Exhibit 10.1

 

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March 19, 2013

 

To:

Hawaiian Electric Industries, Inc.

 

900 Richards Street

 

Honolulu, HI 96813

 

 

From:

JPMorgan Chase Bank, National Association, London Branch

 

25 Bank Street

 

Canary Wharf, London, E14 5JP

 

England

 

 

From:

J.P. Morgan Securities LLC,

 

Solely as Agent

 

tel: (212) 622-5270

 

fax: (212) 622-0105

 

 

 

___________________________________________________________________________

 

Dear Sirs,

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the “Transaction”).  This Confirmation constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1.                                      The definitions and provisions contained
in the 2002 ISDA Equity Derivatives Definitions (the “2002 Definitions”), as
published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation.  In the event of any inconsistency between
the 2002 Definitions and this Confirmation, this Confirmation will govern.

 

This Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall supplement, form a part of, and be subject to an
agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if
Party A and Party B had executed an agreement in such form on the Trade Date
(but without any Schedule except for the election of the laws of the State of
New York as the governing law). In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.  For purposes of
the 2002 Definitions, the Transaction is a Share Forward Transaction.

 

Party A and Party B each represents to the other that it has entered into the
Transaction in reliance upon such tax, accounting, regulatory, legal, and
financial advice as it deems necessary and not upon any view expressed by the
other.

 

2.                                      The terms of the particular Transaction
to which this Confirmation relates are as follows:

 

JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association.
Main Office 1111 Polaris Parkway, Columbus, Ohio 43240
Registered as a branch in England & Wales branch No. BR000746
Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP
Authorised and regulated by the Financial Services Authority

 

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General Terms:

 

 

 

Party A:

JPMorgan Chase Bank, National Association, London Branch

 

 

Party B:

Hawaiian Electric Industries, Inc.

 

 

Trade Date:

March 19, 2013

 

 

Effective Date:

March 25, 2013

 

 

Base Amount:

Initially, 6,100,000 Shares. On each Settlement Date, the Base Amount shall be
reduced by the number of Settlement Shares for such Settlement Date.

 

 

Maturity Date:

March 25, 2015 (or, if such date is not a Scheduled Trading Day, the next
following Scheduled Trading Day).

 

 

Forward Price:

On the Effective Date, the Initial Forward Price, and on any other day, the
Forward Price as of the immediately preceding calendar day multiplied by the sum
of (i) 1 and (ii) the Daily Rate for such day; provided that on each Forward
Price Reduction Date, the Forward Price in effect on such date shall be the
Forward Price otherwise in effect on such date, minus the Forward Price
Reduction Amount for such Forward Price Reduction Date.

 

 

Initial Forward Price:

USD $25.74688 per Share.

 

 

Daily Rate:

For any day, (i)(A) USD-Federal Funds Rate for such day minus (B) the Spread
divided by (ii) 365.

 

 

USD-Federal Funds Rate

For any day, the rate set forth for such day opposite the caption “Federal
funds”, as such rate is displayed on the page “FedsOpen <Index> <GO>” on the
BLOOMBERG Professional Service, or any successor page; provided that if no rate
appears for any day on such page, the rate for the immediately preceding day for
which a rate appears shall be used for such day.

 

 

Spread:

0.75%

 

 

Forward Price Reduction Date:

May 20, 2013, August 19, 2013, November 18, 2013, February 21, 2014, May 20,
2014, August 20, 2014, November 19, 2014, February 20, 2015 and May 20, 2015.

 

 

Forward Price Reduction Amount:

For each Forward Price Reduction Date, the Forward Price Reduction Amount set
forth opposite such date on Schedule I.

 

 

Shares:

Common Stock, no par value per share, of Party B (also referred to herein as the
“Issuer”) (Exchange identifier: “HE”).

 

 

Exchange:

New York Stock Exchange.

 

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Related Exchange(s):

All Exchanges.

 

 

Clearance System:

DTC.

 

 

Calculation Agent:

Party A; provided that following the occurrence and during the continuation of
an Event of Default described in Section 5(a)(vii) of the Agreement with respect
to which Party A is the Defaulting Party, Party B shall have the right to
designate a nationally or internationally recognized third-party dealer with
expertise in over-the-counter corporate equity derivatives to replace Party A as
Calculation Agent and the parties shall work in good faith to execute any
appropriate documentation required by such replacement Calculation Agent.

 

 

 

Any determination or calculation by the Calculation Agent in such capacity
pursuant to this Confirmation, the Agreement or the 2002 Definitions shall be
made in good faith and in a commercially reasonable manner. In the event the
Calculation Agent makes any determination or calculation in such capacity
pursuant to this Confirmation, the Agreement or the 2002 Definitions, the
Calculation Agent shall promptly provide an explanation in reasonable detail of
the basis for such determination or calculation if requested by Party B, it
being understood that the Calculation Agent shall not be obligated to disclose
any proprietary models used by it for such determination or calculation.

 

 

Settlement Terms:

 

 

 

Settlement Date:

Any Scheduled Trading Day following the Effective Date and up to and including
the Maturity Date, as designated by (a) Party A pursuant to “Termination
Settlement” below or (b) Party B in a written notice substantially in the form
attached hereto as Schedule II (a “Settlement Notice”) that satisfies the
Settlement Notice Requirements and is delivered to Party A at least (i) three
Scheduled Trading Days prior to such Settlement Date, which may be the Maturity
Date, if Physical Settlement applies, and (ii) a number of Scheduled Trading
Days prior to such Settlement Date equal to 83, multiplied by the number of
Settlement Shares specified in such Settlement Notice, divided by the initial
Base Amount (such number of Scheduled Trading Days rounded up to the nearest
whole number), which such Settlement Date may be the Maturity Date, if Cash
Settlement or Net Share Settlement applies; provided that (i) the Maturity Date
shall be a Settlement Date if on such date the Base Amount is greater than zero
and (ii) if Cash Settlement or Net Share Settlement applies and Party A shall
have fully unwound its hedge during an Unwind Period by a date that is more than
three Scheduled Trading Days prior to a Settlement Date specified above, Party A
will, by written notice to Party B, specify the date one Settlement Cycle

 

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following the date on which Party A shall have fully unwound its hedge as the
Settlement Date.

 

 

Settlement Shares:

With respect to any Settlement Date, a number of Shares, not to exceed the Base
Amount, designated as such by Party B in the related Settlement Notice or by
Party A pursuant to “Termination Settlement” below; provided that on the
Maturity Date the number of Settlement Shares shall be equal to the Base Amount
on such date.

 

 

Settlement:

Physical Settlement, Cash Settlement or Net Share Settlement, at the election of
Party B as set forth in a Settlement Notice delivered on or after the Effective
Date that satisfies the Settlement Notice Requirements; provided that Physical
Settlement shall apply (i) if no Settlement Method is validly selected,
(ii) with respect to any Settlement Shares in respect of which Party A is
unable, in its judgment, to unwind its hedge by the end of the Unwind Period in
a manner that, in the judgment of Party A, is consistent with the requirements
for qualifying for the safe harbor provided by Rule 10b-18 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or due to the lack of
sufficient liquidity in the Shares on any Exchange Business Day during the
Unwind Period or (iii) to any Termination Settlement Date (as defined below
under “Termination Settlement”).

 

 

Representation and Agreement:

Notwithstanding Section 9.11 of the 2002 Definitions, the parties acknowledge
that any Shares delivered to Party A (whether in connection with Physical
Settlement or Net Share Settlement) may be subject to restrictions and
limitations under applicable securities laws, as described in clause (a) under
the heading “Covenants of Party A” in Paragraph 3 below.

 

 

Settlement Notice Requirements:

Notwithstanding any other provision hereof, a Settlement Notice delivered by
Party B that specifies Cash Settlement or Net Share Settlement will not be
effective to establish a Settlement Date or require Cash Settlement or Net Share
Settlement unless Party B delivers to Party A with such Settlement Notice a
representation signed by Party B substantially in the following form: “As of the
date of this Settlement Notice, Party B is not aware of any material nonpublic
information concerning itself or the Shares, and is designating the date
contained herein as a Settlement Date and is electing Cash Settlement or Net
Share Settlement, in each case, in good faith and not as part of a plan or
scheme to evade compliance with the federal securities laws.”

 

 

Unwind Period:

Each Exchange Business Day that is not a Suspension Day during the period from
and including the first Exchange Business Day following the date Party B validly
elects Cash Settlement or Net Share Settlement in respect of a Settlement Date
through the third Scheduled Trading Day preceding such Settlement Date (or the
immediately preceding Exchange

 

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Business Day if such Scheduled Trading Day is not an Exchange Business Day);
subject to “Termination Settlement” below. Party A shall use commercially
reasonable efforts to unwind its hedge by the end of the Unwind Period, taking
into consideration Party’s A obligations under applicable laws and regulations
and the covenant set forth in clause (b) under the heading “Covenants of Party
A” in Paragraph 3 below.

 

 

Unwind Daily Share Amount:

On each Scheduled Trading Day during the Unwind Period, other than a Suspension
Day or a Disrupted Day, Party A will, in accordance with the principles of best
execution, use its good faith commercially reasonable efforts to purchase a
number of Shares not to exceed the least of (i) 100% of the applicable volume
limitation of Rule 10b-18 for the Shares on such Scheduled Trading Day, without
reference to any block purchases, (ii) 25% of the daily trading volume for the
Shares on the Exchange on such Scheduled Trading Day, and (iii) the number of
Shares necessary to complete the purchases required to calculate the Cash
Settlement Amount or the Net Share Settlement Shares, as the case may be.

 

 

Suspension Day:

Any Exchange Business Day on which Party A determines based on the advice of
counsel that there is a reasonable likelihood that Cash Settlement may violate
applicable securities laws. Party A shall promptly notify Party B if it receives
such advice from its counsel.

 

 

Market Disruption Event:

Section 6.3(a)(ii) of the 2002 Definitions is hereby amended by replacing clause
(ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting
immediately following clause (iii) the phrase “; in each case that the
Calculation Agent determines is material.”

 

 

Exchange Act:

The Securities Exchange Act of 1934, as amended from time to time.

 

 

Physical Settlement:

On any Settlement Date in respect of which Physical Settlement applies, Party B
shall deliver to Party A through the Clearance System the Settlement Shares for
such Settlement Date, and Party A shall deliver to Party B, by wire transfer of
immediately available funds to an account designated by Party B, an amount in
cash equal to the Physical Settlement Amount for such Settlement Date, on a
delivery versus payment basis. If, on any Settlement Date, the Shares to be
delivered by Party B to Party A hereunder are not so delivered (the “Deferred
Shares”), and a Forward Price Reduction Date occurs during the period from, and
including, such Settlement Date to, but excluding, the date such Shares are
actually delivered to Party A, then the portion of the Physical Settlement
Amount payable by Party A to Party B in respect of the Deferred Shares shall be
reduced by an amount equal to the Forward Price Reduction Amount for such
Forward Price Reduction Date, multiplied by the number of Deferred Shares.

 

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Physical Settlement Amount:

For any Settlement Date in respect of which Physical Settlement applies, an
amount in cash equal to the product of (i) the Forward Price on such Settlement
Date and (ii) the number of Settlement Shares for such Settlement Date.

 

 

Cash Settlement:

On any Settlement Date in respect of which Cash Settlement applies, if the Cash
Settlement Amount for such Settlement Date is a positive number, Party A will
pay such Cash Settlement Amount to Party B. If the Cash Settlement Amount is a
negative number, Party B will pay the absolute value of such Cash Settlement
Amount to Party A. Such amounts shall be paid on the Settlement Date.

 

 

Cash Settlement Amount:

For any Settlement Date in respect of which Cash Settlement applies, an amount
determined by the Calculation Agent equal to the difference between (1) the
product of (i) (A) the average Forward Price over the period beginning on, and
including, the date that is one Settlement Cycle following the first day of the
applicable Unwind Period and ending on, and including, such Settlement Date
(calculated assuming no reduction to the Forward Price for any Forward Price
Reduction Date that occurs during the Unwind Period, except as set forth in
clause (2) below), minus (B) the weighted average price at which Party A is able
to purchase Shares during the Unwind Period applicable to Cash Settlement to
unwind its hedge during such Unwind Period, multiplied by (ii) the number of
Settlement Shares for such Settlement Date, minus (2) the product of (i) the
Forward Price Reduction Amount for any Forward Price Reduction Date that occurs
during such Unwind Period, multiplied by (ii) the number of Settlement Shares
with respect to which Party A has not unwound its hedge as of such Forward Price
Reduction Date.

 

 

Net Share Settlement:

On any Settlement Date in respect of which Net Share Settlement applies, if the
number of Net Share Settlement Shares is a (i) negative number, Party A shall
deliver a number of Shares to Party B equal to the absolute value of the Net
Share Settlement Shares, or (ii) positive number, Party B shall deliver to Party
A the Net Share Settlement Shares; provided that if Party A determines in its
good faith commercially reasonable judgment that it would be required to deliver
Net Share Settlement Shares to Party B, Party A may elect to deliver a portion
of such Net Share Settlement Shares on one or more dates prior to the applicable
Settlement Date. In no event will Party B be required to return any Net Share
Settlement Shares Party A has delivered to it pursuant to the proviso to the
immediately preceding sentence.

 

 

Net Share Settlement Shares:

For any Settlement Date in respect of which Net Share Settlement applies, a
number of Shares equal to (a) the number of Settlement Shares for such
Settlement Date, minus (b) the number of Shares Party A actually purchases
during the Unwind Period for a total purchase price equal to the difference
between (1) the product of (i) the average Forward

 

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Price over the period beginning on, and including, the date that is one
Settlement Cycle following the first day of the applicable Unwind Period and
ending on, and including, such Settlement Date (calculated assuming no reduction
to the Forward Price for any Forward Price Reduction Date that occurs during the
Unwind Period, except as set forth in clause (2) below), multiplied by (ii) the
number of Settlement Shares for such Settlement Date, minus (2) the product of
(i) the Forward Price Reduction Amount for any Forward Price Reduction Date that
occurs during such Unwind Period, multiplied by (ii) the number of Shares with
respect to which Party A has not unwound its hedge as of such Forward Price
Reduction Date.

 

 

Settlement Currency:

USD.

 

 

Failure to Deliver:

Inapplicable.

 

 

Adjustments:

 

 

 

Method of Adjustment:

Subject to the provisions set forth in clause (b) under “Acceleration Events”
below, Calculation Agent Adjustment.

 

 

Additional Adjustment:

If the Calculation Agent determines that the actual cost to Party A, over any
one month period, of borrowing a number of Shares equal to the Base Amount to
hedge its exposure to the Transaction exceeds a weighted average rate equal to
75 basis points per annum (a “Borrow Adjustment Event”), then, following the
first Borrow Adjustment Event to occur hereunder, the Calculation Agent shall
notify Party B of such occurrence and, at the election of Party B within one
Exchange Business Day of such notice, either (1) in respect of such Borrow
Adjustment Event and each subsequent Borrow Adjustment Event, the Calculation
Agent shall reduce the Forward Price in order to compensate Party A for the
amount by which such cost exceeded a weighted average rate equal to 75 basis
points per annum during such period or (2) the Borrow Cost Threshold (as defined
below) shall thereafter be reduced to 75 basis points per annum. If Party B
fails timely to make an election pursuant to the immediately preceding sentence,
then the Calculation Agent shall, in respect of such Borrow Adjustment Event and
each subsequent Borrow Adjustment Event, reduce the Forward Price pursuant to
clause (1) above. If Party B timely elects for clause (2) in the second
immediately preceding sentence to apply, then the Calculation Agent shall
immediately thereafter reduce the Forward Price in order to compensate Party A
solely for the amount by which the actual cost to Party A, over any one month
period, of borrowing a number of Shares equal to the Base Amount to hedge its
exposure to the Transaction exceeded a weighted average rate equal to 75 basis
points per annum during the period prior to such election. Upon the request of
Party B, Party A shall provide an itemized list of its stock loan costs for the
applicable one month period. If the

 

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Calculation Agent determines that Party A’s stock loan costs over any trailing
three-week period exceed a weighted average rate equal to 75 basis points per
annum, Party A shall notify Party B of such fact no later than 5:00 p.m., New
York City time, on the Exchange Business Day following such determination.

 

 

Account Details:

 

 

 

Payments to Party A:

To be advised under separate cover or telephone confirmed prior to each
Settlement Date.

 

 

Payments to Party B:

To be advised under separate cover or telephone confirmed prior to each
Settlement Date.

 

 

Delivery of Shares to Party A:

To be advised.

 

 

Delivery of Shares to Party B:

To be advised.

 

3.             Other Provisions:

 

Conditions to Effectiveness:

 

The effectiveness of this Confirmation on the Effective Date shall be subject to
(i) the condition that, subject to clause (iii) hereof, the sale of a number of
Borrowed Underwritten Shares (as such term is defined in the Underwriting
Agreement, as defined hereafter) equal to the Base Amount as of the Effective
Date shall have been consummated, pursuant to the Underwriting Agreement dated
as of the date hereof among Party B and J.P. Morgan Securities LLC and Morgan
Stanley & Co. LLC as Representatives of the Several Underwriters (the
“Underwriting Agreement”); provided that if the sale of a number of Borrowed
Underwritten Shares less than the Base Amount as of the Effective Date shall
have been consummated pursuant to the Underwriting Agreement, this Confirmation
shall be effective, but the Base Amount for the Transaction shall be such lesser
number of Borrowed Underwritten Shares sold, (ii) the condition that Party B
have delivered to Party A opinion of counsel dated as of the Effective Date with
respect to matters set forth in Section 3(a) of the Agreement (subject to
customary exceptions and limitations) and (iii)  the condition that neither of
the following has occurred (A) in the commercially reasonable judgment of Party
A, neither Party A nor its affiliates are able to borrow and deliver for sale a
number of Shares equal to the Base Amount, or (B) in the commercially reasonable
judgment of Party A, Party A (or its affiliate) would incur a stock loan cost of
more than a rate equal to 75 basis points per annum to do so (in which event
this Confirmation shall be effective but the Base Amount for the Transaction
shall be the number of Shares Party A (or an affiliate of Party A) is required
to deliver in accordance with Section 2(c) of the Underwriting Agreement).

 

Representations and Agreements of Party A and Party B:

 

Each of Party A and Party B represents and warrants to, and agrees with, the
other party that:

 

(a)         It (i) has such knowledge and experience in financial and business
affairs as to be capable of evaluating the merits and risks of entering into the
Transaction and (ii) has consulted with its own legal, financial, accounting and
tax advisors in connection with the Transaction.

 

(b)         It will by the next succeeding New York Business Day notify the
other party upon obtaining knowledge of the occurrence of any event that would
constitute an Event of Default in respect to which it is the Defaulting Party.

 

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Additional Representations, Warranties and Agreements of Party B:  Party B
hereby represents and warrants to, and agrees with, Party A as of the date
hereof that:

 

(a)         Any Shares, when issued and delivered in accordance with the terms
of the Transaction, will be duly authorized and validly issued, fully paid and
nonassessable, and the issuance thereof will not be subject to any preemptive or
similar rights.

 

(b)         Party B has reserved and will keep available at all times, free from
preemptive rights, out of its authorized but unissued Shares, solely for the
purpose of issuance upon settlement of the Transaction as herein provided, a
number of Shares equal to the Maximum Share Number (as defined below under
“Maximum Share Delivery”).  A number of Shares equal to the Maximum Share Number
have been approved for listing on the Exchange, subject to official notice of
issuance.

 

(c)          Party B is not and has not been the subject of any civil proceeding
of a judicial or administrative body of competent jurisdiction that could
reasonably be expected to impair materially Party B’s ability to perform its
obligations hereunder.

 

(d)         No filing with, or approval, authorization, consent, license
registration, qualification, order or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
execution, delivery and performance by Party B of this Confirmation and the
consummation of the Transaction (including, without limitation, the issuance and
delivery of Shares on any Settlement Date) except (i) such as have been made or
obtained, as the case may be, under the Securities Act of 1933, as amended (the
“Securities Act”), and (ii) as may be required to be obtained under state
securities laws.

 

(e)          Party B agrees not to repurchase any Shares if, immediately
following such repurchase, the Base Amount would be equal to or greater than
8.5% of the then outstanding Shares.

 

(f)           Party B is not insolvent, nor will Party B be rendered insolvent
as a result of the Transaction.

 

(g)          Party B shall not, Party B shall cause its subsidiaries not to, and
Party B shall use its reasonable best efforts to cause its affiliated purchasers
(as defined in Rule 10b-18) other than its subsidiaries not to, take any action
(including, without limitation, any direct purchases by Party B or any
affiliated purchaser or any purchases by a party to a derivative transaction
with Party B or any of its affiliated purchasers), either under this
Confirmation, under an agreement with another party or otherwise, that would
cause any purchases of Shares by Party A or any of its affiliates during the
Unwind Period in connection with any Cash Settlement or Net Share Settlement of
the Transaction not to meet the requirements of the safe harbor provided by
Rule 10b-18 under the Exchange Act if such purchases were made by Party B.

 

(h)         Party B will not engage in any “distribution” (as defined in
Regulation M under the Exchange Act (“Regulation M”)) that would cause a
“restricted period” (as defined in Regulation M) to occur during any Unwind
Period.

 

(i)             Party B is an “eligible contract participant” (as such term is
defined in Section 1a(18) of the Commodity Exchange Act, as amended).

 

(j)            In addition to any other requirements set forth herein, Party B
agrees not to elect Cash Settlement or Net Share Settlement if, in the
reasonable judgment of Party B, such settlement or the purchase of Shares in the
open market in connection therewith would result in a violation of the U.S.
federal securities laws or any other federal or state law or regulation
applicable to Party B.

 

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(k)         Party B (i) is capable of evaluating investment risks independently,
both in general and with regard to all transactions and investment strategies
involving a security or securities; (ii) will exercise independent judgment in
evaluating the recommendations of any broker-dealer or its associated persons,
unless it has otherwise notified the broker-dealer in writing; and (iii) has
total assets of at least $50 million as of the date hereof.

 

(l)             Party B acknowledges and agrees that:

 

(i)                                  during the term of the Transaction, Party A
and its Affiliates may buy or sell Shares or other securities or buy or sell
options or futures contracts or enter into swaps or other derivative securities
in order to establish, adjust or unwind its hedge position with respect to the
Transaction;

 

(ii)                             Party A and its Affiliates may also be active
in the market for the Shares and Share-linked transactions other than in
connection with hedging activities in relation to the Transaction;

 

(iii)                            Party A shall make its own determination as to
whether, when or in what manner any hedging or market activities in Party B’s
securities shall be conducted and shall do so in a manner that it deems
appropriate to hedge its price and market risk with respect to the Forward
Price;

 

(iv)                           any market activities of Party A and its
Affiliates with respect to the Shares may affect the market price and volatility
of the Shares, as well as the Forward Price, each in a manner that may be
adverse to Party B; and

 

(v)                                the Transaction is a derivatives transaction
in which it has granted Party A the right, under certain circumstances, to
receive cash or Shares, as the case may be; Party A may purchase Shares for its
own account at an average price that may be greater than, or less than, the
effective price paid by Party B under the terms of the Transaction.

 

(m)     Party B is not subject to the Federal Power Act as of the date hereof,
and Party B shall not become subject to the Federal Power Act prior to the date
that all payments and deliveries have been made under the Transaction.

 

Covenant of Party B:

 

Unless the provisions set forth below under “Private Placement Procedures” shall
be applicable, the parties acknowledge and agree that any Shares delivered by
Party B to Party A on any Settlement Date will be newly issued Shares and when
delivered by Party A (or an affiliate of Party A) to securities lenders from
whom Party A (or an affiliate of Party A) borrowed Shares in connection with
hedging its exposure to the Transaction will be freely saleable without further
registration or other restrictions under the Securities Act, in the hands of
those securities lenders, irrespective of whether such stock loan is effected by
Party A or an affiliate of Party A.  Accordingly, Party B agrees that the Shares
that it delivers to Party A on each Settlement Date will not bear a restrictive
legend and that such Shares will be deposited in, and the delivery thereof shall
be effected through the facilities of, the Clearance System.

 

Covenants of Party A:

 

(a)         Unless the provisions set forth below under “Private Placement
Procedures” shall be applicable, Party A shall use any Shares delivered by Party
B to Party A on any Settlement Date to return to securities lenders to close out
open Share loans created by Party A or an

 

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affiliate of Party A in the course of Party A’s or such affiliate’s hedging
activities related to Party A’s exposure under this Confirmation.

 

(b)         In connection with bids and purchases of Shares in connection with
any Cash Settlement or Net Share Settlement of the Transaction, Party A shall
use its commercially reasonable efforts to conduct its activities, or cause its
affiliates to conduct their activities, in a manner consistent with the
requirements of the safe harbor provided by Rule 10b-18 under the Exchange Act,
as if such provisions were applicable to such purchases.

 

Insolvency Filing:

 

Notwithstanding anything to the contrary herein, in the Agreement or in the 2002
Definitions, upon any Insolvency Filing in respect of the Issuer, the
Transaction shall automatically terminate on the date thereof without further
liability of either party to this Confirmation to the other party (except for
any liability in respect of any breach of representation or covenant by a party
under this Confirmation prior to the date of such Insolvency Filing).

 

Extraordinary Dividends:

 

If a record date for an Extraordinary Dividend occurs during the period from,
and including, the Effective Date to, but excluding, (1) the last date on which
Party A becomes the record holder of any Shares delivered or to be delivered to
Party A pursuant to this Confirmation, if Physical Settlement or Net Share
Settlement applies or (2) the Settlement Date, if Cash Settlement applies, then,
on the date on which Party B pays such Extraordinary Dividend to holders of
record of the Shares, Party B shall pay an amount, as determined by the
Calculation Agent, in cash equal to the product of such Extraordinary Dividend
and the Base Amount as of such record date to Party A.  “Extraordinary Dividend”
means the per Share amount of any cash dividend or distribution declared by the
Issuer with respect to the Shares that is specified by the board of directors of
the Issuer as an “extraordinary” dividend.

 

Acceleration Events:

 

The following events shall each constitute an “Acceleration Event”:

 

(a)         Stock Borrow Events.  In its commercially reasonable judgment Party
A (or its affiliate) is unable to hedge Party A’s exposure to the Transaction (a
“Stock Borrow Event”) because (i) of the lack of sufficient Shares being made
available for Share borrowing by lenders or (ii) Party A (or its affiliate)
would incur a stock loan cost of more than 200 basis points per annum (the
“Borrow Cost Threshold”);

 

(b)         Dividends and Other Distributions.  On any day occurring after the
Trade Date and prior to (1) the last date on which Party A becomes the record
holder of any Shares delivered or to be delivered to Party A pursuant to this
Confirmation, if Physical Settlement or Net Share Settlement applies or (2) the
Settlement Date, if Cash Settlement applies, Party B declares a distribution,
issue or dividend to existing holders of the Shares of (i) any cash dividend
(other than an Extraordinary Dividend) to the extent all cash dividends having
an ex-dividend date during the period from and including any Forward Price
Reduction Date (with the Trade Date being a Forward Price Reduction Date for
purposes of this clause (b) only) to but excluding the next subsequent Forward
Price Reduction Date exceeds, on a per Share basis, the Forward Price Reduction
Amount set forth opposite the first date of any such period on Schedule I or
(ii) share capital or securities of another issuer acquired or owned (directly
or indirectly) by Party B as a result of a spin-off or other similar transaction
for which the related record date occurs during the period from, and including,
the Effective Date to, but excluding, (1) the last date on which Party A becomes
the record holder of any Shares delivered or to be delivered to

 

11

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Party A pursuant to this Confirmation, if Physical Settlement or Net Share
Settlement applies or (2) the Settlement Date, if Cash Settlement applies, or
(iii) any other type of securities (other than Shares), rights or warrants or
other assets, for payment (cash or other consideration) at less than the
prevailing market price as determined by the Calculation Agent for which the
related record date occurs during the period from, and including, the Effective
Date to, but excluding, (1) the last date on which Party A becomes the record
holder of any Shares delivered or to be delivered to Party A pursuant to this
Confirmation, if Physical Settlement or Net Share Settlement applies or (2) the
Settlement Date, if Cash Settlement applies. To the extent the declaration of a
distribution, issue or dividend contemplated by this paragraph (b) would also be
considered to be a Potential Adjustment Event, the provisions of this paragraph
(b) will apply, and Calculation Agent Adjustment shall not apply;

 

(c)          ISDA Early Termination Date.  The occurrence of any event as a
result of which Party A has the right to designate an Early Termination Date
pursuant to Section 6 of the Agreement, in which case the provisions set forth
in “Termination Settlement” below shall apply in lieu of Section 6 of the
Agreement;

 

(d)         Other ISDA Events.  Sections 12.2 and 12.9(b) of the 2002
Definitions shall not apply to the Transaction; instead (i) the announcement by
Party B of a firm intention to enter into a transaction that, if consummated,
would result in a Merger Event, and (ii) the announcement of any event that, if
consummated, would result in a Nationalization or the occurrence of any Change
in Law or a Delisting, shall, in each case, constitute an Acceleration Event;
provided that in case of a Delisting, in addition to the provisions of
Section 12.6(a)(iii) of the 2002 Definitions, it will also constitute a
Delisting if the Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the
NASDAQ Global Market (or their respective successors); and provided further that
the definition of “Change in Law” provided in Section 12.9(a)(ii) of the 2002
Definitions is hereby amended by (i) inserting the parenthetical “(including,
for the avoidance of doubt and without limitation, adoption or promulgation of
new regulations authorized or mandated by existing statute)” at the end of
clause (A) thereof and (ii) replacing the phrase “the interpretation” in the
third line thereof with the phrase “or public announcement of the formal or
informal interpretation”; or

 

(e)          Ownership Event.  In the reasonable judgment of Party A based on
the advice of counsel, on any day, the Share Amount for such day exceeds the
Post-Effective Limit for such day (if any applies).

 

For purposes of clause (e) above, the “Share Amount” as of any day is the number
of Shares that Party A and any person whose ownership position would be
aggregated with that of Party A (Party A or any such person, a “Party A Person”)
under any law, rule, regulation or regulatory order that for any reason becomes
applicable to ownership of Shares after the Trade Date (“Applicable Laws”),
owns, beneficially owns, constructively owns, controls, holds the power to vote
or otherwise meets a relevant definition of ownership of under the Applicable
Laws, as determined by Party A in its reasonable discretion.  The
“Post-Effective Limit” means (x) the minimum number of Shares that would give
rise to reporting or registration obligations or other requirements (including
obtaining prior approval from any person or entity) of a Party A Person, or
would result in an adverse effect on a Party A Person, under the Applicable
Laws, as determined by Party A in its reasonable discretion, minus (y) 1% of the
number of Shares outstanding.  For the avoidance of doubt, the parties hereto
agree and acknowledge that the filing requirements of Section 16 and Section 13
of the Exchange Act as in effect, and as interpreted by the Securities and
Exchange Commission or any other relevant court, tribunal or regulator, on the
date hereof shall not give rise to reporting or registration obligations or
other requirements of a Party A Person, or would result in an adverse effect on
a Party A Person, under the Applicable Laws.

 

12

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Termination Settlement:

 

Upon the occurrence of any Acceleration Event, Party A shall have the right to
designate, upon at least one Scheduled Trading Day’s notice, any Scheduled
Trading Day following such occurrence to be a Settlement Date hereunder (a
“Termination Settlement Date”) to which Physical Settlement shall apply, and to
select the number of Settlement Shares relating to such Termination Settlement
Date; provided that (i) in the case of an Acceleration Event arising out of an
Ownership Event, the number of Settlement Shares so designated by Party A shall
not exceed the number of Shares necessary to reduce the Share Amount to the
Post-Effective Limit and (ii) in the case of an Acceleration Event arising out
of a Stock Borrow Event the number of Settlement Shares so designated by Party A
shall not exceed the number of Shares as to which such Stock Borrow Event
exists.  If, upon designation of a Termination Settlement Date by Party A
pursuant to the preceding sentence, Party B fails to deliver the Settlement
Shares relating to such Termination Settlement Date when due or otherwise fails
to perform obligations within its control in respect of the Transaction, it
shall be an Event of Default with respect to Party B and Section 6 of the
Agreement shall apply.  If an Acceleration Event occurs during an Unwind Period
relating to a number of Settlement Shares to which Cash Settlement or Net Share
Settlement applies, then on the Termination Settlement Date relating to such
Acceleration Event, notwithstanding any election to the contrary by Party B,
Cash Settlement or Net Share Settlement shall apply to the portion of the
Settlement Shares relating to such Unwind Period as to which Party A has unwound
its hedge and Physical Settlement shall apply in respect of (x) the remainder
(if any) of such Settlement Shares and (y) the Settlement Shares designated by
Party A in respect of such Termination Settlement Date. Under no circumstances
will Party A be entitled to an adjustment for the effects of an Extraordinary
Dividend (other than as set forth above under the heading “Extraordinary
Dividends”) or a change in expected dividends.

 

Private Placement Procedures

 

If Party B is unable to comply with the provisions of “Covenant of Party B”
above because of a change in law or a change in the policy of the Securities and
Exchange Commission or its staff, or Party A otherwise determines that in its
reasonable opinion any Settlement Shares to be delivered to Party A by Party B
may not be freely returned by Party A or its affiliates to securities lenders as
described under “Covenant of Party B” above, then delivery of any such
Settlement Shares (the “Restricted Shares”) shall be effected pursuant to Annex
A hereto, unless waived by Party A.

 

Rule 10b5-1:

 

It is the intent of Party A and Party B that following any election of Cash
Settlement or Net Share Settlement by Party B, the purchase of Shares by Party A
during any Unwind Period comply with the requirements of
Rule 10b5-1(c)(1)(i)(B) of the Exchange Act and that this Confirmation shall be
interpreted to comply with the requirements of Rule 10b5-1(c).

 

Party B acknowledges that (i) during any Unwind Period Party B does not have,
and shall not attempt to exercise, any influence over how, when or whether to
effect purchases of Shares by Party A (or its agent or affiliate) in connection
with this Confirmation and (ii) Party B is entering into the Agreement and this
Confirmation in good faith and not as part of a plan or scheme to evade
compliance with federal securities laws including, without limitation,
Rule 10b-5 promulgated under the Exchange Act.

 

Party B hereby agrees with Party A that during any Unwind Period Party B shall
not communicate, directly or indirectly, any Material Non-Public Information (as
defined herein) to any EDG Personnel (as defined below).  For purposes of the
Transaction, “Material Non-Public Information” means information relating to
Party B or the Shares that (a) has not been widely

 

13

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disseminated by wire service, in one or more newspapers of general circulation,
by communication from Party B to its shareholders or in a press release, or
contained in a public filing made by Party B with the Securities and Exchange
Commission and (b) a reasonable investor might consider to be of importance in
making an investment decision to buy, sell or hold Shares.  For the avoidance of
doubt and solely by way of illustration, information should be presumed
“material” if it relates to such matters as dividend increases or decreases,
earnings estimates, changes in previously released earnings estimates,
significant expansion or curtailment of operations, a significant increase or
decline of orders, significant merger or acquisition proposals or agreements,
significant new products or discoveries, extraordinary borrowing, major
litigation, liquidity problems, extraordinary management developments, purchase
or sale of substantial assets, or other similar information.  For purposes of
the Transaction, “EDG Personnel” means any employee on the trading side of the
Equity Derivatives Group of J.P. Morgan Securities LLC and does not include
Messrs. David Aidelson, Greg Batista, James Rothschild and Elliot Chalom (or any
other person or persons designated from time to time by the Compliance Group of
Party).

 

Maximum Share Delivery:

 

Notwithstanding any other provision of this Confirmation, in no event will Party
B be required to deliver on any Settlement Date, whether pursuant to Physical
Settlement, Net Share Settlement, Termination Settlement or any Private
Placement Settlement, more than a number of Shares equal to 1.75 times the
initial Base Amount to Party A (the “Maximum Share Number”), subject to
reduction by the amount of any Shares delivered by Party B on any prior
Settlement Date.

 

Transfer and Assignment:

 

Party A may assign or transfer any of its rights or delegate any of its duties
hereunder to any affiliate of Party A whose obligations hereunder and under the
Agreement are guaranteed by Party A so long as (a) such assignee or transferee
is organized under the laws of the United States, any State thereof or the
District of Columbia; (b) Party B will not be required to pay to such assignee
or transferee an amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) of the Agreement greater than the amount in respect of which
Party B would have been required to pay Party A in the absence of such
assignment or transfer; (c) Party B will not receive a payment from which an
amount has been withheld or deducted on account of a Tax under
Section 2(d)(i) of the Agreement in excess of that which Party A would have been
required to so withhold or deduct in the absence of such assignment or transfer;
and (d) no Event of Default, Potential Event of Default or Termination Event
will occur as a result of such assignment or transfer. Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing Party A to
purchase, sell, receive or deliver any Shares or other securities to or from
Party B, Party A may designate any of its affiliates to purchase, sell, receive
or deliver such Shares or other securities and otherwise to perform Party A’s
obligations in respect of the Transaction and any such designee may assume such
obligations.  Party A shall be discharged of its obligations to Party B solely
to the extent of any such performance.

 

Matters Relating to Agent:

 

Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, as
agent, (the “Agent”) acts solely as agent on a disclosed basis with respect to
the transactions contemplated hereunder, and (ii) the Agent has no obligation,
by guaranty, endorsement or otherwise, with respect to the obligations of either
Party B or Party A hereunder, either with respect to the delivery of cash or
Shares, either at the beginning or the end of the transactions contemplated
hereby.  In this regard, each of Party A and Party B acknowledges and agrees to
look solely to the other for performance hereunder, and not to the Agent.

 

14

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Indemnity

 

Party B agrees to indemnify Party A and its affiliates and their respective
directors, officers, agents and controlling parties (Party A and each such
affiliate or person being an “Indemnified Party”) from and against any and all
losses, claims, damages and liabilities, joint and several, incurred by or
asserted against such Indemnified Party arising out of, in connection with, or
relating to any breach of any covenant or representation made by Party B in this
Confirmation or the Agreement. In addition, Party B will reimburse any
Indemnified Party for all reasonable expenses (including reasonable legal fees
and reasonable expenses)  in connection with the investigation of, preparation
for, or defense of any pending or threatened claim or any action or proceeding
arising therefrom (whether or not such Indemnified Party is a party thereto) at
the time, and only to the extent that the relevant loss, claim, damage,
liability or expense is found in a final and nonappealable judgment by a court
of competent jurisdiction to have resulted from a breach of a covenant or
representation made by Party B in this Confirmation or the Agreement.  For the
avoidance of doubt, Party B will not be liable under this Indemnity paragraph to
the extent that any loss, claim, damage, liability or expense is found in a
final and nonappealable judgment by a court of competent jurisdiction to have
resulted from Party A’s negligence, fraud, bad faith and/or willful misconduct
or a breach of any representation or covenant of Party A contained in this
Confirmation or the Agreement.

 

Notice

 

 

Non-Reliance:

Applicable

 

 

Additional Acknowledgments:

Applicable

 

 

Agreements and Acknowledgments Regarding Hedging Activities:

Applicable

 

4.                                      The Agreement is further supplemented by
the following provisions:

 

No Collateral or Setoff.:

 

Notwithstanding Section 6(f) or any other provision of the Agreement or any
other agreement between the parties to the contrary, the obligations of Party B
hereunder are not secured by any collateral.  Obligations under the Transaction
shall not be set off against any other obligations of the parties, whether
arising under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise, and no other
obligations of the parties shall be set off against obligations under the
Transaction, whether arising under the Agreement, this Confirmation, under any
other agreement between the parties hereto, by operation of law or otherwise,
and each party hereby waives any such right of setoff.  In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding anything to the
contrary in the Agreement, (a) separate amounts shall be calculated as set forth
in such Section 6(e) with respect to (i) the Transaction and (ii) all other
Transactions, and (b) such separate amounts shall be payable pursuant to
Section 6(d)(ii) of the Agreement.

 

Delivery of Cash:

 

For the avoidance of doubt, except as set forth above under the heading
“Extraordinary Dividends,” nothing in this Confirmation shall be interpreted as
requiring Party B to deliver cash  in settlement of the Transaction, except in
circumstances where such delivery of cash is within Party B’s control
(including, without limitation, where Party B elects to deliver cash or where
Party B fails timely to elect to deliver Shares in respect of settlement of the
Transaction).

 

15

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Status of Claims in Bankruptcy:

 

Party A acknowledges and agrees that this confirmation is not intended to convey
to Party A rights with respect to the transactions contemplated hereby that are
senior to the claims of common stockholders in any U.S. bankruptcy proceedings
of Party B; provided, however, that nothing herein shall limit or shall be
deemed to limit Party A’s right to pursue remedies in the event of a breach by
Party B of its obligations and agreements with respect to this Confirmation and
the Agreement; and provided further, that nothing herein shall limit or shall be
deemed to limit Party A’s rights in respect of any transaction other than the
Transaction.

 

Limit on Beneficial Ownership:

 

Notwithstanding any other provisions hereof (a) Party A shall not be entitled to
take delivery of any Shares or any other class of voting securities of Party B
deliverable hereunder (whether in connection with the purchase of Shares on any
Settlement Date or any Termination Settlement Date, any Private Placement
Settlement or otherwise) to the extent (but only to the extent) that, after such
receipt of any Shares or any other class of voting securities of Party B
hereunder, (i) the Share Amount would exceed the Post-Effective Limit or
(ii) Party A and each person subject to aggregation of Shares with Party A for
purposes of determining whether Party A directly or indirectly beneficially owns
more than 10% of the Shares for purposes of Section 16 of the Exchange Act and
rules promulgated thereunder (the “Party A Group”) would directly or indirectly
beneficially own for such purposes or have ownership or control (within the
meaning of the Bank Holding Company Act of 1956, as amended) in excess of 4.5%
of the then outstanding Shares or any other class of voting securities of Party
B (the “Threshold Number of Shares”) and (b) Party A shall not have the “right
to acquire” (within the meaning of NYSE Rule 312.04(g)) Shares hereunder
(whether in connection with the purchase of Shares on any Settlement Date or any
Termination Settlement Date, any Private Placement Settlement or otherwise) to
the extent (but only to the extent) that, after such receipt of any Shares
hereunder, the “Party A Group” would directly or indirectly beneficially own for
such purposes in excess of 4,824,927 Shares (the “Exchange Limit”).  Any
purported delivery hereunder shall be void and have no effect to the extent (but
only to the extent) that, after such delivery, (i) the Share Amount would exceed
the Post-Effective Limit or (ii) Party A Group would directly or indirectly so
beneficially own or have ownership or control in excess of the lesser of the
Threshold Number of Shares and the Exchange Limit.  If any delivery owed to
Party A hereunder is not made, in whole or in part, as a result of this
provision, Party B’s obligation to make such delivery shall not be extinguished
and Party B shall make such delivery as promptly as practicable after, but in no
event later than one Exchange Business Day after, Party A gives notice to Party
B that, after such delivery, (i) the Share Amount would not exceed the
Post-Effective Limit and (ii) Party A Group would not directly or indirectly so
beneficially own or have ownership or control in excess of the lesser of the
Threshold Number of Shares and the Exchange Limit.

 

In addition, notwithstanding anything herein to the contrary, if any delivery
owed to Party A hereunder is not made, in whole or in part, as a result of the
immediately preceding paragraph, Party A shall be permitted to make any payment
due in respect of such Shares to Party B in two or more tranches that correspond
in amount to the number of Shares delivered by Party B to Party A pursuant to
the immediately preceding paragraph; provided that, in all events, Party A shall
make such payment due in respect of the full number of Settlement Shares for the
related Settlement Date to Party B no later than the 20th day following such
Settlement Date (it being understood, for the avoidance of doubt, that this
proviso shall not affect Party B’s obligation to deliver such Settlement Shares
pursuant hereto, including, without limitation, pursuant to the last sentence of
the immediately preceding paragraph).

 

Miscellaneous:

 

16

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(a)         Addresses for Notices.  For the purpose of Section 12(a) of the
Agreement:

 

Address for notices or communications to Party A:

 

JPMorgan Chase Bank, National Association

EDG Marketing Support

Email:

EDG_OTC_HEDGING_MS@jpmorgan.com

Facsimile No:

1-866-886-4506

 

 

With a copy to:

 

 

 

Attention:

Tim Oeljeschlager

Telephone No:

212-622-5603

Facsimile No:

917-464-3163

 

Address for notices or communications to Party B:

 

Address:

Hawaiian Electric Industries, Inc.

 

1001 Bishop Street, Suite 2900

 

Honolulu, HI 96813

Fax:

808-203-1184

 

 

Attention:

James A. Ajello

Title:

Executive Vice President, Chief Financial Officer and Treasurer

 

 

With a copy to:

 

 

 

Address:

Hawaiian Electric Industries, Inc.

 

1001 Bishop Street, Suite 2900

 

Honolulu, HI 96813

Fax:

808-203-1991

 

 

Attention:

Chet A. Richardson

Title:

Executive Vice President, General Counsel, Secretary and Chief Administrative
Officer

 

(b)         Waiver of Right to Trial by Jury.  Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any suit, action or proceeding relating to this Confirmation.  Each
party (i) certifies that no representative, agent or attorney of the other party
has represented, expressly or otherwise, that such other party would not, in the
event of such a suit action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other party have been induced to enter
into this Confirmation by, among other things, the mutual waivers and
certifications herein.

 

(c)          London Branch.  Party A is entering into this Confirmation and the
Agreement through its London branch.  Notwithstanding the foregoing, Party A
represents to Party B that the obligations of Party A are the same as if it had
entered into this Confirmation and the Agreement through its head or home office
in New York.

 

Acknowledgements.

 

The parties hereto intend for:

 

17

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(a)         the Transaction to be a “securities contract” as defined in
Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”),
qualifying for the protections under Section 555 of the Bankruptcy Code;

 

(b)         a party’s right to liquidate the Transaction and to exercise any
other remedies upon the occurrence of any Event of Default under the Agreement
with respect to the other party to constitute a “contractual right” as defined
in the Bankruptcy Code;

 

(c)          Party A to be a “financial institution” within the meaning of
Section 101(22) of the Bankruptcy Code; and

 

(d)         all payments for, under or in connection with the Transaction, all
payments for the Shares and the transfer of such Shares to constitute
“settlement payments” as defined in the Bankruptcy Code.

 

Severability.

 

If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Confirmation and the deletion of such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision of
Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in
Section 14 to the extent that it relates to, or is used in or in connection with
any such Section) shall be so held to be invalid or unenforceable.

 

[Remainder of page intentionally left blank]

 

18

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[g82371ki05i001.jpg]

 

Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.

 

 

Yours faithfully,

 

 

 

J.P. MORGAN SECURITIES LLC,

 

as agent for JPMorgan Chase Bank, National Association

 

 

 

 

By:

   /s/ Tim Oeljeschlager

 

 

Name: Tim Oeljeschlager

 

Title: Vice President

 

 

 

 

 

 

Confirmed as of the date first written above:

 

 

 

 

 

HAWAIIAN ELECTRIC INDUSTRIES, INC.

 

 

 

 

 

 

 

 

 

By:

   /s/ Constance H. Lau

 

 

 

Name: Constance H. Lau

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

By:

   /s/ James A. Ajello

 

 

 

Name: James A. Ajello

 

 

Title: Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

 

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SCHEDULE I

 

FORWARD PRICE REDUCTION DATES AND AMOUNTS

 

Forward Price Reduction Date

Forward Price Reduction Amount

 

 

Trade Date

USD 0.00

May 20, 2013

USD 0.31

August 19, 2013

USD 0.31

November 18, 2013

USD 0.31

February 21, 2014

USD 0.31

May 20, 2014

USD 0.31

August 20, 2014

USD 0.31

November 19, 2014

USD 0.31

February 20, 2015

USD 0.31

May 20, 2015

USD 0.31

 

I-1

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SCHEDULE II

 

[CASH][NET SHARE][PHYSICAL] SETTLEMENT NOTICE

 

__________, 20__

 

To:

JPMorgan Chase Bank, National Association, London Branch

 

25 Bank Street

 

Canary Wharf, London, E14 5JP

 

England

 

 

From:

Hawaiian Electric Industries, Inc.

 

900 Richards Street

 

Honolulu, HI 96813

 

 

Reference is hereby made to the letter agreement (the “Confirmation”) dated
March 19, 2013 between Hawaiian Electric Industries, Inc. and JPMorgan Chase
Bank, National Association, London Branch.  Capitalized terms used but not
defined herein shall have the meaning assigned to them in the Confirmation.

 

Hawaiian Electric Industries, Inc. hereby elects for [Cash][Net Share][Physical]
Settlement to apply with respect to __________ Settlement Shares.  The
Settlement Date with respect to such Settlement Shares shall be __________,
20__.

 

[As of the date of this Settlement Notice, Hawaiian Electric Industries, Inc.
represents that it is not aware of any material nonpublic information concerning
itself or the Shares, and it is designating the date contained herein as a
Settlement Date and electing [Cash][Net Share] Settlement in good faith and not
as part of a plan or scheme to evade compliance with the federal securities
laws.]1

 

 

 

 

Yours sincerely,

 

 

 

HAWAIIAN ELECTRIC INDUSTRIES, INC.

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

--------------------------------------------------------------------------------

 

1  Include if Cash Settlement or Net Share Settlement is applicable.

 

II-1

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ANNEX A

 

PRIVATE PLACEMENT PROCEDURES

 

(i)                                     If Party B delivers the Restricted
Shares pursuant to this clause (i) (a “Private Placement Settlement”), then
delivery of Restricted Shares by Party B shall be effected in customary private
placement procedures for issuers with a market capitalization comparable to, and
in the same industry as, Party B with respect to such Restricted Shares
reasonably acceptable to Party A; provided that if, on or before the date that a
Private Placement Settlement would occur, Party B has taken, or caused to be
taken, any action that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by Party B to Party A (or any
affiliate designated by Party A) of the Restricted Shares or the exemption
pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of
the Restricted Shares by Party A (or any such affiliate of Party A) or Party B
fails to deliver the Restricted Shares when due or otherwise fails to perform
obligations within its control in respect of a Private Placement Settlement, it
shall be an Event of Default with respect to Party B and Section 6 of the
Agreement shall apply.  The Private Placement Settlement of such Restricted
Shares shall include customary (for issuers with a market capitalization
comparable to, and in the same industry as, Party B) representations, covenants,
blue sky and other governmental filings and/or registrations, indemnities to
Party A, due diligence rights (for Party A or any designated buyer of the
Restricted Shares by Party A), opinions and certificates, and such other
documentation as is customary for private placement agreements (for issuers with
a market capitalization comparable to, and in the same industry as, Party B),
all reasonably acceptable to Party A.  In the case of a Private Placement
Settlement, Party A shall, in its good faith discretion, adjust the amount of
Restricted Shares to be delivered to Party A hereunder and/or the Forward Price
in a commercially reasonable manner to reflect the fact that such Restricted
Shares may not be freely returned to securities lenders by Party A and may only
be saleable by Party A at a discount to reflect the lack of liquidity in
Restricted Shares.  Notwithstanding the Agreement or this Confirmation, the date
of delivery of such Restricted Shares shall be the Clearance System Business Day
following notice by Party A to Party B of the number of Restricted Shares to be
delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of
Restricted Shares shall be due as set forth in the previous sentence and not be
due on the Settlement Date or Termination Settlement Date that would otherwise
be applicable.

 

(ii)                                  If Party B delivers any Restricted Shares
in respect of the Transaction, Party B agrees that (i) such Shares may be
transferred by and among JPMorgan Chase Bank, National Association and its
affiliates and (ii) after the minimum “holding period” within the meaning of
Rule 144(d) under the Securities Act has elapsed after the applicable Settlement
Date, Party B shall (so long as Party A or any such affiliate is not an
“affiliate” of Party B within the meaning of Rule 144 under the Securities Act)
promptly remove, or cause the transfer agent for the Shares to remove, any
legends referring to any transfer restrictions from such Shares upon delivery by
Party A (or such affiliate of Party A) to Party B or such transfer agent of
seller’s and broker’s representation letters customarily delivered by Party A or
its affiliates in connection with resales of restricted securities pursuant to
Rule 144 under the Securities Act, each without any further requirement for the
delivery of any certificate, consent, agreement, opinion of counsel, notice or
any other document, any transfer tax stamps or payment of any other amount or
any other action by Party A (or such affiliate of Party A).

 

A-1

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