HAR §16-1-15. Application of this chapter to report

Notwithstanding the provisions of section 16-1-5(b) and (c), two copies of any portion of the report referred to in section 16-1-5(b) which comments upon or refers to any solicitation subject to this section, or to any participant in any solicitation, other than the solicitation by the management, shall be filed with the insurance commissioner as proxy material subject to this chapter. The portion of the report shall be filed with the insurance commissioner in preliminary form at least five business days prior to the date copies of the report are first sent or given to stockholders. [Eff 6/22/81] (Auth: HRS §431:2-201) (Imp: HRS §431:4-103) 1-9 SCHEDULE A INFORMATION REQUIRED IN PROXY STATEMENT 1. Revocability of proxy. State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, briefly describe the limitation or procedure. 2. Dissenters’ rights of appraisal. Outline briefly the rights of appraisal or similar rights of dissenting stockholders with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by the stockholders in order to perfect their rights. Where the rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment, or other similar act, state whether the person solicited will be notified of the date. 3. Persons making solicitation not subject to section 16-1-10. (a) If the solicitation is made by the management of the insurer, so state. Give the name of any director of the insurer who has informed the management in writing that the director intends to oppose any action intended to be taken by the management and indicate the action which the director intends to oppose. (b) If the solicitation is made otherwise than by the management of the insurer, state the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons by whom the cost of solicitation has been or will be borne, directly or indirectly. (c) If the solicitation is to be made by specially engaged employees or paid solicitors, state (1) the material features of any contract or arrangement for the solicitation and identify the parties, and (2) the cost or anticipated cost thereof. 4. Interest of certain persons in matters to be acted upon. Describe briefly any substantial interest, direct or indirect, by stockholdings or otherwise, of any director, nominee for election for director, officer and, if the solicitation is made otherwise than on behalf of management, each person on whose behalf the solicitation is made, in any matter to be acted upon other than elections to office. A-10 5. Stocks and principal stockholders. (a) State, as to each class of voting stock of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled. (b) Give the date as of which the record list of stockholders entitled to vote at the meeting will be determined. If the right to vote is not limited to stockholders of record on that date, indicate the conditions under which other stockholders may be entitled to vote. (c) If action is to be taken with respect to the election of directors and if the person solicited have cumulative voting rights, make a statement that they have the rights and state briefly the conditions precedent to the exercise thereof. 6. Nominees and directors. If action is to be taken with respect to the election of directors furnish the following information, in tabular form to the extent practicable, with respect to each person nominated for election as a director and each other person whose term of office as director will continue after the meeting: (1) Name each person, state when the person’s term of office or the term of office for which the person is a nominee will expire, and all other positions and offices with the insurer presently held by the person, and indicate which persons are nominees for election as directors at the meeting. (2) State the person’s present principal occupation or employment and give the name and principal business of any corporation or other organization in which employment is carried on. Furnish similar information as to all of the person’s principal occupations or employments during the last five years, unless the person is now a director and was elected to the person’s present term of office by a vote of stockholders at a meeting for which proxies were solicited under this chapter. (3) If the person is or has previously been a director of the insurer, state the period or periods during which the person has served. (4) State, as of the most recent practicable date, the approximate amount of each class of stock of the insurer or any of its parents, subsidiaries or affiliates other than directors’ qualifying shares, beneficially owned directly or indirectly by the person. If the person is not the beneficial owner of any stocks make a statement to that effect. A-11 7. Remuneration and other transactions with management and others. Furnish the information reported or required in item one of the exhibit entitled "Stockholder Information Supplement" under the heading "Information Regarding Management and Directors" if action is to be taken with respect to: (1) The election of directors; or (2) Any remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate; or (3) Any pension or retirement plan in which any person will participate; or (4) The granting or extension to any person of any options, warrants or rights to purchase any stocks other than warrants or rights issued to stockholders on a pro rata basis. If the solicitation is made on behalf of persons other than the management, the information required need be furnished only as to nominees of persons making the solicitation and associates of the nominees. 8. Bonus, profit sharing and other remuneration plans. If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan of the insurer, furnish the following information: (1) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each class, and the basis of the participation. (2) The amounts which would have been distributable under the plan during the last calendar year to: (A) Each person named is section 7 of schedule "A"; (B) Directors and officers as a group; and (C) To all other employees as a group, if the plan had been in effect. (3) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in paragraph (2) of this section, the nature of the amendments should be specified. 9. Pension and retirement plan. If action is to be taken with respect to any pension or retirement plan of the insurer, furnish the following information: A-12 (1) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each class, and the basis of the participation. (2) State: (A) The approximate total amount necessary to fund the plan with respect to past services, the period over which the amount is to be paid, and the estimated annual payments necessary to pay the total amount over the period; (B) The estimated annual payment to be made with respect to current services; and (C) The amount of the annual payments to be made for the benefit of: (i) Each person named in section 7 of schedule "A"; (ii) Directors and officers as a group; and (iii) Employees as a group. (3) If the plan to be acted upon may be amended (other than by a vote of stockholders) in a manner which would materially increase the cost thereof to the insurer or to materially after the allocation of the benefits as between the groups specified in subsection (2)(C), the nature of the amendments should be specified. 10. Options, warrants, or rights. If action is to be taken with respect to the granting or extension of any options, warrants or rights (all referred to herein as "warrants") to purchase stock of the insurer or any subsidiary or affiliate, other than warrants issued to all stockholders on a pro rata basis, furnish the following information: (1) The title and amount of stock called for or to be called for, the prices, expiration dates and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary or affiliate for the granting or extension of the warrants and the market value of the stock called for or to be called for by the warrants, as of the latest practicable date. (2) If known, state separately the amount of stock called for or to be called for by warrants received or to be received by the following persons, naming each person: (A) Each person named in section 7 of schedule "A"; and A-13 (B) Each other person who will be entitled to acquire five per cent or more of the stock called for or to be called for by the warrants. (3) If known, state also the total amount of stock called for or to be called for by the warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming them. 11. Authorization or issuance of stock. (a) If action is to be taken with respect to the authorization or issuance of any stock of the insurer furnish the title, amount and description of the stock to be authorized or issued. (b) If the shares of stock are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, pre-emptive, and conversion rights, redemption and sinking fund provisions, interest rate and date of maturity. (c) If the shares of stock to be authorized or issued are other than additional shares of common stock of a class outstanding, the insurance commissioner may require financial statements comparable to those contained in the annual report. 12. Mergers, consolidations, acquisitions, and similar matters. (a) If action is to be taken with respect to a merger, consolidation, acquisition, or similar matter, furnish in brief outline the following information: (1) The rights of appraisal or similar rights of dissenters with respect to any matters to be acted upon. Indicate any procedure required to be followed by dissenting stockholders in order to perfect the rights. (2) The material features of the plan or agreement. (3) The business done by the company to be acquired or whose assets are being required. (4) If available, the high and low sales prices for each quarterly period within two years. (5) The percentage of outstanding shares which must approve the transaction before it is consummated. (b) For each company involved in a merger, consolidation or acquisition, the following financial statements shall be furnished: (1) A comparative balance sheet as of the close of the last two fiscal years. A-14 (2) A comparative statement of operating income and expenses for each of the last two fiscal years and, as a continuation of each statement, a statement of earning per share after related taxes and cash dividends paid per share. (3) A pro forma combined balance sheet and income and expenses statement for the last fiscal year giving effect to the necessary adjustments with respect to the resulting company. 13. Restatement of accounts. If action is to be taken with respect to the restatement of any asset, capital, or surplus of the insurer, furnish the following information: (1) State the nature of the restatement and the date as of which it is to be effective. (2) Outline briefly the reasons for the restatement and for the selection of the particular effective date. (3) State the name and amount of each account affected by the restatement and the effect of the restatement thereon. 14. Matters not required to be submitted. If action is to be taken with respect to any matter which is not required to be submitted to a vote of stockholders, state the nature of such matter, the management in the event of a negative vote on the matter by the stockholders. 15. Amendment of charter, by-laws, or other documents. If action is to be taken with respect to any amendment of the insurer’s charter, by-laws, or other documents as to which information is not required, state briefly the reasons for and general effect of the amendment and the vote needed for its approval. A-15 SCHEDULE B INFORMATION TO BE INCLUDED IN STATEMENTS FILED BY OR ON BEHALF OF A PARTICIPANT (OTHER THAN THE INSURER) IN A PROXY SOLICITATION IN AN ELECTION CONTEST 1. Insurer. State the name and address of the insurer. 2. Identity and background. (a) State the following: (1) Your name and business address. (2) Your present principal occupation or employment and the name, principal business address of any corporation or other organization in which employment is carried on. (b) State the following: (1) Your resident address. (2) Information as to all material occupations, positions, offices or employments during the last ten years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each occupation, position, office or employment was carried on. (c) State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past ten years. If so, identify the principals, the subject matter and your relationship to the parties and the outcome. (d) State whether or not, during the past ten years, you have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this paragraph need not be included in the proxy statement or other proxy soliciting material. 3. Interest in stock of the insurer. (a) State the amount of each class of stock of the insurer which you own beneficially, directly or indirectly. (b) State the amount of each class of stock of the insurer which you own of record but not beneficially. B-16 (c) State with respect to the stock specified in subsections (a) and (b) the amounts acquired within the past two years, the dates of acquisition and the amounts acquired on each date. (d) If any part of the purchase price or market value of any of the stock specified in subsection (c) is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding the stock, so state and indicate the amount of the indebtedness as of the latest practicable date. If the funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction and state the names of the parties. (e) State whether or not you are a party to any contracts, arrangements or understandings with any person with respect to any stock of the insurer, including but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom the contracts, arrangements, or understandings exist and give the details thereof. (f) State the amount of stock of the insurer owned beneficially, directly or indirectly, by each of your associates and the name and address of each associate. (g) State the amount of each class of stock by any parent, subsidiary or affiliate of the insurer which you own beneficially, directly or indirectly. 4. Further matters. (a) Describe the time and circumstances under which you became a participant in the solicitation and state the nature and extent of your activities or proposed activities as a participant. (b) Describe briefly, and where practicable state the approximate amount of, any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company is last fiscal year, or in any material proposed transaction, to which the company or any of its subsidiaries or affiliates was or is to be a party. (c) State whether or not you or any of your associates have any arrangement or understanding with any person: (1) With respect to any future employment by the insurer or its subsidiaries or affiliates; or (2) With respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will or may be a party. If so, describe such arrangement or understanding and state the names of the parties thereto. B-17 5. Signature. The statement shall be dated and signed in the following manner: I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief. (Date) (Signature of participant or authorized representative) B-18 STOCKHOLDERS INFORMATION SUPPLEMENT Financial Reporting to Stockholder. 1. Did the company distribute to its stockholders prior to the (insert current year) Annual Meeting an Annual Report for the year (insert preceding year)? Answer If answer is "Yes" attach copy. If answer is "No" explain in detail below. Attach separate sheet if necessary. 2. Will the company distribute to its stockholders prior to the (insert following year) Annual Meeting an Annual Report for the year (insert current year)? Answer If answer is "Yes" a copy of the report shall be forwarded to the insurance commissioner of the company’s domiciliary state at the time as it is discributed to stockholders. If answer is "No" explain in detail below. Attach separate sheet if necessary. 3. If an Annual Report to stockholders was distributed for the year (insert preceding year): (a) Was such distribution prior to or contemporaneous with the solicitation of proxies in respect of the Annual Meeting? Answer If the answer is "No" explain in detail below. Attach separate sheet if necessary. (b) Did it contain the following financial statements (indicate answer in Column A) and were financial statements prepared substantially on the basis (individual or consolidated) as required to be presented in the company’s Annual Statement (indicate answer in Column B)? SIS-19 To be answered by Life and A & H Companies: (a) Statement of Assets, Liabilities, Surplus and Other Funds . . . . (b) Summary of Operations . . . . (c) Surplus Account . . . . . . . . . . To be answered by Fire and Casualty Companies: (a) Statement of Assets, Liabilities, Surplus and Other Funds . . . . (b) Statement of Income - Underwriting and investment Exhibit . . . . . (c) Capital and Surplus Account . To be Answered by Title Insurance Companies: (a) Statement of Assets, Liabilities, Surplus and Other Funds . . . . (b) Statement of Income, Operations and Investment Exhibit . . . . . (c) Capital and Surplus Account . Column A Column B YES NO YES NO SIS-20 Information Regarding Management and Directors. Name and Principal OccupationServed as Aggregate Benefits Accrued or set aside During Current Year Est. Annual benefits Upon Retirement Title (1) or Employme nt (2) Director From (3) Direct Remuneratio n (4) Retirement Plan (5) Other Emp. Benefits (6) Retirement Plan (7) Other Emp. Benefits (8) 1. Furnish the above information for each director, and for each of the three highest paid officers, whose aggregate direct remuneration exceeded $20,000 during the year, naming each such person. SIS-21 Furnish on a separate sheet the following information as to each of the individuals named above or state below that such information is not present: (a) Information as to any material interest, direct or indirect, on on the part of such individual during the year (insert current year) in any material transaction or any material proposed transaction as to which the company, or any of its subsidiaries, was or is to be a party. (b) Information as to all options to purchase securities of the company granted to or exercised by each individual during the current year. 2. Answer "Yes" or "No" in each column as to whether or not the information in item 1 has been, or will be, furnished to stockholders in any proxy statement relating to: (a) The election of directors; or (b) Any bonus, profit sharing or other remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the company will participate; or (c) Any pension or retirement plan in which any person will participate; or (d) The granting or extension to any person of any options, warrants, or rights to purchase any securities, other than warrants or rights issued to security holders, as such, on a pro rata basis. If any answer is "No" explain in detail on separate sheet. 3. Furnish the information specified in item 1 for all directors and officers of the company, as a group, without naming them. XXXXX XXXXX 4. Did the stockholders have an opportunity to vote for or against the election of directors and also other matters to be presented at any stockholders’ meeting? Answer . If answer is "No" explain on separate sheet. 5. Will the company solicit proxies from its stockholders during (insert following year) and will the solicitation(s) precede any shareholders’ meeting or meetings by at least ten days? Answer . If answer is "Yes" and proxies are to be solicited, copies of the proxy statement and form of proxy and other soliciting material to be furnished SIS-22 stockholders shall be submitted to the insurance commissioner of the company’s domiciliary state at least ten days prior to the date the material is first sent or given to stockholders. If answer is "No" and proxies are not to be solicited from stockholders, explain in detail below. Attach separate sheet if necessary. SIS-23 DEPARTMENT OF REGULATORY AGENCIES Chapter 1, Proxies, Consents, and Authorizations of Domestic Stock Insurers Rules of Practice and Procedure, on the Summary Page dated May 28, 1981 was adopted on May 28, 1981 following a public hearing held on May 28, 1981, after public notice was given in the Honolulu Star-Bulletin on May 8, 1981. These rules shall take effect ten days after filing with the Office of the Lieutenant Governor. /s/ Mary G.F. Bitterman MARY G.F. BITTERMAN Director of Regulatory Agencies APPROVED AS TO FORM: /s/ Ruth I. Tsujimura Deputy Attorney General /s/ George R. Ariyoshi GEORGE R. ARIYOSHI Governor State of Hawaii Date: June 10, 1981 June 12, 1981 Filed