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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential for Use Of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Hawaiian Airlines, Inc.
- - --------------------------------------------------------------------------------
(Name Of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box).
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy Pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if ANY part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
PRELIMINARY COPIES
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G-350
HONOLULU, HAWAII 96819
Dear Fellow Shareholder:
On behalf of the Board of Directors, it is our pleasure to invite
you to attend the 1996 Annual Meeting of Shareholders of Hawaiian Airlines, Inc.
The meeting will be held at the Royal Hawaiian Hotel, 2259
Kalakaua Avenue, Honolulu, Hawaii, in the Regency Room, on Thursday, June 6,
1996 at 9:00 a.m., Hawaii standard time. At the meeting, in addition to acting
on the matters described in the attached Proxy Statement, we will report on the
Company's activities during fiscal year 1995. There will also be an opportunity
to discuss matters of interest to you as a shareholder.
Members of your Board of Directors and management look forward to
greeting those shareholders who are able to attend the Company's Annual Meeting.
It is important that your shares be represented and voted at the
Annual Meeting. Please sign and date the enclosed proxy card in the enclosed,
self-addressed envelope. The proxy card should be returned even if you plan to
attend the meeting in person. Returning your executed proxy card will not
affect your right to attend the meeting and vote your shares in person.
Accordingly, we urge you to take a moment now to sign, date and mail your proxy.
If you will need special assistance at the Annual Meeting because
of a disability, please contact Ms. Audrey Yuh, Investor Relations, Hawaiian
Airlines, Inc., P.O. Box 30008, Honolulu, Hawaii 96820.
On behalf of the Board of Directors, thank you for your support
and continued interest in Hawaiian Airlines.
John W. Adams Bruce R. Nobles
Chairman of the Board President and Chief Executive Officer
Honolulu, Hawaii
May __, 1996
<PAGE>
PRELIMINARY COPIES
HAWAIIAN AIRLINES, INC.
3375 Koapaka Street, Suite G-350
Honolulu, Hawaii 96819
--------------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JUNE 6, 1996
--------------------------------
TO THE SHAREHOLDERS OF HAWAIIAN AIRLINES, INC.:
Notice is hereby given that the 1996 Annual Meeting of
Shareholders of Hawaiian Airlines, Inc. (the "Company") will be held at the
Royal Hawaiian Hotel, 2259 Kalakaua Avenue, Honolulu, Hawaii, in the Regency
Room, on Thursday, June 6, 1996 at 9:00a.m., Hawaii standard time, for the
following purposes:
1. To elect eleven directors;
2. To consider approval of an amendment to the Company's
Amended Articles of Incorporation (the "Articles of Incorporation") to correct
the Company's current mailing address (the "First Proposed Charter Amendment");
3. To consider ratification of the conversion of the Class
B Common Stock to Class A Common Stock ("Ratification of Conversion of Class B
Common Stock to Class A Common Stock") and approval of an amendment to the
Articles of Incorporation to (i) eliminate the Company's Class B Common Stock
and (ii) designate the Company's Class A Common Stock as "Common Stock" (the
"Second Proposed Charter Amendment");
4. To consider approval of an amendment to the Articles of
Incorporation to eliminate provisions no longer required by the Third Amended
Consolidated Plan of Reorganization, as amended, or Section 1123 of the United
States Bankruptcy Code (the "Third Proposed Charter Amendment");
5. To consider approval of an amendment to the Articles of
Incorporation to insure that no holder of any securities of the Company shall
have preemptive rights unless granted by the Board of Directors (the "Fourth
Proposed Charter Amendment");
6. To consider approval of an amendment to the Articles of
Incorporation to provide that officer titles shall be designated in the Bylaws
and to delete officer qualifications (the "Fifth Proposed Charter Amendment");
7. To consider approval of the Company's 1996 Stock
Incentive Plan; and
8. To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
<PAGE>
Only holders of record of the Company's Class A Common Stock
and Special Preferred Stock at the close of business on April 8, 1996 will be
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
Rae A. Capps
Vice President, General Counsel
and Corporate Secretary
Honolulu, Hawaii
May __, 1996
YOUR VOTE IS IMPORTANT. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
YOUR ATTENTION IS DIRECTED TO THE PROXY STATEMENT
WHICH APPEARS ON THE FOLLOWING PAGES.
<PAGE>
PRELIMINARY COPIES
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G-350
HONOLULU, HAWAII 96819
____________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
June 6, 1996
____________________________
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and proxy card are being mailed on or about May 6, 1996 in
connection with the solicitation of proxies by the Board of Directors of
Hawaiian Airlines, Inc., a Hawaii corporation ("Hawaiian Airlines" or the
"Company"), for use at the 1996 Annual Meeting of Shareholders of the Company
(the "Annual Meeting") to be held at the Royal Hawaiian Hotel, 2259 Kalakaua
Avenue, Honolulu, Hawaii, in the Regency Room, on Thursday, June 6, 1996 at 9:00
a.m., Hawaii standard time, and at any adjournment or postponement thereof.
The cost of soliciting proxies will be borne by the Company, including
the expense of preparing, assembling, printing and mailing this Proxy Statement
and the material used in this solicitation of Proxies. It is contemplated that
Proxies will be solicited principally through the mails, but directors, officers
and regular employees of the Company may solicit Proxies personally or by
telephone. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding these proxy materials to their
principals.
VOTING RIGHTS AND PROCEDURES
VOTING STOCK
The Board of Directors has set April 8, 1996, as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting. Holders of record at the close of business on April 8, 1996
(the "Record Date") of Class A Common Stock and of Series B Special Preferred
Stock, Series C Special Preferred Stock, Series D Special Preferred Stock and
Series E Special Preferred Stock (collectively the "Special Preferred Stock")
are entitled to notice of and to vote as a single class at the Annual Meeting
and any adjournment or postponement thereof. On the Record Date,
27,067,424 shares of Class A Common Stock, four shares of Series B Special
Preferred Stock, one share of Series C Special Preferred Stock, one share of
Series D Special Preferred Stock and one share of Series E Special Preferred
Stock were issued and outstanding and entitled to vote. Each outstanding share
of Class A Common Stock and Special Preferred Stock entitles the holder thereof
to one vote.
VOTING BY PROXY
A proxy card ("Proxy") for use at the Annual Meeting is enclosed. Any
shareholder who executes and delivers a Proxy has the right to revoke it at any
time before it is voted by filing an instrument revoking it or a duly executed
Proxy bearing a later date with the Corporate Secretary of the Company. It also
may be revoked by attending the Annual Meeting and voting in person. Subject to
such revocation, all shares represented by a properly executed Proxy received
prior to or at the Annual Meeting will be voted by the proxy holders whose names
are set forth in the accompanying Proxy (the "Proxy Holders") in accordance with
the instructions on the Proxy. If no instruction is specified with respect to a
Proposal, the shares represented by the Proxy will be voted FOR such Proposal
(and, in the case of Proposal 1, FOR the nominees for director identified in
this Proxy Statement). It is not anticipated that any matters will be presented
at the Annual Meeting other than as set forth in the accompanying Notice of
Annual Meeting of Shareholders. If, however, any other matters properly are
presented at the Meeting, the Proxy will be voted in accordance with the best
judgment and in the discretion of the Proxy Holders.
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QUORUM AND VOTING REQUIREMENTS
The presence, in person or by proxy, at the Annual Meeting of the
holders of a majority of the shares of Class A Common Stock and Special
Preferred Stock issued and outstanding as of the Record Date, counted as a
single class, will constitute a quorum for transacting business. The election
of each director and the approval of the 1996 Stock Incentive Plan require the
vote of the majority of the shares of Class A Common Stock and Special Preferred
Stock represented in person or by proxy at the Annual Meeting, voting as a
single class. Approval of each of the Proposed Charter Amendments requires the
vote of not less than two-thirds (2/3) of all shares of Class A Common Stock and
Special Preferred Stock issued and outstanding on the Record Date, voting as a
single class. Abstentions and broker non-votes will be counted for purposes of
determining whether a quorum is present at the Annual Meeting for the
transaction of business and will be treated as the equivalent of a vote against
the election of any director nominee and each of the Proposed Charter Amendments
for the purpose of determining whether director nominees have been elected or
whether the Proposed Charter Amendments have been adopted.
GENERAL INFORMATION
CONTROL OF THE COMPANY
At a Special Meeting on January 30, 1996, the Company received
shareholder approval of a series of transactions which closed on January 31,
1996. These transactions included, among other things, the issuance and sale to
Airline Investors Partnerships, L.P. ("AIP") of 18,181,818 shares of the
Company's Class A Common Stock, par value $.01 per share, and four shares of the
Company's Series B Special Preferred Stock, par value $.01 per share,
(collectively the "Shares") for an aggregate cash purchase price of $20 million
(the "Transaction"). As a result of the Transaction, AIP became the majority
shareholder of the Company, and, as of April 8, 1996, beneficially owned 67.2%
of the Company's outstanding Class A Common Stock. Prior to the Transaction, no
shareholder of the Company owned more than 12% of the Company's outstanding
voting stock.
Pursuant to the Company's Amended Bylaws, AIP has the right to
nominate six nominees for election to the Board of Directors so long as it is
the holder of one or more shares of Series B Special Preferred Stock and of at
least 35% of the outstanding Common Stock on a fully diluted basis. AIP's
right to nominate directors will be reduced to five so long as it retains 25% of
such Common Stock, reduced to four so long as it retains 10% of such Common
Stock, and reduced to three so long as it retains 5% of such Common Stock.
Thereafter, AIP will not have the right to nominate any individuals to the Board
unless it reacquires at least 5% of such Common Stock within 365 days. To the
extent Board members are not required to be nominated by AIP because of the
reductions in its stock holdings, such Board members are to be outside
directors, defined as directors who are not employed by the Company and not
affiliated with the Company's labor unions, AIP or American Airlines, Inc.
Pursuant to the Company's Bylaws and the collective bargaining
agreements with its principal labor unions, each of the Association of Flight
Attendants ("AFA"), the International Association of Machinists and Aerospace
Workers (AFL-CIO) ("IAM") and the Air Line Pilots Association International
("ALPA") has the right to nominate one nominee for election to the Board so long
as it is the holder of record of one share of the Series C, Series D and Series
E Special Preferred Stock, respectively. Of the two remaining directors, one is
required to be an outside director and one is required to be a senior management
official of the Company.
AIP has agreed with each of the labor unions that so long as the right
to nominate one nominee for election to the Board is in the labor union's
collective bargaining agreement, AIP will vote its shares in favor of such
union's nominee for the Board of Directors.
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BOARD OF DIRECTORS
The Board of Directors has responsibility for establishing broad
corporate policies for the overall performance of the Company, although it is
not involved in day-to-day operations. The Company keeps members of the Board
informed by providing them various reports and documents at meetings of the
Board of Directors and its Committees and at other times during the year.
Regular meetings of the Board of Directors are held six times per year and
special meetings are held when required.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 10 meetings in 1995 and all directors
attended at least 75% of the meetings of the Board and Committees of which they
were members. The Board of Directors has Audit, Compensation and Nominating
Committees, among others.
At the January 30, 1996 Special Meeting, in addition to voting on the
Transaction, the shareholders elected a new Board of Directors. The new Board
had its first meeting on February 2, 1996. The new Board is comprised of five
directors who were directors prior to the Transaction and six new directors.
Each member of the new Board has been nominated for election at the Annual
Meeting.
The Audit Committee, which during 1995 was comprised of former
director Mr. Jeffrey A. Brodsky and current directors Mr. Todd G. Cole and Ms.
Carol A. Fukunaga, met five times during 1995. The responsibilities of the
Audit Committee include recommending to the Board the selection of the Company's
independent auditor and reviewing the Company's internal accounting controls.
The Audit Committee is authorized to conduct such reviews and examinations as it
deems necessary or desirable with respect to the Company's accounting and
internal control practices and policies, and the relationship between the
Company and its independent auditor, including the availability of Company
records, information and personnel.
The Compensation Committee, which during 1995 was comprised of former
directors Messrs. Martin Anderson and Clifton Kagawa and current director
Mr. Cole, met four times during 1995. The Compensation Committee focuses on
executive compensation, the administration of the Company's stock option and
stock purchase plans and the granting of discretionary bonuses.
The Nominating Committee, which during 1995 was comprised of former
directors Messrs. Anderson, Kagawa and Einar Olafsson and current director
Mr. Nobles, met once during 1995. The responsibilities of the Nominating
Committee include recommending to the Board of Directors candidates for election
to directorships at annual meetings of shareholders. AIP, AFA, IAM and ALPA
currently have the right under the Company's Amended Bylaws to identify nine of
the 11 nominees for directors. The Nominating Committee has not determined
whether it will consider nominees recommended by security holders for the other
two Board positions.
The current Audit Committee is comprised of Messrs. Robert C. Coo,
Todd G. Cole and Edward Z. Safady. The current Compensation Committee is
comprised of Messrs. Richard K. Matros, Richard F. Conway and
Samson Poomaihealani. The current Nominating Committee is comprised of Messrs.
Conway and Coo and Ms. Carol A. Fukunaga.
COMPENSATION OF DIRECTORS
For the portion of 1994 prior to the September 12, 1994 Effective Date
of the Third Amended Consolidated Plan of Reorganization of HAL, INC., West Maui
Airport, Inc. and the Company, as amended, (the "Plan of Reorganization"), the
directors of the Company received no compensation for their service as
directors. From and after the Effective Date, all outside directors of the
Company are entitled to receive a retainer fee of $12,000 per year, an
attendance fee of $1,250 for each meeting of the Board of Directors attended,
and an attendance fee of $500 for each committee meeting attended (collectively,
"Directors' Fees"). The Company provides travel to and from Board meetings, as
well as one night hotel and ground transportation as needed. For their service
as directors of the Company from the Effective Date through December 31, 1994,
the outside Directors earned a $4,000 retainer fee,
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<PAGE>
except for former director Mr. David Urrea who, pursuant to his wishes, only
accepted reimbursement for expenses incurred in attending meetings. For their
service as directors of the Company for fiscal year 1995, the outside directors
were entitled to a $12,000 retainer fee, except for Mr. Urrea who, pursuant to
his wishes, only accepted reimbursement for expenses incurred in attending
meetings. Mr. Nobles does not receive Directors' Fees. In February 1995, the
Board of Directors resolved to defer payment of their Directors' Fees until
January 1996. In December 1995, the Board of Directors decided to further defer
the directors' fees earned in 1994 and 1995 until consummation of the
Transaction. These deferred Directors' Fees were paid by March, 1996.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is comprised of 11 directors, each of whom has
been nominated for election to another term at the Annual Meeting. Each
director elected at the Annual Meeting shall hold office from the date of the
Annual Meeting until his or her successor shall have been elected and shall
qualify at the Company's 1997 Annual Meeting of Shareholders or until he or she
shall resign or shall have been removed as provided in the Amended Bylaws. The
Company has no reason to believe that any of those persons nominated will not be
available to serve as a director. However, if such a situation should arise,
the accompanying Proxy Card will be voted for the election in his or her stead
of such other person as the Board of Directors may recommend.
The affirmative vote of the holders of a majority of the shares of
Class A Common Stock and Special Preferred Stock represented in person or by
proxy and entitled to vote at the Annual Meeting, voting as a single class, is
required to elect each director nominee, provided that there is a quorum present
at the Annual Meeting. Shareholders do not have the right to cumulate their
votes in the election of directors.
NOMINEES
The Board of Directors has recommended and approved the nomination of
the following 11 nominees for election as directors of the Company:
John W. Adams, Todd G. Cole, Richard F. Conway, Robert G. Coo,
Carol A. Fukunaga, William Boyce Lum, Richard K. Matros, Reno F.
Morella, Bruce R. Nobles, Samson Poomaihealani and Edward Z.
Safady.
All of the nominees, except Mr. Morella who filled a vacancy on the
Board in March 1996, were elected by the shareholders at the January 30, 1996
Special Meeting of Shareholders. Two of the incumbent directors, Mr. Nobles and
Mr. Morella, are full-time employees of the Company. The nominees have a wide
and valuable range of judgment and experience from such diverse fields as air
transportation, banking, health care services, investment banking and law.
Certain information about the nominees follows:
JOHN W. ADAMS has been Chairman of the Board since February 2, 1996.
He has been the President of Smith Management Company, a New York based
investment firm since 1984. He has been Chairman of the Board of Directors of
Regency Health Services, Inc. since 1994. He is also Chairman of the Board of
Servico, Inc. and a director of Harvard Industries, Inc. He has been a director
of Hawaiian Airlines since January 31, 1996. He was identified for nomination
to the Board of Directors by AIP. Age 52.
TODD G. COLE was Chairman and Chief Executive Officer of CIT Financial
Corporation from 1982 until his retirement in 1986. He has served as Managing
Director of SH&E, Inc., a consulting firm specializing in aviation from 1992
until 1996, President and Chief Executive Officer of Frontier Airlines, Inc.
D.I.P. from 1986 until 1990 and Vice Chairman of Eastern Airlines, Inc. D.I.P.
from 1989 until 1991. He is Vice Chairman of CapMAC Holdings, Inc. and is a
Director of Kaiser
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Ventures, Inc., NAC Re Corporation, Delta Insurance Corporation, Dillon Read
Structured Finance Corporation and Arrow Air, Inc. He has been a director of
Hawaiian Airlines since 1994. He is member of the Audit Committee. Age 75.
RICHARD F. CONWAY has been Vice President of Smith Management Company
since 1994. He was Senior Vice President of Needham & Company, a New York based
investment banking firm from 1992 until 1994 and he was Vice President of
Security Pacific Merchant Bank from 1990 until 1991. He is a director of Inland
Resources, Inc. He has been a director of Hawaiian Airlines since January 31,
1996. He is Chairman of the Nominating Committee and a member of the
Compensation Committee. He was identified for nomination to the Board of
Directors by AIP. Age 42.
ROBERT G. COO has been an independent financial consultant since 1995.
He was Vice President and Chief Financial Officer of Pengo Industries, Inc., an
investment holding company, from 1990 until 1995. He is a director of First
National Bank in San Diego, California and of Regency Health Services, Inc. in
Tustin, California. He has been a director of Hawaiian Airlines since January
31, 1996. He is the Chairman of the Audit Committee and a member of the
Nominating Committee. He was identified for nomination to the Board of
Directors by AIP. Age 54.
CAROL A. FUKUNAGA has been a Hawaii State Senator since 1992. She was
a Hawaii State Representative from 1978 until 1992. She has been a director of
Hawaiian Airlines since 1991. She is a member of the Nominating Committee. She
was identified for nomination to the Board of Directors by AFA. Age 48.
WILLIAM BOYCE LUM is a psychologist and an attorney. He has been on
the faculty of and a training analyst with the Institute for Psychoanalysis and
Psychotherapy of New Jersey since 1988. He has been Of Counsel with the law
firm of Lum, Danzis, Drasco, Positan & Kleinberg in Roseland, New Jersey since
1981. He was a director of The Summit Bancorporation from 1981 until 1996. He
has been a director of Hawaiian Airlines since January 31, 1996. He was
identified for nomination to the Board of Directors by AIP. Age 57.
RICHARD K. MATROS has been Chief Executive Officer and President of
Regency Health Care Services, Inc. since April 1994. He was Chief Executive
Officer and President of Care Enterprises, Inc. from January 1994 until April
1994, at which time Care Enterprises, Inc. was merged into Regency Health Care
Services, Inc. He was President and Chief Operating Officer of Care
Enterprises, Inc. from 1991 until January 1994 and Executive Vice President of
Operations of Care Enterprises, Inc., from 1988 until 1991. He has been
President of the California Association of Health Facilities since 1995. He has
been a director of Hawaiian Airlines since January 31, 1996. He is the Chairman
of the Compensation Committee. He was identified for nomination to the Board of
Directors by AIP. Age 42.
RENO F. MORELLA has been a pilot for Hawaiian Airlines since 1978. He
is currently a Captain flying the DC-10 aircraft. He has been Chairman of the
Hawaiian Master Executive Council of ALPA since 1994. He was the First Officer
Category Representative for Council 102 of ALPA from 1993 until 1994. He has
been a director of Hawaiian Airlines since March 1, 1996. He was identified for
nomination to the Board of Directors by ALPA. Age 47.
BRUCE R. NOBLES has been the President and Chief Executive Officer of
Hawaiian Airlines since 1993. He was Chairman of the Board of Hawaiian Airlines
from September 1994 until February 1996. In 1991 he was President and Chief
Executive Officer of L'Express, Inc. in New Orleans, Louisiana. He was
President and Chief Operating Officer of Trump Shuttle, Inc. in New York, New
York from 1988 until 1990. He has been a director of Hawaiian Airlines since
1993. Age 49.
SAMSON POOMAIHEALANI has been the Assistant General Chairman of the
Airline Machinists District 141 of the IAM since 1987. He has been a mechanic
for United Airlines, Inc. since 1963. He has been a director of Hawaiian
Airlines since 1990. He is a member of the Compensation Committee. He was
identified for nomination to the Board of Directors by IAM. Age 54.
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EDWARD Z. SAFADY has been a Vice President of Smith Management Company
since October 1995. He was President and Chief Executive Officer of Liberty
National Bank in Austin, Texas from 1988 until 1995. He currently serves as
Chairman of the Board of Norwest Bank Texas in Austin, N.A. He is also Chairman
of the Board of First National Bank in San Diego, California and a director of
U.S. Medical Products, Inc. He has been a director of Hawaiian Airlines since
January 31, 1996. He is a member of the Audit Committee. He was identified
for nomination to the Board of Directors by AIP. Age 38.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE SLATE OF DIRECTOR NOMINEES SET FORTH ABOVE.
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SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership, as of April 8, 1996, of the Company's voting stock of each person
known to the Company to be the beneficial owner of more than five percent of the
outstanding shares of Class A Common Stock, Series B Special Preferred Stock,
Series C Special Preferred Stock, Series D Special Preferred Stock and Series E
Special Preferred Stock. This table also lists the beneficial ownership, as of
April 8, 1996, of the Company's Class A Common Stock by each of the directors,
by each of the Named Executive Officers (see "Executive Compensation"), and by
all directors and executive officers as a group.
<TABLE>
<CAPTION>
Name and Address (1) Number of Shares(2) Percent and Class of Stock
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIP General Partner, Inc. 18,181,818(3) 67.2% of Class A Common Stock
885 Avenue of the Americas
34th Floor 4(3) 100% of Series B Special Preferred
New York, New York 10022 Stock
Airline Investors Partnership, L.P. 18,181,818(3) 67.2% of Class A Common Stock
885 Avenue of the Americas
34th Floor 4(3) 100% of Series B Special Preferred
New York, New York 10022 Stock
Association of Flight Attendants 1 100% of Series C Special Preferred
1625 Massachusetts Avenue, N.W. Stock
Washington, DC 20036-2212
Attn.:David Borer, Esq.
International Association of Machinists and
Aerospace Workers 1 100% of Series D Special Preferred
P.O. Box 3141 Stock
South San Francisco, California
Attn.: Ken Thiede
Hawaiian Master Executive Council 1 100% of Series E Special Preferred
c/o Airline Pilots Association Stock
5959 West Century Boulevard, Suite 576
Los Angeles, California 90045
Attn.: Master Chairman, Hawaiian MEC
John W. Adams 18,181,818(3) 67.2% of Class A Common Stock
4(3) 100% of Series B Special Preferred
Stock
Todd G. Cole -- --
Richard F. Conway -- --
Robert C. Coo -- --
Carol A. Fukunaga -- --
William Boyce Lum -- --
Richard K. Matros -- --
Reno F. Morella 2,148(4) Class A Common Stock*
Bruce R. Nobles 304,342(5) 1.1 % of Class A Common Stock
Samson Poomaihealani -- --
Edward Z. Safady -- --
Peter W. Jenkins 40,000(6) Class A Common Stock*
C.J. David Davies 67,672(7) Class A Common Stock*
Frank L. Forster 60,534(8) Class A Common Stock*
Clarence K. Lyman 51,670(9) Class A Common Stock*
All directors and executive officers as a 18,788,662(10) 67.9% of Class A Common Stock
group including those named above (21 persons)
</TABLE>
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(1) The address of each of the executive officers and directors is 3375 Koapaka
Street, Suite G-350, Honolulu, Hawaii 96819.
(2) Each executive officer and director has sole voting and investment power
with respect to the shares listed after his or her name except for shares
issued to the Hawaiian ESOP, as defined below, and the Company's Pilots'
401(k) Plan or as otherwise indicated below. The shares owned by each
person, or by the group, and the shares included in the total number of
shares outstanding have been adjusted, and the percentage owned (where the
percentage exceeds 1%) have been computed in accordance with Rule 13d-
3(d)(1) under the Securities Exchange Act of 1934, as amended. Shares of
the Company's Class A Common Stock allocated to participants' accounts in
the Hawaiian Airlines, Inc. Employee Stock Plan (the "Hawaiian ESOP") are
voted by the Trustee, First Hawaiian Bank, pursuant to written directions
of the participants on matters presented at meetings of shareholders;
shares with respect to which no participant directions are received are
voted according to the direction of the majority of number of shares for
which the Trustee receives written directions; and unallocated shares are
voted by fiduciaries designated under the Hawaiian ESOP. Shares of the
Company's Class A Common Stock allocated to participants' accounts in the
Hawaiian Airlines, Inc. Pilots' 401(k) Plan (the "Pilots' 401(k) Plan") are
voted by the Trustee, Vanguard Group, Inc., pursuant to written directions
of the participants on matters presented at meetings of shareholders;
shares with respect to which no participant directions are received are
voted according to the direction of the majority of number of shares for
which the Trustee received written directions; and unallocated shares are
voted by fiduciaries designated under the 401(k) Plan.
(3) The shares reported as owned by Airline Investors Partnership, L.P., of
which AIP General Partner, Inc. is its general partner and John W. Adams is
AIP General Partner, Inc.'s sole shareholder, include the shares reported
as beneficially owned by AIP General Partner, Inc. and John W. Adams.
According to their Schedule 13D dated January 31, 1996, Airline Investors
Partnership, L.P., AIP General Partner, Inc. and John W. Adams exercise
sole voting and dispositive power with respect to all 18,181,818 shares of
Class A Common Stock and all four shares of Series B Special Preferred
Stock.
(4) Consists entirely of Mr. Morella's account in the Pilots' 401(k) Plan. The
number of shares reported represents the equivalent number of shares held
through the Pilots 401(k) Plan. The investment is tracked using a unit
value accounting method, similar to a mutual fund. To determine the
equivalent number of whole shares represented by the fund units, the market
value of the shareholder's balance in the Pilots 401(k) Plan was divided by
the shares price of the Company's Class A Common Stock.
(5) Includes fully vested and exercisable options to purchase 300,000 shares of
Class A Common Stock granted on February 2, 1995 under the 1994 Stock
Option Plan, as amended, expiring ten years from the date of grant; and
4,342 shares issued to the Hawaiian ESOP.
(6) Consists entirely of fully vested and exercisable options to purchase
40,000 shares of Class A Common Stock granted on February 2, 1995 under the
1994 Stock Option Plan, as amended, expiring ten years from the date of
grant.
(7) Includes fully vested and exercisable options to purchase 65,000 shares of
Class A Common Stock granted on February 2, 1995 under the 1994 Stock
Option Plan, as amended, expiring ten years from the date of grant; and
2,672 shares issued to the Hawaiian ESOP.
(8) Includes fully vested and exercisable options to purchase 60,000 shares of
Class A Common Stock granted on February 2, 1995 under the 1994 Stock
Option Plan, as amended, expiring ten years from the date of grant; and 534
shares issued to the Hawaiian ESOP.
(9) Includes fully vested and exercisable options to purchase 50,000 shares of
Class A Common Stock granted on February 2, 1995 under the 1994 Stock
Option Plan, as amended, expiring ten years from the date of grant; and
1,670 shares issued to the Hawaiian ESOP.
(10) The number of shares reported includes the equivalent number of shares held
by certain directors and officers through the Pilots 401(k) Plan. The
investment is tracked using a unit value accounting method, similar to a
mutual fund. To determine the equivalent number of whole shares
represented by the fund units, the market value of the shareholder's
balance in the Pilots 401(k) Plan was divided by the shares price of the
Company's Class A Common Stock.
* Less than 1%
8
<PAGE>
OTHER MATTERS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
All officers are appointed annually by the Board of Directors at the
Board of Directors' first meeting after the annual meeting of the shareholders
at which the Board of Directors is elected. No executive officer or director of
the Company bears any relationship by blood, marriage or adoption to any other
executive officer or director, except for Mr. Adams and Mr. Coo who are related
through marriage.
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are currently no employment contracts, termination of employment
or change-in-control agreements between the Company and any of its executive
officers.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the "SEC") and
the Company initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. Based upon the
information supplied to it by such persons, the Company is required to report
any known failure to file these reports within the period specified by the
instructions to the reporting forms. To the knowledge of the Company, based
upon a review of the Section 16(a) reports furnished to the Company and the
written representations of officers and directors, all these filing requirements
were satisfied by the Company's directors and executive officers with respect to
1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Compensation Committee consisted of former directors
Messrs. Martin Anderson and Clifton Kagawa and current director Mr. Cole.
During 1995, the law firm of Goodsill Anderson Quinn & Stifel, of
which Mr. Anderson, a member and chairman of the Compensation Committee, is a
partner, billed legal fees to the Company in the amount of $102,767. As of
December 31, 1995, $9,836 of fees were outstanding. Goodsill Anderson Quinn &
Stifel received 28,606 shares of Class A Common Stock upon the June 19, 1995
initial distribution by the Company of shares of Class A Common Stock. Goodsill
Anderson Quinn & Stifel sold all 28,606 shares of Class A Common Stock after the
initial distribution.
In conjunction with obtaining financing under the Plan of
Reorganization, $2.0 million of letters of credit were provided by certain third
parties as additional security for performance of the Company's obligations
under the financing. One such letter of credit in the amount of $1.0 million is
guaranteed by Mr. Anderson. In consideration for the guarantee, Mr. Anderson
received a subordinate security interest in the assets securing the financing
and received warrants to purchase 494,505 shares of Class A Common Stock. The
warrants have a five-year term, expiring September 12, 1999, and are exercisable
at a price equal to $2.73 per share, subject to adjustment pursuant to anti-
dilution provisions. As a result of the Transaction, pursuant to the anti-
dilution provisions of the warrants, Mr. Anderson received additional warrants
to purchase 293,678 shares of Class A Common Stock. These additional warrants
expire September 12, 1999 and are exercisable at a price equal to $1.71 per
share.
Mr. Anderson served as Vice President of the Company from 1976 to
1980, and Vice President-Legal and Assistant Secretary to the Company from 1980-
1981.
Mr. Kagawa, a former member of the Compensation Committee, is the
President and Chief Executive Officer of Hill and Knowlton Asia Pacific, and
senior representative in Hawaii for WPP Group plc, the parent company of Hill
and Knowlton, Inc., and advertising agency Ogilvy and Mather Worldwide. Hill
and Knowlton, Inc. is a public relations company which provides services to the
Company. During 1995, this public relations company billed the Company for
services totaling $181,457
9
<PAGE>
and collected the full amount billed. Hill and Knowlton, Inc. received 1,431
shares of Class A Common Stock upon the June 19, 1995 initial distribution by
the Company of shares of Class A Common Stock. Hill and Knowlton, Inc. sold all
1,431 shares of Class A Common Stock after the initial distribution. The
Company also employs the services of Ogilvy & Mather Hawaii, which received
20,410 shares of Class A Common Stock upon the June 19, 1995 initial
distribution by the Company of shares of Class A Common Stock. Ogilvy & Mather
Hawaii sold all 20,410 shares of Class A Common Stock after the initial
distribution. During 1995, this advertising agency billed the Company for
services totaling $2,852,998 and collected net revenue of $2,852,998.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
was formed in October 1994 after the Company's Third Amended Consolidated Plan
of Reorganization became effective in September 1994. The Committee is charged
with making salary recommendations to the full Board of Directors for Company
executive officers at the Vice President level and higher along with
recommendations for bonuses, deferred compensation, stock option plans and
director compensation. The Committee grants awards under and administers the
1994 Stock Option Plan.
In November 1994, the Committee obtained a detailed review of
executive compensation from KPMG Peat Marwick LLP to aid in determining
compensation levels. The information consisted of base salaries and total
compensation paid to the Chief Executive Officers, and formulations of long-term
incentive plans, bonuses, insurance and stock option plans for executive
officers, of the Company's peer group and major airlines. For these purposes,
the Company's peer group consisted of Alaska Air Group, America West, Atlantic
Southeast, Comair Holdings, Mesa Airlines, SkyWest, Inc., Southwest Airlines and
World Airways. Many airlines of the peer group used for determining executive
compensation were also used as the peer group for the Stock Performance Graph.
See "Stock Performance Graph" below.
On December 1, 1994, the Committee recommended and the Board of
Directors approved a salary increase for the Chief Executive Officer. The Chief
Executive Officer, Mr. Nobles, was a director but did not participate in the
decision to increase his salary. The Board compared the levels of chief
executive officer compensation for the other airlines with the level of
compensation of the Company's Chief Executive Officer. Because the Company
emerged from bankruptcy late in 1994, the Committee did not believe that the
Company's performance in 1994 was a relevant factor in determining the Chief
Executive Officer's compensation. Mr. Nobles, the Chief Executive Officer,
recommended that the Board raise the salaries of the Company's most highly
compensated Executive Officers based upon their significant contributions to the
Company. The information contained in the executive compensation review
compared revenues to salaries of Chief Executive Officers. Because the
Company's revenues had not been as high as those of many of the other members of
the peer group, the Compensation Committee and the Board of Directors did not
want to set the salaries for the Company's most highly compensated Executive
Officers, including the Chief Executive Officer, as high as those of the
comparable officers of such other companies. The Board realized, however, that
there was a possibility that if they did not raise salaries, certain key
executive officers might leave the Company. Because the Board believed that
these certain key executive officers were important to the Company's daily
operation, the Company's most highly compensated Executive Officers received
raises in 1995, which placed their salaries somewhat closer to those of
comparable officers of their peer group.
THE 1995 BOARD OF DIRECTORS
Martin Anderson Jeffrey A. Brodsky
Todd G. Cole Carol A. Fukunaga
Richard L. Humphreys Clifton Kagawa
Bruce R. Nobles Einar Olafsson
Samson Poomaihealani David B. Urrea
Samuel A. Woodward
10
<PAGE>
The above report of the Committee will not be deemed to be incorporated by
reference into any filing by the Company under the Securities Act or the
Exchange Act, except to the extent that the Company specifically incorporates
the same by reference.
11
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain
information regarding compensation paid for the last three fiscal years to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers ("Named Executive Officers") whose salary and bonus exceeded
$100,000 in the 1995 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
- - -----------------------------------------------------------------------------------------------------------------------
Securities
Name and Principal Salary Bonus Other Annual Underlying
Position Year ($) ($) Compensation Options*
------------------ ---- --- --- ------------ --------
<S> <C> <C> <C> <C> <C>
Bruce R. Nobles 1995 295,000 -- 41,200(1) 300,000
President and Chief 1994 199,166 53,106 40,643(1) --
Executive Officer 1993 100,454(2) 50,000(3) 39,590(1) --
Frank L. Forster 1995 187,083 -- (4) 60,000
Senior Vice President and Chief 1994 100,250(2) 17,500 (4) --
Operating Officer 1993 -- -- -- --
C.J. David Davies 1995 182,292 -- (4) 65,000
Senior Vice President- 1994 120,000 25,000 (4) --
Finance and Chief 1993 50,000(2) -- (4) --
Financial Officer
Peter W. Jenkins 1995 177,500 -- (4) 40,000
Senior Vice President- 1994 72,170(2) 5,000 (4) --
Marketing and Sales 1993 -- -- -- --
Clarence K. Lyman
Vice President-Finance, 1995 105,625 -- -- 50,000
Treasurer and Assistant 1994 95,000 17,500 -- --
Corporate Secretary 1993 79,479 -- (4) --
</TABLE>
______________
* The options are fully vested and exercisable. They were granted to certain
key executive officers of the Company on February 2, 1995 pursuant to the
1994 Stock Option Plan, as amended. See "1994 Employee Stock Option Plan"
below.
(1) Includes a housing allowance of $36,000 in both 1995 and 1994, $20,000 in
1993 and certain Company or HAL, INC. related club and business expenses.
(2) These salaries represent the actual amounts paid to the Named Executive
Officer as the Named Executive Officer was not employed by the Company for
the entire calendar year. Mr. Nobles' reflected compensation is for the
period beginning June 10, 1993 through December 31, 1993, Mr. Forster's
compensation reflects a consulting fee for the months January and February
1994, as well as Chief Operating Officer compensation beginning March 1,
1994 through December 31, 1994. Mr. Davies' reflected compensation is for
the period beginning July 16, 1993 through December 31, 1993. Mr. Jenkins
reflected compensation is for the period beginning May 9, 1994 through
December 31, 1994.
(3) This represents a signing bonus intended to cover moving expenses.
12
<PAGE>
(4) The Company provides various perquisites to its executives which are not
disclosed in accordance with SEC regulations because the value of such
perquisites is less than 10% of the executive's combined salary and bonus.
In September 1993, the Company, HAL, INC. and West Maui Airport, Inc.
filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code. At the time or within two years before the time of the
Chapter 11 filing, the present executive officers of the Company except Messrs.
Forster, Jenkins, Taniguchi and Davis were executive officers of the Company,
HAL, INC. and/or West Maui Airport, Inc. and Messrs. Nobles and Poomaihealani
and Ms. Fukunaga were directors of the Company, HAL, INC. and/or West Maui
Airport, Inc.
1994 EMPLOYEE STOCK OPTION PLAN
Pursuant to the terms of the Plan of Reorganization, 600,000 shares of
the Company's Class A Common Stock have been reserved for issuance under a 1994
Stock Option Plan. The 1994 Stock Option Plan provides for issuance of options
to officers and key employees of the Company, with the terms of such options and
the recipients of such options to be determined by a committee. In February
1995, the Compensation Committee of the Board of Directors approved a form of
nonqualified stock option agreement and granted options under such agreements
covering substantially all of the 600,000 reserved shares. The Compensation
Committee established the exercise price of the options granted as equal to 25%
of the average of the closing prices of the Class A Common Stock as reported on
the American Stock Exchange (the "AMEX") for the ten consecutive days of trading
beginning on June 26, 1995. The initial distribution of Class A Common Stock
occurred on June 19, 1995. Trading during the succeeding days was so volatile
that the AMEX suspended trading on June 23, 1995. Trading was resumed on
June 26, 1995. The application of the aforementioned formula resulted in an
option exercise price of $1.62 per share. At the 1995 Annual Meeting of
Shareholders, the shareholders ratified the prior approval of the 1994 Stock
Option Plan. The Company has since registered these 600,000 shares of Class A
Common Stock with the SEC.
The following table sets forth the (i) aggregated option exercises in
the last fiscal year and (ii) fiscal year-end option value for each of the Named
Executive Officers in 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR ("FY"), AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
Number of Valu of Unexercised
Securities In-the-Money Options
Underlying at
Unexercised FY-End ($)
Options at
FY-End (#)
Shares
Name Acquired on Value Realized ($) Exercisable Exercisable(1)
Exercise (#)
<S> <C> <C> <C> <C>
Bruce R. Nobles 0 0 300,000 207,750
Frank L. Forster 0 0 60,000 41,550
C.J. David Davies 0 0 65,000 45,012.50
Peter W. Jenkins 0 0 40,000 27,700
Clarence K. Lyman 0 0 50,000 34,625
</TABLE>
(1)Based on the market value of the Class A Common Stock of $2.3125 on the close
of business on December 29, 1995, less the exercise price of $1.62.
The options are fully vested and exercisable pursuant to the terms of
the 1994 Stock Option Plan. As of the Record Date, none of the options has been
exercised.
13
<PAGE>
The following table sets forth the option grants pursuant to the 1994
Employee Stock Option Plan to the Named Executive Officers in fiscal year 1995.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- - -------------------------------------------------------------------------------------------------------------------------------
% of Total Potential Realizable Value at
Number of Options Assumed Annual Rates of Stock
Securities Granted to Exercise Price Appreciation for Option
Underlying Employees or Base Term (3)
Options in Fiscal Price Expiration
Name Granted (#)(1) Year ($/Sh)(2) Date 5% ($) 10%($)
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce R. Nobles 300,000 50.6% 1.62 2/2/05 1,292,753 2,346,367
Frank Forster 60,000 10.1% 1.62 2/2/05 258,551 469,273
C.J. David Davies 65,000 11.0% 1.62 2/2/05 280,096 508,379
Peter W. Jenkins 40,000 6.8% 1.62 2/2/05 172,367 312,849
Clarence Lyman 50,000 8.4% 1.62 2/2/05 215,459 391,061
</TABLE>
_______________
(1) The options are exercisable pursuant to the terms of the 1994 Stock Option
Plan. The 1994 Stock Option Plan provides for the use of option shares to
meet an employee's required tax withholding. In addition, the Company may
make arrangements with an independent party to assist employees in
consummating an immediate sale of stock acquired by exercise of stock
options.
(2) The exercise price is $1.62 per share. The Committee administering the
1994 Stock Option Plan (the "Committee"), with the consent of the optionee,
may amend the terms of any Option to provide that the exercise price of the
shares remaining subject to the option shall be reestablished at an
exercise price determined by the Committee at the date the terms of such
options are amended. See "1994 Employee Stock Option Plan" above for
further discussion on the exercise price.
(3) Because no shares of Class A Common Stock had been issued upon the date of
grant, the price used for calculating the potential realizable value at
assumed annual rates of stock price appreciation is $3.64, the price at
which each share was valued on the Effective Date prior to the distribution
of the Class A Common Stock following the Reorganization. There can be no
assurance provided to any executive officer or other holder of the
Company's securities that the actual stock price will appreciate over the
10-year option term, or that, if the stock price does appreciate, the
appreciation will be at the assumed 5% and 10% levels or at any other
defined level.
HAWAIIAN AIRLINES, INC. PENSION PLAN FOR SALARIED EMPLOYEES
The Company has several retirement plans covering a substantial number
of its employees. The Hawaiian Airlines, Inc. Pension Plan for Salaried
Employees (the "Salaried Plan") covers those directors and officers who are
employees of the Company hired prior to September 1, 1992. Effective October 1,
1993, the Salaried Plan was frozen. The Salaried Plan continued after the
Effective Date of the Plan of Reorganization, but credited service is not
recognized after September 1993 and the 1994 calendar year compensation is not
taken into account.
Benefits paid under the Salaried Plan are primarily determined by the
number of years the employee participated in the Salaried Plan through October
1, 1993 and the employee's average compensation for the five consecutive
calendar years through 1993 that results in the highest average.
14
<PAGE>
For purposes of the Salaried Plan, compensation includes only base compensation;
overtime, bonuses and other forms of compensation are not included.
The following table shows the annual amounts payable in the form of a
single life annuity commencing at age 65 under the current provisions of the
Salaried Plan, without regard to any survivor options, based on assumed earnings
for various years of credited service, as indicated. The benefits shown in the
table are not subject to a deduction for Social Security payments or other
offset amounts.
<TABLE>
<CAPTION>
Assumed Average
Annual Earnings for
Highest Five Years of Credited Service
Consecutive Calendar
Years
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$25,000 $6,000 $8,000 $10,000 $12,000 $14,000
50,000 $12,000 $16,000 $20,000 $24,000 $28,000
75,000 $18,000 $24,000 $30,000 $36,000 $42,000
100,000 $24,000 $32,000 $40,000 $48,000 $56,000
125,000 $30,000 $40,000 $50,000 $60,000 $70,000
150,000(1) $36,000 $48,000 $60,000 $72,000 $84,000
</TABLE>
______________
(1) Pursuant to Section 401 of the Internal Revenue Code, effective January 1,
1994, no more than $150,000 (as adjusted from time to time by the Internal
Revenue Service) of compensation may be taken into consideration in
calculating benefits payable under the Salaried Plan.
The years of credited service as of October 1, 1993 and the 1995
calendar year compensation covered by the Salaried Plan for Messrs. Forster and
Lyman are 2.58 years and $0 and 7.17 years and $0, respectively. Compensation
earned in the 1995 calendar year is not taken into account when calculating
final average earnings under the Salaried Plan because the Salaried Plan was
frozen as of October 1, 1993. Messrs. Nobles, Davies and Jenkins are not
eligible to participate under the Salaried Plan.
INDEMNITY AGREEMENTS AND INDEMNIFICATION TRUST AGREEMENT
At the 1995 Annual Meeting of Shareholders, the shareholders approved
and authorized the Company to enter into Indemnity Agreements and an
Indemnification Trust Agreement benefiting the Company's directors and certain
of its officers. The Indemnification Trust Agreement sets forth the terms of a
trust fund created by the Company to fund the Company's obligations for
indemnification pursuant to the Indemnification Agreements. Prior to the
consummation of the Transaction, the Board of Directors of the Company
determined that the Indemnification Trust Agreement was no longer necessary for
indemnification purposes. As a result, as of January 30, 1996, the
Indemnification Trust Agreement was terminated. Furthermore, the Indemnity
Agreements have been amended and restated to delete any reference to the
Indemnification Trust Agreement. Under the terms of the Indemnity Agreements
and the Indemnification Trust Agreement, shareholder approval is not a
requirement for amendment of the Indemnity Agreements nor for termination of the
Indemnification Trust Agreement.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total return of the Company,
the S&P 500 Index and the Company's selected Peer Issuer Index from June 21,
1995, the first day of trading of the Class A Common Stock on the AMEX, to
December 31, 1995. The Peer Issuers the Company selected consist of Alaska
Airgroup Inc., America West Airlines, Amtran, Inc., Atlantic Coast Airlines,
Inc., Atlantic Southeast Airlines, Comair Holdings Inc., Great Lakes Aviation
Ltd., Mesa Airlines, Inc., Reno Air Inc., Southwest Airlines and Valujet Inc.
The S&P 500 Index and the Company's selected Peer Issuer Index for the month of
June have been prorated to arrive at the beginning index used in this graph.
The comparison assumes $100 was invested on June 21, 1995 in the Class A Common
Stock and each of the foregoing indices and assumes reinvestment of dividends
before consideration of income taxes.
COMPANY & INDEX NAME BASE PERIOD 6/21/95 TO 12/29/95
6/21/95 RETURN
- - ------------------------------------------------------------------------
HAWAIIAN AIRLINES, INC. 100 61.68
S&P 500 INDEX 100 114.61
PEER GROUP 100 103.20
The stock performance depicted in the graph above is not necessarily
indicative of future performance. The Stock Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC or subject to
Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically requests that such
information be treated as soliciting material or specifically incorporates it by
reference into a filing under the Securities Act or Exchange Act.
CHARTER AMENDMENTS
The Board of Directors has unanimously approved and recommends for
shareholder approval five proposed amendments set forth below (the "Charter
Amendments") to Articles II, IV and VI of the Amended Articles of Incorporation
of the Company (the "Articles of Incorporation"), and to the Designation of
Preferred Stock (the "Series A Preferred Designation") creating the Company's
Series A Junior Participating Cumulative Preferred Stock (the "Series A
Preferred"), which by operation of Hawaii law constituted an amendment to the
Articles of Incorporation when filed by the Director of Commerce and Consumer
Affairs of the State of Hawaii on December 15, 1994.
The Proposed Charter Amendments will each be voted on separately. The
affirmative vote of the holders of not less than two-thirds (2/3) of the shares
of issued and outstanding Class A Common Stock and Special Preferred Stock
voting as a single class is required to approve each of the Proposed Charter
Amendments.
PROPOSAL 2
FIRST PROPOSED CHARTER AMENDMENT
AMENDMENT TO ARTICLE II OF ARTICLES OF INCORPORATION TO CORRECT THE COMPANY'S
MAILING ADDRESS
The Board of Directors recommends for shareholder approval a proposed
amendment (the "First Proposed Charter Amendment") to Article II of the Articles
of Incorporation to reflect the current mailing address of the Company and to
provide that the Company's mailing address may be changed in the future by an
amendment to the Bylaws of the Company.
Article II currently states that the mailing address of the principal
office of the Company shall be 531 Ohohia Street, Honolulu, Hawaii 96819.
However, in May 1995 the Company moved its headquarters and changed its mailing
address from 531 Ohohia Street to 3375 Koapaka Street, Suite G-350, Honolulu,
Hawaii 96819. The First Proposed Charter Amendment corrects the mailing address
of
16
<PAGE>
the Company set forth in Article II of the Articles of Incorporation and adds
new text which provides that the mailing address of the Company may be changed
in the future by amendment to the Bylaws of the Company. The Bylaws of the
Company may be amended to specify a new mailing address by action of a majority
of the Board of Directors. The addition of this provision to Article II will
avoid the future expense associated with obtaining shareholder approval of
further amendments to Article II of the Articles of Incorporation in the event
the Company subsequently moves its principal office and changes it mailing
address.
If the First Proposed Charter Amendment is approved, Article II of the
Articles of Incorporation will be amended to read as follows:
"The location of the principal office of the Corporation shall be in the
City of Honolulu, Island of Oahu, State of Hawaii, and the mailing
address of the principal office of the Corporation shall be 3375 Koapaka
Street, Suite G-350, Honolulu, Hawaii 96819, or such other mailing
address as shall be specified by an amendment to the Bylaws of the
Corporation. The Corporation may have such other offices within and
without the State of Hawaii as its business may have from time to time
require."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF CONVERSION OF CLASS B COMMON STOCK
TO CLASS A COMMON STOCK AND SECOND PROPOSED
CHARTER AMENDMENT
RATIFICATION OF CONVERSION OF CLASS B COMMON STOCK TO CLASS A COMMON STOCK AND
AMENDMENT TO SECTIONS A AND B OF ARTICLE IV OF THE ARTICLES OF INCORPORATION TO
ELIMINATE THE COMPANY'S CLASS B COMMON STOCK
The Board of Directors recommends for shareholder approval (i)
ratification of the conversion of shares of Class B Common Stock to Class A
Common Stock ("Ratification of Conversion") and (ii) proposed amendments to
Sections A and B of Article IV of the Articles of Incorporation to (a) eliminate
the Class B Common Stock and (b) designate the Company's Class A Common Stock as
"Common Stock."
The Class B Common Stock was created to address certain ownership
restrictions under provisions of the federal Transportation Act in light of
circumstances confronting the Company in connection with its bankruptcy
reorganization proceedings. On September 21, 1993, the Company, together with
HAL, INC., its parent company, and West Maui Airport, Inc., another wholly owned
subsidiary of HAL, INC. (collectively, the "Debtors") commenced reorganization
cases by filing voluntary petitions for relief under Chapter 11, Title 11 of the
U.S. Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the District
of Hawaii. Concurrently therewith, the Debtors filed a Consolidated Plan of
Reorganization dated September 21, 1993 (as amended through the most recent
amendment dated April 20, 1995, the "Plan of Reorganization"). On August 30,
1994, the U.S. Bankruptcy Court entered an order confirming the Plan of
Reorganization and, with the satisfaction of certain conditions, the Plan of
Reorganization became effective on September 12, 1994 (the "Effective Date").
Pursuant to the Plan of Reorganization, on the Effective Date, first West Maui
Airport, Inc. and then HAL, INC. were merged with and into Hawaiian Airlines
with Hawaiian Airlines being the sole surviving corporation. On the Effective
Date, all of the outstanding equity securities of the Company, HAL, INC., and
West Maui Airport, Inc. were canceled.
Under the Plan of Reorganization, the Company was to issue and
distribute 9,400,000 shares of its common stock to unsecured creditors whose
claims were allowed under the Plan of Reorganization. However, a distribution
of voting common stock to all unsecured creditors would have presented a serious
problem because it would have resulted in foreign ownership of more than 25% of
17
<PAGE>
the voting stock of the Company. The federal Transportation Act prohibits the
ownership by non-U.S. citizens or entities of more than 25% of the voting stock
of the Company.
To address this situation, the Class B Common Stock was created with
the consent of the U.S. Bankruptcy Court and the two largest non-U.S. citizen
unsecured creditors. The Class B Common Stock is in all respects identical to
the Class A Common Stock, except that the Class B Common Stock has voting rights
in only a highly limited number of circumstances and is convertible into Class A
Common Stock. The Articles of Incorporation provide that shares of the Class B
Common Stock convert to shares of Class A Common Stock upon transfer to a U.S.
citizen or when the Company determines that the number of shares of Class A
Common Stock held by the persons who are not U.S. citizens has decreased
sufficiently to allow the Class B Common Stock to be converted with the result
that all holders of Class A Common Stock (or any other rights, options or
warrants to acquire Common Stock) who are non-U.S. citizens would not thereafter
own more than 24% of the Class A Common Stock of the Company after all the
distributions have been made pursuant to the Plan of Reorganization.
On June 19, 1995, the Company commenced distribution pursuant to the
Plan of Reorganization of its Class A Common Stock and Class B Common Stock to
unsecured creditors whose claims had been allowed. The two largest unsecured
creditors who were non-U.S. citizens received a combination of Class A Common
Stock and Class B Common Stock in such proportion as to insure that the total
number of shares of Class A Common Stock held by all such persons did not exceed
the 25% foreign ownership restriction. A total of 2,252,404 shares of Class B
Common Stock ultimately were issued out of the 3,050,000 shares of Class B
Common Stock authorized in the Articles of Incorporation.
At the Special Meeting of Shareholders on January 30, 1996, the
shareholders of the Company approved the Transaction with AIP. The Transaction
was consummated on January 31, 1996. In light of the issuance, pursuant to the
Transaction, of a substantial number of shares to a U.S. citizen, representing
more than 67% of all outstanding shares of Common Stock of the Company, and
taking into account (a) other ownership of shares of Class A Common Stock by
U.S. citizens, (b) all outstanding rights, warrants and options to acquire
shares of Class A Common Stock and (c) final distributions that may be made when
the few remaining claims of unsecured creditors of the Debtors are resolved, the
Company concluded that all of the outstanding shares of Class B Common Stock
could be converted into shares of Class A Common Stock without posing a foreign
ownership problem. Although the Articles of Incorporation provided that
conversion of all outstanding shares of Class B Common Stock would occur after
all distributions had been made under the Plan of Reorganization so as to insure
that a foreign ownership problem would not be presented at the time of any such
remaining distributions, the Board of Directors concluded that the purpose of
this provision had been satisfied and that it need not delay conversion because
substantially all of the shares to be issued under the Plan of Reorganization
had been issued and any foreign ownership problem had been resolved by virtue of
the Transaction. Accordingly, all 2,252,404 previously issued and outstanding
shares of Class B Common Stock have been converted to Class A Common Stock and
the converted shares of Class B Common Stock have been canceled and may not be
reissued. The 797, 596 shares of Class B Common Stock that currently remain
authorized will not be issued in the future and their continued authorization
thus serves no purpose.
Because the purposes for which the Class B Common Stock was originally
created have been satisfied, the Board of Directors recommends (a) shareholder
Ratification of the Conversion of the Class B Common Stock into Class A Common
Stock, (b) elimination of the Class B Common Stock and (c) designation of the
Class A Common Stock as "Common Stock" through adoption of the Second Proposed
Charter Amendment. Elimination of the Class B Common Stock will simplify the
Company's capital stock structure. The Company's capital stock will thereafter
consist of only two classes, Common Stock and Preferred Stock, and Sections A
and B of Article IV will be simplified by deleting the provisions that were only
necessary because of the existence of the Class B Common Stock. This amendment
will not reduce the total number of shares of Class A Common Stock that may be
issued in that the Company will be permitted to issue up to 60,000,000 shares of
Common Stock, which is the same aggregate number of shares of Class A Common
Stock and Class B Common Stock that may be issued under the current Articles of
Incorporation.
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If Proposal 3 is approved, the conversion of all previously outstanding
shares of Class B Common Stock will be ratified by shareholders and Sections A
and B of Article IV of the Articles of Incorporation will be amended to read as
follows:
"A. The Corporation is authorized to issue two classes of shares
of capital stock, which shall be designated Common Stock and
Preferred Stock, respectively. The total number of shares of
capital stock which the Corporation is authorized to issue is sixty-
two million (62,000,000) shares.
B. (i) The total number of shares of Common Stock which the
Corporation shall have authority to issue is sixty million
(60,000,000) shares, and all such shares shall have a par value of
$.01 per share.
(ii) The Common Stock shall have all the voting rights
provided under the Hawaii Business Corporation Act for voting common
stock except as otherwise provided in these Amended Articles of
Incorporation.
(iii) The ownership or control of more than twenty-five
percent (25%) of the issued and outstanding voting capital stock of the
Corporation by persons who are not "citizens of the United States" as
defined in Section 102(a)(15) of the Transportation Act (49 u.S.C.
Section 4101, ET SEQ., the "Act") is prohibited; provided, however, that
such percentage shall be deemed to be automatically increased or
decreased from time to time so that percentage of ownership which is then
permissible by persons who are not "citizens of the United States" under
the Act or under any successor or other law of the United States of
America which provides for the regulation of, or is otherwise applicable
to, the corporation or its subsidiaries in their business activities. As
used in the preceding sentence, capital stock of the corporation means
the common stock and any shares of preferred stock of the corporation
entitled to vote on matters generally referred to the shareholders for a
vote.
(iv) All shares of Common Stock shall rank equally in the event of
liquidation of the Corporation and shall be entitled to any assets of the
Corporation available for distribution to shareholders after payment in
full of any preferential amount to which holders of Preferred Stock may
be entitled.
(v) Any certificates that represent shares of Class A Common Stock and
any documents that refer to shares of Class A Common Stock shall for all
purposes be deemed to represent and refer to shares of Common Stock of
the Company."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL 3.
PROPOSAL 4
THIRD PROPOSED CHARTER AMENDMENT
AMENDMENT TO SECTION C AND DELETION OF SECTION F OF ARTICLE IV OF THE ARTICLES
OF INCORPORATION TO ELIMINATE PROVISIONS NO LONGER REQUIRED BY THE PLAN OF
REORGANIZATION OR SECTION 1123 OF THE UNITED STATES BANKRUPTCY CODE
The Board of Directors recommends for shareholder approval proposed
amendments to Sections C and F of Article IV of the Articles of Incorporation
(the "Third Proposed Charter Amendment") to delete: (i) the references to
Section 1123 of the Bankruptcy Code and the reference to the Plan of
Reorganization in Section C and (ii) Section F in its entirety.
The provisions proposed to be deleted were included in the Articles of
Incorporation in August 1994, pursuant to Section 1123 (a)(6) of the Bankruptcy
Code, which requires that a reorganized debtor's charter include a provision
prohibiting the issuance of nonvoting equity securities. There is no
requirement under the Bankruptcy Code, or under the Plan of Reorganization,
however, that such provisions, once included in a corporate charter, may not be
deleted by vote of the shareholders of the reorganized debtor. Section F of
Article IV expressly recognizes that the prohibition on issuance of
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nonvoting securities (a) is subject to the further amendment of the Articles of
Incorporation and (b) is included in compliance with Section 1123 of the
Bankruptcy Code and is to have no further force and effect beyond what is
required by that section.
The Plan of Reorganization has been substantially consummated in that
more than 93% of all of the shares of Class A Common Stock and Class B Common
Stock required to be issued under the Plan of Reorganization have been issued,
and the remaining shares will be issued when the unresolved claims of creditors
have been allowed. Because all prepetition creditors who were entitled to
receive voting shares have or will receive such shares, their equity interest in
the reorganized Company (including the right to vote their shares) has been
protected as required by the Bankruptcy Code. Because the restriction on the
issuance of non-voting shares is not required for the protection of prepetition
creditors under Section 1123 of the Bankruptcy Code, the Board of Directors of
the Company has determined that the restriction should be deleted from the
Articles of Incorporation.
All equity securities of the Company that are currently issued and
outstanding (or which will be issued when the disputed claims are allowed) are
and will continue to be voting securities. However, the Board of Directors of
the Company is authorized to create and then issue additional shares of the
Company's Preferred Stock. If the Third Proposed Charter Amendment is adopted,
the Board of Directors would be permitted to specify that shares of any new
series of Preferred Stock it might create would be nonvoting. Although there
currently are no plans to create or issue additional shares of the Company's
Preferred Stock, in the event such shares are to be created and issued in the
future, the Board of Directors believes it would be beneficial to the Company
and its shareholders if the Board of Directors had the flexibility to provide
that such shares are nonvoting.
If the Third Proposed Charter Amendment is approved, Section C of
Article IV of the Articles of Incorporation will be amended to read as follows:
"C. The total number of shares of Preferred Stock which this
Corporation is authorized to issues is two million (2,000,000) shares
having a par value of $.01 each and which may be issued from time to
time in one or more series. Prior to or simultaneously with the
creation and/or issuance of any such series, the Board of Directors is
hereby authorized to fix the voting powers, designations, preferences
and participating, optional, relative or other special rights, and
qualifications, limitations or restrictions thereof to the full extent
permitted by the laws of the State of Hawaii, unless such voting
powers, designations, preferences, rights and qualifications,
limitations or restrictions thereof are otherwise established by these
Amended Articles of Incorporation; provided that, in no event shall any
shares, except shares of the Series A Junior Participating Cumulative
Preferred Stock, par value $.01 per share, be entitled to more than one
vote per share on any matters for which shareholder approval is
required. Unless otherwise provided in the resolution creating a
series, all shares of that series redeemed, repurchased or otherwise
reacquired, as well as shares of a series authorized but not yet
issued, shall thereupon, without further action by the Board of
Directors, be or become authorized but unissued shares subject to all
of the authority of the Board of Directors in this Article IV
provided."
Section F of Article IV of the Articles of Incorporation will be
deleted in its entirety if the Third Proposed Charter Amendment is approved.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL
4.
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PROPOSAL 5
FOURTH PROPOSED CHARTER AMENDMENT
AMENDMENT TO SECTION D OF ARTICLE IV OF THE ARTICLES OF INCORPORATION AND THE
SERIES A DESIGNATION TO INSURE THAT NO HOLDER OF ANY SECURITIES OF THE COMPANY
SHALL HAVE PREEMPTIVE RIGHTS UNLESS GRANTED BY THE BOARD OF DIRECTORS
The Board of Directors recommends for shareholder approval a proposed
amendment to Section D of Article IV of the Articles of Incorporation, and to
the addition of a new Section 12 to the Series A Preferred Designation
(collectively, the "Fourth Proposed Charter Amendment"), to provide that no
holders of any series of Preferred Stock or other securities of the Corporation
will have preemptive rights, except as expressly granted in the discretion of
the Board of Directors. Preemptive rights are the rights that security holders
have to subscribe to shares of capital stock or other securities subsequently
issued by the Company.
Section 415-26 of the Hawaii Business Corporation Act (the "HBCA")
provides that a corporation's articles of incorporation may "deny, limit or
restrict, or may be amended so as to deny, limit or restrict, the right of
shareholders of the corporation, which may exist by virtue of the common law or
by virtue of the existing articles of incorporation, to subscribe for additional
shares of stock, whether then or thereafter authorized." Inasmuch as the
existence and extent of any common law preemptive rights have never been
adjudicated by a Hawaii court in any reported decision, the Company believes
that including a provision in the Articles of Incorporation to deny preemptive
rights, unless granted by the Board of Directors, is highly desirable. In the
absence of such a provision, a common law preemptive rights offering to existing
shareholders might be required before the Company's securities could otherwise
be issued, and this could be costly and severely limit the Company's flexibility
in the timing, pricing and offering of its securities, to the likely detriment
of the Company and its shareholders.
Section D of Article IV of the Articles of Incorporation currently
provides that holders of the Common Stock of the Company do not have preemptive
rights. However, this provision does not apply to holders of the Company's
Preferred Stock or to holders of other types of securities that might be issued
in the future. If the Fourth Proposed Charter Amendment is adopted, Section D
will be modified to extend its denial of preemptive rights to holders of
Preferred Stock and of any other securities of the Company.
The Board of Directors has created five series of its Preferred Stock
- - -- Series A Preferred Junior Participating Cumulative (the "Series A Preferred
Stock"), and the Series B, C, D and E Special Preferred Stock. No shares of the
Company's Series A Preferred Stock, which was created for possible issuance
pursuant to the Company's Rights Plan adopted in December of 1994, have as yet
been issued; all of the authorized shares of the Series B, C, D and E Special
Preferred Stock have been issued.
The Series A Preferred Designation, which creates the Series A
Preferred Stock and became an amendment to the Articles of Incorporation upon
its filing by the Director of the Department of Commerce and Consumer Affairs of
the State of Hawaii, does not include a provision denying preemptive rights.
However, if the Fourth Proposed Charter Amendment is adopted, the Series A
Preferred Designation will be amended to include such a provision in the form of
a new Section 12.
Shareholders of Common Stock do not have preemptive rights under
Section D of Article IV of the Articles of Incorporation. Similarly, holders of
the Series B, C, D and E Special Preferred Stock, all of the authorized shares
of which are issued and outstanding, do not have preemptive rights under a
provision in the designation creating those series that is substantially
identical to the provision proposed to be added to the Series A Designation.
Finally, there are no holders of the Series A Preferred Stock because no shares
of Series A Preferred Stock have as yet been issued. Accordingly, no holders of
any outstanding shares of the stock of the Company will be denied preemptive
rights if the Fourth Proposed Charter Amendment is approved, and approval of
such amendment will thus not give rise to any right of shareholders to dissent.
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If the Fourth Proposed Charter Amendment is approved, Section D of
Article IV will be amended to read as follows:
"D. No holder of the shares of any class of capital stock or other securities
of the Corporation shall have any preemptive or preferential right of
subscription for or to purchase any shares of any class of stock or other
securities of the Corporation, whether now or hereafter authorized, other than
such right or rights, if any, and upon such terms and at such prices as the
Board of Directors, in its discretion, from time to time may determine. The
Board of Directors may issue shares of capital stock or other securities without
offering the same in whole or part to the holders of the capital stock or any
other securities of the Corporation."
If the Fourth Proposed Charter Amendment is approved, the Series A
Preferred Designation will be amended to add a new Section 12 to read as
follows:
"SECTION 12. PREEMPTIVE RIGHTS. No holder of shares of
Series A Preferred Stock shall have any preemptive or
preferential rights of subscription for or to purchase any shares
of any class of stock or other securities of the Corporation,
whether now or hereafter authorized, other than such right or
rights, if any, and upon such terms and at such prices as the
Board of Directors, in its discretion, from time to time may
determine. The Board of Directors may issue shares of any class
of stock or other securities without offering the same in whole
or in part to the stockholders of the Corporation."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS
PROPOSAL 5.
PROPOSAL 6
FIFTH PROPOSED CHARTER AMENDMENT
AMENDMENT TO ARTICLE VI OF THE ARTICLES OF INCORPORATION TO PROVIDE THAT OFFICER
TITLES SHALL BE DESIGNATED IN THE BYLAWS AND TO DELETE OFFICER QUALIFICATIONS
The Board of Directors recommends for shareholder approval a proposed
amendment (the "Fifth Proposed Charter Amendment") to Article VI of the Articles
of Incorporation that will delete provisions specifying that the Company have
certain officer titles and the qualifications of such officers and provide that
such matters be provided for in the Company's Bylaws.
If the Fifth Proposed Charter Amendment is adopted, the specific
officer titles set forth in Article VI would be deleted and the titles of
officers of the Company would thus be determined by the provisions of the Bylaws
of the Company. Similarly, the current provisions in Article VI, providing that
the Chairman of the Board shall be a director of the Company, that no other
officer and no subordinate officer need be a director of the Company and that
officers need not be shareholders, would be deleted. Any such qualifications
would be set forth only in the Bylaws of the Company.
Section 415-50 of the HBCA specifies that the officers of a
corporation shall consist of a president, one or more vice-presidents as maybe
prescribed in its Bylaws, a secretary, a treasurer and such other officers as
may be specified in the corporation's bylaws. However, the HBCA does not
require that the officers of a corporation and their titles be specified in the
articles of incorporation, nor is there a requirement that the qualifications of
officers be set forth in the articles of incorporation.
There are currently no plans to change titles of any officers of the
Company, to select a Chairman of the Board who is not a director, or to change
the qualifications of any officer. However, if the Company determines that it
would be beneficial to change the titles or qualifications of the Company's
officers from time to time, the Board of Directors believes that it should be
permitted to do so without the need to amend the Articles of Incorporation.
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If the Fifth Proposed Charter Amendment is adopted, Article VI of the
Articles of Incorporation will be amended to read as follows:
"The officers of the Corporation shall consist of such officers
and assistant officers and agents as may be prescribed by the
Bylaws. The officers shall be elected or appointed, hold office
and may be removed, and shall have such qualifications, as may
be prescribed by the Bylaws. Any two or more offices may be held
by the same person, provided, however, that not less than two (2)
persons shall be officers.
All officers and agents of the Corporation, as between themselves
and the Corporation, shall have such authority and perform such
duties in the management of the Corporation as may be prescribed
by the Bylaws, or as may be determined by resolution of the Board
of Directors not inconsistent with the Bylaws."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL 6.
PROPOSAL 7
APPROVAL OF 1996 STOCK INCENTIVE PLAN
1996 STOCK INCENTIVE PLAN
The Board of Directors is expected to recommend for shareholder
approval the 1996 Stock Incentive Plan (the "Stock Plan"). On May __, 1996,
the Board of Directors of the Company is expected to adopt, subject to
shareholder approval, the Stock Plan.
Under the Stock Plan, all officers, directors and employees of the
Company will be eligible to receive options to purchase Class A Common Stock
or other awards. The complete text of the Stock Plan is attached as Appendix
A to this Proxy Statement. The following description of the material
features of the Stock Plan does not purport to be complete and is qualified
in its entirety by reference to Appendix A. The term "employees" in the
following discussion is used to refer to officers and directors (other than
non-employee directors) and other employees of the Company.
The purpose of the Stock Plan is to enable the Company to attract,
retain and motivate employees by providing for or increasing their
proprietary interests in the Company and, in the case of non-employee
directors, to attract such directors and further align their interests with
those of the Company's shareholders by providing for or increasing their
proprietary interests in the Company. The Company believes that the stock
options and other awards issuable under the Stock Plan constitute a form of
compensation that it would not otherwise be able to pay employees and
non-employees. Eligible employees of the Company will be considered for the
grant of awards under the Stock Plan at the discretion of the Committee.
The maximum number of shares of Class A Common Stock that may be
issued pursuant to awards granted under the Stock Plan is 2,000,000, and the
maximum number of shares of Class A Common Stock with respect to which options
may be issued to any employee during any 12-month period is _________, and in
each case such maximum is subject to adjustments to prevent dilution.
If the shareholders of the Company approve the Stock Plan, the
Company intends to grant options to purchase an aggregate of _________ shares
of Class A Common Stock. The per share exercise price of these initial
options will equal the fair market value of a share of Class A Common Stock
as of the date of grant.
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The Stock Plan will be administered by the Compensation Committee,
which is a committee of disinterested directors appointed by the Board of
Directors of the Company (the "Committee"), except that grants to non-employee
directors will be made by the Board of Directors pursuant to a pre-determined
formula. The Committee consists of two or more non-employee directors of the
Company. The Committee has full and final authority to select the employees to
receive awards and to grant such awards. Subject to the provisions of the Stock
Plan, the Committee has a wide degree of flexibility in determining the terms
and conditions of awards and the number of shares to be issued pursuant thereto,
including conditioning the receipt or vesting of awards upon achievement by the
Company of specified performance criteria. The expenses of administering the
Stock Plan will be borne by the Company.
The Stock Plan authorizes the Committee to enter into any type of
arrangement with an eligible employee that, by its terms, involves or might
involve the issuance of Class A Common Stock or any other security or benefit
with a value derived from the value of Common Stock. Awards to employees
are not restricted to any specified form or structure and may include,
without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to
acquire stock, securities convertible into or redeemable for stock
appreciation rights, limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance shares. An award to
an employee may consist of one such security or benefit or two or more of
them in tandem or in the alternative. The Stock Plan does not provide for a
minimum amount that employees will be required to pay to acquire benefits in
connection with an award. Any such amount will be established by the
Committee and set forth in the agreement evidencing the award. For federal
income tax purposes, the maximum compensation payable to employees pursuant
to the Stock Plan, during the term of the Stock Plan and awards granted
thereunder, is equal to the number of shares of Class A Common Stock with
respect to which awards may be issued thereunder, multiplied by the value of
such shares on the date such compensation is measured (which, in the case of
Nonqualified Options (defined below), will generally be the date of exercise
of the options). If the Stock Plan is approved by the shareholders, stock
options to purchase ________ shares of Class A Common Stock will be granted
automatically to each non-employee director presently serving on the Board
and in the future will be granted automatically to each new non-employee
director upon his or her election to the Board of Directors. Options to
purchase an additional _______ shares will be granted each year thereafter,
provided such individual continues to serve as director.
An award granted under the Stock Plan to an employee may include a
provision accelerating the receipt of benefits upon the occurrence of specified
events, such as a change of control of the Company or a dissolution,
liquidation, merger, reclassification, sale of all or substantially all of the
property and assets of the Company or other significant corporate transaction.
Options granted to non-employee directors must be exercised within two years
after the grantee ceases to be a director of the Company. Any stock option
granted to an employee may be a tax-benefited incentive stock option or a non-
qualified stock option that is not tax-benefited. Awards to non-employee
directors may be only non-qualified stock options.
An award to an employee may permit the employee to pay all or part
of the purchase price of the shares or other property issuable pursuant
thereto, and/or to pay all or part of such employee's tax withholding
obligation with respect to such issuance, by (i) delivering previously owned
shares of capital stock of the Company or other property, (ii) reducing the
amount of shares or other property otherwise issuable pursuant to the award
or (iii) delivering a promissory note, the terms and conditions of which will
be determined by the Committee. If an option granted to an employee
permitted the employee to pay for the shares issuable pursuant thereto with
previously owned shares, the employee would be able to exercise the option in
successive transactions, starting with a relatively small number of shares
and, by a series of exercises using shares acquired from each such
transaction to pay the purchase price of the shares acquired in the following
transaction, to exercise an option for a large number of shares with no more
investment than the original share or shares delivered. The exercise price
and any withholding taxes are payable in cash by non-employee directors, by
delivery of shares of Class A Common Stock or delivery of broker instructions
authorizing a loan secured by the shares acquired upon exercise, payment to
the Company of proceeds from the sale of such shares, or delivery of a fully
recourse promissory note secured by such shares.
Pursuant to Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), directors, certain officers and 10% shareholders
of the Company are generally liable to the Company for repayment of any "short-
swing" profits realized from any non-exempt purchase and sale of Class A Common
Stock occurring within a six-month period. Rule 16b-3, promulgated under the
Exchange Act, provides an exemption from Section 16(b) liability for certain
transactions by an officer or
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director pursuant to an employee benefit plan that complies with such Rule.
Specifically, the grant of an option under an employee benefit plan that
complies with Rule 16b-3 will be an exempt purchase of a security for Section
16(b) purposes provided that the recipient of the option holds the option or
the underlying shares for at least six months from the date of grant. The
Stock Plan is designed to comply with Rule 16b-3.
The Stock Plan will become effective on the date it is approved by
the Board of Directors, subject to shareholder approval. Awards may not be
granted under the Stock Plan after the tenth anniversary of the adoption of
the Stock Plan. Although any award that was duly granted on or prior to such
date may thereafter be exercised or settled in accordance with its terms, no
shares of Class A Common Stock may be issued pursuant to any award after the
twentieth anniversary of the adoption of the Stock Plan.
Subject to limitations imposed by law, the Board of Directors of
the Company may amend or terminate the Stock Plan at any time and in any
manner. However, no such amendment or termination may deprive the recipient
of an award previously granted under the Stock Plan of any rights thereunder
without his or her consent.
FEDERAL INCOME TAX TREATMENT
The following is a brief description of the federal income tax
treatment which will generally apply to options issued under the Stock
Plan, based on federal income tax laws in effect on the date hereof. The
exact federal income tax treatment of awards will depend on the specific
nature of the award. Such an award may, depending on the conditions
applicable to the award, be taxable as an option, as restricted or
unrestricted stock, as a cash payment, or otherwise. Recipients of options
or other awards should not rely on this discussion for individual tax advice,
as each recipient's situation and the tax consequences of any particular
award will vary depending upon the specific facts and circumstances involved.
Each recipient is advised to consult with his or her own tax advisor for
particular federal, as well as state and local, income and any other tax
advice.
INCENTIVE OPTIONS. Pursuant to the Stock Plan, employees may be
granted options which are intended to qualify as incentive stock options
("Incentive Options") under the provisions of Section 422 of the Internal
Revenue Code (the "Code"). Generally, the optionee is not taxed on the
grant or the exercise of an Incentive Option. However, the optionee's
"alternative minimum taxable income" for the year of exercise will be
increased by the excess of the fair market value of the shares acquired upon
the exercise of an Incentive Option ("ISO Shares") over the exercise price,
and thus exercise of an Incentive Option may subject the optionee to the
"alternative minimum tax" in the year of exercise.
If the optionee sells the ISO Shares at any time within (a) one
year after the date of transfer of ISO Shares to the optionee pursuant to the
exercise of the Incentive Option or (b) two years after the date of grant of
the Incentive Option (a "Disqualifying Disposition"), then, at the time of
such Disqualifying Disposition (1) the optionee will recognize capital gain
equal to the excess, if any, of the sales price over the fair market value of
the ISO Shares on the date of exercise, (2) the optionee will recognize
ordinary income equal to the excess, if any, of the lesser of the sales price
or the fair market value of the ISO Shares on the date of exercise, over the
exercise price of such Incentive Option, and (3) the optionee will recognize
capital loss equal to the excess, if any, of the exercise price of such
Incentive Option over the sales price of the ISO Shares. If the optionee
sells the ISO Shares at any time after the one-year and two-year periods
described above, then the optionee will recognize capital gain or loss equal
to the difference between the sales price and the exercise price of such
Incentive Option, and the Company will not be entitled to any deduction.
NONQUALIFIED OPTIONS. The grant of an option or other similar
right to acquire stock which does not qualify for treatment as an Incentive
Option (a "Nonqualified Option") is generally not a taxable event for the
optionee. Upon exercise of the option, the optionee will generally recognize
ordinary income equal to the excess of the fair market value of the stock
acquired upon exercise (determined as of the date of the exercise) over the
exercise price of such option. See "SPECIAL RULES FOR AWARDS GRANTED TO
INSIDERS," below.
SPECIAL RULES FOR AWARDS GRANTED TO INSIDERS. If an optionee is a
director, officer or shareholder subject to Section 16 of the Exchange Act
(an "Insider") and exercises an option within six months of the date of
grant, the timing of the recognition of any ordinary income should be
deferred until (and the amount of ordinary income should be determined based
on the fair market value (or sales price in the case of a disposition) of the
shares of Class A Common Stock upon) the earlier of the following two dates:
(i) six months after the date of grant or (ii) a disposition of the shares of
Class A Common Stock, unless the Insider makes an election under Section
83(b) of the Code (an "83(b) Election") within 30 days after exercise to
recognize ordinary income based on the value of the Class A Common Stock on
the date of exercise. In addition, special rules apply to an Insider who
exercises an option having an exercise price greater than the fair market
value of the underlying shares on the date of exercise. Insiders should
consult their tax advisors to determine the tax consequences to them of
exercising options granted to them pursuant to the Stock Plan.
MISCELLANEOUS TAX ISSUES. Awards may be granted under the Stock
Plan which do not fall clearly into the categories described above. The
federal income tax treatment of these awards will depend upon the specific
terms of such awards. Generally, the Company will be required to make
arrangements for withholding applicable taxes with respect to any ordinary
income recognized by a participant in connection with awards made under the
Stock Plan.
A holder's tax basis in Class A Common Stock acquired pursuant to
the Stock Plan generally will equal the amount paid for the Class A Common
Stock (including the exercise price of an option) plus any amount recognized
as ordinary income with respect to such stock. Other than ordinary income
recognized with respect to the Class A Common Stock and included in basis,
any subsequent gain or loss upon the disposition of such stock generally will
be capital gain or loss (long-term or short-term, depending on the holder's
holding period).
Special rules will apply in cases where a recipient of an award
pays the exercise or purchase price of the award or applicable withholding
tax obligations under the Stock Plan by delivering previously owned shares of
Class A Common Stock or by reducing the amount of shares otherwise issuable
pursuant to the award. The surrender or withholding of such shares will in
certain circumstances result in the recognition of income with respect to
such shares or a carryover basis in the shares acquired, and may constitute a
Disqualifying Disposition with respect to ISO Shares.
The terms of the agreements pursuant to which specific awards are
made to employees under the Stock Plan may provide for accelerated vesting or
payment of an award in connection with a change in ownership or control of
the Company. In that event and depending upon the individual circumstances of
the recipient, certain amounts with respect to such awards may constitute
"excess parachute payments" under the ''golden parachute'' provisions of
the Code. Pursuant to these provisions, a recipient will be subject to a 20%
excise tax on any "excess parachute payments" and the Company will be
denied any deduction with respect to such payments. Recipients of awards
should consult their tax advisors as to whether accelerated vesting of an
award in connection with a change of ownership or control of the Company
would give rise to an excess parachute payment.
With certain exceptions, an individual may not deduct investment
interest to the extent such interest exceeds the individual's net investment
income for the year. Investment interest generally includes interest paid on
indebtedness incurred to purchase shares of Class A Common Stock. Interest
disallowed under this rule may be carried forward to and deducted in later
years, subject to the same limitations.
The Company generally obtains a deduction equal to the ordinary
income recognized by the recipient of an award. However, the Company's
deduction for such amounts (including amounts attributable to the ordinary
income recognized with respect to options) may be limited to $1,000,000 (per
person) annually.
THE BOARD OF DIRECTORS IS EXPECTED TO RECOMMEND A VOTE FOR THIS PROPOSAL 7.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's certified public accountant
during 1995. The appointment of auditors is approved annually by the Board of
Directors, based in part on the recommendation of the Audit Committee. In
making its recommendation to appoint KPMG Peat Marwick LLP as the Company's
auditor for 1995, the Audit Committee reviewed both the audit scope and
estimated audit fees for the proposed 1995 audit. A representative of KPMG Peat
Marwick LLP will be present at the Annual Meeting and will be given an
opportunity to make a statement if he or she desires to do so and will be
available to respond to questions from shareholders.
SUBMISSION OF SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's 1997 proxy material
under SEC regulations, a shareholder proposal to be considered for presentation
at the 1997 Annual Meeting of Shareholders must be received by the Corporate
Secretary of the Company at its principal offices at 3375 Koapaka Street, Suite
G-350, Honolulu, Hawaii 96819 on or before February 5, 1997.
ANNUAL REPORT
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1995. The Annual Report,
which contains financial and other information regarding the Company, is not
incorporated in the Proxy Statement and is not to be deemed a part of the proxy
soliciting material.
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MISCELLANEOUS
Except for the matters referred to in the accompanying Notice of
Annual Meeting, the Board of Directors does not intend to present any matter for
action at the Annual Meeting and knows of no matter to be presented at the
Annual Meeting that is a proper subject for action by the shareholders.
However, if any other matters should properly come before the Annual Meeting or
any postponements or adjournments thereof, it is intended that votes will be
cast pursuant to the authority granted by the enclosed Proxy in accordance with
the best judgment of the Proxy Holders.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN AND RETURN YOUR PROXY PROMPTLY. PROXY CARDS SHOULD BE
RETURNED BY MAIL IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
RAE A. CAPPS
VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
Honolulu, Hawaii
May __, 1996
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APPENDIX A
HAWAIIAN AIRLINES, INC.
1996 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of this 1996 Stock Incentive Plan (this "Plan") of
Hawaiian Airlines, Inc., a Hawaii corporation (the "Company"), is to enable the
Company to attract, retain and motivate its employees by providing for or
increasing the proprietary interests of such employees in the Company, and to
enable the Company to attract, retain and motivate its nonemployee directors and
further align their interests with those of the shareholders of the Company by
providing for or increasing the proprietary interests of such directors in the
Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an
employee of the Company (an "Employee") shall be eligible to be considered for
the grant of Awards (as hereinafter defined) hereunder. Any director of the
Company who is not an Employee (a "Nonemployee Director") shall automatically
receive Nonemployee Director Options (as hereinafter defined) pursuant to
Section 4 hereof, but shall not otherwise participate in this Plan.
SECTION 3. AWARDS
(a) The Committee (as hereinafter defined), on behalf of the
Company, is authorized under this Plan to enter into any type of arrangement
with an Employee that is not inconsistent with the provisions of this Plan and
that, by its terms, involves or might involve the issuance of (i) shares of
Class A Common Stock, par value $.01 per share, of the Company ("Common Shares")
or (ii) a Derivative Security (as such term is defined in Rule 16a-1 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
such Rule may be amended from time to time) with an exercise or conversion
privilege at a price related to the Common Shares or with a value derived from
the value of the Common Shares. The entering into of any such arrangement is
referred to herein as the "grant" of an "Award."
(b) Awards are not restricted to any specified form or structure
and may include, without limitation, sales or bonuses of stock, restricted
stock, stock options, reload stock options, stock purchase warrants, other
rights to acquire stock, securities convertible into or redeemable for stock,
stock appreciation rights, limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance shares, and an Award may
consist of one such security or benefit, or two or more of them in tandem or in
the alternative.
<PAGE>
(c) Common Shares may be issued pursuant to an Award for any
lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Committee, in
its sole and absolute discretion, shall determine all of the terms and
conditions of each Award granted under this Plan, which terms and conditions may
include, among other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay
the purchase price of the Common Shares or other property issuable pursuant
to such Award, or such recipient's tax withholding obligation with respect
to such issuance, in whole or in part, by any one or more of the following:
(A) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding") or other property,
provided that the Company is not then prohibited from purchasing or
acquiring shares of its capital stock or such other property,
(B) a reduction in the amount of Common Shares or
other property otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion
of the Committee, upon the occurrence of specified events, including,
without limitation, a change of control of the Company, an acquisition of a
specified percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 8
hereof; or
(iii) a provision required in order for such Award to
qualify as an incentive stock option (an "Incentive Stock Option") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
provided that the recipient of such Award is eligible under the Code to
receive an Incentive Stock Option.
(e) Notwithstanding any other provision of this Plan, no
Employee shall to be granted options for in excess of __________ shares of Class
A Common Stock. This limitation is intended to satisfy the requirements of
Section 162(m) of the Code so that compensation attributable to Awards hereunder
qualify as performance-based compensation under Section 162(m) of the Code. The
limitation under this Subsection (e) shall be subject to adjustment under
Section 8 hereof, but only to the extent permitted under Section 162(m) of the
Code.
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SECTION 4. NONEMPLOYEE DIRECTOR OPTIONS
(a) Each person who is or becomes a Nonemployee Director after
the effective date of this Plan shall automatically be granted, on the effective
date of this Plan or upon becoming a Nonemployee Director, a Nonemployee
Director Option to purchase _____ Common Shares. Each year, on the first
business day following the date of the annual meeting of shareholders of the
Company, or any adjournment thereof, at which directors of the Company are
elected, each Nonemployee Director shall automatically be granted an option (a
"Nonemployee Director Option") to purchase _____ Common Shares.
(b) If, on any date upon which Nonemployee Director Options are
to be automatically granted pursuant to this Section 4 (a "Date of Grant"), the
number of Common Shares remaining available for option under this Plan is
insufficient for the grant to each Nonemployee Director of a Nonemployee
Director Option to purchase the entire number of Common Shares specified in this
Section 4, then a Nonemployee Director Option to purchase a proportionate amount
of such available number of Common Shares (rounded to the nearest whole share)
shall be granted to each Nonemployee Director on such date.
(c) Each Nonemployee Director Option granted under this Plan
shall be exercisable in full ___ months after/on the Date of Grant of such
Nonemployee Director Option.
(d) Each Nonemployee Director Option granted under this Plan
shall expire upon the first to occur of the following:
(i) The second anniversary of the date upon which the
optionee shall cease to be a Nonemployee Director; or
(ii) The tenth anniversary of the Date of Grant of such
Nonemployee Director Option.
(e) Each Nonemployee Director Option shall have an exercise
price equal to the greater of (i) the aggregate Fair Market Value on the Date of
Grant of such option of the Common Shares subject thereto or (ii) the aggregate
par value of such Common Shares on such date.
(f) Payment of the exercise price of any Nonemployee Director
Option granted under this Plan and the optionee's tax withholding obligation, if
any, with respect to such Nonemployee Stock Option shall be made in full in cash
concurrently with the exercise of such Nonemployee Director Option; provided,
however, that the payment of such exercise price and/or tax withholding may
instead be made, in whole or in part, by any one or more of the following:
(i) the delivery of previously owned shares of capital
stock of the Company, provided that the Company is not then prohibited from
purchasing or acquiring shares of its capital stock or such other property;
or
3
<PAGE>
(ii) the delivery, concurrently with such exercise and in
accordance with Section 220.3(e)(4) of Regulation T promulgated under the
Exchange Act, of a properly executed exercise notice for such Nonemployee
Director Option and irrevocable instructions to a broker promptly to deliver
to the Company a specified dollar amount of the proceeds of a sale of or a
loan secured by the Common Shares issuable upon exercise of such Nonemployee
Director Option; or
(iii) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee; provided,
however, that such promissory note shall: (A) be secured by a pledge of
the Common Shares issuable upon exercise of such Nonemployee Director
Option but shall be a fully recourse obligation of the maker of the note;
(B) have a maturity date that is no later than the fifth anniversary of
the making of the note; and (C) provide for interest on the principal at
a commercially reasonable rate.
(g) The "Fair Market Value" of a Common Share or other
security on any date (the "Determination Date") shall be equal to the closing
price per Common Share or unit of such other security on the business day
immediately preceding the Determination Date on the American Stock Exchange
(or such other exchange or interdealer quotation system on which the Common
Shares or such other security are then listed or quoted) or, if no closing
price was so reported for such immediately preceding business day, the
closing price for the next preceding business day for which a closing price
was so reported, or, if no closing price was so reported for any of the 30
business days immediately preceding the Determination Date, the average of
the closing bid and asked prices per Common Share or unit of such other
security on the business day immediately preceding the Determination Date as
furnished by a professional market maker, selected by the Board of Directors,
making a market in the Common Shares or such other security.
(h) All outstanding Nonemployee Director Options shall terminate
upon the first to occur of the following:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the
Company (other than a reorganization, merger or consolidation the sole
purpose of which is to change the Company's domicile solely within the
United States) as a result of which the outstanding securities of the
class then subject to such outstanding Nonemployee Director Options are
exchanged for or converted into cash, property and/or securities not issued
by the Company, unless such reorganization, merger or consolidation shall
have been affirmatively recommended to the shareholders of the Company by
the Board and the terms of such reorganization, merger or consolidation
shall provide that such Nonemployee Director Options shall continue in
effect thereafter and shall be exercisable to acquire the number and type
of securities or other consideration to which the Nonemployee Directors
would have been entitled had they exercised such Nonemployee Director
Options immediately prior to such reorganization, merger or consolidation;
or
(iii) the sale of all or substantially all of the
property and assets of the Company.
(i) Each Nonemployee Director Option shall be nontransferable by
the optionee other than by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by the optionee or the
optionee's guardian or legal representative.
(j) Nonemployee Director Options are not intended to qualify as
Incentive Stock Options.
4
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SECTION 5. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued
pursuant to all Incentive Stock Options granted under this Plan shall not exceed
______, subject to adjustment as provided in Section 8 hereof; provided,
however, that adjustments pursuant to Section 8 shall be limited to those that
will not adversely affect the status of options as Incentive Stock Options under
Section 422 of the Code.
(b) The aggregate number of Common Shares issued and issuable
pursuant to all Awards (including Incentive Stock Options) and Nonemployee
Director Options granted under this Plan shall not exceed 2,000,000 subject
to adjustment as provided in Section 8 hereof.
(c) For purposes of Section 5(b) hereof, the aggregate number of
Common Shares issued and issuable pursuant to all Awards and Nonemployee
Director Options granted under this Plan shall at any time be deemed to be equal
to the sum of the following:
(i) the number of Common Shares that were issued prior to
such time pursuant to Awards and Nonemployee Director Options granted under
this Plan, other than Common Shares that were subsequently reacquired by the
Company pursuant to the terms and conditions of such Awards and with
respect to which the holder thereof received no benefits of ownership such
as dividends; plus
(ii) the number of Common Shares that were otherwise
issuable prior to such time pursuant to Awards granted under this Plan,
but that were withheld by the Company as payment of the purchase price of
the Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares issuable at or
after such time pursuant to Awards and Nonemployee Director Options granted
under this Plan prior to such time.
SECTION 6. DURATION OF PLAN
Neither Awards nor Nonemployee Director Options shall be granted
under this Plan after _________ __, 2006. Although Common Shares may be issued
after _________ __, 2006 pursuant to Awards and Nonemployee Director Options
granted prior to such date, no Common Shares shall be issued under this Plan
after _________ __, 2016.
SECTION 7. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by a committee of the Board
(the "Committee") consisting of two or more directors, each of whom is a
"disinterested person"
5
<PAGE>
(as such term is defined in Rule 16b-3 promulgated under the Exchange Act, as
such Rule may be amended from time to time).
(b) Subject to the provisions of this Plan, the Committee shall
be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:
(i) adopt, amend and rescind rules and regulations relating
to this Plan;
(ii) determine which persons are Employees and to which of
such Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms
and conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine the terms and conditions of the Nonemployee
Director Options that are automatically granted hereunder, other than the
terms and conditions specified in Section 4 hereof;
(v) determine whether, and the extent to which, adjustments
are required pursuant to Section 8 hereof; and
(vi) interpret and construe this Plan and the terms and
conditions of all Awards and Nonemployee Director Options granted hereunder.
SECTION 8. ADJUSTMENTS
If the outstanding securities of the class then subject to this
Plan are increased, decreased or exchanged for or converted into cash,
property or a different number or kind of securities, or if cash, property or
securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or if substantially all of the property and assets
of the Company are sold, then, unless the terms of such transaction or this
Plan shall provide otherwise, the Committee shall make appropriate and
proportionate adjustments in (a) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to
Incentive Stock Options and other Awards and Nonemployee Director Options
theretofore granted under this Plan, (b) the maximum number and type of
shares or other securities that may be issued pursuant to Incentive Stock
Options and other Awards and Nonemployee Director Options thereafter granted
under this Plan as provided in Section 5 hereof, and (c) the maximum number
of Common Shares for which options may be granted during any one calendar
year, as provided in Section 3(e) hereof.
6
<PAGE>
SECTION 9. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in any
manner, subject to the following limitations:
(a) no such amendment or termination shall deprive the recipient
of any Award or Nonemployee Director Option theretofore granted under this Plan,
without the consent of such recipient, of any of his or her rights thereunder or
with respect thereto; and
(b) Section 4 hereof shall not be amended more than once every
six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act, as amended, or the rules thereunder.
SECTION 10. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of _________ __, 1996, the date
upon which it was approved by the Board; provided, however, that no Common
Shares may be issued under this Plan until it has been approved, directly or
indirectly, by the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote at a
meeting duly held in accordance with the laws of the State of Hawaii.
7
<PAGE>
PRELIMINARY COPIES
PROXY
HAWAIIAN AIRLINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE JUNE 6, 1996
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints Bruce R. Nobles, C. J.
David Davies, Clarence K. Lyman and Rae A. Capps, and each or any of them,
attorneys and proxies with full power of substitution, to represent the
undersigned and to vote all shares of Class A Common Stock, $.01 par value,
of Hawaiian Airlines, Inc. (the "Company") held of record by the undersigned
on April 8, 1996, at the 1996 Annual Meeting of Shareholders of the Company
to be held on June 6, 1996 at the Royal Hawaiian Hotel, 2259 Kalakaua Avenue,
Honolulu, Hawaii, in the Regency Room at 9:00 a.m. Hawaii standard time, and
at any and all adjournments or postponements thereof, as herein specified
upon the proposals listed herein and described in the Proxy Statement for the
meeting and in his or her discretion upon any other matter that may properly
come before the meeting. The Board of Directors has proposed the matters set
forth below for the vote of the shareholders of the Company.
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 3, 4, 5, 6 AND 7
Please mark your votes as indicated in this example /X/
1. Election of Directors
FOR all nominees listed below
(except as marked to the contrary below) / /
WITHHOLD AUTHORITY for all nominees listed below / /
Election of the following nominees as directors: John W. Adams, Todd G.
Cole, Richard F. Conway, Robert C. Coo, Carol A. Fukunaga, William Boyce
Lum, Richard K. Matros, Reno F. Morella, Bruce R. Nobles, Samson
Poomaihealani and Edward Z. Safady
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through the nominee's name in the list above.)
2. Amendment to the Company's Articles of Incorporation to reflect the
Company's current address
FOR / / AGAINST / / ABSTAIN / /
3. Ratification of the conversion of Class B Common Stock to Class A Common
Stock and Amendment to the Company's Articles of Incorporation to
eliminate the Class B Common Stock and to designate the Company's Class A
Common Stock as "Common Stock"
FOR / / AGAINST / / ABSTAIN / /
4. Amendment to the Company's Articles of Incorporation to eliminate
provisions required by the Third Amended Plan of Reorganization or
Section 1123 of the U.S. Bankruptcy Code
FOR / / AGAINST / / ABSTAIN / /
5. Amendment to the Company's Articles of Incorporation to eliminate
preemptive rights
FOR / / AGAINST / / ABSTAIN / /
6. Amendment to the Company's Articles of Incorporation to designate officer
titles in the Bylaws and delete officer qualifications
FOR / / AGAINST / / ABSTAIN / /
7. Adoption of the 1996 Stock Incentive Plan
FOR / / AGAINST / / ABSTAIN / /
8. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
THE SHARES VOTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER INSTRUCTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO INSTRUCTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3, 4, 5, 6 AND 7 LISTED ABOVE
AND IN THE DISCRETION OF THE PROXY HOLDER ON MATTERS DESCRIBED IN ITEM 8.
IMPORTANT: Please sign your name or names exactly as stenciled on this Proxy.
When signing as attorney, executor or administrator, trustee or guardian, please
give your full title as such. If shares are held jointly, EACH holder should
sign.
Signature
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Signature
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DATE: , 1996
--------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
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FOLD AND DETACH HERE
