentures would have been capable of issuing and selling debt
instruments with the same terms and conditions as the applicable Initial
Debentures to unrelated third party investors, (iii) the terms and conditions of
the Initial Debentures taken as a whole are
36
not more favorable to the relevant Investment Affiliate than could have been
obtained by such Investment Affiliate from unrelated third party investors
pursuant to a contemporaneous public offering or private placement pursuant to
Rule 144A under the Securities Act of such Initial Debentures. On the Closing
Date, the Partnership shall invest at least 1% of such Initial Partnership
Proceeds in Eligible Debt Securities. The terms of the Initial Debentures will
be as set forth in the Indentures.
SECTION 7.2 REINVESTMENT OF PAYMENTS RECEIVED BY THE PARTNERSHIP.
(a) The Partnership must at all times invest an amount equal to at
least 1% of the Initial Partnership Proceeds in Eligible Debt Securities.
(b) The Partnership may reinvest any payments it receives in respect
of its investments in (i) Eligible Debt Securities without limitation or (ii)
additional Affiliate Investment Instruments but only upon (A) the acceptance of
a written offer setting forth the terms and conditions on which an Investment
Affiliate would be willing to issue an Affiliate Investment Instrument to the
Partnership (an "INVESTMENT OFFER") and (B) the receipt of an opinion of the
Independent Financial Advisor that the terms of such Affiliate Investment
Instrument set forth in such Investment Offer satisfy the Reinvestment Criteria
(as defined below).
(c) If the Independent Financial Advisor determines that the terms of
an Affiliate Investment Instrument (as set forth in the Investment Offer) do not
satisfy the Reinvestment Criteria, the Partnership shall be prohibited from
making any investment in such Affiliate Investment Instrument.
(d) Each Affiliate Investment Instrument shall satisfy the following
criteria (the "REINVESTMENT CRITERIA"): (i) the applicable terms and conditions
of each Affiliate Investment Instrument taken as a whole shall be no more
favorable to the relevant Investment Affiliate than could otherwise be
obtainable through a contemporaneous public offering or private placement
under Rule 144A of the Securities Act to unrelated third party investors;
37
(ii) the Partnership shall not have held any Affiliate Investment Instruments of
the Investment Affiliate submitting the Investment Offer within the three-year
period ending on the date of the Investment Offer; (iii) there shall not have
been a default on any debt obligation of the Investment Affiliate submitting the
Investment Offer that was previously owned by the Partnership; (iv) no dividend
arrearages shall have existed on any equity security of the Investment Affiliate
submitting the Investment Offer that was previously owned by the Partnership;
and (v) the Investment Affiliate submitting the Investment Offer shall not be
deemed to be an investment company by reason of Section 3(a) or 3(b) of the 1940
Act.
(e) Any payments received by the Partnership in respect of its
investments that are not invested in additional Affiliate Investment
Instruments, may be reinvested only in Eligible Debt Securities (subject to
restrictions of applicable law, including the 1940 Act).
SECTION 7.3 ASSUMPTION OF OBLIGATIONS AND RELEASE OF INVESTMENT
AFFILIATE. The General Partner, on behalf of the Partnership, may without the
approval of the Holders of Partnership Preferred Securities, release any
Investment Affiliate other than HEI (a "RELEASED INVESTMENT AFFILIATE") from its
obligations under an Affiliate Investment Instrument but only upon (A) the
receipt of a written instrument of assumption evidencing the assumption by
another Investment Affiliate (an "ASSUMING INVESTMENT AFFILIATE") of all
obligations of the Released Investment Affiliate under such Affiliate Investment
Instrument, (B) the receipt of a written instrument of HEI evidencing its
agreement that its Investment Guarantee will continue to be applicable to such
Affiliate Investment Instrument following the assumption and release and (C) the
receipt of an opinion of the Independent Financial Advisor that the terms of
such Affiliate Investment Instrument would satisfy the Reinvestment Criteria if
such Affiliate
38
Investment Instrument were entered into de novo by the Assuming Investment
Affiliate on the date of such assumption.
ARTICLE VIII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
SECTION 8.1 BOOKS AND RECORDS.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner, in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's investments. The books and records of the Partnership, together
with a certified copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal office of the General Partner and shall be
open to the inspection and examination of the Partners or their duly authorized
representatives for any proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the General Partner may, to the maximum extent permitted by applicable
law, keep confidential from the Partners any information with respect to the
Partnership, the disclosure of which the General Partner reasonably believes is
not in the best interests of the Partnership, or is adverse to the interests of
the Partnership, or which the Partnership or the General Partner is required by
law or by an agreement with any Person to keep confidential.
(c) (i) For so long as the Partnership Preferred Securities are held
by the Property Trustee on behalf of the Trust, within one month after the close
of each Fiscal Year, the General Partner shall transmit (or cause to be
transmitted) to each Partner a statement indicating such Partner's share of each
item of Partnership income, gain, loss, deduction or credit, for United States
federal income tax purposes, for such Fiscal Year.
39
(ii) In the event that the Partnership Preferred Securities are no
longer held by the Property Trustee on behalf of the Trust, as soon as
reasonably possible after the close of the Fiscal Year, the General Partner
shall transmit to each Partner the statement referred to in Section 8.1(c)(i)
hereof.
SECTION 8.2 ACCOUNTING METHOD. For both financial and tax reporting
purposes, the books and records of the Partnership shall be kept on the accrual
method of accounting applied on a consistent basis and shall reflect all
Partnership transactions.
ARTICLE IX
PAYMENT OF EXPENSES
SECTION 9.1 PAYMENT OF TRUST EXPENSES AND PARTNERSHIP TAXES. Since
the Trust is being formed solely to facilitate a direct investment in the
Partnership Preferred Securities, the General Partner on behalf of the
Partnership hereby agrees, at any time while the Property Trustee is the Holder
of any Partnership Preferred Securities, to pay all the expenses of the Trust,
including, but not limited to, any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed on the Trust
by the United States, or any other taxing authority, so that the net amounts
received and retained by the Trust and the Property Trustee after paying such
expenses will be equal to the amounts the Trust and the Property Trustee would
have received had no such costs or expenses been incurred by or imposed on the
Trust. The General Partner shall be liable for and shall pay all such expenses
on behalf of the Partnership solely out of its own funds. In addition, if the
Partnership is required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than federal, state and local withholding
taxes and taxes or charges imposed by reason of the transfer of the Partnership
Preferred Securities) imposed by the United States, or any other taxing
authority, then, in any case, the General Partner will pay such taxes, duties,
assessments or other governmental charges on behalf of the Partnership out of
its own funds.
40
SECTION 9.2 PAYMENT OF OTHER PARTNERSHIP EXPENSES. In connection
with the offering, sale and issuance of the Partnership Preferred Securities by
the Partnership, the General Partner shall:
(a) pay all costs and expenses of the Partnership (including, but not
limited to, costs and expenses relating to the organization of the Partnership,
the offering, sale and issuance of the Partnership Preferred Securities
(including commissions to the underwriters in connection therewith)), the fees
and expenses of the Special Representatives (if any), and the costs and expenses
relating to the operation of the Partnership, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses; and
(b) be primarily and fully liable for any indemnification obligations
arising with respect to this Agreement.
ARTICLE X
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
SECTION 10.1 LIMITATIONS. The Limited Partners shall not participate
in the management or control of the Partnership's investment activity, property
or other assets, nor shall the Limited Partners engage in any activities for the
Partnership, nor shall the Limited Partners have the power to act for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner (and, upon appointment, and to the extent set forth herein, the Special
Representative). The Limited Partners shall have such rights as are set forth
herein and in the Partnership Guarantee. The Limited Partners shall have no
interest in the properties or assets of the General Partner, or any equity
therein, or in any proceeds of any sales thereof (which sales shall not be
41
restricted in any respect), by virtue of acquiring or owning an Interest in the
Partnership.
SECTION 10.2 LIABILITY. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
SECTION 10.3 PRIORITY. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
ARTICLE XI
POWERS, RIGHTS, DUTIES AND COVENANTS
OF THE GENERAL PARTNER
SECTION 11.1 AUTHORITY. Subject to the provisions of Section
6.2(h)(i) with respect to the Special Representative, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the
investment activity of the Partnership. Any action taken by the General Partner
shall constitute the act of and serve to bind the Partnership. In dealing with
the General Partner acting on behalf of the Partnership no Person shall be
required to inquire into the authority of the General Partner to bind the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the General Partner as set forth in
this Agreement.
SECTION 11.2 POWERS AND DUTIES OF GENERAL PARTNER. Subject to the
provisions of Section 6.2(h)(i) with respect to the Special Representative, the
General Partner shall have all rights and powers of a general partner under the
Act, and shall have all authority, rights and powers in the management of the
Partnership's investment activity to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of this
Agreement, including by way of illustration but not by way of limitation, the
following:
42
(a) to secure the necessary goods and services required in performing
the General Partner's duties for the Partnership;
(b) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under the
Affiliate Investment Instruments and the Partnership Guarantee;
(c) to issue Partnership Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this Agreement;
(d) to act as registrar and transfer agent for the Partnership
Preferred Securities or designate an entity to act as registrar and transfer
agent;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date to be established, including with respect
to Distributions and voting rights and to make determinations as to the payment
of Distributions, and make or cause to be made all other required payments to
Holders of the Partnership Preferred Securities and to the General Partner;
(f) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the
Partnership;
(h) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(i) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence, rights,
franchises and privileges as a limited partnership under the laws of the State
of Delaware and of each other jurisdiction in which such
43
existence is necessary to protect the limited liability of the Limited Partners
or to enable the Partnership to invest in the Affiliate Investment Instruments
and Eligible Debt Securities;
(j) to take all action not inconsistent with applicable law, the
Certificate or this Agreement, that the General Partner or, upon appointment
pursuant to Section 6.2(h)(i), the Special Representative, determines in its
sole discretion to be necessary or desirable, as long as such action does not
materially adversely affect the interests of the Partnership Preferred Security
Holders, to ensure or cause (i) the Partnership not to be deemed to be an
"investment company" required to be registered under the 1940 Act, (ii) any
Initial Debentures (or any subsequent Affiliate Investment Instrument that is
intended to be classified as debt) to be treated as indebtedness for United
States federal income tax purposes, or (iii) the Partnership not to be treated
as an association or as a publicly traded partnership taxable as a corporation;
(k) to cause the Partnership to enter into and perform the Purchase
Agreement and to purchase Eligible Debt Securities and Affiliate Investment
Instruments, as the case may be, without any further act, vote or approval of
any Partner; and
(l) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
44
SECTION 11.3 OBLIGATIONS AND EXPENSES PAYABLE BY AND COVENANTS OF THE
GENERAL PARTNER
(a) The General Partner hereby assumes and shall be liable for the
debts, obligations and liabilities of the Partnership, including, but not
limited to, any liabilities arising under the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and all costs and expenses
relating to the investment by the Partnership in any Affiliate Investment
Instruments (but not with respect to any losses related to any nonpayment with
respect to such investments), and agrees to pay on behalf of the Partnership and
solely out of its own funds to each Person to whom the Partnership is now or
hereafter becomes indebted or liable (the "Beneficiaries"), whether such
indebtedness, obligations or liabilities arise in contract, tort or otherwise
(excluding payment obligations of HEI to Holders of the Partnership Preferred
Securities in such Holders' capacities as Holders of such Partnership Preferred
Securities, such obligations being separately guaranteed under the Partnership
Guarantee to the extent set forth therein), the full payment of such
indebtedness and any and all liabilities, when and as due. This Agreement is
intended to be for the benefit of and to be enforceable by all such
Beneficiaries whether or not such Beneficiaries have received notice hereof.
(b) The General Partner agrees to pay on behalf of the Partnership and
solely out of its own funds the expenses described in Sections 9.1 and 9.2 of
this Agreement.
(c) The General Partner covenants (i) subject to Section 12.1(b) of
this Agreement to remain the sole general partner of the Partnership and to
maintain direct ownership of 100% of the General Partner's interest in the
Partnership, which interest will at all times represent at least 1% of the total
capital of the Partnership, (ii) to cause the Partnership to remain a limited
partnership and not to voluntarily dissolve, liquidate, wind-up or be
terminated, except as permitted by this Agreement, (iii) to use its commercially
reasonable efforts to ensure that the Partnership will not be an "investment
company" for purposes of the 1940 Act and (iv) to take no action that would be
reasonably likely
45
to cause the Partnership to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
SECTION 11.4 LIABILITY. Except as expressly set forth in this
Agreement, (a) the General Partner shall not be personally liable for the return
of any portion of the capital contributions (or any return thereon) of the
Limited Partners; (b) the return of such capital contributions (or any return
thereon) shall be made solely from assets of the Partnership; and (c) the
General Partner shall not be required to pay to the Partnership or to any
Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution, winding-up or otherwise. Other than as expressly provided in this
Agreement or under the Act, no Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
The General Partner shall be liable to an unlimited extent for the debts and
other obligations of the Partnership.
SECTION 11.5 OUTSIDE ACTIVITIES. Any Partner or Affiliate thereof
may engage in or possess an interest in other ventures of any nature or
description, independently or with others, similar or dissimilar to the
activities of the Partnership, and the Partnership and the Partners shall have
no rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the activities of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
SECTION 11.6 LIMITS ON GENERAL PARTNER'S POWERS. Anything in this
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to:
46
(i) acquire any assets other than as expressly provided herein;
(ii) do any act which would make it impractical or impossible to carry
on the ordinary activity of the Partnership as set forth in Section 2.3 of this
Agreement;
(iii) possess Partnership property for other than a Partnership
purpose;
(iv) admit a Person as a Partner, except as expressly provided in this
Agreement;
(v) make any advances of funds to the General Partner or its
Affiliates, other than such as represented by the Affiliate Investment
Instruments;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the purposes
of the Partnership, as set forth in Section 2.3 of this Agreement;
(viii) without the written consent of the Holders of 66-2/3% in
Liquidation Preference of the Partnership Preferred Securities, have an order
for relief entered with respect to the Partnership or commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of the Partnership's property, or make any assignment for the benefit of
creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any third
party or to engage in any financial or other trade or business.
47
SECTION 11.7 EXCULPATION.
(a) No Partnership Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Partnership or any Partnership
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Partnership Indemnified Person in good
faith on behalf of the Partnership and in a manner such Partnership Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Partnership Indemnified Person by this Agreement or by law, except that a
Partnership Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Partnership Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) A Partnership Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership by any
Person as to matters the Partnership Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Partnership, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Partners might
properly be paid.
SECTION 11.8 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, a Partnership Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or to any other Partnership Covered Person, a Partnership
Indemnified Person acting under this Agreement shall not be liable to the
Partnership or to any other Partnership Covered Person for its good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict the duties and liabilities of a Partnership
Indemnified Person otherwise existing at law or in equity, are
48
agreed by the parties hereto to replace such other duties and liabilities of
such Partnership Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Partnership Covered Persons and
Partnership Indemnified Persons, or (ii) whether this Agreement or any other
agreement contemplated herein or therein provides that a Partnership Indemnified
Person shall act in a manner that is, or provides terms that are, fair and
reasonable to the Partnership or any Partner, the Partnership Indemnified Person
shall resolve such conflict of interest, take such action or provide such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles. In the absence of bad faith by the Partnership Indemnified Person,
the resolution, action or term so made, taken or provided by the Partnership
Indemnified Person shall not constitute a breach of this Agreement or any other
agreement contemplated herein or of any duty or obligation of the Partnership
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Partnership Indemnified Person is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority, the Partnership Indemnified Person shall be entitled
to consider such interests and factors as it desires, including its own
interest, and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Partnership or any other Person, or (ii) in
its "good faith" or under another express standard, the Partnership Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
SECTION 11.9 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Partnership
shall indemnify and hold harmless each
49
Partnership Indemnified Person from and against any loss, damage or claim
incurred by such Partnership Indemnified Person by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of the Partnership and in a manner such Partnership Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Partnership Indemnified Person by this Agreement, except that no Partnership
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Partnership Indemnified Person by reason of
gross negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Partnership Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Partnership Indemnified Person to repay such
amount if it shall be determined that the Partnership Indemnified Person is not
entitled to be indemnified as authorized in Section 11.9(a).
SECTION 11.10 TAX MATTERS.
(a) For purposes of section 6231(a)(7) of the Code, the "TAX MATTERS
PARTNER" shall be the Company as long as it remains the general partner of the
Partnership. The Tax Matters Partner shall keep the Limited Partners fully
informed of any inquiry, examination or proceeding.
(b) Neither the Partnership, nor the Tax Matters Partner on behalf of
the Partnership, shall make an election under section 754 of the Code.
(c) The General Partner and the Partnership Preferred Security Holders
acknowledge that they intend, for United States federal income tax purposes,
that the Partnership shall be treated as a "partnership" (other than a publicly
traded partnership taxable as a corporation) and that the
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General Partner and the Partnership Preferred Security Holders shall be treated
as "partners" of the Partnership.
(d) The General Partner shall retain, at the expense of the
Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all United States federal,
state, local or other tax and information returns of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar forms or
schedules.
SECTION 11.11 CONSOLIDATION, AMALGAMATION, MERGER, OR SALE OF ASSETS.
The Partnership may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person, except as permitted pursuant to
this Section 11.11. The Partnership may, without the consent of the Holders of
the Partnership Preferred Securities, consolidate, amalgamate, merge with or
into, or be replaced by a limited partnership, limited liability company or
trust organized as such under the laws of any state of the United States of
America, provided that (i) such successor entity either (x) expressly assumes
all of the obligations of the Partnership under the Partnership Preferred
Securities or (y) substitutes for the Partnership Preferred Securities other
securities having substantially the same terms as the Partnership Preferred
Securities (the "PARTNERSHIP SUCCESSOR SECURITIES") so long as the Partnership
Successor Securities are not junior to any other equity securities of the
successor entity, with respect to participation in the profits and
distributions, and in the assets, of the successor entity, (ii) the Investment
Affiliates expressly acknowledge such successor entity as the holder of the
Affiliate Investment Instruments, (iii) if the Partnership Preferred Securities
are then so listed, the Partnership Preferred Securities continue to be listed,
or any Partnership Successor Securities are or will be listed, upon notification
of issuance, on any national securities exchange or other organization on which
the Partnership Preferred Securities, if so listed, are then listed or quoted,
(iv) such merger, consolidation, amalgamation or replacement does not cause the
Trust Preferred Securities (or, in the event that the Trust is liquidated in
connection with a Trust Special Event, the Partnership Preferred Securities
(including any
51
Partnership Successor Securities)) to be downgraded by any nationally recognized
statistical securities rating organization, (v) such merger, consolidation,
amalgamation or replacement does not adversely affect the powers, preferences
and other special rights of the holders of the Trust Preferred Securities or the
Holders of the Partnership Preferred Securities (including any Partnership
Successor Securities) in any material respect (other than, in the case of the
Partnership Preferred Securities, with respect to any dilution of the Holders'
interest in the new resulting entity), (vi) such successor entity has a purpose
substantially identical to that of the Partnership, (vii) prior to such merger,
consolidation, amalgamation or replacement, the Company has received an opinion
of independent counsel to the Partnership experienced in such matters to the
effect that (A) such successor entity will be treated as a "partnership" for
United States federal income tax purposes and not as an association or a
publicly traded partnership taxable as a corporation, (B) such merger,
consolidation, amalgamation or replacement will not cause the Trust to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes, (C) following such
merger, consolidation, amalgamation or replacement, the Company and such
successor entity will be in compliance with the 1940 Act without registering
thereunder as an investment company, and (D) such merger, consolidation,
amalgamation or replacement will not adversely affect the limited liability of
the Holders of the Partnership Preferred Securities (or the Partnership
Successor Securities) and (viii) HEI guarantees the obligations of such
successor entity under the Partnership Successor Securities at least to the same
extent provided by the Partnership Guarantee.
ARTICLE XII
TRANSFERS OF INTERESTS BY PARTNERS
SECTION 12.1 TRANSFER OF INTERESTS.
(a) Partnership Preferred Securities shall be freely transferable by a
Holder.
52
(b) Except as provided in the next sentence, the General Partner may
not assign or transfer its Interest in the Partnership in whole or in part
unless, prior to such assignment or transfer, the General Partner has obtained
the consent of the Holders of not less than 66-2/3% in Liquidation Preference of
the Partnership Preferred Securities. The General Partner may assign or transfer
its Interest in the Partnership without such consent only to HEI (or to a
wholly-owned subsidiary of HEI whose obligations are guaranteed by HEI to the
same extent as the General Partner's obligations are then guaranteed by HEI
pursuant to the Partnership Agreement) or to an entity that is the survivor of a
merger, amalgamation, conversion or consolidation of the General Partner in a
transaction that meets the requirements of Section 11.11 and only if prior to
such assignment or transfer the Company has received an opinion of independent
tax counsel to the Partnership experienced in such matters to the effect that
after such assignment or transfer the Partnership will continue to be treated as
a partnership for United States federal income tax purposes and will not be
treated as an association or a publicly traded partnership taxable as a
corporation. "PERMITTED SUCCESSOR" shall mean an entity that is an assignee or
transferee of the Interest of the General Partner as permitted by this Section
12.1(b). The admission of a Permitted Successor as a general partner of the
Partnership shall be effective upon the filing of an amendment to the
Certificate with the Secretary of State of the State of Delaware which indicates
that the Permitted Successor has been admitted as a general partner of the
Partnership. If the General Partner assigns its entire Interest, the General
Partner shall cease to be a general partner of the Partnership simultaneously
with the admission of the Permitted Successor as a general partner of the
Partnership. Any such Permitted Successor is hereby authorized to and shall
continue the business of the Partnership without dissolution.
(c) Except as provided above, no Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Agreement. Any transfer or purported transfer of any Interest not made
in accordance with this Agreement shall be null and void.
53
SECTION 12.2 TRANSFER OF L.P. CERTIFICATES. The General Partner
shall provide for the registration of L.P. Certificates and of transfers of L.P.
Certificates. Upon surrender for registration of transfer of any L.P.
Certificate, the General Partner shall cause one or more new L.P. Certificates
to be issued in the name of the designated transferee or transferees. Every
L.P. Certificate surrendered for registration of transfer shall be accompanied
by a written instrument of transfer in form satisfactory to the General Partner
duly executed by the Partnership Preferred Security Holder or his or her
attorney duly authorized in writing. Each L.P. Certificate surrendered for
registration of transfer shall be canceled by the General Partner. A transferee
of an L.P. Certificate shall be admitted to the Partnership as a Limited
Partner, shall become bound by this Agreement and shall be entitled to the
rights and subject to the obligations of a Partnership Preferred Security Holder
hereunder upon the receipt by the transferee of an L.P. Certificate, which
receipt shall be deemed to constitute a request by such transferee that the
books and records of the Partnership reflect such transferee's admission as a
limited partner. The transferor of an L.P. Certificate, in whole, shall cease
to be a Limited Partner at the time that the transferee of such L.P. Certificate
is admitted to the Partnership as a Limited Partner in accordance with this
Section 12.2.
SECTION 12.3 DEFINITIVE L.P. CERTIFICATES; PERSONS DEEMED PARTNERSHIP
PREFERRED SECURITY HOLDERS.
(a) Unless and until the Partnership issues a global L.P. Certificate
pursuant to Section 12.4(a), the Partnership shall only issue definitive L.P.
Certificates to the Partnership Preferred Security Holders.
(b) The Partnership may treat the Person in whose name any L.P.
Certificate shall be registered on the books and records of the Partnership as
the sole holder of such L.P. Certificate and of the Partnership Preferred
Securities represented by such L.P. Certificate for purposes of receiving
Distributions and for all other purposes whatsoever (including without
limitation, tax returns and information reports) and, accordingly, shall not be
bound to recognize any equitable or
54
other claim to or interest in such L.P. Certificate or in the Partnership
Preferred Securities represented by such L.P. Certificate on the part of any
other Person, whether or not the Partnership shall have actual or other notice
thereof.
SECTION 12.4 BOOK-ENTRY PROVISIONS.
(a) GENERAL. The provisions of this Section 12.4 shall apply only in
the event that the Partnership Preferred Securities are distributed to the
Holders of Trust Securities in connection with the involuntary or voluntary
dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Trust Special Event. Upon the occurrence of such event, a global
L.P. Certificate representing the Book-Entry Interests and executed on behalf of
the Partnership by the manual signature of the General Partner, or by facsimile
signature of the General Partner with the authentication by the Registrar (as
defined herein) or the Transfer Agent (as defined herein) shall be delivered to
DTC, the initial Depository, by, or on behalf of, the Partnership and any
previously issued and still outstanding definitive L.P. Certificates shall be of
no further force and effect. The global L.P. Certificate shall initially be
registered on the books and records of the Partnership in the name of Cede &
Co., the nominee of DTC, and no Partnership Preferred Security Beneficial Owner
will receive a new definitive L.P. Certificate representing such Holder's
interests in such L.P. Certificate, except as provided in Section 12.4(c). In
connection with the involuntary or voluntary dissolution, winding-up or
liquidation of the Trust as a result of the occurrence of a Trust Special Event,
Cede & Co., the nominee of DTC, or the successor nominee of DTC or of any
successor Depository, shall automatically be admitted to the Partnership as a
Limited Partner. Receipt of the global L.P. Certificate shall be deemed to
constitute a request by Cede & Co., the nominee of DTC, or the successor nominee
of DTC or of any successor Depository, that the books and records of the
Partnership reflect its admission as a Limited Partner. After the provisions of
this Section 12.4 begin to apply in accordance with this Agreement, unless and
until new definitive, fully registered L.P. Certificates (the "DEFINITIVE L.P.
CERTIFICATES") have been issued to the Partnership Preferred Security Beneficial
Owners pursuant to Section 12.4(c):
55
(i) The provisions of this Section 12.4 shall be in full force and
effect and to the extent the provisions of this Section 12.4 conflict with any
other provisions of this Agreement, the provisions of this Section 12.4 shall
control;
(ii) The Partnership, the General Partner and any Special
Representative shall be entitled to deal with the Depository for all purposes of
this Agreement (including the payment of Distributions, Redemption Price and
liquidation proceeds on the L.P. Certificates and receiving approvals, votes or
consents hereunder) as the Partnership Preferred Security Holder and the sole
Holder of the L.P. Certificates and shall have no obligation to the Partnership
Preferred Security Beneficial Owners;
(iii) None of the Partnership, the Trust, the General Partner, any
Special Representative or any agents of any of the foregoing shall have any
liability or responsibility for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global L.P.
Certificate for such beneficial ownership interests or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests; and
(iv) Except as provided in Section 12.4(c) below, the Partnership
Preferred Security Beneficial Owners will not be entitled to receive physical
delivery of the Partnership Preferred Securities in definitive form and will not
be considered Holders thereof for any purpose under this Agreement, and no
global L.P. Certificate representing Partnership Preferred Securities shall be
exchangeable, except for another global L.P. Certificate of like denomination
and tenor to be registered in the name of DTC or Cede & Co., or to a successor
Depository or its nominee. Accordingly, each Partnership Preferred Security
Beneficial Owner must rely on the procedures of DTC or if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest to exercise any rights of a Holder under the Agreement.
(b) NOTICES TO DEPOSITORY. Whenever a notice or other communication
to the Partnership Preferred Security
56
Holders is required under this Agreement, unless and until Definitive L.P.
Certificates shall have been issued to the Partnership Preferred Security
Beneficial Owners pursuant to Section 12.4(c), the General Partner and any
Special Representative shall give all such notices and communications specified
herein to be given to the Partnership Preferred Security Holders to the
Depository, and shall have no obligations to the Partnership Preferred Security
Beneficial Owners.
(c) DEFINITIVE L.P. CERTIFICATES. Definitive L.P. Certificates shall
be prepared by the Partnership and exchangeable for the global L.P. Certificate
or L.P. Certificates if and only if (i) the Depository notifies the General
Partner that it is unwilling or unable to continue its services as a securities
depository and no successor depository shall have been appointed, (ii) the
Depository, at any time, ceases to be a clearing agency registered under the
Exchange Act at such time as the Depository is required to be so registered to
act as such depository and no successor depository shall have been appointed, or
(iii) the General Partner, in its sole discretion, determines that such global
L.P. Certificate shall be so exchangeable. Upon surrender of the global L.P.
Certificate or L.P. Certificates representing the Book-Entry Interests by the
Depository, accompanied by registration instructions, the General Partner shall
cause Definitive L.P. Certificates to be delivered to Partnership Preferred
Security Beneficial Owners in accordance with the instructions of the
Depository. Neither the General Partner nor the Partnership shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Any Person receiving a
Definitive L.P. Certificate in accordance with this Section 12.4 shall be
admitted to the Partnership as a Limited Partner upon receipt of such Definitive
L.P. Certificate and shall be registered on the books and records of the
Partnership as a Partnership Preferred Security Holder. The Depository or the
nominee of the Depository, as the case may be, shall cease to be a Limited
Partner under this Section 12.4(c) at the time that at least one additional
Person is admitted to the Partnership as a Limited Partner in accordance
herewith. The Definitive L.P. Certificates shall be printed, lithographed or
engraved or may
57
be produced in any other manner as may be required by any national securities
exchange on which Partnership Preferred Securities may be listed and is
reasonably acceptable to the General Partner, as evidenced by its execution
thereof, which execution shall be by manual signature of the General Partner, or
by facsimile signature of the General Partner with the authentication by the
Registrar (as defined herein) or the Transfer Agent (as defined herein).
SECTION 12.5 REGISTRAR, TRANSFER AGENT AND PAYING AGENT.
(a) The General Partner will act as Registrar, Transfer Agent and
Paying Agent for the Partnership Preferred Securities for so long as the
Partnership Preferred Securities are held by the Trust or, if the Trust is
liquidated in connection with a Trust Special Event, for so long as the
Partnership Preferred Securities remain in book-entry only form.
(b) Except in such case where the General Partner shall act as
Registrar or Paying Agent pursuant to Section 12.5(a) hereof, the Partnership
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Partnership Preferred Securities may be presented
for registration of transfer or for exchange ("REGISTRAR") and (ii) an office or
agency where Partnership Preferred Securities may be presented for payment
("PAYING AGENT"). The Registrar shall keep a register of the Partnership
Preferred Securities and of their transfer and exchange. The Partnership may
appoint the Registrar and the Paying Agent and may appoint one or more co-
registrars and one or more additional paying agents in such other locations as
it shall determine. The term "PAYING AGENT" includes any additional paying
agent. The Partnership may change any Paying Agent, Registrar or co-registrar
without prior notice to any Holder. If the Partnership fails to appoint or
maintain another entity as Registrar or Paying Agent, the General Partner shall
act as such.
(c) Registration of transfers of Partnership Preferred Securities
shall be effected without charge by or on
58
behalf of the Partnership, but upon payment (with the giving of such indemnity
as the Partnership or the General Partner may require) in respect of any tax or
other governmental charges that may be imposed.
(d) The Partnership will not be required to register or cause to be
registered the transfer of Partnership Preferred Securities after such
Partnership Preferred Securities have been called for redemption.
ARTICLE XIII
WITHDRAWAL, DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
SECTION 13.1 WITHDRAWAL OF PARTNERS. The General Partner shall not
at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 13.1, it shall indemnify, defend and hold harmless
the Partnership and the other Partners from and against any losses, expenses,
judgments, fines, settlements or damages suffered or incurred by the Partnership
or such other Partners arising out of or resulting from such retirement or
withdrawal.
SECTION 13.2 DISSOLUTION OF THE PARTNERSHIP.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. The death, withdrawal,
bankruptcy or dissolution of a Limited Partner, or the occurrence of any other
event which terminates the Interest of a Limited Partner in the Partnership,
shall not, in and of itself, cause the Partnership to be dissolved and its
affairs wound up. To the fullest extent permitted by applicable law, upon the
occurrence of any such event, the General Partner may, without any further act,
vote or approval of any Partner, admit any Person to the Partnership as an
additional or substitute limited partner in the Partnership, which admission
shall be effective as of the date of the occurrence of such event, and the
business of the Partnership shall be continued without dissolution.
59
(b) The Partnership shall be dissolved and its affairs shall be wound
up upon the earliest to occur of any of the following events:
(i) upon the bankruptcy, insolvency or dissolution of the General
Partner;
(ii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the Partnership
as a general partner of the Partnership in accordance with this Agreement, or
the filing of a certificate of dissolution or its equivalent with respect to the
General Partner, or the revocation of the General Partner's charter and the
expiration of 90 days after the date of notice to the General Partner of
revocation without a reinstatement of its charter, or if any other event occurs
that causes the General Partner to cease to be a general partner of the
Partnership under the Act, unless the business of the Partnership is continued
in accordance with the Act;
(iii) the Partnership has redeemed or otherwise purchased all of
the Partnership Preferred Securities;
(iv) the entry of a decree of judicial dissolution under Section
17-802 of the Act; or
(v) the written consent of all Partners.
(c) Upon dissolution of the Partnership, the Liquidator shall promptly
notify the Partners of such dissolution.
SECTION 13.3 LIQUIDATION.
(a) In the event of the dissolution of the Partnership for any reason,
the General Partner (or, if the Partnership is dissolved pursuant to Section
13.2(b)(i) or (ii), then a liquidating agent appointed by Holders of not less
than 66 2/3% in Liquidation Preference of the Partnership Preferred Securities
(the General Partner or such Person so appointed is hereinafter referred to as
the "LIQUIDATOR"))
60
shall commence to wind up the affairs of the Partnership and to liquidate the
Partnership's assets; provided, however, that a reasonable time shall be allowed
for the orderly liquidation of the assets of the Partnership and the
satisfaction of liabilities to creditors so as to enable the Partners to
minimize the normal losses attendant upon liquidation. The Partners shall
continue to share all income, losses and distributions during the period of
liquidation in accordance with Articles IV and V. Subject to the provisions of
this Article XIII, the Liquidator shall have full right and unlimited discretion
to determine the time, manner and terms of any sale or sales of Partnership
property pursuant to such liquidation, giving due regard to the activity and
condition of the relevant market and general financial and economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator that is not a General
Partner shall not, by virtue of acting in such capacity, be deemed a Partner in
this Partnership and shall not have any of the economic interests in the
Partnership of a Partner; and such Liquidator may be compensated for its
services to the Partnership at normal customary and competitive rates for its
services to the Partnership as reasonably determined by all the Limited
Partners.
SECTION 13.4 DISTRIBUTION IN LIQUIDATION. The proceeds of
liquidation shall be applied in the following order of priority (and without
regard to the non-mandatory provisions of Section 17-804 of the Act):
61
(i) first, to creditors of the Partnership, including Partners who
are creditors, to the extent otherwise permitted by law, in satisfaction of the
liabilities of the Partnership (whether by payment or the making of reasonable
provisions for payment thereof), other than liabilities for distributions
(including Distributions) to Partners;
(ii) second, following any allocations required under Section
4.2(e) of the Agreement, to the Limited Partners, an amount equal to the
aggregate liquidation preference of their Partnership Preferred Securities, plus
the amount of Distributions (including any Compounded Distributions) that are
accumulated and unpaid as of the date of such liquidating distribution; and
(iii) thereafter, to the General Partner.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS. Each Limited Partner shall
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including returns
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner. No Partner shall have any right to demand or receive property other
than cash upon dissolution and termination of the Partnership.
SECTION 13.6 TERMINATION. The Partnership shall terminate when all
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 13.4 and the Liquidator has
executed and caused to be filed a certificate of cancellation of the
Partnership.
ARTICLE XIV
AMENDMENTS AND MEETINGS
SECTION 14.1 AMENDMENTS. Except as provided by Section 3.3(b) and
Section 6.2(h)(ii), this Agreement may be amended by, and only by, a written
instrument executed by the
62
General Partner without the consent of any Limited Partner; provided, however,
that no amendment shall be made, and any such purported amendment shall be void
and ineffective, to the extent the result thereof would be to (A) cause the
Partnership to be treated for United States federal income tax purposes as an
association or a publicly traded partnership taxable as a corporation, (B)
require the Partnership to register under the 1940 Act or (C) materially
adversely affect the rights, privileges or preferences of the Partnership
Preferred Securities. Notwithstanding any provision to the contrary, in the
event of (i) a liquidation of the Trust for any reason or (ii) any other
distribution which effectively causes Partnership Preferred Securities to be
distributed to Holders of Trust Preferred Securities, the General Partner may
amend this Agreement without the consent of the Limited Partners to provide for
(A) orderly dissemination, purchase, sale, exchange and replacement of such
Partnership Preferred Securities, (B) all other matters to the extent required
by or desirable under then applicable law and (C) such other matters reasonably
incidental or related thereto; provided, however, that no such amendment may
materially adversely affect the rights, privileges, or preferences of the
Partnership Preferred Securities without the consent of a Majority in
Liquidation Preference.
SECTION 14.2 AMENDMENT OF CERTIFICATE. In the event this Agreement
shall be amended pursuant to Section 14.1, the General Partner shall amend the
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.
SECTION 14.3 MEETINGS OF PARTNERS.
(a) Meetings of the Limited Partners who are Holders may be called at
any time by the General Partner to consider and act on any matter on which
Limited Partners are entitled to act under the terms of this Agreement or the
Act. The General Partner shall call a meeting of Holders if directed to do so
by Holders of no less than 10% in Liquidation Preference of the Partnership
Preferred Securities as permitted by this Agreement. Such direction shall be
given by delivering to the General Partner a request in writing stating that the
signing
63
Limited Partners desire to call a meeting and indicating the general or specific
purpose for which the meeting is to be called. Any Limited Partners calling a
meeting shall specify in writing the L.P. Certificates held by the Limited
Partners exercising the right to call a meeting and only those specified
Interests shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
Except to the extent otherwise provided in this Agreement, the following
provisions shall apply to meetings of Partners.
(b) Notice of any such meeting shall be given to all Limited Partners
having a right to vote thereat not less than seven Business Days nor more than
60 days prior to the date of such meeting. Each such notice shall set forth the
date, time and place of the meeting, a description of any matter on which
Holders are entitled to vote and instructions for the delivery of proxies or
written consents.
(c) Any action that may be taken at a meeting of the Limited Partners
may be taken without a meeting if a consent in writing setting forth the action
so taken is signed by Limited Partners owning not less than the minimum
Interests that would be necessary to authorize or take such action at a meeting
in which all Limited Partners having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be given
to the Limited Partners entitled to vote who have not consented in writing. The
General Partner may provide that any written ballot submitted to the Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for it by proxy on
all matters as to which a Partner is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy
must be signed by the Partner or its attorney-in-fact. No proxy shall be valid
after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
Partner executing it. Except as otherwise provided herein, or pursuant to
Section 14.3(f),
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all matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Partnership were a
Delaware corporation and the Limited Partners were stockholders of a Delaware
corporation.
(e) Each meeting of Partners shall be conducted by the General Partner
or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable procedures
relating to meetings of Limited Partners or the giving of written consents, in
addition to those expressly provided, including notice of time, place or purpose
of any meeting at which any matter is to be voted on by any Partners, waiver of
any such notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 NOTICES. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and General
Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner at the
Partnership's mailing address set forth below:
HEI Preferred Funding, LP
c/o HYCAP MANAGEMENT, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
65
(b) if given to the General Partner, at its mailing address set forth
below:
HYCAP MANAGEMENT, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
SECTION 15.2 POWER OF ATTORNEY. Each Holder of a Partnership
Preferred Security does hereby constitute and appoint the General Partner, and
if applicable, any Special Representative appointed pursuant to Section
6.2(h)(i) of this Agreement, as its true and lawful representative and attorney-
in-fact, in its name, place and stead to make, execute, sign, deliver and file
(a) any amendment of the Certificate required because of an amendment of this
Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement adopted in accordance with the
terms of this Agreement and (d) all such other instruments, documents and
certificates which from time to time may be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction, or any
political subdivision or agency thereof, to effectuate, implement and continue
the valid and subsisting existence of the Partnership or to dissolve the
Partnership for any other purpose consistent with this Agreement and the
transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest and
shall (a) survive and not be affected by the subsequent death, incapacity,
disability, dissolution, termination, or bankruptcy of the Holder granting the
same or the transfer of all or any portion of such Holder's Interest and (b)
extend to such Holder's successors, assigns and legal representatives.
SECTION 15.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any manner
other than as set forth herein.
66
SECTION 15.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 15.5 EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
SECTION 15.6 PRONOUNS AND NUMBER. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
SECTION 15.7 CAPTIONS. Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.
SECTION 15.8 PARTIAL ENFORCEABILITY. If any provision of this
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 15.9 COUNTERPARTS. This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signature of each of the Partners to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
SECTION 15.10 WAIVER OF PARTITION. Each Partner hereby irrevocably
waives any and all rights (if any) that such
67
Partner may have to maintain any action for partition of any of the
Partnership's property.
SECTION 15.11 REMEDIES. The failure of any party to seek redress for
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to
any other rights the parties may have by law, statute, ordinance or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
GENERAL PARTNER: HYCAP MANAGEMENT, INC.,
a Delaware Corporation
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
68
INITIAL LIMITED PARTNER: HAWAIIAN ELECTRIC INDUSTRIES
CAPITAL TRUST I, a Delaware
Statutory business trust
By: HAWAIIAN ELECTRIC INDUSTRIES,
INC., a Hawaii corporation
Its: Sponsor
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
69
SCHEDULE 1
LIST OF PARTNERS
Partner Capital Account
------- ---------------
HYCAP MANAGEMENT, INC. $______________
HAWAIIAN ELECTRIC INDUSTRIES CAPITAL
TRUST I $______________
ANNEX A
FORM OF L.P. CERTIFICATE
[IF THE PARTNERSHIP PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT: This Partnership Preferred Security Certificate is a Global Certificate
within the meaning of the Agreement of Limited Partnership hereinafter referred
to and is registered in the name of The Depository Trust Company (the
"DEPOSITORY") or a nominee of the Depository. This Partnership Preferred
Security is exchangeable for Partnership Preferred Securities registered in the
name of a person other than the Depository or its nominee only in the limited
circumstances described in the Agreement of Limited Partnership and no transfer
of this Partnership Preferred Security (other than a transfer of this
Partnership Preferred Security as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository) may be registered except in limited circumstances.
Unless this Partnership Preferred Security is presented by an
authorized representative of The Depository Trust Company (55 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx), a New York corporation, to the Partnership or its agent for
registration
of transfer, exchange or payment, and any Partnership Preferred Security issued
is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depository and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depository, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
[ ]
CERTIFICATE EVIDENCING PARTNERSHIP PREFERRED SECURITIES
OF
HEI PREFERRED FUNDING, LP
____% Partnership Preferred Securities (liquidation amount $25 per
Partnership Preferred Security)
HEI PREFERRED FUNDING, LP, a limited partnership formed under the laws
of the State of Delaware (the "PARTNERSHIP"), hereby certifies that The Bank of
New York, the Property Trustee of Hawaiian Electric Industries Capital Trust I
(the "Trust") pursuant to the Amended and Restated Trust Agreement of the Trust,
dated as of ______________, 1997 (the "HOLDER"), is the registered owner of ____
preferred securities of the Partnership representing limited partner interests
in the Partnership designated the ____% Partnership Preferred Securities
(liquidation amount $25 per Partnership Preferred Security) (the "PARTNERSHIP
PREFERRED SECURITIES"). The Partnership Preferred Securities are freely
transferable on the books and records of the Partnership, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Partnership
Preferred Securities represented hereby are set forth in, issued under and shall
in all respects be subject to the provisions of the Amended and Restated
Agreement of Limited Partnership, dated as of _____________, 1997, as the same
may be amended from time to time (the "AGREEMENT OF LIMITED PARTNERSHIP").
Capitalized terms used herein but not defined shall have the meaning given to
them in the Agreement of Limited Partnership. The Holder is entitled to the
benefits of the Partnership Guarantee to the extent provided therein. The
Partnership will provide a copy of the Agreement of Limited Partnership and the
Partnership Guarantee to a Holder without charge upon written request to
the Partnership at its principal place of business.
Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Agreement of Limited
Partnership and is entitled to the benefits thereunder. Each Holder of a
Partnership Preferred Security, by acceptance of this Certificate and each
Certificate owner, by acquisition of a beneficial interest in a Certificate,
agrees to treat the Initial Debentures, and any other Affiliate Investment
Instruments that are treated as debt instruments by the relevant Investment
Affiliate and by the Partnership, as indebtedness for United States federal
income tax purposes.
IN WITNESS WHEREOF, the Partnership has executed this certificate this
____ day of _______________, 1997.
HEI PREFERRED FUNDING, LP
BY: HYCAP MANAGEMENT, INC.
AS GENERAL PARTNER
BY: ___________________________
NAME: ____________________
TITLE: ___________________
BY: ___________________________
NAME: ____________________
TITLE: ___________________
(SEE REVERSE FOR ADDITIONAL TERMS)
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Partnership Preferred Security will be
fixed at a rate per annum of ____% of the stated liquidation amount of $25 per
Partnership Preferred Security. Distributions not paid on the scheduled payment
date will accumulate and compound quarterly (to the extent permitted by
applicable law) at the rate of ____ % per annum ("COMPOUNDED DISTRIBUTIONS").
The term "DISTRIBUTIONS" as used herein shall
mean ordinary cumulative distributions in respect of each quarterly payment
period together with any such Compounded Distributions. Distributions on the
Partnership Preferred Securities will be paid only if, as and when declared in
the sole discretion of the General Partner of the Partnership out of funds
legally available for the payment of such distributions. Amounts available to
the Partnership for distribution to the holders of the Partnership Preferred
Securities will be limited to payments received by the Partnership from Hawaiian
Electric Industries, Inc. and certain of its subsidiaries on Affiliate
Investment Instruments or from Hawaiian Electric Industries, Inc. on the
Partnership Guarantee or on the Eligible Debt Securities. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period on the basis of
the actual number of days elapsed in a 90-day quarter.
Except as otherwise described herein, distributions on the Partnership
Preferred Securities will be cumulative, will accrue from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on March 31, 1997, if, as
and when declared by the General Partner in its sole discretion. If the Trust
Preferred Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry only form, Distributions will be payable to the
Holders of record of Partnership Preferred Securities as they appear on the
books and records of the Partnership on the relevant record dates, which will be
one Business Day prior to the relevant payment dates. If the Trust or the
Property Trustee is the Holder of the Partnership Preferred Securities, all
distributions of cash shall be made by wire transfer of same day funds to such
Holder by 12:00 Noon, New York City time, on the applicable Distribution Payment
Date. Distributions payable on any Partnership Preferred Securities that are
not punctually paid on any Distribution Payment Date will cease to be payable to
the Person in whose name such Partnership Preferred Securities
are registered on the relevant record date, and such Distribution will instead
be payable to the Person in whose name such Partnership Preferred Securities are
registered on the record date for payment of such defaulted or accrued
Distribution. If the Trust Preferred Securities (or, if the Trust is liquidated,
the Partnership Preferred Securities) are not in book-entry only form, the
relevant record dates shall be the 15th day of the month of the relevant payment
dates. In the event that any date on which Distributions are payable is not a
Business Day, payment of such Distributions shall be made on the next succeeding
day which is a Business Day (without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day (without any reduction in interest or other amounts in respect of any such
early payment), in each case with the same force and effect as if made on the
payment date.
The Partnership Preferred Securities shall be redeemable as provided
in the Agreement of Limited Partnership.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Partnership Preferred Security Certificate to:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(INSERT ADDRESS AND ZIP CODE OF ASSIGNEE)
and irrevocably appoints
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
agent to transfer this Partnership Preferred Security Certificate on the books
of the Trust. The agent may substitute another to act for him or her.
Date: ______________________________
Signature: _________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS PARTNERSHIP
PREFERRED SECURITY CERTIFICATE)
