EXHIBIT 4.5
FRONTIER AIRLINES, INC.
1994 STOCK OPTION PLAN
1. Purpose.
The purpose of the Frontier Airlines, Inc. 1994 Stock Option Plan (the
"Plan")is to provide an incentive to certain employees and directors of Frontier
Airlines, Inc.(the "Company"), by granting to such employees incentive stock
options ("ISOs"), within the meaning of Section 422A of the Internal Revenue
code of 1986, as amended (the ("Code"), to acquire Common Stock, no par value of
the Company ("Stock"); and by granting to such employees and directors Options
not constituting ISOs ("NQSOs"), to acquire Stock.
2. Effective Date and Term of the Plan.
The Plan is effective March 10, 1994 (the "Effective Date"). Unless
sooner terminated, the Plan shall continue in effect from the Effective Date
until March 10, 1004 (the "Termination Date"). In no event shall an ISO or any
other Option be granted after the Termination Date. Options granted prior to the
Termination Date shall remain in effect until their exercise, surrender,
cancellation or expiration in accordance with their terms.
3. Stock Subject to the Plan.
(a) Subject to adjustment as provided in Section 10 below, the aggregate number
of shares of Stock ("Shares") to be delivered upon exercise of all Options
granted under the Plan shall not exceed four million, two hundred fifty thousand
(4,250,000).
(b) If any Option granted under the Plan expires, terminates or is canceled
without having been exercised in full, the number of shares of Stock as to which
the Option has not been exercised shall become available for further grants
under the Plan, except that if any Option is canceled on account of the exercise
of a related Option, the Shares represented by such canceled Option shall no
longer be available for issuance under the Plan.
(c) Upon exercise of an Option the Company may issue authorized but unissued
shares of Stock, shares of Stock held in its treasury, or both.
(d) Shares of Stock issued upon the exercise of an Option shall be fully paid
and nonassessable.
(e) Unless otherwise determined by the Committee, no fractional share of Stock
shall be issued or transferred upon exercise of an Option under the Plan.
4. Administration of the Plan.
(a) Committee. The Plan shall be administered by a Committee of the Board of
Directors (the "Committee"). The Committee shall initially consist of the entire
Board. However, the Board may elect at any time to provide that the Committee
shall consist of not less than two members, each of whom shall be a Director who
is a "disinterested person" within the meaning of Title 17, Code of Federal
Regulations, Section 16b-3(c)(2)(i). The Committee shall be appointed by, and
serve at the pleasure of, the Board of Directors.
(b) Authority. Subject to the specific limitations and restrictions set forth in
the Plan, the Committee shall have the authority: (i) to grant ISOs to employees
whom the Committee determines are key to the success of the Company ("Key
Employees"); (ii) to grant NQSOs to such employees or members of the Board of
Directors as the Committee shall select (the grantee of an ISO or NQSO being
hereinafter referred to as an "Optionee"); (iii) to make all determinations
necessary or desirable for the administration of the Plan including, within any
applicable limits specifically set out in the Plan, the number of shares of
Stock that may be purchased under an Option, the price at which an Option may be
exercisable, and the period during which an Optionee must remain in the employ
of the Company or a subsidiary of the Company prior to the exercise of an
Option; (iv) to construe the respective Option agreements and the Plan; (v) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vi) to
determine the terms and provisions of the respective Option agreements, which
need not be identical; (vii) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Option granted under the Plan,
in a manner that the Committee deems necessary or desirable; (viii) to amend any
Option granted under the Plan, subject to the provisions of the Plan; (ix) to
grant to Optionees in exchange for their surrender of Options, new Options
containing such other terms and conditions as the Committee shall determine; and
(x) to make all other determinations in the judgment of the Committee necessary
or desirable for the administration of the Plan. Any interpretation or decision
of the Committee shall be final and conclusive. Nothing in this Section 4(b)
shall give the Committee the right to increase the total number of Shares that
may be purchased on exercise of Options (except as provided in Section 10
below), to extend the term of the Plan, or to extend the period during which an
ISO is exercisable beyond ten years from the date of grant thereof.
(c) Liability/Protection. No member of the Committee shall be liable, in the
absence of bad faith, for any act or omission with respect to serving as a
member of the Committee. Service as a member of the Committee shall constitute
service as a member of the Board of Directors, so that members of the Committee
shall be entitled to indemnification for their service on the Committee to the
full extent provided for service as members of the Board of Directors.
5. Option Grants.
(a) Option Agreement. The Committee shall have sole authority to grant Options
under this Plan. Each Option granted under the Plan shall be evidenced by a
stock option agreement (the "Option Agreement"). The Option Agreement shall be
subject to the terms and conditions of the Plan and may contain additional terms
and conditions (which may vary from Optionee to Optionee) not inconsistent with
the Plan, as the Committee may deem necessary or desirable. Appropriate officers
of the Company are hereby authorized to execute and deliver Option Agreements,
and amendments thereto, in the name of the Company.
(b) Option Price. The Option Price of each Share purchasable under an Option
granted under the Plan shall be determined by the Committee at the time the
Option is granted, and shall be specified in the Option Agreement. The Option
Price shall not be less than (i) in the case of a grant of an ISO to a Key
Employee who, at the time of the grant, is not a Ten Percent Shareholder, as
defined below, one hundred percent (100%) of the fair market value of a share of
Stock as determined on the date the Option is granted, (ii) in the case of a
grant of an ISO to a Key Employee who, at the time of grant, owns stock
representing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any subsidiary (a "Ten Percent
Stockholder"), one hundred and ten percent (110%) of the fair market value of a
Share of Stock, as determined on the date the Option is granted, or (iii) in the
case of a NQSO, the price determined by the Committee. The fair market value of
a share of Stock for purposes of determining the Option Price shall be
determined by the Committee in accordance with any reasonable method of
valuation consistent with applicable requirements of Federal tax law, including,
as applicable, the provisions of Section 422(c)(8) of the Internal Revenue Code
of 1986, as amended. The Option Price shall be subject to adjustment in
accordance with Section 10 hereof.
(c) Number of Shares of Stock. Each Option Agreement shall specify the number of
shares of Stock which the Optionee may purchase. The Committee shall have the
authority to allow a form of payment other than cash to the extent consistent
with applicable requirements of Federal tax law.
(d) Option Term. The Committee shall determine the length of the Option term,
except that no Option term shall extend for a period greater than ten (10) years
from the date of grant.
6. Exercise of Options.
General Rules. Subject to applicable law and the terms and conditions
of the Plan, an Option granted under the Plan shall be exercisable at such time,
or times, upon the occurrence of such event or events, for such period or
periods, in such amount or amounts, and upon the satisfaction of such terms and
conditions including, without limitation, terms and conditions relating to
notice of exercise, date the Option is deemed exercised, delivery and
transferability of shares and withholding of taxes, as the Committee shall
determine and specify in the Option Agreement. The aggregate fair market value
(determined at the time the Option is granted), of the Stock with respect to
which an ISO or ISOs granted to any Key Employee are to become exercisable for
the first time during any calendar year (under the Plan and any other plan of
the Company and its subsidiary corporations) shall not exceed One Hundred
Thousand Dollars ($100,000). The application of the limitation set forth in the
preceding sentence to any individual Option shall be determined by the Committee
subject to applicable rules and regulations under Section 422 of the Code.
However, no Option granted hereunder may provide for exercise in the form of
stock or other securities of the Company unless the Plan meets the applicable
requirements of Title 17, Code of Federal Regulations, Section 16b-3.
7. Expiration of Options.
The unexercised portion of any Option granted under the Plan shall
automatically and without notice expire at the time of the earliest to occur of
the following:
(a) the expiration of ten years from the date on which the Option is granted, or
such shorter term as may be specified in the Option Agreement; or
(b) the expiration of the period specified in the Option Agreement following the
termination of the Optionee's employment with the Company.
Anything to the contrary notwithstanding, in the case of an ISO, such Option
shall by its terms not be exercisable after the expiration of ten years (or, in
the case of a Ten Percent Stockholder, five years) from the date such Option is
granted.
8. Non-Transferability of Options.
(a) No Option granted under the Plan shall be transferable by an Optionee other
than by will or the laws of descent or distribution. During the lifetime of an
Optionee, an Option shall be exercisable only by the Optionee. Except as
otherwise determined by the Committee, any attempt to transfer, assign, pledge,
hypothecate, or otherwise dispose of, or to subject to execution, attachment or
similar process, any Option other than as permitted above shall be null and void
and of no effect, and shall result in the forfeiture of all rights as to such
Option.
(b) The Company may require any person to whom an Option is granted, as a
condition of exercising such Option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
Common Stock subject to the Option for his or her 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 applicable Federal and state securities laws.
(c) Notwithstanding any provision of the Plan or the terms of any Option granted
pursuant to the Plan, the Company shall not be required to issue any Shares if
such issue or transfer would, in the judgment of the Committee, constitute a
violation of any state or Federal law or the rules or regulations of any
governmental regulatory body or any securities exchange. Each Option may be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the Shares subject
to such Option 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 Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Board. Nothing herein shall
be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.
9. No Special Rights.
Until an Optionee has made payment of the Option Price, has paid or has
had satisfied any applicable withholding taxes, and has had issued to him a
certificate or certificates for the shares of Stock so acquired, the Optionee
shall have no rights as a stockholder of the Company with respect to the Stock.
No Option granted under the Plan shall confer upon an Optionee any right to
continued employment with the Company or its subsidiaries, nor shall it
interfere in any way with the right of the Company or its subsidiaries to
terminate an Optionee's employment at any time.
10. Adjustments for Change in Capital Structure and Special Transactions.
(a) Recapitalization etc. In the event of a stock dividend, stock split or
recapitalization or a corporate reorganization in which the Company is a
surviving corporation, including without limitation a merger, consolidation,
split-up or spin-off or a liquidation or distribution of securities or assets
other than cash dividends (a "Restructuring Event"), the number or kinds of
Shares subject to the Plan or to any Option previously granted, and the Option
Price, shall be adjusted by the Committee as it determines in its sole
discretion to reflect such Restructuring Event.
(b) Special Transactions. In the event of a merger, consolidation or other form
of reorganization of the Company with or into another corporation (other than a
merger, consolidation or other form of reorganization in which the Company is
the surviving corporation), a sale or transfer of all or substantially all of
the assets of the Company or a tender or exchange offer made by any corporation,
person or entity (other than an offer made by the Company), the committee,
either before or after the merger, consolidation or other form of
reorganization, may take such action as it determines in its sole discretion
with respect to the number or kinds of shares subject to the Plan or any Option
under the Plan. Such action by the Committee may include (but shall not be
limited to) the following:
(i) accelerating the full exercisability of an Option during such period as
the Committee shall prescribe following the public announcement of such
merger, consolidation, other form of reorganization, sale or transfer
of assets or tender or exchange offer;
(ii) permitting an Optionee at any time during such period as the Committee
shall prescribe in connection with such merger, consolidation, other
form of reorganization, sale or transfer of assets or tender or
exchange offer, to surrender his Option (or any portion thereof), to
the Company in exchange for a cash payment in an amount and in a manner
determined by the Committee; or
(iii) requiring an Optionee, at any time in connection with such merger,
consolidation, other form of reorganization, sale or transfer of assets
or tender or exchange offer, to surrender his Option (or any portion
thereof) to the Company (A) in exchange for a cash payment as described
in clause (ii) above, or (B) in exchange for, and subject to
shareholder approval of, a substitute Option or other award issued by
the corporation surviving such merger, consolidation or other form of
reorganization (or an affiliate of such corporation), or the
corporation acquiring such assets (or an affiliate of such
corporation), which the Committee, in its sole discretion, determines
to have a value substantially equivalent to the value of the Option
surrendered.
11. Amendment, Suspension or Termination of the Plan.
The Committee may, at any time, amend, suspend or terminate any and all
parts the Plan and any Option granted under the Plan in such respects as the
Committee shall deem necessary or desirable, except that no such action may be
taken which would impair the rights of any Optionee with respect to any Option
previously granted under the Plan without the Optionee's consent.
12. Governing Law.
The Plan shall be governed by the laws of the State of Colorado without
regard to the principles of conflict of laws. In case any one or more of the
provisions contained herein are for any reason deemed to be invalid, illegal or
unenforceable in any respect by a judicial body, such illegality, invalidity or
unenforceability shall not effect any other provision of this Plan, and this
Plan shall be construed as if such invalid, unenforceable or illegal provision
had never been contained herein.
13. References.
In the event of an Optionee's death or a judicial determination of his
physical or mental incompetence, reference in the Plan to the Optionee shall be
deemed, where appropriate, to refer to his beneficiary or his legal
representative.
FRONTIER AIRLINES, INC.