EXHIBIT A
FRONTIER AIRLINES, INC.
2003 Long-term INCENTIVE AND equity compensation PLAN
ARTICLE I
INTRODUCTION
1.1 Purposes. The purposes of the 2003 Long-Term Incentive and Equity
Compensation Plan (the "Plan") of Frontier Airlines, Inc. (the "Company") are (i) to
align the interests of the Company's stockholders and the recipients of awards under
this Plan by increasing the proprietary interest of these recipients in the Company's
growth and success, (ii) to advance the Company's interests by attracting and
retaining directors, officers, managers, and other employees, and (iii) to motivate
these persons to act in the long-term best interests of the Company and its
stockholders.
1.2 Effective Date and Term of Plan. This Plan will be submitted to the Company's
stockholders for approval and, if approved by the affirmative vote of the holders of a
majority of the shares of Common Stock entitled to vote and present in person or by
proxy at the 2003 annual meeting of stockholders, will become effective on the date of
this approval. No award shall be made to any individual who is or who may be covered
by Section 162(m) of the Code and no option may be exercised until the Plan is
approved. This Plan will terminate ten (10) years after its effective date, unless
terminated earlier by the Board. Termination of the Plan will not affect the terms or
conditions of any award granted prior to termination.
ARTICLE II
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth below:
"Agreement" means the written agreement evidencing an award under this Plan
between the Company and the recipient of the award.
"Board" means the Board of Directors of Frontier Airlines, Inc.
"Bonus Stock" means shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.
"Bonus Stock Award" means an award of Bonus Stock under this Plan.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee the Board designates, consisting of three or
more members of the Board each of whom must be (i) a "Non-Employee Director" within
the meaning of Rule 16b-3 under the Exchange Act and (ii) an "outside director" within
the meaning of Section 162(m) of the Code.
"Common Stock" means the common stock, no par value, of the Company.
"Company" means Frontier Airlines, Inc.
"Directors Options" has the meaning described in Section 9.5.
"Directors Restricted Stock" has the meaning described in Section 9.4.
"Disabled" or "Disability" means the inability of the holder of an award to
perform substantially their duties and responsibilities for a continuous period of at
least six months, as determined solely by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the closing transaction price of a share of Common
Stock reported on the NASDAQ on the date as of which such value is being determined
or, if there shall be no reported transactions for such date, on the next preceding
date for which transactions were reported; provided, however, that Fair Market Value
may be determined by the Committee by whatever means or method as the Committee, in
the good faith exercise of its discretion, shall at such time deem appropriate.
"Incentive Option" means an option designated as such and granted in
accordance with Section 422 of the Code.
"Non-Employee Director" means any director of the Company who is not an
officer or employee of the Company or any Subsidiary.
"Non-Statutory Stock Option" means an option to purchase shares of Common
Stock that is not an Incentive Stock Option.
"Performance Measures" means the criteria and objectives, established by the
Committee, which shall be satisfied or met (i) as a condition to the grant of a Stock
Award, or (ii) during the applicable Restriction Period or Performance Period as a
condition to the holder's receipt, in the case of a Restricted Stock Award, of the
shares of Common Stock subject to such award, or, in the case of a Performance Share
Award, of the shares of Common Stock subject to such award and/or of payment with
respect to such award. These criteria and objectives may include, but are not limited
to, the attainment by a share of Common Stock of a specified Fair Market Value for a
specified period of time, earnings per share, return to stockholders (including
dividends), return on equity, earnings of the Company, revenues, market share, cash
flow or cost reduction goals, or any combination of the foregoing and any other
criteria and objectives established by the Board or the Committee.
"Performance Period" means any period designated by the Committee during which
the Performance Measures applicable to a Performance Share Award will be measured.
"Performance Share" means a right, contingent upon attaining a specified
Performance Measure within the specified Performance Period, to receive one share of
Common Stock, which may be Restricted Stock, or in lieu of all or a portion thereof,
the Fair Market Value of the Performance Share in cash.
"Performance Share Award" means an award of Performance Shares under this Plan.
"Permanent and Total Disability" will have the meaning set forth in Section
22(e)(3) of the Code or any successor to the Code.
"Post Termination Exercise Period" means the period specified in or under
Section 6.2(a), Section 6.2(b), or Section 6.2(d) following termination of employment
with the Company during which an option may be exercised.
"Restricted Stock" means shares of Common Stock subject to a Restriction
Period and includes Directors Restricted Stock.
"Restricted Stock Award" means an award of Restricted Stock under this Plan.
"Restriction Period" means any period the Committee designates during which
the Common Stock under a Restricted Stock Award may not be sold, transferred,
assigned, pledged, hypothecated, or otherwise encumbered or disposed of, except as
provided for in this Plan or the Agreement relating to the award.
"Retirement" means termination of employment with the Company by reason of
retirement in accordance with the Company's normal criteria or with the consent of the
Company.
"Stock Award" means a Restricted Stock Award or a Bonus Stock Award.
"Subsidiary" and "Subsidiaries" means the subsidiaries of the Company the
Board or Committee designates and the Committee selects in its sole discretion,
provided that for the purposes of Incentive Stock Options, it must be a subsidiary
within the meaning of Section 424 of the Code.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of any
term herein in the singular shall also include the plural. The verb "to include" in
all of its form, tenses, and variations, is always used in the nonexclusive sense.
ARTICLE III
PLAN ADMINISTRATION
3.1 General. The Committee shall administer the Plan. Any one or a combination of
the following awards may be made under this Plan to eligible persons: (i) options to
purchase shares of Common Stock in the form of Incentive Stock Options or
Non-Statutory Stock Options, (ii) Stock Awards in the form of Restricted Stock or
Bonus Stock, and (iii) Performance Shares. In accordance with the provisions of the
Plan, the Committee shall, in its sole discretion, select eligible persons for
participation in this Plan, determine the form, amount, and timing of each award to be
made pursuant to the Plan, and, as applicable, the shares of Common Stock and the
number of Performance Shares to be issued thereunder, the exercise or base price
associated with the award, the time and conditions of exercise or settlement of the
award, the duration and nature of Restricted Stock Award restrictions, and all other
terms and conditions the Committee may deem necessary or desirable and consistent with
the terms of the Plan. The Committee shall determine the form or forms of the
Agreements evidencing the awards granted under the Plan, which provisions need not be
identical except as may be provided herein. The Committee may in its sole discretion
and for any reason at any time, subject to the requirements of Section 162(m) of the
Code and its regulations in the case of an award intended to be qualified
performance-based compensation, adopt such rules and regulations for carrying out the
purposes of the Plan as it may deem proper and in the best interests of the Company.
The Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or in any Agreement in the manner and to the extent it shall
deem expedient and it shall be the sole and final judge of such expediency. The
Committee will, subject to the terms of this Plan, establish rules and regulations it
deems necessary or desirable for the administration of the Plan and may impose,
incidental to the grant of an award, conditions to the award, including limiting
competitive employment or other activities. The determinations, interpretations, and
other actions of the Committee pursuant to the provisions of the Plan shall be binding
and conclusive for all purposes and on all persons.
3.2 Delegation by Committee. The Committee may delegate some or all of its power
and authority under this Plan to the Board, Chief Executive Officer, or other Company
executive officers, as the Committee deems appropriate. The delegation shall be as
broad or as narrow as the Committee determines. To the extent that the Committee has
delegated the authority to determine certain terms and conditions of an award, all
references in the Plan to the Committee's exercise of authority in determining such
terms and conditions shall be construed to include the officer or officers to whom the
Committee has delegated the power and authority to make such determination. The
Committee shall not delegate its power and authority to grant awards to any
participant who is covered by Section 16 of the Exchange Act or the deductibility of
whose compensation is, or may become, subject to the limitations of Code Section
162(m).
3.3 Committee Liability. No member of the Board, Committee, the Chief Executive
Officer, nor any other executive officer to whom the Committee delegates any of its
power and authority hereunder, shall be liable for any act, omission, interpretation,
construction or determination made in connection with this Plan in good faith, and the
members of the Board, the Committee, the Chief Executive Officer, and other executive
officers are entitled to indemnification and reimbursement by the Company in respect
of any claim, loss, damage, or expense (including attorneys' fees) arising therefrom
to the full extent permitted by law, except as otherwise may be provided in the
Company's Articles of Incorporation and/or By-laws, and under any directors' and
officers' liability insurance that may be in effect from time to time.
3.4 Quorum. A majority of the Committee shall constitute a quorum. The acts of
the Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in writing
by all of the members of the Committee without a meeting.
3.5 Eligibility. Participants in this Plan will consist of the directors
(including Non-Employee Directors), officers, managers, and other employees, persons
expected to become directors, officers, managers, and other employees, and consultants
of the Company, and its Subsidiaries as the Committee in its sole discretion may
select from time to time. For purposes of this Plan, references to employment by the
Company shall also mean employment by a Subsidiary. The Committee's selection of a
person to participate in this Plan at any time shall not require the Committee to
select such person to participate in this Plan at any other time. Non-Employee
Directors of the Company shall be eligible to participate in this Plan in accordance
with Article IX.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, Three
Million, Five Hundred Thousand (3,500,000) shares of Common Stock will be available
under this Plan, reduced by the sum of the aggregate number of shares of Common Stock
that become subject to outstanding options, including Directors Options, outstanding
Stock Awards, and outstanding Performance Shares. The maximum number of shares of
Common Stock that may be issued under Incentive Stock Options is Three Million, Five
Hundred Thousand (3,500,000) shares of Common Stock. To the extent that shares of
Common Stock subject to an outstanding option, Stock Award, or Performance Share are
not issued or delivered by reason of the expiration, termination, cancellation, or
forfeiture of such award or by reason of the withholding of shares of Common Stock to
pay all or a portion of the exercise price of an award, if any, or to satisfy all or a
portion of the tax withholding obligations relating to an award, then such shares of
Common Stock shall again be available under this Plan. Shares of Common Stock shall
be made available from authorized and unissued shares of Common Stock, or authorized
and issued shares of Common Stock reacquired and held as treasury shares or otherwise
or a combination thereof. The Company shall at all times during the term of the Plan
and while any options are outstanding retain as authorized and unissued Common Stock
at least the number of shares from time to time required under the provisions of the
Plan, or otherwise assure itself of its ability to perform its obligations hereunder.
4.2 Limit on Option Grants. To the extent required by Section 162(m) of the Code
and the regulations thereunder, the maximum number of shares of Common Stock with
respect to which options may be granted during any calendar year to any person shall
be 250,000, subject to adjustment as provided in Section 4.3 below.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. In the event of any stock
split, stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other than a
regular cash dividend, the number and class of securities available under this Plan,
the number and class of securities subject to each outstanding option and the purchase
price per security, the number and class of securities subject to each Restricted
Stock Award granted to Non-Employee Directors pursuant to Article IX, the number and
class of securities subject to each outstanding Stock Award, the terms of each
outstanding Performance Share, the maximum number of Shares available for grant to any
one person in a calendar year pursuant to Section 4.2, the maximum number of Shares
available for grant pursuant to Incentive Options, and the number of Shares subject to
a delegation of authority under Section 3.2 of this Plan shall be appropriately
adjusted by the Committee, such adjustments to be made in the case of outstanding
options without an increase in the aggregate purchase price or base price. The
decision of the Committee regarding any such adjustment shall be final, binding and
conclusive. If any such adjustment would result in a fractional security being (a)
available under this Plan, such fractional security shall be disregarded, or (b)
subject to an award under this Plan, the Company shall pay the holder of such award,
in connection with the first vesting (other than vesting of an option), exercise, or
settlement of such award in whole or in part occurring after such adjustment, an
amount in cash determined by multiplying (i) the fraction of such security (rounded to
the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
vesting (other than vesting of an option), exercise, or settlement date over (B) the
exercise or base price, if any, of such award.
ARTICLE V
CORPORATE REORGANIZATION; CHANGE IN CONTROL
5.1 Change in Control. Notwithstanding any provision in this Plan or any
Agreement, in the event of a Change in Control, (i) all outstanding options shall
immediately become exercisable in full, (ii) the Restriction Period applicable to any
outstanding Restricted Stock Award shall lapse, (iii) the Performance Period
applicable to any outstanding Performance Share Award shall lapse, (iv) the
Performance Measures applicable to any outstanding Restricted Stock Award (if any) and
to any outstanding Performance Share Award shall be deemed to be satisfied at the
maximum level.
5.2 Change in Control means
(a) the acquisition by any individual, entity or group (a "Person"), including any
"person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 30% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the following:
(A) any acquisition directly from the Company (excluding any acquisition
resulting from the exercise of an exercise, conversion or exchange privilege
unless the security being so exercised, converted or exchanged was acquired
directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (D)
any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii), and (iii) of Section 5.2(c);
(b) individuals who, as of September 4, 2003, constitute the Board of Directors
(the Incumbent Board") cease for any reason to constitute at least a majority
of such Board; provided that any individual who becomes a director of the
Company subsequent to September 4, 2003 whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed
a member of the Incumbent Board; and provided further, that any individual who
was initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board shall not be deemed a member of the Incumbent Board;
(c) approval by the stockholders of the Company of a reorganization, merger or
consolidation of the Company or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate Transaction");
excluding, however, a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the beneficial
owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
Corporate Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(other than: the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; the corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 30% or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, as the case may be)
will beneficially own, directly or indirectly, 30% or more of, respectively,
the outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the election of
directors, and (iii) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction;
(d) approval by the stockholders of the Company of a plan of complete liquidation
or dissolution of the Company; or
(e) any other transaction that the Board determines by resolution to be a Change
in Control.
ARTICLE VI
STOCK OPTIONS
6.1 Stock Options. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons the Committee may select.
Each option, or portion thereof, that is not an Incentive Stock Option, shall be a
Non-Statutory Stock Option. An Incentive Stock Option may not be granted to any
person who is not an employee of the Company or any parent or subsidiary (as defined
in Section 424 of the Code). Each Incentive Stock Option shall be granted within ten
years of the effective date of this Plan. To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of shares of Common Stock with respect to
which options designated as Incentive Stock Options are exercisable for the first time
by a participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or subsidiary as defined in Section 424 of the Code) exceeds
the amount (currently $100,000) established by the Code, such options shall constitute
Non-Statutory Stock Options. Options shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of Common Stock
subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined in each case by
the Committee and set forth in the Agreement, but, in the case of an Incentive
Stock Option, in no event shall the price be less than 100 percent of the Fair
Market Value of the Stock on the date the Incentive Stock Option is granted.
(b) Duration of Options; Restrictions on Exercise. The Committee will determine
the period during which an option may be exercised; provided the exercise
period for an Incentive Stock Option must end, in all cases, not more than ten
years from the date the Incentive Stock Option is granted. The Agreement shall
also set forth any installment or other restrictions on exercise of the option
during such period, if any, as may be determined by the Committee. Each
option shall become exercisable (vest) over such period of time, if any, or
upon the occurrence of other events, as determined by the Committee. An
exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.
(c) Manner of Exercise. Subject to the applicable award Agreement, an option may
be exercised by (i) giving written notice to the Company specifying the number
of whole shares of Common Stock to be purchased and accompanied by payment in
full of the exercise price (A) by cash, certified or bank check, or other
instrument or arrangement made for such payment to the Company's satisfaction,
(B) by delivery (either actual delivery or by attestation procedures
established by the Company) of previously acquired shares of Common Stock for
which the holder thereof has good title, free and clear of all liens and
encumbrances, which were not acquired within the six months prior to the
exercise date, and having an aggregate Fair Market Value, determined as of the
date of exercise, equal to the aggregate purchase price payable by reason of
such exercise, (C) in cash by a broker-dealer acceptable to the Company to
whom the optionee has submitted an irrevocable notice of exercise, or (D)
through a cashless exercise program authorized by the Committee and Company,
and (ii) by executing such documents as the Company may reasonably request.
The Company shall have sole discretion to disapprove of an election under any
of clauses (B)-(D). Any fraction of a share of Common Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate representing
Common Stock shall be delivered until the full purchase price therefor has
been paid and the amount of required tax withholding has been paid (or
arrangement made for such payment or withholding to the Company's
satisfaction).
(d) Dividend Equivalents. The Agreement relating to any Non-Statutory Stock
Option may provide for the grant of "dividend equivalents" with respect to
each Non-Statutory Stock Option. Each dividend equivalent shall entitle the
optionee to receive a cash payment equal to the product of (i) the dividends
declared with respect to a share of Common Stock and (ii) the number of shares
of Common Stock subject to such option. Each cash payment shall be subject to
tax withholding required by law.
6.2 Termination of Employment or Service.
(a) Disability. Subject to Article V, and unless otherwise specified in the
Agreement relating to an option, if the employment with or service to the
Company of the holder of an option terminates by reason of Disability,
Permanent and Total Disability in the case of an Incentive Option, each option
held by such holder shall be exercisable only to the extent that such option
is exercisable on the effective date of such holder's termination of
employment or service and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is six (6) months (or such shorter
period as set forth in the Agreement relating to such option) after the
effective date of such holder's termination of employment or service and (ii)
the expiration date of the term of such option.
(b) Retirement. Subject to Article V, and unless otherwise specified in the
Agreement relating to an option, if the employment with or service to the
Company of the holder of an option terminates by reason of Retirement, each
option held by such holder shall be exercisable only to the extent that such
option is exercisable on the effective date of such holder's termination of
employment or service and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is six (6) months, three (3) months
in the case of Incentive Stock Options, (or such shorter period as set forth
in the Agreement relating to such option) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option .
(c) Death. Unless otherwise specified in the Agreement relating to an option,
as the case may be, and subject to Article V, if the employment with or
service to the Company of the holder of an option terminates by reason of
death, each option held by such holder shall be exercisable only to the extent
that such option is exercisable on the date of such holder's death, and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary, or similar person until and including the
earliest to occur of (i) the date which is six (6) months (or such shorter
period as set forth in the Agreement relating to such option) after the date
of death and (ii) the expiration date of the term of such option
(d) Other Termination. Subject to Article V, and unless otherwise specified
in the Agreement relating to an option, if the employment with or service to
the Company of the holder of an option terminates for any reason other than
Disability, Retirement, or death, each option held by such holder shall be
exercisable only to the extent that such option is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative
or similar person) until and including the earliest to occur of (i) the date
which is six (6) months, three (3) months in the case of Incentive Options,
(or such shorter period as set forth in the Agreement relating to such option)
after the effective date of such holder's termination of employment or service
and (ii) the expiration date of the term of such option .
(e) Death Following Termination of Employment or Service. Unless otherwise
specified in the Agreement relating to an option, and subject to Article V, if
the holder of an option dies during the applicable Post-Termination Exercise
Period, each option held by such holder shall be exercisable only to the
extent that such option is exercisable on the date of such holder's death and
may thereafter be exercised by the holder's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is 90 days after the date of death and (ii) the
expiration date of the term of such option .
6.3 Restrictions on Incentive Stock Options.
(a) Initial Exercise. The aggregate Fair Market Value of the shares of Common
Stock with respect to which Incentive Stock Options are exercisable for the first time
by a holder in any calendar year, under the Plan or otherwise, shall not exceed
$100,000. For this purpose, the Fair Market Value of the Common Stock shall be
determined as of the date of grant and Incentive Stock Options shall be taken into
account in the order granted.
(b) Ten Percent Stockholders. Incentive Stock Options granted to a holder of
record of 10% or more of the outstanding Stock of the Company shall have an option
price equal to 110% of the Fair Market Value of the shares of Common Stock on the date
of grant of the option and the option period for any such option shall not exceed five
(5) years.
ARTICLE VII
STOCK AWARDS
7.1 Stock Awards. The Committee may, in its discretion, grant Stock Awards to
such eligible persons as may be selected by the Committee. The Agreement relating to a
Stock Award shall specify whether the Stock Award is a Restricted Stock Award or Bonus
Stock Award.
7.2 Terms of Stock Awards. Stock Awards shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms. The Committee will determine the number of
shares of Common Stock subject to a Restricted Stock Award or Bonus Stock
Award and the Performance Measures (if any) and Restriction Period applicable
to a Restricted Stock Award.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award
shall provide, in the manner determined by the Committee, in its discretion,
and subject to the provisions of this Plan, for the vesting of the shares of
Common Stock subject to such award (i) if specified Performance Measures are
satisfied or met during the specified Restriction Period or (ii) if the holder
of such award remains continuously in the employment of or service to the
Company during the specified Restriction Period and for the forfeiture of all
or a portion of the shares of Common Stock subject to such award (x) if
specified Performance Measures are not satisfied or met during the specified
Restriction Period or (y) if the holder of such award does not remain
continuously in the employment of or service to the Company during the
specified Restriction Period. Bonus Stock Awards shall not be subject to any
Performance Measures or Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate or
certificates representing a Restricted Stock Award may be registered in the
holder's name or a nominee name at the discretion of the Company and may bear
a legend, in addition to any legend which may be required pursuant to Sections
11.1 and 11.2, indicating that the ownership of the shares of Common Stock
represented by such certificate is subject to the restrictions, terms, and
conditions of this Plan and the Agreement relating to the Restricted Stock
Award. All certificates registered in the holder's name shall be deposited
with the Company, together with stock powers or other instruments of
assignment (including a power of attorney), each endorsed in blank with a
guarantee of signature if deemed necessary or appropriate by the Company,
which would permit transfer to the Company of all or a portion of the shares
of Common Stock subject to the Restricted Stock Award in the event such award
is forfeited in whole or in part. Upon termination of any applicable
Restriction Period (and the satisfaction or attainment of applicable
Performance Measures), or upon the grant of a Bonus Stock Award, in each case
subject to the Company's right to require payment of any taxes in accordance
with Article XIV, a certificate or certificates evidencing ownership of the
requisite number of shares of Common Stock shall be delivered to the holder of
such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in
the Agreement relating to a Restricted Stock Award, and subject to the terms
and conditions of a Restricted Stock Award, the holder of such award shall
have all rights as a stockholder of the Company, including, but not limited
to, voting rights, the right to receive dividends and the right to participate
in any capital adjustment applicable to all holders of Common Stock; provided,
however, that a distribution with respect to shares of Common Stock, other
than a regular cash dividend, shall be deposited with the Company and shall be
subject to the same restrictions as the shares of Common Stock with respect to
which such distribution was made. The Agreement relating to Restricted Stock
Award may provide that regular cash dividends made with respect to Common
Stock in a Restricted Stock Award prior to the termination of the Restriction
Period shall be deposited with the Company and such cash dividends shall be
used to purchase additional shares of Common Stock which shall be subject to
the same restrictions, vesting period, Performance Measures, and other
provisions as the shares of Common Stock with respect to which such cash
dividend was made.
7.3 Termination of Employment or Service. Unless otherwise set forth in the
Agreement relating to a Restricted Stock Award, and subject to Article V, if the
employment with or service to the Company of the holder of such award terminates by
reason of Disability, Retirement, death, or any other reason, the portion of such
award which is subject to a Restriction Period on the effective date of such holder's
termination of employment or service shall be forfeited by such holder and such
portion shall be canceled by the Company.
Article VIII
PERFORMANCE SHARE AWARDS
8.1 Performance Share Awards. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the Committee.
8.2 Terms of Performance Share Awards. Performance Share Awards shall be subject
to the following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall deem
advisable.
(a) Number of Performance Shares and Performance Measures. The Committee shall
determine the number of Performance Shares subject to any award and the
Performance Measures and Performance Period applicable to such award.
(b) Vesting and Forfeiture. The Agreement relating to a Performance Share Award
shall provide, in the manner determined by the Committee, in its discretion,
and subject to the provisions of this Plan, for the vesting of such award, if
specified Performance Measures are satisfied or met during the specified
Performance Period, and for the forfeiture of all or a portion of such award,
if specified Performance Measures are not satisfied or met during the
specified Performance Period.
(c) Settlement of Vested Performance Share Awards. The Agreement relating to a
Performance Share Award (i) shall specify whether such award may be settled in
shares of Common Stock (including shares of Restricted Stock) or cash or a
combination thereof and (ii) may specify whether the holder thereof shall be
entitled to receive, on a current or deferred basis, dividend equivalents,
and, if determined by the Committee, interest on or the deemed reinvestment of
any deferred dividend equivalents, with respect to the number of shares of
Common Stock subject to such award. If a Performance Share Award is settled in
shares of Restricted Stock, a certificate or certificates representing such
Restricted Stock shall be issued in accordance with Section 7.2(c) and the
holder of such Restricted Stock shall have such rights of a stockholder of the
Company as determined pursuant to Section 7.2(d). Prior to the settlement of a
Performance Share Award in shares of Common Stock, including Restricted Stock,
the holder of such award shall have no rights as a stockholder of the Company
with respect to the shares of Common Stock subject to such award and shall
have rights as a stockholder of the Company in accordance with Section 10.4.
(d) Termination of Employment. Unless otherwise set forth in the Agreement
relating to a Performance Share Award, and subject to Article V, if the
employment with or service to the Company of the holder of such award
terminates by reason of Disability, Retirement, death, or any other reason,
the portion of such award which is subject to a Performance Period on the
effective date of such holder's termination of employment shall be forfeited
and such portion shall be canceled by the Company.
ARTICLE IX.
PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
9.1 Eligibility. The Committee may, in its discretion, grant awards to
Non-Employee Directors in accordance with this Article IX.
9.2 Terms of Awards. On the date on which a person is first elected or begins to
serve as a Non-Employee Director other than by reason of termination of employment, or
on the date of each annual meeting of stockholders of the Company, the Committee may,
in its discretion, grant each person who is a Non-Employee Director a number,
determined by the Committee, of shares of Restricted Stock having the terms described
in Section 9.4 ("Directors Restricted Stock") or options having the terms described in
Section 9.5 ("Directors Options").
9.3 Elective Participation. Each Non-Employee Director may from time to time
elect, in accordance with procedures to be specified by the Committee, to receive in
lieu of all or part of the cash retainer and any meeting fees that would otherwise be
payable to such Non-Employee Director, on each date on which such retainer and meeting
fees would otherwise be payable during the period that such election is in effect,
either (i) Directors Restricted Stock with a Fair Market Value as of such payment date
equal to 100% of the foregone amount of such retainer payment and meeting fees or (ii)
Directors Options to purchase shares of Common Stock having a Fair Market Value as of
such payment date equal to 100% of the foregone amount of such retainer payment and
meeting fees.
9.4 Directors Restricted Stock. Shares of Directors Restricted Stock shall be
subject to a Restriction Period commencing on the date of grant of such award and
terminating on the date of the first anniversary of the date of grant of such award,
shall vest (subject to earlier vesting pursuant to Article V) if the holder of such
award remains continuously in the service of the Company as a Non-Employee Director
during the Restriction Period and shall be forfeited if the holder of such award does
not remain continuously in the service of the Company as a Non-Employee Director
during the Restriction Period. A certificate or certificates representing Directors
Restricted Stock shall be issued in accordance with Section 7.2(c) and the holder of
such award shall have such rights of a stockholder of the Company as determined
pursuant to Section 7.2(d). Notwithstanding the foregoing paragraph, if the service
to the Company as a Non-Employee Director of the holder of Directors Restricted Stock
terminates for any reason other than cause as determined in the sole discretion of the
Committee, the Restriction Period shall terminate as of the effective date of such
holder's termination of service.
9.5 Directors Options. Each Directors Option shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Exercise Period and Exercisability. Each Directors Option shall not be
exercisable during the first year following its date of grant, and may be
exercised in full thereafter and from and after a Change in Control. Each
Directors Option shall expire ten (10) years after its date of grant.
(b) Purchase Price. The purchase price for the shares of Common Stock subject to
any Directors Option shall be equal to 100% of the Fair Market Value of a
share of Common Stock on the date of grant of such Directors Option. An
exercisable Directors Option, or portion thereof, may be exercised in whole or
in part only with respect to whole shares of Common Stock. Directors Options
shall be exercisable in accordance with Section 6.1(c).
(c) Termination of Directorship. If the holder of a Directors Option ceases to be
a director of the Company by reason of Disability, death, or for any reason
other than cause as determined in the sole discretion of the Committee, each
such option held by such holder shall be fully exercisable and may thereafter
be exercised by such holder (or such holder's legal representative or similar
person) until and including the expiration date of the term of such option.
9.6 Other Awards of Restricted Stock to Directors. The Committee, with the
approval of the Board, may award shares of Restricted Stock for service as Chairman of
the Board (or for service in other capacities to the Board). The provisions of Section
9.4 shall govern any such award of Restricted Stock or such other provisions as shall
be adopted by the Committee with the approval of the Board.
ARTICLE X
RIGHTS OF PARTICIPANTS
10.1 Service. No person has any right to participate in this Plan. Nothing
contained in the Plan or in any award granted under the Plan shall confer upon any
participant any right with respect to the continuation of his employment by, or
consulting relationship with, the Company, or interfere in any way with the right of
the Company at any time to terminate such services or to increase or decrease the
compensation of the participant from the rate in existence at the time of the grant of
an award. The Committee, in its sole discretion, shall determine whether an authorized
leave of absence, or absence in military or government service, shall constitute a
termination of service.
10.2 Nontransferability of Awards. Unless otherwise specified in the Agreement
relating to an award, no award shall be transferable other than by will, the laws of
descent and distribution or pursuant to beneficiary designation procedures approved by
the Company. Except to the extent permitted by the foregoing sentence or the Agreement
relating to an award, each award may be exercised or settled during the holder's
lifetime only by the holder or the holder's legal representative or similar person.
Except to the extent permitted by the second preceding sentence or the Agreement
relating to an award, no award may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law or
otherwise) or be subject to execution, attachment or similar process. Upon any attempt
to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of
any such award, such award and all rights thereunder shall immediately become null and
void. The holder of an Incentive Stock Option may not transfer the Incentive Stock
Option during the holder's lifetime under any circumstances.
10.3 No Plan Funding. Obligations to participants under the Plan will not be
funded, trusteed, insured, or secured in any manner. The participants under the Plan
shall have no security interest in any assets of the Company, and shall be only
general creditors of the Company.
10.4 Rights as Stockholder. No person shall have any right as a stockholder of the
Company with respect to any shares of Common Stock or other equity security of the
Company which is subject to an award hereunder unless and until such person becomes a
stockholder of record with respect to such shares of Common Stock or equity security.
10.5 Designation of Beneficiary. If permitted by the Company, a holder of an award
may file with the Committee a written designation of one or more persons as such
holder's beneficiary or beneficiaries (both primary and contingent) in the event of
the holder's death. To the extent an outstanding option granted hereunder is
exercisable, such beneficiary or beneficiaries shall be entitled to exercise such
option. Each beneficiary designation shall become effective only when filed in
writing with the committee during the holder's lifetime on a form prescribed by the
Committee. The spouse of a married holder domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such spouse.
The filing with the Committee of a new beneficiary designation shall cancel all
previously filed beneficiary designations. If a holder fails to designate a
beneficiary, or if all designated beneficiaries of a holder predecease the holder,
then each outstanding option hereunder held by such holder, to the extent exercisable,
may be exercised by such holder's executor, administrator, legal representative or
similar person.
ARTICLE XI
GENERAL RESTRICTIONS
11.1 Investment Representations. The Company may require any person to whom an
award is granted, as a condition of exercising or receiving such award, to give
written assurances in substance and form satisfactory to the Company and its counsel
to the effect that such person is acquiring the Common Stock for his own account for
investment and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Company deems necessary or appropriate in order
to comply with Federal and applicable state securities laws. Legends evidencing such
restrictions may be placed on the Stock certificates.
11.2 Compliance with Securities Laws. Each award made under this Plan shall be
subject to the requirement that, if at any time the Company determines that the
listing, registration, or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, is necessary as a condition of, or
in connection with, the issuance or purchase of shares thereunder, such award grant
may not be accepted or exercised in whole or in part and the shares shall not be
delivered unless such listing, registration, qualification, consent, or approval shall
have been effected or obtained on conditions acceptable to the Committee. Nothing
herein shall be deemed to require the Company to apply for or to obtain such listing,
registration, or qualification. The Company may require that certificates evidencing
shares of Common Stock delivered pursuant to any award made hereunder bear a legend
indicating that the sale, transfer, or other disposition thereof by the holder is
prohibited except in compliance with the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
11.3 Changes in Accounting Rules. Except as provided otherwise at the time an
award is granted, notwithstanding any other provision of the Plan to the contrary, if,
during the term of the Plan, any changes in the financial or tax accounting rules
applicable to awards shall occur which, in the sole judgment of the Committee, may
have a material adverse effect on the reported earnings, assets, or liabilities of the
Company, the Committee shall have the right and power to modify as necessary, any then
outstanding and unexercised options, outstanding Stock Awards, or outstanding
Performance Share Awards as to which the applicable services or other restrictions
have not been satisfied.
ARTICLE XII
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a participant as a
result of the exercise of an option, the sale of shares received upon such exercise,
or the vesting of any Stock Award or Performance Share Award shall not constitute
"earnings" or "compensation" with respect to which any other employee benefits of such
employee are determined, including without limitation benefits under any pension,
profit sharing, 401(k), life insurance or salary continuation plan.
ARTICLE XIII
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or modify
the Plan provided, however, that no amendment or modification may become effective
without approval of the amendment or modification by the shareholders if shareholder
approval is required to enable the Plan to satisfy any applicable statutory or
regulatory requirements, or if the Company, on the advice of counsel, determines that
shareholder approval is otherwise necessary or desirable.
ARTICLE XIV
WITHHOLDING
14.1 Withholding Requirement. The Company's obligations to deliver shares
of Common Stock upon the exercise of any option or the vesting of any Stock Award or
Performance Share Award shall be subject to the participant's satisfaction of all
applicable federal, state and local income and other tax withholding requirements. Any
cash paid to a participant under this Plan, including dividend equivalents or
dividends paid on Restricted Stock prior to vesting, is subject to wage withholding.
14.2 Withholding With Stock. At the time the Committee grants an award or
at any time thereafter, it may, in its sole discretion, grant the participant an
election to pay all such amounts of tax withholding, or any part thereof, by electing
(a) to have the Company withhold from shares otherwise issuable to the participant,
shares of Common Stock having a value equal to the amount required to be withheld or
such lesser amount as may be elected by the participant; provided however, that the
amount of Common Stock so withheld shall not exceed the minimum amount required to be
withheld under the method of withholding that results in the smallest amount of
withholding, or (b) to transfer to the Company a number of shares of Common Stock that
were acquired by the participant more than six (6) months prior to the transfer to the
Company or such other period that is required to avoid a charge to the Company's
earnings for financial accounting purposes and that have a value equal to the amount
required to be withheld or such lesser amount as may be elected by the participant.
All elections shall be subject to the approval or disapproval of the Committee. The
value of shares of Common Stock to be withheld shall be based on the Fair Market Value
of the Common Stock on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). Any such elections by participants to have shares of
Common Stock withheld for this purpose will be subject to the following restrictions:
(e) All elections must be made prior to the Tax Date.
(f) All elections shall be irrevocable.
(g) If the participant is an officer or director of the Company within the meaning
of Section 16 of the Exchange Act ("Section 16"), the participant must satisfy
the requirements of such Section 16 and any applicable rules thereunder with
respect to the use of Common Stock to satisfy such tax withholding obligation.
ARTICLE XV
REQUIREMENTS OF LAW
15.1 Requirements of Law. The issuance of Common Stock and the payment of
cash pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
15.2 Federal Securities Law Requirements. If a participant is an officer or
director of the Company within the meaning of Section 16, awards granted hereunder
shall be subject to all conditions required under Rule 16b-3, or any successor rule
promulgated under the Exchange Act, to qualify the award for any exception from the
provisions of Section 16(b) of the Exchange Act available under that Rule. Such
conditions shall be set forth in the agreement with the Participant which describes
the award or other document evidencing or accompanying the award.
15.3 Governing Law. The Plan, each award hereunder and the related Agreement,
and all determinations made and actions taken under this Agreement, to the extent not
otherwise governed by the Code and the federal laws of the United States, shall be
construed in accordance with and governed by the laws of the State of Colorado without
giving effect to principles of conflicts of laws.
Dated: _________________, 2003
FRONTIER AIRLINES, INC.
a Colorado corporation
By:
