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EXHIBIT 10.1
SKYWEST, INC. EXECUTIVE STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
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1. ESTABLISHMENT AND PURPOSE.............................................................1
2. DEFINITIONS ........................................................................1
3. STOCK SUBJECT TO THE PLAN.............................................................5
(a) Aggregate Limitation on Shares Available for Issuance..........................5
(b) Aggregate Annual Limitation on Awards..........................................5
(c) Individual Annual Limitation...................................................5
(d) Adjustment for Change in Capitalization........................................5
(e) Re-Use of Shares...............................................................6
4. ADMINISTRATION OF THE PLAN............................................................6
5. ELIGIBILITY ........................................................................7
6. AWARDS UNDER THE PLAN; AWARD AGREEMENT................................................7
7. OPTIONS ..............................................................................7
(a) Identification of Options......................................................7
(b) Exercise Price.................................................................7
(c) Term and Exercise of Options...................................................8
(d) Limitations on Incentive Stock Options.........................................8
(e) Effect of Termination of Employment............................................9
(f) Effect of Removal from Board of Directors......................................9
(g) Acceleration of Exercise Date Upon Change in Control...........................9
(h) Reload Stock Options...........................................................10
(i) Restrictions on Transferability................................................10
8. TANDEM SARS ..........................................................................10
(a) Benefit Upon Exercise..........................................................10
(b) Term and Exercise of Tandem SAR................................................10
9. NON-TANDEM SARS.......................................................................11
(a) Benefit Upon Exercise..........................................................11
(b) Term and Exercise of Non-Tandem SARs...........................................11
(c) Effect of Termination of Employment or Removal from Board of Directors.........12
(d) Acceleration of Exercise Date Upon Change in Control...........................12
10. RESTRICTED SHARES.....................................................................12
(a) Grants ........................................................................12
(b) Issue Date and Vesting Date....................................................12
(c) Conditions to Vesting..........................................................12
(d) Restrictions on Transfer Prior to Vesting......................................13
(e) Dividends on Restricted Stock..................................................13
(f) Issuance of Certificates.......................................................13
(g) Consequences of Vesting........................................................13
(h) Effect of Termination of Employment............................................13
(i) Effect of Change in Control....................................................14
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11. PERFORMANCE UNITS.....................................................................14
(a) Grants ........................................................................14
(b) Vesting Date...................................................................14
(c) Benefit Upon Vesting...........................................................14
(d) Conditions to Vesting..........................................................14
(e) Effect of Termination of Employment............................................15
(f) Effect of Change in Control....................................................15
12. RIGHTS AS A STOCKHOLDER AND DIVIDEND EQUIVALENTS......................................15
(a) General........................................................................15
(b) Dividend Equivalents...........................................................15
13. DEFERRAL OF AWARDS....................................................................15
14. NO SPECIAL EMPLOYMENT OR DIRECTORSHIP RIGHTS; NO RIGHT TO AWARDS......................16
15. SECURITIES LAW AND LISTING MATTERS....................................................16
16. WITHHOLDING TAXES.....................................................................16
17. NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE CODE..............................16
18. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(b)
OF THE CODE ........................................................................17
19. AMENDMENT OR TERMINATION OF THE PLAN..................................................17
20. TRANSFERS UPON DEATH; NONASSIGNABILITY................................................17
21. EXPENSES AND RECEIPTS.................................................................17
22. FAILURE TO COMPLY.....................................................................17
23. RELATION TO BENEFIT PLANS.............................................................18
24. APPLICABLE LAW .......................................................................18
25. PARTICIPANT RIGHTS....................................................................18
26. UNFUNDED STATUS OF AWARDS.............................................................18
27. NO FRACTIONAL SHARES..................................................................18
28. BENEFICIARY ..........................................................................18
29. INTERPRETATION .......................................................................18
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SKYWEST, INC.
EXECUTIVE STOCK INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE
Skywest, Inc. hereby adopts the Skywest, Inc. Executive Stock Incentive
Plan (the "Plan"). The Plan is intended to promote the interests of the Company
and the shareholders of the Company by providing officers, directors and other
key management employees of the Company and its subsidiaries with appropriate
incentives and rewards to encourage them to enter into and continue in the
employ of the Company and/or to acquire a proprietary interest in the long-term
success of the Company, thereby aligning their interest more closely to the
interest of the shareholders of the Company.
The Board of Directors of the Company adopted the Plan on May 9, 2000.
Subject to approval of the Plan by the shareholders of the Company at the annual
shareholders meeting scheduled for August 8, 2000, the Plan shall become
effective on January 1, 2001.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Award" shall mean an Option, SAR, Restricted Share or
Performance Unit granted pursuant to the terms of the Plan.
(b) "Award Agreement" shall mean the written agreement between the
Company and a Participant evidencing an Award.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Change in Control" shall mean a change in the beneficial
ownership of the Company, the composition of the Board or the
Company's business that occurs upon and as a result of:
(i) The acquisition by any "person," as such term is used
in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common
Stock of the Company) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50 percent or more of the
combined voting power of the Company's then outstanding
securities;
(ii) The individuals who at the beginning of any two-year
period constituted the members of the Board of Directors and any
new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clause (i) or (iii) of this Section
2(d)) whose election by the Board of Directors or nomination for
election was approved by a vote of at least two-thirds (2/3) of
the directors then in office who either were directors at the
beginning of the two-year period or whose election or nomination
for election was previously so approved, ceasing for any reason
to constitute at least a majority of the Board;
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(iii) The shareholders of the Company approving and the
Company consummating a merger or consolidation of the Company with
any other entity, or the sale or other transfer of all or
substantially all of the Company's assets to another entity, other
than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
50 percent of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after
such merger or consolidation, (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as herein above defined) acquires
50 percent or more of the combined voting power of the Company's
then outstanding securities, or (C) a sale or other transfer to
another entity of all or substantially all of the Company's assets
if the shareholders of the Company immediately prior to the sale own
immediately after the sale more than 50 percent of the combined
voting power of the equity interests in the acquiror; or
(iv) The shareholders of the Company approving and the
Company consummating a plan of complete liquidation of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Compensation Committee of the Board.
(g) "Company" shall mean Skywest, Inc., a Utah corporation, or any
successor corporation.
(h) "Common Stock" shall mean the common stock, no par value, of the
Company.
(i) "Covered Employee" shall mean a "covered employee" of the Company or
any Subsidiary as defined in Code Section 162(m)(3).
(j) "Director" shall mean any member of the Board of Directors.
(k) "Disability" shall mean permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(l) "Effective Date" shall mean January 1, 2001.
(m) "Eligible Employee" shall mean an officer or other management
employee (as determined by the Committee) of the Company or any
Subsidiary.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(o) "Executive Officer" shall have the meaning set forth in Rule 3b-7
promulgated under the Exchange Act.
(p) "Exercise Date" shall mean the effective date as of which a
Participant exercises an Award.
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(q) "Fair Market Value" of a share of Common Stock , as of a date of
determination, shall mean the fair market value of a share of
Common Stock, as determined by the Committee in good faith
pursuant to the following rules:
(i) If the principal market for the Common Stock is a
national securities exchange or the NASDAQ stock market, then the
"Fair Market Value" as of that date shall be the mean between the
lowest and highest reported sale prices of the Stock on that date
on the principal exchange or market on which the Common Stock is
then listed or admitted to trading.
(ii) If sale prices are not available or if the principal
market for the Stock is not a national securities exchange and
the Common Stock is not quoted on the NASDAQ stock market, the
average between the highest bid and lowest asked prices for the
Common Stock on such day as reported on the NASDAQ OTC Bulletin
Board Service or by the National Quotation Bureau, Incorporated
or a comparable service.
(iii) If the day is not a business day, and as a result,
paragraphs (i) and (ii) next above are inapplicable, the Fair
Market Value of the Stock shall be determined as of the next
earlier business day. If paragraphs (i) and (ii) above are
otherwise inapplicable, then the Fair Market Value of the Common
Stock shall be determined in good faith by the Committee.
(r) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the
Code.
(s) "Issue Date" shall mean the date established by the Company on
which certificates representing shares of Restricted Stock shall
be issued by the Company pursuant to the terms of Section 10(e)of
the Plan.
(t) "Non-Employee Director" shall mean a Director who is not also an
employee of the Company or any Subsidiary of the Company.
(u) "Non-Statutory Stock Option" or "Non-Qualified Stock Option"
shall mean an Option that is not an Incentive Stock Option.
(v) "Non-Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 9 of the Plan which is not related to any
Option.
(w) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 7 of the Plan.
(x) "Participant" shall mean an Employee of the Company or a
Subsidiary of the Company or any Non-Employee Director to whom an
Award is granted pursuant to the Plan, and, upon such
individual's death, such individual's successors, heirs,
executors and administrators, as the case may be.
(y) "Performance Goals" mean the targeted levels of financial
performance upon which vesting of Restricted Shares and
Performance Units may be based. Performance Goals, if any, will
be determined by the Committee and will be based on any one or
more of the following performance factors, measured at the
Company or, if so designated, Subsidiary or divisional level:
price of Common Stock, total shareholder return, return on
equity,
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return on investment, return on capital, economic profit, net
income or profit, operating income, operating income margin, net
income margin, sales, sales growth, net sales, cash flow,
earnings before interest and taxes ("EBIT"), earnings before
interest, taxes, depreciation and amortization ("EBITDA"),
earnings per share, operating expenses, and market share. Any
Performance Goals designated by the Compensation Committee
will have a minimum performance standard below which vesting
will occur and no payments will be made and a maximum
performance standard above which no additional payments will
be made. Achievement of Performance Goals shall be measured
over a specified Performance Period set forth in the Award
Agreement. The Performance Goals may be based on an analysis
of historical performance and growth expectations for the
business, financial results of other comparable businesses,
and progress towards achieving the long-range strategic plan
for the business. The Performance Goals and determination of
results will be based entirely on financial measures.
(z) "Performance Period" means the period over which the attainment
of designated Performance Goals is measured.
(aa) "Performance Unit" shall mean the contractual right, granted
pursuant to Section 11 of the Plan, to receive in shares of
Common Stock, cash or a combination thereof, as determined by the
Committee, a pre-determined amount or value, contingent upon the
attainment of designated financial results, Performance Goals or
other factors. Performance Units do not constitute actual shares
of Common Stock even if denominated in shares of Common Stock.
(bb) "Plan" shall mean this Executive Stock Incentive Plan, as amended
from time to time.
(cc) "Predecessor Plan" shall mean the Amended and Combined Incentive
and Nonstatutory Stock Option Plan adopted by the Company in
1991.
(dd) "Reference Value" shall mean, with respect to Non-Tandem SARs,
the greater of the Fair Market Value of a share of Common Stock
or the value set by the Committee on the date of the grant.
(ee) "Restricted Share" shall mean a share of Common Stock which is
granted pursuant to the terms of Section 10 hereof and which is
subject to the restrictions set forth in Section 10 of the Plan.
(ff) "SAR" shall mean a stock appreciation right granted pursuant to
Sections 8 or 9 below.
(gg) "Subsidiary" shall mean a "subsidiary corporation" of the Company
within the meaning of Section 424(f) of the Code.
(hh) "Tandem SAR" shall mean an SAR right granted pursuant to Section
8 of the Plan which is related to an Option.
(ii) "Vesting Date" shall mean the date established by the Committee
on which a Restricted Share or Performance Unit vests.
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3. STOCK SUBJECT TO THE PLAN.
(a) Aggregate Limitation on Shares Available for Issuance.
The maximum number of shares of Common Stock reserved for
issuance pursuant to all Awards, including Incentive Stock
Options, under the Plan shall be 2,000,000 shares (subject to
adjustment as provided herein), plus any shares of Common Stock
(not in excess of 1,378,000) which are subject to options granted
under the Predecessor Plan to the extent those Predecessor Plan
options are forfeited, canceled or expire after December 31, 2000
without delivery of shares of Common Stock. The shares of Common
Stock reserved for issuance hereunder may be authorized but
unissued Common Stock or authorized and issued Common Stock held
in the Company's treasury or acquired by the Company for the
purposes of the Plan. Upon the exercise of any Tandem SAR, the
related Option shall be canceled to the extent of the number of
shares of Common Stock as to which the Tandem SAR is exercised
and such number of shares shall no longer be available for Awards
under the Plan.
(b) Aggregate Annual Limitation on Awards.
The number of shares of Common Stock with respect to which Awards
(including SARs denominated in shares but payable in cash) may be
granted in any calendar year (the "Annual Limit") may not exceed
the sum of: (a) one percent of the Company's total issued and
outstanding shares of Common Stock at the beginning of each
calendar year (the "Annual One Percent Limit"), subject to
adjustment as described below; plus (b) such additional number of
shares of Common Stock as the Compensation Committee determines,
not to exceed, on a cumulative basis for all calendar years
during the term of the Plan, four percentage of the Company's
issued and outstanding shares of Common Stock on January 1 of the
calendar year in question. To the extent that Awards granted with
respect to shares of Common Stock in any calendar year beginning
with 2001 are less than the Annual One Percent Limit for that
calendar year, the unused portion of the Annual One Percent Limit
(expressed in terms of percentage points, not number of shares)
shall be carried forward and added to the Annual One Percent
Limit for each succeeding calendar year until fully realized.
(c) Individual Annual Limitation.
Subject to adjustment as provided herein, the total number of
shares of Common Stock subject to Awards (including Incentive
Stock Options and SARs) granted to any Participant during any
calendar year shall not exceed 250,000 shares. The maximum value
of any Performance Units that are denominated in cash rather than
shares which may be granted in any calendar year to any
Participant shall not exceed $500,000.
(d) Adjustment for Change in Capitalization.
In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Common Stock,
or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar
corporate transaction or event, affects the Common Stock such
that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then
the Committee shall make such equitable changes or adjustments as
it deems necessary or appropriate to any or all
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of (i) the number and kind of shares of Common Stock which may
thereafter be issued in connection with Awards, including
adjustment of the maximums specified in Sections 3(a) through
3(c) above, (ii) the number and kind of shares of Common Stock
issued or issuable in respect of outstanding Awards, and (iii)
the exercise price, grant price, purchase price, formula value
and/or Performance Goals relating to any Award; provided that,
with respect to Incentive Stock Options, such adjustment shall be
made in accordance with Section 424 of the Code.
(e) Re-Use of Shares.
Subject to the last sentence of Section 3(a), the following
shares of Common Stock shall again become available for delivery
under the Plan: (i) any shares subject to an Award that remain
unissued upon the cancellation, surrender, exchange or
termination of such Award for any reason whatsoever; (ii) any
Restricted Shares that are forfeited; (iii) except as provided in
Section 3(a) above with respect to Tandem SARs, any shares that
are not delivered upon exercise or vesting of an Award because
the shares are held back to pay the Exercise Price and/or
withholding taxes due upon exercise or because the share-based
Award is otherwise settled in cash; and (iv) in any case in which
a Participant pays the Exercise Price of an Option and/or
applicable withholding taxes by tendering shares of Common Stock
(whether by actual delivery or by attestation), that number of
shares covered by the Option being exercised that equal the
number of shares so tendered.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the type and
number of Awards to be granted, the number of shares of Common Stock to which an
Award may relate and the terms, conditions, restrictions and performance
criteria relating to any Award; to determine whether, to what extent, and under
what circumstances an Award may be settled, canceled, forfeited, exchanged, or
surrendered; to set Performance Goals and make adjustments in the Performance
Goals in recognition of unusual or non-recurring events affecting the Company or
the financial statements of the Company (to the extent such adjustments are in
accordance with Section 162(m)of the Code, if applicable), or in response to
changes in applicable laws, regulations, or accounting principles; to construe
and interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of Award
Agreements; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
The Committee may, in its absolute discretion, without amendment to the
Plan (but subject to consent of the affected Participant if such act would
result in adverse tax consequences under the Code), accelerate the date on which
any Award becomes exercisable, waive or amend the operation of Plan provisions
respecting exercise after termination of employment of any Award or otherwise
adjust any of the terms of any Award.
Except to the extent prohibited by applicable law, the Board may
allocate and delegate all or any portion of the Committee's responsibilities and
powers (including the power to grant Awards and the power to determine the
grantees of such Awards) to any two or more Non-Employee Directors who are
members of the Committee. The Board may revoke any such delegation at any time.
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No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, if, in either case, such action, omission or
determination was taken or made by such member, director or employee in good
faith and in a manner such member, director or employee reasonably believed to
be in or not opposed to the best interests of the Company.
5. ELIGIBILITY.
The persons who shall be eligible to receive Awards pursuant to the Plan
shall be all Eligible Employees and Non-Employee Directors of the Company and
its Subsidiaries. Notwithstanding the foregoing, only individuals who are
employees of the Company or any Subsidiary of the Company as of the date of the
grant of any Incentive Stock Option shall be eligible to receive such Incentive
Stock Options.
6. AWARDS UNDER THE PLAN; AWARD AGREEMENT.
The Committee may grant Options, Tandem SARs, Non-Tandem SARs,
Restricted Shares, and Performance Units, in such amounts and with such terms
and conditions as the Committee shall determine, subject to the provisions of
the Plan. Unless otherwise established by the Committee or specified in the
Award Agreement, each Award shall be deemed granted on the date it is approved
by the Committee.
Each Award granted under the Plan shall be evidenced by an Award
Agreement that shall contain such provisions as the Committee may in its sole
discretion deem necessary or desirable. By accepting an Award, a Participant
thereby agrees that the Award and any shares of Common Stock issuable in
connection with the Award shall be subject to all of the terms and provisions of
the Plan and the Award Agreement.
7. OPTIONS.
The Committee may grant Awards to Participants in the form of Options.
(a) Identification of Options.
Each Option shall be identified in the applicable Award Agreement
as either an Incentive Stock Option or a Non-Qualified Stock
Option.
(b) Exercise Price.
Each Award Agreement with respect to an Option shall set forth
the amount (the "Exercise Price") payable by the grantee to the
Company upon exercise of the Option. The Option Exercise Price
per share shall be determined by the Committee, and in no event
shall be less than the Fair Market Value of a share of Common
Stock on the date the Option is granted.
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(c) Term and Exercise of Options.
(i) The Committee shall determine the expiration date of
each Option; provided, however, that no Incentive Stock Option
shall be exercisable more than 10 years after the date of grant.
(ii) An Option may be exercised for all or any portion of
the shares as to which it is exercisable, provided, that no
partial exercise of an Option shall be for an aggregate Exercise
Price of less than $1,000. The partial exercise of an Option
shall not cause the expiration, termination or cancellation of
the remaining portion thereof.
(iii) An Option shall be exercised by delivering written
notice (in the form attached to the Award Agreement or such other
form as the Company prescribes) to the Company's principal
office, to the attention of its Secretary, no less than one
business day in advance of the effective date of the proposed
exercise. Such notice shall specify the number of shares of
Common Stock with respect to which the Option is being exercised
and the effective date of the proposed exercise and shall be
signed by the Participant or other person then having the right
to exercise the Option. Such notice may be withdrawn in writing
at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed
exercise. Payment for shares of Common Stock purchased upon the
exercise of an Option shall be made in cash, by certified check,
bank cashier's check or wire transfer; provided, however, that if
approved by the Committee on a case-by-case basis at the time of
exercise payment also may be made by: (A) by tendering (through
actual delivery or attestation) shares of Common Stock owned by
the Participant with appropriate stock powers; (B) electing to
have the Company retain shares of Common Stock which would
otherwise be issued on the exercise of the Option; (C)
irrevocably authorizing and directing a third party to sell
shares of Common Stock acquired upon exercise of the Option and
remit to the Company a sufficient amount of the proceeds to pay
the Exercise Price and any applicable withholding tax; or (D) any
combination of the foregoing forms. In determining the number of
shares of Common Stock necessary to be delivered to or retained
by the Company, such shares shall be valued at their Fair Market
Value as of the Exercise Date.
(iv) Certificates for shares of Common Stock purchased
upon the exercise of an Option shall be issued in the name of the
Participant or other person entitled to receive such shares, and
delivered to the Participant or such other person as soon as
practicable following the Exercise Date.
(d) Limitations on Incentive Stock Options.
(i) To the extent that the aggregate Fair Market Value of shares
of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year
under the Plan and any other incentive stock option plan of the Company
(or any Subsidiary of the Company) shall exceed $100,000, such Options
shall be treated as Non-Qualified Stock Options. Such Fair Market Value
shall be determined as of the date on which each such Incentive Stock
Option is granted.
(ii) No Incentive Stock Option may be granted to an individual
if, at the time of the grant, such individual owns stock possessing more
than 10 percent of the total voting power of the Common Stock of the
Company unless: (A) the exercise price per share of such Incentive Stock
Option is at least 110 percent of the Fair Market Value of a share of
Common Stock at the
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time such Incentive Stock Option is granted, and (B) such Incentive
Stock Option is not exercisable after the expiration of five years from
the date such Incentive Stock Option is granted.
(e) Effect of Termination of Employment.
(i) Unless the applicable Award Agreement provides otherwise and
except as provided by Sections 7(g) and 9(d) with respect to a Change in
Control, in the event that the employment of a Participant with the
Company or a Subsidiary of the Company shall terminate for any reason
other than death or Disability, (A) Options granted to the Participant,
to the extent that they are exercisable at the time of such termination,
shall remain exercisable until the date that is three months after such
termination (or one year after the date of death, if death occurs within
three months after the date of termination), on which date they shall
expire, and (B) Options granted to such Participant, to the extent that
they were not exercisable at the time of such termination, shall expire
at the close of business on the date of such termination.
Notwithstanding the foregoing, no Option shall be exercisable after the
expiration of its term.
(ii) Unless the applicable Award Agreement provides otherwise, in
the event that the employment of a Participant with the Company or a
Subsidiary of the Company shall terminate on account of the Disability
or death of the Participant, (A) Options granted to such Participant, to
the extent that they were exercisable at the time of such termination,
shall remain exercisable until the first anniversary of such
termination, on which date they shall expire, and (B) Options granted to
such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the
date of such termination. Notwithstanding the foregoing, no Option shall
be exercisable after the expiration of its term.
(f) Effect of Removal from Board of Directors.
Unless the applicable Award Agreement provides otherwise, in the event a
Non-Employee Director ceases to serve on the Board of Directors for any
reason, the Committee shall determine the effect such termination has
with respect to Options granted to such director; provided, that (i)
Options granted to a Non-Employee Director, to the extent that they were
not exercisable at the time of such termination, shall expire at the
close of business on the date of such termination and (ii) no Option
shall be exercisable after the expiration of its term. Notwithstanding
the foregoing, Options granted to a Non-Employee Director while such
Director was also an employee of the Company or any Subsidiary of the
Company shall be governed by the provisions set forth in Section 7(e).
(g) Acceleration of Exercise Date Upon Change in Control.
(i) Except as provided in the applicable Award Agreement, upon
the occurrence of a Change in Control described in Section 2(d) then
each Option granted under the Plan and outstanding at such time shall
become fully and immediately exercisable. Notwithstanding the foregoing,
no Option shall be exercisable after the expiration of its term.
(ii) In connection with a pending or completed Change in Control
the Committee in its sole discretion may require that the Options be:
(A) cashed out and terminated in exchange for a lump sum cash payment or
shares of Common Stock having a value equal to the fair market value of
the Options immediately preceding the Change in Control; and/or (B)
converted into options in the acquiring entity having a fair market
value immediately after the Change in Control equal to the fair market
value of the Options immediately prior to the Change in Control. For
this
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purpose, the fair market value of an Option shall equal the
excess of the Fair Market Value of the underlying shares over the
Exercise Price.
(h) Reload Stock Options.
The Committee shall have the authority to specify, at the time of grant
of Option, that upon exercise of all or a portion of that Option through
the tender of shares previously owned by the Participant for more than
six months a reload stock option shall automatically be granted under
specified conditions. A reload stock option entitles the grantee to
purchase that number of shares of owned Common Stock that the
Participant has tendered to pay the Option Exercise Price or withholding
taxes. The per share Exercise Price of the reload stock Option shall be
the Fair Market Value of a share of Common Stock at the time of exercise
of the original Option. The duration of a reload stock Option shall not
extend beyond the expiration date of the original Option it replaces.
(i) Restrictions on Transferability.
No Option may be transferred except by will or the laws of descent and
distribution and is exercisable during the grantee's lifetime only by
the grantee or his personal representative. Notwithstanding the
foregoing, the Committee may permit a Participant to transfer by sale or
by gift all or a portion of his or her Non-Qualified Stock Options to
the Participant's spouse and/or to the Participant's lineal descendants,
parents, or siblings, or to the spouse(s) of such persons.
8. TANDEM SARS.
The Committee may, in connection with any Option granted hereunder, also
grant one or more Tandem SARs relating to a number of shares of Common Stock
less than or equal to the number of shares of Common Stock subject to the
related Option. A Tandem SAR may be granted at the same time as, or, in the case
of a Non-Qualified Stock Option, subsequent to the time that, its related Option
is granted.
(a) Benefit Upon Exercise.
The exercise of a Tandem SAR with respect to any number of shares
of Common Stock shall entitle the Participant to receive a
benefit, for each such underlying Option share, equal to the
excess of (i) the Fair Market Value of a share of Common Stock on
the exercise date, over (ii) the Option Exercise Price per share
of the related Option. All SAR benefits shall be satisfied with
shares of Common Stock except to the extent the Committee elects
to make payment under the exercised SAR in cash. Such payment
shall be made as soon as practicable after the effective date of
such exercise.
(b) Term and Exercise of Tandem SAR.
(i) A Tandem SAR shall be exercisable only if and to the
extent that its related Option is exercisable and only if, at the
time of such exercise, the Fair Market Value of a share of Common
Stock exceeds the Option Exercise Price per share of the related
Option.
(ii) The exercise of a Tandem SAR with respect to a number
of shares of Common Stock shall cause the immediate and automatic
cancellation of its related Option with respect to an equal
number of shares. The exercise of an Option, or the cancellation,
termination or expiration of an Option (other than pursuant to
this Section
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8(b)(2)), with respect to a number of shares of Common
Stock shall cause the automatic and immediate cancellation of any
related Tandem SARs to the extent that the number of shares of
Common Stock remaining subject to such Option is less than the
number of shares then subject to such Tandem SAR. Such Tandem
SARs shall be canceled in the order in which they become
exercisable.
(iii) A Tandem SAR may be exercised for all or any portion
of the shares as to which the related Option is exercisable;
provided, that no partial exercise of a Tandem SAR shall be for
less than a number of shares having an aggregate option exercise
price of less than $1,000. The partial exercise of a Tandem SAR
shall not cause the expiration, termination or cancellation of
the remaining portion thereof.
(iv) No Tandem SAR shall be assignable or transferable
otherwise than together with its related Option, and any such
transfer or assignment will be subject to the provisions of
Section 20 of the Plan.
(v) A Tandem SAR shall be exercised by delivering written
notice to the Company's principal office, to the attention of its
Secretary, no less than one business day in advance of the
effective date of the proposed exercise. Such notice shall
specify the number of shares of Common Stock with respect to
which the Tandem SAR is being exercised and the effective date of
the proposed exercise and shall be signed by the Participant or
other person then having the right to exercise the Option to
which the Tandem SAR is related. Such notice may be withdrawn in
writing at any time prior to the close of business on the
business day immediately preceding the effective date of the
proposed exercise.
9. NON-TANDEM SARS.
The Committee may grant Awards to Participants in the form of Non-Tandem
SARs as to a designated number of shares of Common Stock at a specified
Reference Value.
(a) Benefit Upon Exercise.
The exercise of a Non-Tandem SAR with respect to any number of
shares of Common Stock shall entitle the Participant to receive,
for each underlying share, shares of Common Stock having a Fair
Market Value on the date of exercise (or, in the discretion of
the Committee, cash or a combination of cash and shares in an
amount) equal to the excess of (i) the Fair Market Value of a
share of Common Stock on the exercise date, over (ii) the
Reference Value of the Non-Tandem SAR. All Non-Tandem SARs shall
be satisfied with shares of Common Stock except to the extent the
Committee elects to make payment for the exercised SAR in cash.
Such payments shall be made as soon as practicable after the
effective date of such exercise.
(b) Term and Exercise of Non-Tandem SARs.
(i) The Committee shall determine the expiration date of
each Non-Tandem SAR.
(ii) A Non-Tandem SAR may be exercised for all or any
portion of the shares as to which it is exercisable; provided,
that no partial exercise of a Non-Tandem SAR shall be for an
aggregate Reference Value of less than $1,000. The partial
exercise
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of a Non-Tandem SAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof.
(iii) A Non-Tandem SAR shall be exercised by delivering
notice to the Company's principal office, to the attention of its
Secretary, no less than one business day in advance of the
proposed Exercise Date. Such notice shall specify the number of
shares of Common Stock with respect to which the Non-Tandem SAR
is being exercised, and the desired Exercise Date, and shall be
signed by the Participant. The Participant may withdraw such
notice at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed
exercise.
(iv) No Non-Tandem SAR shall be assignable or transferable
except by will or the laws of descent and distribution, and any
such transfer or assignment will be subject to the provisions of
Section 20 of the Plan.
(c) Effect of Termination of Employment or Directorship.
The provisions set forth in Section 7(e) and 7(f) with respect to
the exercise of Options shall apply as well to the exercise of
Non-Tandem SARs.
(d) Acceleration of Exercise Date Upon Change in Control.
Unless the applicable Award Agreement provides otherwise, the
provisions set forth in Section 7(g)(i) and (ii) with respect to
Options shall apply as well to the exercise of Non-Tandem SARs.
10. RESTRICTED SHARES.
(a) Grants.
The Committee may grant Awards to employees of the Company and
its Subsidiaries in the form of Restricted Shares.
(b) Issue Date and Vesting Date.
At the time of the grant of Restricted Shares, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date
or Vesting Dates with respect to such shares. The Committee may
divide such shares into classes and assign a different Issue Date
and/or Vesting Date for each class. If the grantee is still
employed by the Company or a Subsidiary on an Issue Date (which
may or may not be the date of grant), the number of Restricted
Shares specified by the Committee in the applicable Award
Agreement shall be issued in accordance with the provisions of
Section 10(f) of the Plan. Provided that all conditions to
vesting of a Restricted Share imposed pursuant to Section 10(c)
of the Plan are satisfied or excused as provided in Section 10(i)
of the Plan, upon the occurrence of the Vesting Date with respect
to a Restricted Share, such share shall vest and the restrictions
of Section 10(d) of the Plan shall lapse.
(c) Conditions to Vesting.
At the time of the issuance of Restricted Shares, the Committee
may impose such restrictions or conditions to the vesting of such
shares as it, in its absolute discretion,
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deems appropriate. The Committee may designate that the Award of
Restricted Shares is intended to constitute "performance based
compensation" within the meaning of Section 162(m) of the Code,
in which case the vesting conditions will include attainment of
one or more Performance Goals and/or other standards established
by the Committee at the time of grant. Any Restricted Shares
granted contingent upon achievement of Performance Goals shall be
released from restriction only after the Committee certifies that
those Performance Goals have been met.
(d) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a Restricted Share, no transfer of a
Participant's rights with respect to such share, whether
voluntary or involuntary, by operation of law or otherwise, shall
be permitted. Immediately upon any attempt to transfer such
rights, the Participant shall forfeit such share and all of the
rights related thereto.
(e) Dividends on Restricted Stock.
The Committee in its discretion may require that any dividends
paid on Restricted Shares be held in escrow until all vesting
requirements with respect to the shares have lapsed.
(f) Issuance of Certificates.
(i) Reasonably promptly after the Issue Date with respect
to Restricted Shares, the Company shall cause to be issued a
stock certificate, registered in the name of the Participant to
whom such shares were granted, evidencing such shares; provided,
that the Company shall not cause such a stock certificate to be
issued unless it has received a stock power duly endorsed in
blank by the Participant with respect to such shares. Each such
stock certificate shall bear such legend, if any, as the
Committee requires. That legend shall not be removed until the
Restricted Shares vest pursuant to the terms of the applicable
Award Agreement and this Plan.
(ii) Each certificate issued pursuant to this Section
10(f), together with the stock powers relating to the Restricted
Shares evidenced by such certificate, shall be held in escrow by
the Company until vested, unless the Committee determines
otherwise.
(g) Consequences of Vesting.
Upon the vesting of a Restricted Share pursuant to the terms of
the applicable Award Agreement, the restrictions of Section 10(d)
of the Plan shall lapse. Reasonably promptly after a Restricted
Share vests, the Company shall cause to be delivered to the
Participant to whom such shares were granted, a certificate
evidencing such share, free of the legend described in Section
10(f) of the Plan plus any escrowed of retained dividends on such
shares.
(h) Effect of Termination of Employment.
Unless the applicable Award Agreement provides otherwise, upon
the termination of a Participant's employment by the Company or
any Subsidiary of the Company for any reason, any and all
non-vested Restricted Shares to which restrictions on
transferability apply shall be immediately forfeited by the
Participant and transferred to the Company; provided that if the
Committee, in its sole discretion and within 30 days after such
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<PAGE> 17
termination of employment notifies the Participant in writing of
its decision not to terminate the Participant's rights in such
shares, then the Participant shall continue to be the owner of
such shares subject to such continuing restrictions as the
Committee may prescribe in such notice. If Restricted Shares are
forfeited in accordance with the provision of this Section 10,
then unless the applicable Award Agreement provides otherwise,
the Company shall also have the right to require the return of
all dividends paid on such shares, whether by termination of any
escrow arrangement under which such dividends are held or
otherwise.
(i) Effect of Change in Control.
Except as otherwise provided in the applicable Award Agreement,
notwithstanding any provision herein to the contrary, upon the
occurrence of a Change in Control described in Section 2(d), then
each Restricted Share granted under the Plan and outstanding at
the date of such Change in Control above shall immediately vest
and all restrictions on such shares shall immediately lapse.
11. PERFORMANCE UNITS.
(a) Grants.
The Committee may grant Awards to employees of the Company and
its Subsidiaries in the form of Performance Units.
(b) Vesting Date.
At the time of the grant of Performance Units, the Committee
shall establish a Vesting Date or Vesting Dates with respect to
such units. The Committee may divide such units into classes and
assign a different Vesting Date for each class. Provided that all
conditions to the vesting of a Performance Unit imposed pursuant
to Section 11(d) of the Plan are satisfied, upon the occurrence
of the Vesting Date with respect to a Performance Unit, such unit
shall vest and become payable.
(c) Benefit Upon Vesting.
Upon the vesting of a Performance Unit, the Participant shall be
entitled to receive a specified number of shares of Common Stock,
shares of Common Stock having a specified Fair Market Value on
the Vesting Date, and/or a specified amount of cash, as
determined by the Committee and set forth in the applicable Award
Agreement. Payment of such benefit shall be made within 30 days
of the date on which the Performance Unit vests.
(d) Conditions to Vesting.
At the time of the grant of Performance Units, the Committee may
impose such restrictions or conditions on the vesting of the
Performance Units as it, in its absolute discretion, deems
appropriate, including the applicable Performance Goals, if any,
that must be satisfied for the units to vest. The Committee may
designate that the Award of Performance Units is intended to
constitute "performance based compensation" within the meaning of
Section 162(m) of the Code, in which case vesting of the Award
will be contingent upon the attainment of one or more Performance
Goals designated by the
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Committee at the time of grant. Performance Units granted
contingent upon achievement of Performance Goals will vest only
after the Committee certifies that those Performance Goals have
been met.
(e) Effect of Termination of Employment.
Unless the applicable Award Agreement provides otherwise,
Performance Units that have not vested, together with any
dividends credited on such units, if any, shall be forfeited upon
the Participant's termination of employment for any reason.
(f) Effect of Change in Control.
Upon the occurrence of a Change in Control as defined in Section
2(d), notwithstanding any provision herein to the contrary, each
Performance Unit granted under the Plan and outstanding at the
time of the Change in Control shall vest and become immediately
payable.
12. RIGHTS AS A STOCKHOLDER AND DIVIDEND EQUIVALENTS.
(a) General.
No person shall have any rights as a stockholder with respect to
any shares of Common Stock covered by or relating to any Award
until the date of issuance of a stock certificate with respect to
such shares except to the extent approved by the Committee and
provided in the applicable Award Agreement. Except as otherwise
expressly provided below, no adjustment to any Award shall be
made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
(b) Dividend Equivalents.
If an Award is granted in the form of Performance Units or
Options, or in the form of any other stock-based grant, the
Committee may choose, at the time of the grant of the Award to
include as part of such Award an entitlement to receive dividends
or dividend equivalents, subject to such terms, conditions,
restrictions, limitations, if any, as the Committee may
establish. Dividends and dividend equivalents shall be paid in
such form and manner (i.e., lump sum or installments) and at such
time(s) as the Committee shall determine. All dividends or
dividend equivalents that are not paid currently may, at the
Committee's discretion, accrue interest, be reinvested into
additional shares of Common Stock or, in the case of dividends or
dividend equivalents credited in connection with Performance
Units denominated in shares of Company Stock, be credited as
additional Performance Units and paid to the Participant if and
when, and to the extent that, payment is made pursuant to such
Award. The total number of shares available for grant under the
Plan shall not be reduced to reflect any dividends or dividend
equivalents that are reinvested into additional shares of Common
Stock or credited as additional Performance Units.
13. DEFERRAL OF AWARDS.
At the discretion of the Committee, a Participant may elect to defer the payment
of any Award, dividend or dividend equivalent, or any portion thereof, until
such time as the Committee may establish. All such deferrals shall be
accomplished by the delivery of a written, irrevocable election by the
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<PAGE> 19
Participant prior to the time established by the Committee for such purpose, on
a form provided by the Company. Further, all deferrals shall be made in
accordance with administrative guidelines established by the Committee to ensure
that such deferrals comply with all applicable requirements of the Code.
Deferred payments shall be paid in a lump sum or installments, as determined by
the Committee. Deferred Awards denominated in the form of Common Stock may also
be credited with dividends or dividend equivalents.
14. NO SPECIAL EMPLOYMENT OR DIRECTORSHIP RIGHTS; NO RIGHT TO AWARDS.
Nothing contained in the Plan or any Award Agreement shall confer upon
any Participant any right with respect to continuing as an employee or director
of the Company or any Subsidiary or interfere in any way with the right of the
Company or any Subsidiary, subject to the terms of any separate agreement to the
contrary, at any time to terminate such employment or directorship or to
increase or decrease the compensation of the Participant. No person shall have
any claim or right to receive an Award hereunder. The Committee's granting of an
Award to a Participant at any time shall neither require the Committee to grant
any other Award to such Participant or other person at any time or preclude the
Committee from making subsequent grants to such Participant or any other person.
15. SECURITIES LAW AND LISTING MATTERS.
Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Common Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity on which the shares of
Company Common Stock are listed or registered.
16. WITHHOLDING TAXES.
Whenever cash is to be paid pursuant to an Award, the Company shall have
the right to deduct therefrom an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto. Whenever shares of
Common Stock are to be delivered pursuant to an Award, the Company shall have
the right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy any federal, state and local withholding tax requirements
related thereto as a condition to exercise. With the approval of the Committee,
a Participant may satisfy the foregoing requirement by electing to have the
Company withhold from delivery shares of Common Stock having a fair market value
equal to the minimum amount of tax to be withheld, by tendering previously owned
shares of Common Stock having a Fair Market Value equal to the minimum
withholding tax due and/or by other means acceptable to the Committee on a case
by case basis. Shares held back or tendered to pay withholding taxes shall be
valued at their Fair Market Value on the date withheld or tendered. Fractional
share amounts shall be settled in cash.
17. NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE CODE.
If any Participant shall, in connection with the acquisition of shares
of Common Stock under the Plan, make the election permitted under Section 83(b)
of the Code (i.e., an election to include in gross income in the year of
transfer the amounts specified in Section 83(b)), he or she shall notify the
Company in writing of the election within ten days of filing notice of the
election with the Internal Revenue Service. This written notification is in
addition to any filing and notification required pursuant to regulations issued
under the authority of Code Section 83(b).
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18. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(b) OF
THE CODE.
Each Award Agreement with respect to an Incentive Stock Option shall
require the Participant to notify the Company in writing of any disposition of
shares of Common Stock issued pursuant to the exercise of such Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within ten days of such disposition.
19. AMENDMENT OR TERMINATION OF THE PLAN.
The Board of Directors may, at any time, suspend or terminate the Plan
or revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent the Board of
Directors determines that such approval is appropriate for purposes of
satisfying Section 162(m) or 422 of the Code or to the extent such approval is
required by the rules of any stock exchange on which the Common Stock is listed.
Nothing herein shall restrict the Committee's ability to exercise its
discretionary authority pursuant to Section 4 of the Plan, which discretion may
be exercised without amendment to the Plan. No action hereunder may, without the
consent of a Participant, reduce the Participant's rights under any outstanding
Award.
20. TRANSFERS UPON DEATH; NONASSIGNABILITY.
Upon the death of a Participant, outstanding Awards granted to such
Participant may be exercised only by the executor, administrator or
representative of the Participant's estate or by a person who shall have
acquired the right to such exercise by will or by the laws of descent and
distribution. No transfer of an Award by will or the laws of descent and
distribution shall be effective to bind the Company unless the Committee is
furnished with (a) written notice thereof and with a copy of the will and/or
such evidence as the Committee may deem necessary to establish the validity of
the transfer, and (b) an agreement by the transferee to comply with all the
terms and conditions of the Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Award.
Except as provided in Sections 7(i) and 10(g), during a Participant's
lifetime no Award shall be assignable or transferable, by operation of law or
otherwise. Any transfer or assignment of an Award in violation of the preceding
sentence shall be void and, if voluntary, shall cause the respective Award to
immediately and automatically terminate. Without limiting the foregoing, in the
event an order by any court, arbitrator or other tribunal in any domestic
proceeding shall purport to transfer any Award, such Award shall immediately and
automatically terminate.
21. EXPENSES AND RECEIPTS.
The Company shall pay all expenses of the Plan. Any proceeds received by
the Company in connection with any Award will be used for general corporate
purposes.
22. FAILURE TO COMPLY.
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant (or beneficiary or transferee) to comply with
any of the terms and conditions of the Plan or the applicable Award Agreement,
unless such failure is remedied by such Participant (or beneficiary or
transferee) within ten days after notice of such failure by the Committee, shall
be grounds for the cancellation and forfeiture of such Award, in whole or in
part, as the Committee, in its absolute discretion, may determine.
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23. RELATION TO BENEFIT PLANS.
Options, SARs, Restricted Shares and Performance Units will not be
considered as compensation for the purpose of any other benefit plans maintained
by the Company except as expressly provided in the documents evidencing such
plans.
24. APPLICABLE LAW.
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Utah, without reference to the principles of conflicts of law.
25. PARTICIPANT RIGHTS.
No Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment for Participants.
Except as provided specifically herein, a Participant or a transferee of an
Award shall have no rights as a stockholder with respect to any shares covered
by any Award until the date of the issuance of a Common Stock certificate to him
for such shares or any non-contractual rights with respect to any Award granted
hereunder. Neither the Company nor its subsidiaries, officers, directors or
agents shall have any responsibility, duty or obligation with respect to any
Award, including without limitation any fiduciary or equitable duty, other than
those contractual obligations set forth in this Plan and the applicable Award
Agreement. No person connected with the Plan warrants or guarantees the federal,
state and local income, estate and gift tax consequences of Awards to
Participants.
26. UNFUNDED STATUS OF AWARDS.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award Agreement shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
27. NO FRACTIONAL SHARES.
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash, other Awards,
or other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
28. BENEFICIARY.
A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the Participant's beneficiary.
29. INTERPRETATION
The Plan is designed and intended to comply with 422 of the Code, and
all provisions hereof shall be construed in a manner to so comply.
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IN TESTIMONY WHEREOF, the Company has caused this Plan document to be
executed by its duly authorized officer this _______ day of ______, 2000.
SKYWEST, INC.
By: __________________________
Its: __________________________
19
