<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FRONTIER AIRLINES, INC.
-----------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
<PAGE>
5) Total fee paid:
-------------------------------------------------
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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2
<PAGE>
FRONTIER AIRLINES, INC.
12015 E. 46TH AVENUE
DENVER, CO 80239
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_____________________
TO THE SHAREHOLDERS OF FRONTIER AIRLINES, INC.:
The 1998 annual meeting of shareholders of Frontier Airlines, Inc., a
Colorado corporation, will be held on Thursday, September 10, 1998 at 9:00 a.m.
local time at the Airport Holiday Inn, 4040 Quebec Street, Denver, Colorado for
the following purposes:
1. To consider and vote upon a proposal to elect Samuel D. Addoms, Arthur H.
Amron, B. Ben Baldanza, D. Dale Browning, Jay B. Burnham, Paul S. Dempsey,
William B. McNamara and B. LaRae Orullian to the Company's Board of
Directors;
2. To consider and vote upon a proposal to amend the Company's 1994 Stock
Option Plan to increase the number of shares available for grant.
3. To ratify the appointment of KPMG Peat Marwick LLP as the independent
public accountants of the Company for the fiscal year ending March 31,
1999, and
4. To transact any other business which properly comes before the meeting or
any adjournment.
All shareholders of record on the Company's transfer books as of the close
of business on July 31, 1998 are entitled to vote at the meeting. A complete
list of shareholders entitled to vote at the annual meeting will be available
for examination by any Company shareholder at 12015 E. 46th Avenue, Denver,
Colorado 80239 for purposes germane to the annual meeting, during normal
business hours from August 3, 1998 until the annual meeting.
We invite you to be present at the meeting and look forward to seeing you
there. However, if you cannot attend please read the attached proxy statement
carefully and SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD AUTHORIZING
REPRESENTATIVES OF THE COMPANY'S MANAGEMENT TO VOTE ON YOUR BEHALF AT THE
MEETING.
By order of the Board of Directors
August 4, 1998 FRONTIER AIRLINES, INC.
Arthur T. Voss
Secretary
<PAGE>
FRONTIER AIRLINES, INC.
12015 E. 46TH AVENUE
DENVER, CO 80239
PROXY STATEMENT
This proxy statement and accompanying proxy card support a proxy
solicitation on behalf of the Board of Directors of Frontier Airlines, Inc. (the
"Company") for use at the September 10, 1998 annual meeting of shareholders and
at any adjournment of that meeting. This proxy statement and form of proxy,
together with the Company's Annual Report on Form 10-K, as amended, will be sent
by mail to shareholders beginning approximately August 4, 1998.
The proxy card, when properly signed, dated and returned to the Company,
will be voted by the proxies at the annual meeting as directed. Proxy cards
returned without direction about business to be transacted at the meeting will
be voted in favor of (i) the election of Samuel D. Addoms, Arthur H. Amron, B.
Ben Baldanza, D. Dale Browning, Jay B. Burnham, Paul S. Dempsey, William B.
McNamara and B. LaRae Orullian to the Board of Directors of the Company, (ii)
the approval of an amendment to the Company's 1994 Stock Option Plan to increase
the number of shares available for grant, and (iii) ratification of the
appointment of KPMG Peat Marwick LLP as the independent public accountants of
the Company for the Company's fiscal year ending March 31, 1999. The proxies
will use their best judgment regarding other matters that properly come before
the meeting. The Company is not aware of any matters, other than those
discussed in this proxy statement, that will be presented at the meeting.
The Company can conduct business at the meeting only if holders of a
majority of the total outstanding shares of Common Stock entitled to vote are
present, either in person or by proxy. Abstentions will be counted in
determining whether a quorum has been reached. Broker-dealer non-votes will
also be counted for quorum purposes. Assuming a quorum exists, the affirmative
vote of a majority of the shares present and voted, excluding abstentions, is
necessary to elect directors and approve each of the proposed matters to be
voted on.
Under Securities and Exchange Commission rules, boxes and a designated
blank space are provided on the proxy card for shareholders to mark if they wish
either to vote "for," "against" or "abstain" on one or more of the proposals.
REVOCABILITY OF PROXY
Execution of the enclosed form of proxy will not affect a shareholder's
right to attend the meeting and vote in person. Any shareholder giving a proxy
may revoke it at any time before it is exercised by attending the meeting and
voting in person by providing notice of revocation to the corporate secretary of
the Company at the address set forth above. Shareholders may vote all their
eligible shares if they are personally present at the meeting. When a
shareholder votes at the meeting, his or her vote will revoke any proxy
previously granted by the shareholder.
EXPENSE AND MANNER OF SOLICITATION
In addition to solicitation by mail, proxies may be solicited in person or
by telephone or telegram by directors and officers of the Company who will not
receive compensation for their soliciting activities. Brokers and other
nominees will solicit proxies or authorizations from beneficial owners and will
be reimbursed for their reasonable expenses of forwarding proxy material to
beneficial owners. The Company will bear all of the costs of the solicitation.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of July 31, 1998, the record date, 13,791,564 shares of the Company's
Common Stock were outstanding and entitled to vote at the meeting. Each share
may cast one vote on each separate matter of business properly brought before
the meeting. Only shareholders of record at the close of business on July 31,
1998 may vote.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 31, 1998 by: (i) each
director and nominee for director of the Company, (ii) all directors and
executive officers
<PAGE>
as a group; and (iii) persons to the knowledge of the Company that beneficially
own more than five percent of the Company's outstanding Common Stock.
SHARES BENEFICIALLY PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OWNERSHIP (1)
- ------------------------------------ ----- -------------
Directors and Executive Officers:
- --------------------------------
Samuel D. Addoms
12015 East 46th Avenue
Denver, CO 80239 258,115 (2) 1.8
Paul S. Dempsey
12015 East 46th Avenue
Denver, CO 80239 47,000 (3) *
B. LaRae Orullian
12015 East 46th Avenue
Denver, CO 80239 25,000 (4) *
William B. McNamara
12015 East 46th Avenue
Denver, CO 80239 25,000 (5) *
D. Dale Browning
12015 East 46th Avenue
Denver, CO 80239 25,000 (5) *
Arthur H. Amron (6)
411 West Putnam Avenue
Greenwich, CT 06830 10,000 (7) *
B. Ben Baldanza
12015 E. 46th Avenue
Denver, CO 80239 10,000 (7) *
Jay B. Burnham (8)
141 Linden Street, Suite 4
Wellesley, MA 02482 0 *
All directors and executive officers
as a group (14 persons) 805,569 (9) 5.6
Five Percent and Greater Shareholders:
- -------------------------------------
B III Capital Partners, L.P. (10)
141 Linden Street, Suite 4
Wellesley, MA 02482 5,079,930 (11) 35.0
Wexford Management, LLC (12)
411 West Putnam Avenue
Greenwich, CT 06830 1,750,000 (13) 11.3
_______________________________
* Less than 1%
2
<PAGE>
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date of filing of this proxy statement upon the exercise
of options, warrants or convertible securities that are held by such
person (but not those held by any other person). This table assumes a base
of 13,719,564 shares of Common Stock outstanding as of the date of this
proxy statement, before any consideration is given to other outstanding
options, warrants or convertible securities.
(2) Includes 124,500 shares held under option, all of which are currently
exercisable, and 1,615 shares allocated under the Company's Employee Stock
Ownership Plan ("ESOP").
(3) Includes 35,000 shares held under option, all of which are currently
exercisable.
(4) Includes 15,000 shares held under option, all of which are currently
exercisable.
(5) Consists of 25,000 shares held under option, all of which are currently
exercisable.
(6) Mr. Amron is an officer of Imprimis Investors LLC, Wexford Spectrum
Investors LLC and Wexford Management LLC.
(7) Consists of 10,000 shares held under option. all of which are currently
exercisable.
(8) Mr. Burnham is an officer of DDJ Capital Management, LLC.
(9) Includes 680,103 shares held under option by the Company's directors and
executive officers, and 10,168 shares allocated under the ESOP.
(10) DDJ Capital III, LLC is the general partner of, and DDJ Capital Management,
LLC is the investment manager for, B III Capital Partners, L.P., and may be
deemed to be the beneficial owners of such shares.
(11) Includes warrants to purchase 716,929 shares of Common Stock, all of which
are currently exercisable.
(12) Imprimis Investors LLC, Wexford Spectrum Investors LLC, Wexford Management
LLC, Charles E. Davidson and Joseph M. Jacobs may be deemed to be the
beneficial owners of such shares.
(13) Consists of warrants to purchase 1,750,000 shares of Common Stock, all of
which are currently exercisable.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains the name, age and position with the Company of
each executive officer, each director of the Company, and each nominee for
director of the Company. Their respective backgrounds are described following
the table. Each of the officers devotes his or her full-time efforts to the
affairs of the Company.
NAME AGE POSITION
---- --- --------
Samuel D. Addoms 58 President, Chief Executive Officer and
Chief Financial Officer; Director
Jimmie P. Wyche 63 Executive Vice President-Operations
Jon L. Bartram 60 Vice President-Maintenance and
Engineering
Jeff S. Potter 38 Vice President-Marketing
Elissa A. Potucek 41 Vice President, Controller and Treasurer
Robert M. Schulman 65 Vice President-Corporate Communications
Arthur T. Voss 56 Vice President-Administration and
General Counsel; Secretary
Paul S. Dempsey 47 Director
B. LaRae Orullian 65 Director and Chair of the Board of
Directors
William B. McNamara 66 Director
3
<PAGE>
D. Dale Browning 60 Director
Arthur H. Amron 41 Director
B. Ben Baldanza 36 Director
Jay B. Burnham 35 Nominee for Director
SAMUEL D. ADDOMS is President and Chief Executive Officer and a director of
the Company, having earlier served as Executive Vice President, Treasurer and a
director of the Company during its early development in 1993 through September
1994 when he was elected to the position of President. He was elected Chief
Executive Officer effective January 1, 1995. Before commencing his involvement
in the development of the Company in 1993, he was associated with some 15 firms
for the previous ten years, either as an officer, director or consultant. These
include Gelco Corporation, Connecting Point of America and Communications World,
Inc. His 35 years of management experience include positions as President and
Vice President-Finance of Monfort of Colorado, President of the Denver National
Bank and Vice President of the Continental Illinois National Bank in Chicago.
JIMMIE P. WYCHE has been Executive Vice President-Operations of the Company
since August 1995. Prior to that he had been Vice President-Flight Operations
of the Company since its inception in February 1994. From 1989 to early 1994
Mr. Wyche was a jet captain with Skyways International, headquartered in
Houston, Texas. From 1987 to 1989, he served as Director-Flight Operations with
Ports of Call, a Denver-based charter airline. He served in various capacities
with the former Frontier Airlines, Inc. between 1961 and 1985, starting as a
pilot and then in a succession of management positions including Assistant Chief
Pilot, Chief Pilot and Vice President-Flight Operations.
JON L. BARTRAM has been Vice President-Maintenance and Engineering of the
Company since July 1998 and Vice President - Maintenance since December 1994.
From 1993 to 1994 he served as Vice President-Maintenance Operations for DynAir
Tech of Texas. He held a number of key maintenance positions with Alaska
Airlines between 1987 and 1993 including Director-Production Planning and
Director-Base Maintenance. He was an Air Carrier Inspector for the Federal
Aviation Administration between 1986 and 1987. Before this, he served with the
former Frontier Airlines, Inc., for 27 years (1959-1986) in a succession of
maintenance management positions including Director-Base Maintenance and
Director-Technical Services.
JEFF S. POTTER has been Vice President-Marketing of the Company since July
1995. From 1993 to 1995 he was Regional Director of Commercial Marketing-
Pacific and Asia, for McDonnell Douglas Corporation, Long Beach, California. He
served from 1992 to 1993 as Director-Domestic Schedule Development for Northwest
Airlines in Minneapolis, Minnesota, having earlier held a succession of
marketing management positions with Continental Airlines (1988-1991), Houston,
Texas; Northwest Airlines (1986-1988), Minneapolis, Minnesota; Pacific Southwest
Airlines (1985-1986), San Diego, California; and the former Frontier Airlines
(1981-1985), Denver, Colorado.
ELISSA A. POTUCEK has been Controller/Treasurer of the Company since June
1995 and was promoted to Vice President in September 1996. From 1991 to 1995
she was Controller of Richardson Operating Company and Richardson Production
Company, an oil and gas company based in Denver, Colorado. She served from 1990
to 1991 as Controller of Coral Companies, Inc., Denver, Colorado, having earlier
held accounting positions with US West Paging, Inc. (1988-1989), Denver,
Colorado, and KPMG Peat Marwick LLP (1985-1988), Denver, Colorado.
ROBERT M. SCHULMAN has been Vice President-Corporate Communications of the
Company since its inception in February 1994. From 1986 to 1993 he was
President of BSI Communications, a consulting firm specializing in public
relations programs for airlines and travel agencies, while concurrently (1990-
1992) participating in the development and start-up of Reno Air, Inc., Reno
Nevada. He served with the former Frontier Airlines, Inc. from 1974 to 1986,
most recently as Senior Director-Corporate Communications. From 1972 to 1974 he
was Public Information Officer of the Air Line Pilots Association, Washington,
D.C.; from 1970 to 1972, Regional Manager-Public Relations of Eastern Airlines,
Inc., Washington, D.C.; and from 1967 to 1970, Director-Corporate Communications
of Mohawk Airlines, Inc., Utica, New York.
4
<PAGE>
ARTHUR T. VOSS has been Vice President-Administration, General Counsel and
Secretary of the Company since September 1995 and Vice President, General
Counsel and Secretary of the Company since its inception in February 1994. From
1991 to 1996, Mr. Voss was the Vice President-Legal of Professional Fee
Examiners, Inc. a professional fee auditing firm based in Denver, Colorado. He
was Vice President-Legal of Aeronautics Leasing, Inc., an aircraft leasing firm
based in Golden, Colorado, from 1990 to 1991. From 1986 to 1989 he served as
Vice President and General Counsel of Aspen Airways, Inc. He held various
management positions in the Legal Department of the former Frontier Airlines,
Inc. from 1971 to 1985, most recently as Associate General Counsel.
PAUL S. DEMPSEY has been a director of the Company since July 1994 and Vice
Chairman of the Board of Directors since 1996. He is Professor of Law and
Director of the Transportation Law Program at the University of Denver, College
of Law, Denver, Colorado, having been associated with the institution since
1979. He served as Legal Advisor to the Chairman, U.S. Interstate Commerce
Commission, in 1981 and 1982; Attorney-Advisor to the former Civil Aeronautics
Board's Office of General Counsel, and its Bureau of Pricing and Domestic
Aviation, 1977-1979; and Attorney-Advisor to the Interstate Commerce
Commission's Office of Proceedings, Interstate Commerce, 1975-1977. Dr. Dempsey
holds the following degrees: A.B.J., J.D., University of Georgia; LL.M., George
Washington University; and D.C.L., McGill University. A Fulbright Scholar, he
has written more than 40 law review articles, scores of editorials for the news
media and six books on topics relating to air transportation.
B. LARAE ORULLIAN has been a director of the Company since July 1994 and
Chair of the Board of Directors since September 1995. She is Vice Chair of the
Board of Guaranty Bank, a Denver, Colorado-based commercial bank, and a director
of The Guaranty Corporation, a bank holding company. She also serves as Chair
of the Boards of Colorado Blue Cross/Blue Shield and of Rocky Mountain
Administrative Services Corporation, Denver, and is a member of the Boards of
five other companies in Colorado and Utah. She is a past National President and
former Chair of Girl Scouts of the USA, and serves on the World Board of Girl
Guides and Girl Scouts, based in London, England. Among numerous business and
civic activities in Colorado, she serves on the Governor's Board of Ethics and
on the Board of the Downtown Denver Improvement Association.
WILLIAM B. MCNAMARA has been a director of the Company since May 1996. A
retired 35-year airline executive specializing in financial management, he most
recently served with Continental Airlines, Inc. (1987 to 1994) as Vice
President-Finance. From 1983 to 1987 he was Staff Vice President-Finance with
New York Air, Inc. Before that he served in a succession of positions with
Trans World Airlines, Inc., for 22 years including service as Staff Vice
President-Marketing Administration.
D. DALE BROWNING has been a director of the Company since July 1996. A
long-term bank and bank card executive, he has served since 1995 as President
and Chief Executive Office of ProCard, Inc., Golden Colorado, and from 1993 to
1995 as a Senior Consultant to Visa International. He was President and Chief
Executive Officer of the Colorado National Bank of Denver from 1986 through
1993, having concurrently served as Vice Chairman and Chief Operating Officer of
Colorado National Bankshares and as Chief Executive Officer of Rocky Mountain
BankCard System. In 1982 he founded Plus System, Inc., an international
automatic teller machine network, and served as President of that company until
1992.
ARTHUR H. AMRON has been a director of the Company since December 1997.
Mr. Amron is a Senior Vice President and General Counsel of Wexford Management
LLC, a Greenwich, Connecticut based investment advisor. Previously, he was an
attorney with the New York City law firm of Schulte Roth & Zabel. Mr. Amron
received a J.D. degree from Harvard Law School, cum laude, in 1982 and a B.A.
degree from Colgate University with high honors in 1978. Mr. Amron has served
as an officer of numerous entities managed or controlled by Wexford or its
affiliates.
B. BEN BALDANZA has been a director of the Company since May 1998. From
May 1997 to the present, he has served as Managing Director and Chief Operating
Officer of Gupo Taca, a group of five Central American airlines. From 1994 to
1996, he held various executive positions with Continental Airlines, Inc.,
including Executive Vice President-Marketing and Senior Vice President-Pricing
and Route Scheduling. From 1985 to 1993, he held management posts with United
Parcel Service, Inc., Northwest Airlines, Inc. and American Airlines, Inc.
5
<PAGE>
JAY B. BURNHAM is a nominee for director of the Company. Since March 1996,
Mr. Burnham has served as the Vice President and Senior Research Analyst for DDJ
Capital Management, LLC, an investment firm. From January 1995 to February
1996, Mr. Burnham was an Investment Analyst for Libra Investment, Inc., in New
York, New York, and from June 1990 to November 1994 he served as in Investment
Manager for Paul D. Sonz Partners in California. Mr. Burnham received a B.A. in
Business Economics in 1984 from the University of California, and a Masters in
Business Administration from the Graduate School of Business and Management,
Pepperdine University, in 1987. Mr. Burnham is a director of New Millennium
Homes, LLC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers and persons holding 10% of the Company's Common
Stock to file reports with the Securities and Exchange Commission regarding
their ownership and regarding their acquisitions and dispositions of the
Company's Common Stock. Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons, the
Company believes that during the fiscal year ended March 31, 1998 all filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were complied with.
MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors met 18 times in the fiscal year ended
March 31, 1998. All directors were present at all of these meetings, except Ms.
Orullian who was unable to attend one of the meetings.
COMMITTEES
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Board of Directors does not have a Nominating Committee.
The duties of the Audit Committee are to recommend independent accountants
for selection by the Board of Directors, to review the arrangements for and
scope of the independent accountants' audit, to review the findings and
recommendations of the independent accountants concerning internal accounting
procedures and controls, to review professional services rendered by the
independent accountants in regard to the Company and its management, and to
review potential conflicts of interest between the Company and its employees.
During the fiscal year ended March 31, 1998, the members of the Audit Committee
were B. LaRae Orullian, Paul S. Dempsey, William B. McNamara and D. Dale
Browning. The Audit Committee met once during the fiscal year.
The duties of the Compensation Committee include recommending to the Board
of Directors the compensation to be provided to the executive officers of the
Company and the grant of options to eligible individuals under the Company's
stock option plan. During the fiscal year ended March 31, 1998, the members of
the Compensation Committee were B. LaRae Orullian, Paul S. Dempsey, William B.
McNamara and D. Dale Browning. The Compensation Committee met once during the
fiscal year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 2, 1997, the Company sold a $5,000,000 principal amount Senior
Secured Note (the "Note") to Wexford Management LLC ("Wexford"). The Note
bears interest at a rate of 10% per annum and the principal is due in a single
installment payment on December 15, 2001. In connection with the sale of the
Note, the Company (a) entered into a General Security Agreement that granted
Wexford a security interest in all of the personal property and fixtures of the
Company, (b) granted Wexford the right to designate one member to the Company's
Board of Directors, (c) issued to Wexford warrants to purchase 1,750,000 shares
of Common Stock of the Company at a price of $3.00 per share and (d) agreed to
grant certain registration rights with respect to the securities sold to
Wexford. Mr. Amron is Wexford's designee for election to the Company's Board of
Directors.
On April 24, 1998, the Company sold to B III Capital Partners, L.P. ("B
III"), 4,363,001 shares of Common Stock and warrants to purchase 716,929 shares
of Common Stock at an exercise price of $3.75 per share for an aggregate
purchase price of $14,179,753. In connection with the sale of the shares and
warrants, the Company granted B III (a) the right to designate a maximum of two
members of the Company's Board of Directors and (b) certain registration rights
with respect
6
<PAGE>
to the securities sold to B III. Messrs. Baldanza and Burnham are B III's
designees for election to the Company's Board of Directors.
John E. Luth, an outside director who was appointed to the Company's Board
in May 1998 will not be standing for election at the annual meeting. Mr. Luth
is President of The Seabury Group, LLC. Before Mr. Luth was appointed to the
Board of Directors, The Seabury Group provided financial advisory services to
the Company in connection with debt and equity financing in December 1997 and
April 1998. For The Seabury Group's advisory services for these financings, the
Company paid The Seabury Group $600,000 in cash, and warrants to purchase
548,000 shares of the Company's Common Stock at an exercise price of $3.00 per
share. The warrants issued to The Seabury Group, LLC are not exercisable until
May 1999.
EXECUTIVE COMPENSATION
The following table summarizes the cash and noncash compensation awarded
to, earned by or paid to the Chief Executive Officer of the Company in the
fiscal years ended March 31, 1998, 1997 and 1996. No other officer of the
Company had total salary and bonus exceeding $100,000.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------------------------------
RESTRICTED STOCK
AWARDS STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) GRANTED (#)
- ----------------------------- ------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Samuel D. Addoms, 1998 $84,000 $ 388.09 0
Chief Executive Officer 1997 $79,846 $ 916.50 0
1996 $48,229 $5,809.37 0
</TABLE>
(1) The restricted stock awards represent shares contributed to Mr. Addoms'
account in the ESOP on December 31, 1995, 1996 and 1997. As of March 31,
1998, Mr. Addoms' ESOP account held a total of 1,615 shares of Common
Stock, valued at $6,056, based on the closing bid price of the Common Stock
of $3.75 per share on that date. Mr. Addoms will be 100% vested in the
shares in his ESOP account if he is employed by the Company on December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth certain information regarding options
exercised by the Chief Executive Officer of the Company during the fiscal year
ended March 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED ON UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
EXERCISE (#) VALUE AT MARCH 31, 1998 AT MARCH 31, 1998
-----------
NAME REALIZED ($) (#) ($)(1)
- ---- ----------- ---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Samuel D. Addoms 88,000 $0/(2)/ 124,500 0 342,375 0
</TABLE>
________________________________
(1) Based on the closing bid price of the Common Stock on the Nasdaq SmallCap
Market of $3.75 per share on March 31, 1998.
7
<PAGE>
(2) Mr. Addoms exercised options to acquire 88,000 shares of the Company's
Common Stock, but did not sell any of the shares. The exercise price of
the options was $1.00 per share. The closing bid price of the Common Stock
on the Nasdaq SmallCap Market on March 31, 1998 was $3.75 per share.
DIRECTOR COMPENSATION
For the year ended March 31, 1998, the Company paid each director who is
not a Company employee $10,000 for serving in that capacity and the Company has
agreed to pay each such director the same amount for serving as a director for
the Company's fiscal year beginning April 1, 1998 and ending March 31, 1999.
Directors who are also employees of the Company receive no additional
compensation for serving as directors. The Company reimburses all of its
directors for travel and out-of-pocket expenses in connection with their
attendance at meetings of the Board of Directors, and permits them to fly
without charge on the Company's scheduled flights. The Company's outside
directors are also eligible to receive stock options under the Company's 1994
Stock Option Plan. During the fiscal year ended March 31, 1998, the Company
granted nonqualified options to each of Messrs McNamara and Browning to purchase
10,000 shares at an exercise price of $3.00 per share, and to Mr. Amron to
purchase 10,000 shares at an exercise price of $2.32 per share.
Also during the fiscal year ended March 31, 1998, certain directors
surrendered out-of-the-money options to purchase Common Stock and were granted
an identical number of new options to purchase Common Stock at an exercise price
of $3.00 per share. These directors consisted of Ms. Orullian, 5,000 shares;
Mr. Dempsey, 25,000 shares; Mr. McNamara, 10,000 shares and Mr. Browning, 10,000
shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended March 31, 1998, the Company's Compensation
Committee consisted of Ms. Orullian and Messrs. Dempsey, McNamara and Browning,
who conferred regarding the compensation paid to the Company's executive
officers.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERALL POLICY
--------------
Salary compensation of the Company's executive officers is determined by
the Compensation Committee in conjunction with the Company's entire Board of
Directors. The Committee's consideration of and decisions regarding executive
compensation are guided by a number of factors described below. The objectives
of the Company's total executive compensation package are to attract and retain
executive talent, to provide an economic framework to motivate the Company's
executives to achieve goals consistent with the Company's business strategy, to
provide an identity between executive and shareholder interests through stock
option plans and to provide a compensation package that recognizes an
executive's individual results and contributions in addition to the Company's
overall business results.
SALARIES
--------
The key elements of the Company's executive compensation consist of salary
and stock options. The Compensation Committee in conjunction with the Company's
entire Board of Directors, determine salary levels of officers and employee
stock option awards.
Salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executive talent, including a
comparison of salaries for comparable positions at other airlines.
The salary levels of the officers of the Company for the next fiscal year
are generally established by the Compensation Committee at year-end and are
reviewed and approved by the entire Board of Directors. Specific individual
performance and overall corporate or business segment performance are reviewed
in determining the compensation level of each individual officer.
8
<PAGE>
Mr. Addoms' current salary as Chief Executive Officer is $110,000 per
annum. The Compensation Committee believes that Mr. Addoms' annual salary is
considerably below the annual salaries for similarly situated executives within
the airline industry.
COMPENSATION COMMITTEE
B. LaRae Orullian
Paul S. Dempsey
William B. McNamara
D. Dale Browning
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock compared to the cumulative total return of two other
indices: (i) The Nasdaq Market Index of U.S. Companies, and (ii) the Peer Group
Index of similar line-of-business companies as chosen by the Company, consisting
of Reno Air, Inc. and AirTran Holdings, Inc. (formerly ValuJet Airlines, Inc.)
(the "Peer Group"). Each member of the Peer Group's stock is listed on the
Nasdaq National Market or the Nasdaq SmallCap Market. The time period graphed
is the period from May 20, 1994 (the date the Company's Common Stock commenced
trading) through March 31, 1998.
CUMULATIVE TOTAL SHAREHOLDER RETURN/(1)(2)/
MAY 20, 1994 - MARCH 31, 1998
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Frontier Airlines, Inc. 100.00 162.71 189.83 91.53 101.69
Peer Group Index/(3)/ 100.00 122.97 253.96 81.23 80.13
Nasdaq Market Index 100.00 104.29 140.28 156.94 237.17
</TABLE>
/(1)/ Assumes $100 invested on May 20, 1994 in the Company's Common Stock, the
Nasdaq Market Index and the Peer Group Index of similar line-of-business
companies.
/(2)/ Total shareholder return assumes reinvestment of dividends.
/(3)/ The Peer Group Index used in the Company's 1997 Proxy Statement included
Western Pacific Airlines, Inc., which filed for bankruptcy in 1997 and
whose stock is no longer publicly traded. The 1997 Proxy Statement Peer
Group Index also included Airways Corporation, the parent company of
AirTran Holdings, Inc. (then AirTran Airlines, Inc., and formerly ValuJet
Airlines, Inc.) The stock of Airways Corporation is no longer publicly
traded.
PROPOSAL 1
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has nominated Samuel D. Addoms,
Arthur H. Amron, B. Ben Baldanza, D. Dale Browning, Jay B. Burnham, Paul S.
Dempsey, William B. McNamara and B. LaRae Orullian for election to the Board of
Directors. Each of these nominees, with the exception of Mr. Burnham, are
members of the existing Board of
9
<PAGE>
Directors and were elected to the Board of Directors at the Company's 1997
Annual Meeting of Shareholders, with the exception of Messrs. Amron and
Baldanza, who were appointed in December 1997 and May 1998, respectively.
A proposal to elect Samuel D. Addoms, Arthur H. Amron, B. Ben Baldanza, D.
Dale Browning, Jay B. Burnham, Paul S. Dempsey, William B. McNamara and B. LaRae
Orullian to the Board of Directors of the Company will be presented to the
shareholders at the annual meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE ELECTION OF SAMUEL D. ADDOMS, ARTHUR H. AMRON, B. BEN
BALDANZA, D. DALE BROWNING, PAUL S. DEMPSEY, WILLIAM B. MCNAMARA AND B. LARAE
ORULLIAN TO THE COMPANY'S BOARD OF DIRECTORS.
PROPOSAL 2
PROPOSAL TO AMEND THE 1994 STOCK OPTION PLAN
TO INCREASE OPTIONS AVAILABLE FOR GRANT
The Board of Directors adopted a Stock Option Plan (the "Plan") in March
1994, which was subsequently approved by the Company's shareholders and amended
in 1996. Under the Plan, the Company has reserved an aggregate of 2,250,000
shares of Common Stock for issuance pursuant to the exercise of options.
Options may be granted to key employees of the Company, including directors who
are also employees of the Company, and to outside directors. There are
currently approximately 25 individuals who qualify as key employees of the
Company. At July 27, 1998, the closing price of the Company's Common Stock as
listed on the Nasdaq SmallCap Market was $3.94 per share. As of July 27, 1998,
all but 61,250 of the options currently authorized under the Plan had been
granted.
The Plan is administered by a committee that is composed of disinterested
members of the Board of Directors (the "Committee"). Subject to the terms of
the Plan, the Committee determines the persons to whom awards are granted, the
type of award granted, the number of shares granted, the vesting schedule and
the term of each option (not to exceed ten years).
Under the Plan, the Company may grant both incentive stock options
("incentive stock options") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options that are not
qualified as incentive stock options ("nonqualified stock options"). Incentive
stock options must be granted at an exercise price equal to or greater than the
fair market value of the Common Stock on the date of grant. The exercise price
of nonqualified stock options granted under the Plan will be determined by the
Committee on the date of grant. The exercise price of incentive stock options
granted to holders of more than 10 percent of the Common Stock must be at least
110 percent of the fair market value of the Common Stock on the date of grant,
and the term of these options may not exceed five years.
The Plan provides that the total number of shares covered by such plan, the
number of shares covered by each option and the exercise price per share may be
proportionately adjusted by the Board of Directors or the Committee in the event
of a stock split, reverse stock split, stock dividend or similar capital
adjustment effected without receipt of consideration by the Company.
Upon a change in control of the Company, stock options outstanding under
the Plan immediately become fully vested and exercisable. Also, in the event of
a merger or consolidation in which the Company is not the surviving corporation,
the sale of all or substantially all of the Company's assets, certain
reorganizations or the liquidation of the Company, each option granted under the
Plan may, at the election of the holder, become immediately exercisable.
An optionee will not be deemed to receive any income at the time an
incentive stock option is granted or exercised. The exercise may give rise to
alternative minimum tax liability for the optionee. If an optionee does not
dispose of shares acquired on exercise of an incentive stock option within the
two-year period beginning the day after the day of grant of the option or within
the one-year period beginning on the day after the day of the transfer of the
shares to the optionee, the gain (if any) on a subsequent sale (i.e., the excess
of the proceeds received over the option price) will be long-term capital gain
and any loss the optionee may sustain on such sale will be long-term capital
loss. If the optionee disposes of the shares within the two-year or one-year
periods referred to above, the disposition is a "disqualifying disposition," and
the optionee will generally recognize ordinary income taxable as compensation in
the year of the disqualifying disposition to the extent
10
<PAGE>
of the excess of the fair market value of the shares on the date of exercise
over the option price. The balance, if any, will be a long-term or short-term
capital gain depending, generally, on whether the shares were held more than one
year after the incentive stock option was exercised. To the extent the optionee
recognizes ordinary income with respect to a disqualifying disposition, the
Company will be entitled to a corresponding deduction, subject to general rules
relating to the reasonableness of compensation.
With respect to nonqualified stock options, there is no taxable income to
the optionee as a result of the grant of such an option. However, an optionee
generally recognizes taxable income upon the exercise of a nonqualified stock
option equal to the excess of the fair market value of the stock on the date of
exercise over the option price. The Company is not entitled to a tax deduction
upon the grant of a nonqualified stock option, but is entitled to a tax
deduction upon exercise corresponding to the optionee's taxable income.
The following table summarizes the presently outstanding options issued
under the Plan to the indicated persons as of July 27, 1998:
<TABLE>
<CAPTION>
Name or Group Number
------------- ------
<S> <C>
Samuel D. Addoms, Chief 124,500
Executive Officer
All current executive officers
as a group 663,437
All current directors who are not
executives officers, as a group 112,500
All employees, excluding
executive officers 346,500
Persons owning more than 5%
of outstanding options:
M.C. Lund 245,125
Samuel D. Addoms 124,500
Robert M. Schulman 180,000
Dan A. Love 159,375
William B. Durlin 108,000
Arthur T. Voss 98,937
Each of the eight nominees
for director:
Samuel D. Addoms 124,500
Paul Stephen Dempsey 35,000
B. LaRae Orullian 15,000
William B. McNamara 25,000
D. Dale Browning 25,000
Arthur H. Amron 10,000
B. Ben Baldanza 10,000
Jay B. Burnham 0
</TABLE>
On June 30, 1998, the Board of Directors approved an amendment to the Plan
increasing the number of options available to be granted under the Plan by
2,000,000 or to a total of 4,250,000 and directed that this amendment be
submitted to the shareholders for approval. There are currently 61,250 options
remaining for grant under the Plan, and the Board of
11
<PAGE>
Directors believes that the availability of options in excess of this amount for
grant under the Plan is an important factor in the Company's ability to attract
and retain key employees.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE STOCK OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's independent public accounting firm
for the fiscal years ended March 31, 1995 through March 31, 1998 and has been
appointed by the Company's Board of Directors to continue in that capacity for
the fiscal year ending March 31, 1999.
A proposal to ratify the appointment of KPMG Peat Marwick LLP will be
presented to the shareholders at the annual meeting. Representatives of KPMG
Peat Marwick LLP will be present at the annual meeting and will have an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK
LLP.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission and the Company's bylaws. Should a shareholder wish to have a
proposal appear in the Company's proxy statement for next year's annual meeting,
under the regulations of the Securities and Exchange Commission it must be
received by the corporate secretary at 12015 East 46th Avenue, Denver, CO 80239
on or before May 30, 1999.
OTHER BUSINESS
All items of business to be brought before the meeting are set forth in
this proxy statement. Management knows of no other business to be presented.
If other matters of business not presently known to management are properly
raised at the meeting, the proxies will vote on the matters in accordance with
their best judgment.
NOTE: SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD, USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
12
<PAGE>
FRONTIER AIRLINES, INC. APPENDIX
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, 2004 (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 two million, two hundred
fifty thousand (2,250,000).
(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
<PAGE>
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
-2-
<PAGE>
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
-3-
<PAGE>
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.
-4-
<PAGE>
(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
-5-
<PAGE>
(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
-6-
<PAGE>
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.
-7-
<PAGE>
(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
-8-
<PAGE>
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.
-9-
<PAGE>
FRONTIER AIRLINES, INC.
12015 E. 46TH AVENUE
DENVER, CO 80239
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Samuel D. Addoms and Arthur T. Voss as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Frontier Airlines, Inc. held of record by the undersigned on July 31,
1998, at the annual meeting of shareholders to be held on September 10, 1998, or
any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1 AND "FOR"
ITEM 2 AND ITEM 3.
Item 1 - ELECTION OF DIRECTORS
[_] FOR all nominees [_] WITHHOLD AUTHORITY for all nominees
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
Samuel D. Addoms Arthur H. Amron B. Ben Baldanza
Jay B. Burnham
D. Dale Browning Paul S. Dempsey B. LaRae Orullian
William B. McNamara
Item 2 - PROPOSAL TO APPROVE AN AMENDMENT TO THE 1994 STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR GRANT
[_] For [_] Against [_] Abstain
Item 3 - PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG Peat Marwick LLP as the
independent public accountants of the Company
[_] For [_] Against [_] Abstain
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR all nominees" in Item 1 and "FOR" Item 2 and Item
3.
PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN ENCLOSED
-------------
ENVELOPE.
<PAGE>
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof. This proxy
when properly executed will be voted in the manner directed herein by the
undersigned shareholder.
Please make, sign, date and return the
proxy promptly, using the enclosed
envelope.
Date_____________________________________
Signature________________________________
Signature
if held jointly__________________________
Please sign exactly as name appears. When
shares are held by joint tenants, both
should sign. When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
