Exhibit 4.1


 


SKYWEST, INC.


2006 LONG-TERM INCENTIVE PLAN


 


SkyWest, Inc. (the “Company”), a Utah
corporation, hereby establishes and adopts the following 2006 Long-Term
Incentive Plan (the “Plan”).


 


1.                                      PURPOSE
OF THE PLAN


 


The purpose of the Plan is to assist the
Company and its Subsidiaries in attracting and retaining selected individuals
to serve as directors, employees, consultants and/or advisors of the Company
who are expected to contribute to the Company’s success and to achieve
long-term objectives which will inure to the benefit of all stockholders of the
Company through the additional incentives inherent in the Awards hereunder.


 


2.                                      DEFINITIONS


 


2.1.                            “Award” shall mean any Option, Stock
Appreciation Right, Restricted Stock Award, Performance Award, Other Stock Unit
Award or any other right, interest or option relating to Shares or other
property (including cash) granted pursuant to the provisions of the Plan.


 


2.2.                            “Award Agreement” shall mean any written
agreement, contract or other instrument or document evidencing any Award
granted by the Committee hereunder, including through an electronic medium.


 


2.3.                            “Board” shall mean the board of directors
of the Company.


 


2.4.                            “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time.


 


2.5.                            “Committee” shall mean the Compensation
Committee of the Board, consisting of no fewer than two Directors, each of whom
is “Non-Employee Director” within the meaning of Rule 16b-3 of the Exchange Act.
With respect to any Awards granted by the Subcommittee, references in this Plan
to the “Committee” shall mean the Subcommittee.


 


2.6.                            “Covered Employee” shall mean an employee
of the Company who is a “covered employee” within the meaning of
Section 162(m) of the Code.


 


2.7.                            “Director” shall mean a non-employee member of the Board.


 


2.8.                            “Dividend Equivalents” shall have the meaning set forth in
Section 12.5.


 


2.9.                            “Employee” shall mean any employee of the
Company or any Subsidiary and any prospective employee conditioned upon, and
effective not earlier than, such person’s becoming an employee of the Company
or any Subsidiary. Solely for purposes of the Plan, an Employee shall also mean
any consultant or advisor who provides services to the Company or any
Subsidiary, so long as such person (i) renders bona fide services that are
not in connection with


 

















 


the offer and sale of the Company’s securities in a capital-raising
transaction and (ii) does not directly or indirectly promote or maintain a
market for the Company’s securities.


 


2.10.                     “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.


 


2.11.                     “Fair Market Value” shall mean, with
respect to any property other than Shares, the market value of such property
determined by such methods or procedures as shall be established from time to time
by the Committee. The Fair Market Value of Shares as of any date shall be the
per Share average of the high and low trading prices of the Shares as reported
on the NASDAQ Stock Market on that date (or if there were no reported prices on
such date, on the last preceding date on which the prices were reported) or, if
the Company is not then listed on the NASDAQ Stock Market, on such other
principal securities exchange on which the Shares are traded, and if the
Company is not listed on the NASDAQ Stock Market or any other securities
exchange, the Fair Market Value of Shares shall be determined by the Committee
in its sole discretion using appropriate criteria.


 


2.12.                     “Freestanding Stock Appreciation Right”
shall have the meaning set forth in Section 6.1.


 


2.13.                     “Limitations” shall have the meaning set
forth in Section 10.5.


 


2.14.                     “Option” shall mean any right granted to a
Participant under the Plan allowing such Participant to purchase Shares at such
price or prices and during such period or periods as the Committee shall
determine.


 


2.15.                     “Other Stock Unit Award” shall have the
meaning set forth in Section 8.1.


 


2.16.                     “Participant” shall mean an Employee or
Director who is selected by the Committee to receive an Award under the Plan.


 


2.17.                     “Payee” shall have the meaning set forth in
Section 13.1.


 


2.18.                     “Performance Award” shall mean any Award of
Performance Shares or Performance Units granted pursuant to Article 9.


 


2.19.                     “Performance Period” shall mean that period
established by the Committee at the time any Performance Award is granted or at
any time thereafter during which any performance goals specified by the
Committee with respect to such Award are to be measured.


 


2.20.                     “Performance Share” shall mean any grant
pursuant to Article 9 of a unit valued by reference to a designated number
of Shares, which value may be paid to the Participant by delivery of such
property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance
goals during the Performance Period as the Committee shall establish at the
time of such grant or thereafter.


 


2.21.                     “Performance Unit” shall mean any grant
pursuant to Section 9 of a unit valued by reference to a designated amount
of property other than Shares (or cash), which value may be paid to the
Participant by delivery of such property as the Committee shall determine,
including cash, Shares, other property, or any combination thereof, upon
achievement of such performance 


 


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goals during the Performance Period as the Committee shall establish at
the time of such grant or thereafter.


 


2.22.                     “Permitted Assignee” shall have the meaning
set forth in Section 12.3.


 


2.23.                     “Prior Plans” shall mean, collectively, the
Company’s Executive Stock Incentive Plan and the Company’s 2001 Allshare Stock
Option Plan.


 


2.24.                     “Restricted Stock” shall mean any Share
issued with the restriction that the holder may not sell, transfer, pledge or
assign such Share and with such other restrictions as the Committee in its sole
discretion, may impose (including any restriction on the right to vote such
Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.


 


2.25.                     “Restricted Stock Award” shall have the
meaning set forth in Section 7.1.


 


2.26.                     “Shares” shall mean the shares of common
stock, no par value, of the Company.


 


2.27.                     “Stock Appreciation Right” shall mean the
right granted to a Participant pursuant to Section 6.


 


2.28.                     “Subcommittee” shall mean a subcommittee of
the Committee consisting of each member of the Compensation Committee of the
Board who is both: (i) an “outside director” within the meaning of Section
162(m) of the Code, and (ii) an “independent director” for purpose of the rules
and regulations of the NASDAQ Stock Market (or such other principal securities
market on which the Shares are traded).


 


2.29.                     “Subsidiary” shall mean any corporation
(other than the Company) in an unbroken chain of corporations beginning with
the Company if, at the time of the granting of the Award, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.


 


2.30.                     Substitute Awards” shall mean Awards
granted or Shares issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, or the right or obligation to make
future awards, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.


 


2.31.                     “Tandem Stock Appreciation Right” shall
have the meaning set forth in Section 6.1.


 


2.32.                     “Vesting Period” shall have the meaning set
forth in Section 7.1.


 


3.                                      SHARES
SUBJECT TO THE PLAN


 


3.1                               Number of Shares. (a)  Subject to adjustment as provided in
Section 12.2, a total of 6,000,000 Shares shall be authorized for grant
under the Plan. Any Shares that are subject to Awards of Options or Stock
Appreciation Rights shall be counted against this limit as one (1) 


 


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Share for every one (1) Share granted. Any Shares that are subject to
Awards other than Options or Stock Appreciation Rights shall be counted against
this limit as two and one-half (2.5) Shares
for every one (1) Share granted.


 


(b)                                 If
any Shares subject to an Award or to an award under the Prior Plans are forfeited
(other than as a result of expiration of the Award’s term if the Award is an
Option or Stock Appreciation Right), or any Award or award under the Prior
Plans is settled for cash, the Shares shall, to the extent of such forfeiture
or cash settlement, again be available for Awards under the Plan, subject to
Section 3.1(d) below. Notwithstanding anything to the contrary contained
herein, the following Shares shall not be added to the Shares authorized for
grant under paragraph (a) of this Section: (i) Shares subject to an Option or
Stock Appreciation Right that expires at the conclusion of its term without
being exercised, (ii) Shares tendered by the Participant or withheld by the
Company in payment of the purchase price of an Option, (iii) Shares tendered by
the Participant or withheld by the Company to satisfy any tax withholding
obligation with respect to an Award, (iv) Shares repurchased by the Company
with Option proceeds, and (v) Shares subject to a Stock Appreciation Right that
are not issued in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof.


 


(c)                                  Substitute
Awards shall not reduce the Shares authorized for grant under the Plan or
authorized for grant to a Participant in any calendar year.


 


(d)                                 Any
Shares that again become available for grant pursuant to this Article shall be
added back as one (1) Share if such Shares were subject to Options or Stock
Appreciation Rights granted under the Plan or options or stock appreciation
rights granted under the Prior Plans, and as two and one-half (2.5) Shares if
such Shares were subject to Awards other than Options or Stock Appreciation
Rights granted under the Plan.


 


3.2.                            Character
of Shares. Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased in the open
market or otherwise.


 


4.                                      ELIGIBILITY
AND ADMINISTRATION


 


4.1.                            Eligibility. Any Employee or Director
shall be eligible to be selected as a Participant.


 


4.2.                            Administration. (a) The Plan shall be
administered by the Committee. Subject to Section 4.2(c) below, the other
provisions of the Plan and such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, the
Committee shall have full power and authority to: (i) select the Employees
and Directors to whom Awards may from time to time be granted hereunder;
(ii) determine the type or types of Awards, not inconsistent with the
provisions of the Plan, to be granted to each Participant hereunder;
(iii) determine the number of Shares to be covered by each Award granted
hereunder; (iv) determine the terms and conditions, not inconsistent with
the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property; (vi) determine whether, to what extent,
and under what circumstances cash, Shares, other property and other amounts
payable with respect to an Award made under the Plan shall be deferred either
automatically or at the election 


 


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of the Participant; (vii) determine whether, to what extent and under
what circumstances any Award shall be canceled or suspended;
(viii) interpret and administer the Plan and any instrument or agreement
entered into under or in connection with the Plan, including any Award
Agreement; (ix) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent that the
Committee shall deem desirable to carry it into effect; (x) establish such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; (xi) determine whether any Award, other
than an Option or Stock Appreciation Right, will have Dividend Equivalents; and
(xii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan.


 


(b)                                 Decisions
of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant, and any Subsidiary. A
Participant or other holder of an Award may contest a decision or action of the
Committee with respect to such person or Award only on the grounds that such
decision is arbitrary and capricious or unlawful, and any review of such
decision or action shall be limited to determining whether the Committee’s
decision or action was arbitrary and capricious or unlawful. A majority of the
members of the Committee may determine its actions and fix the time and place
of its meetings.


 


(c)                                  Notwithstanding
Section 4.2(a) above, to the extent required to qualify Awards to officers as “qualified
performance-based compensation” under Section 162(m) of the Code or comply with
applicable securities law or the rules and regulations of the NASDAQ Stock
Market (or such other principal securities market on which the Shares are
traded), the Subcommittee rather than the full Compensation Committee shall have
power and authority to grant Awards to officers and Directors of the Company,
subject to such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be adopted by the Board. The Subcommittee’s
authority hereunder with respect to Awards to officers and Directors of the
Company shall include all of the powers set forth in Section 4.2(a)(i) through
(xii) above.


 


(d)                                 The
full Committee may also delegate to the Subcommittee the right to grant Awards
to Employees who are not Directors or officers of the Company and the authority
to take action on behalf of the Committee pursuant to the Plan to cancel or
suspend Awards to Employees who are not Directors or officers of the Company.


 


(e)                                  Any
action within the scope of its authority by the Subcommittee under Section
4.2(c) or (d) shall be deemed for all purposes under the Plan to have been
taken by the full Committee and references in the Plan to the Committee shall
be deemed to include the Subcommittee unless the context otherwise requires.


 


5.                                      OPTIONS


 


5.1.                            Grant
of Options. Options may be granted hereunder to Participants either alone
or in addition to other Awards granted under the Plan. Any Option shall be
subject to the terms and conditions of this Article and to such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable.


 


5.2.                            Award
Agreements. All Options granted pursuant to this Article shall be evidenced
by a written Award Agreement in such form and containing such terms and
conditions 


 


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as the Committee shall determine which are not inconsistent with the
provisions of the Plan. The terms of Options need not be the same with respect
to each Participant. Granting an Option pursuant to the Plan shall impose no
obligation on the recipient to exercise such Option. Any individual who is
granted an Option pursuant to this Article may hold more than one Option
granted pursuant to the Plan at the same time.


 


5.3.                            Option
Price. Other than in connection with Substitute Awards, the option price
per each Share purchasable under any Option granted pursuant to this Article
shall not be less than 100% of the Fair Market Value of such Share on the date
of grant of such Option. Other than pursuant to Section 12.2, the Committee
shall not without the approval of the Company’s stockholders (a) lower the
option price per Share of an Option after it is granted, (b) cancel an Option
when the option price per Share exceeds the Fair Market Value of the underlying
Shares in exchange for another Award (other than in connection with Substitute
Awards), and (c) take any other action with respect to an Option that may be
treated as a repricing under the rules and regulations of the NASDAQ Stock
Market (or such other principal securities market on which the Shares are
traded).


 


5.4.                            Option Term. The term of each Option shall
be fixed by the Committee in its sole discretion; provided that no Option shall
be exercisable after the expiration of seven (7) years from the date the Option
is granted, except in the event of death or disability.


 


5.5.                            Exercise of Options. Vested Options
granted under the Plan shall be exercised by the Participant or by a Permitted
Assignee thereof (or by the Participant’s executors, administrators, guardian
or legal representative, as may be provided in an Award Agreement) as to all or
part of the Shares covered thereby, by the giving of written notice of exercise
to the Company or its designated agent, specifying the number of Shares to be
purchased, accompanied by payment of the full purchase price for the Shares
being purchased. Unless otherwise provided in an Award Agreement, full payment
of such purchase price shall be made at the time of exercise and shall be made
(a) in cash or cash equivalents (including certified check or bank check or
wire transfer of immediately available funds), (b) by tendering previously
acquired Shares (either actually or by attestation, valued at their then Fair
Market Value), (c) with the consent of the Committee, by delivery of other
consideration (including, where permitted by law and the Committee, other
Awards) having a Fair Market Value on the exercise date equal to the total
purchase price, (d) with the consent of the Committee, by withholding Shares
otherwise issuable in connection with the exercise of the Option, (e) through
any other method specified in an Award Agreement, or (f) any combination of any
of the foregoing. The notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office
as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event may any Option
granted hereunder be exercised for a fraction of a Share. No adjustment shall
be made for cash dividends or other rights for which the record date is prior
to the date of such issuance.


 


5.6.                            Form
of Settlement. In its sole discretion, the Committee may provide, at the
time of grant, that the Shares to be issued upon an Option’s exercise shall be
in the form of Restricted Stock or other similar securities, or may reserve the
right so to provide after the time of grant.


 


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5.7.                            Incentive
Stock Options. The Committee may grant Options intended to qualify as “incentive
stock options” as defined in Section 422 of the Code, to any employee of the
Company or any Subsidiary, subject to the requirements of Section 422 of the
Code. Solely for the purposes of determining whether Shares are available for
the grant of “incentive stock options” under the Plan, the maximum aggregate
number of Shares with respect to which “incentive stock options” may be issued
under the Plan shall be 6,000,000 Shares.


 


6.                                      STOCK APPRECIATION RIGHTS


 


6.1.                            Grant
and Exercise. The Committee may provide Stock Appreciation Rights (a) in
conjunction with all or part of any Option granted under the Plan or at any
subsequent time during the term of such Option (“Tandem Stock Appreciation
Right”), (b) in conjunction with all or part of any Award (other than an
Option) granted under the Plan or at any subsequent time during the term of
such Award, or (c) without regard to any Option or other Award (a “Freestanding
Stock Appreciation Right”), in each case upon such terms and conditions as the
Committee may establish in its sole discretion.


 


6.2.                            Terms
and Conditions. Stock Appreciation Rights shall be subject to such terms
and conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, including the following:


 


(a)                                  Upon
the exercise of a Stock Appreciation Right, the holder shall have the right to
receive the excess of (i) the Fair Market Value of one Share on the date
of exercise, over (ii) the designated based value per Share (the “Base
Amount”) with respect to the right on the date of grant (or in the case of a
Tandem Stock Appreciation Right on the date of grant of the related Option) as
specified by the Committee in its sole discretion, which Base Amount per Share,
except in the case of Substitute Awards or in connection with an adjustment
provided in Section 12.2, shall not be less than the Fair Market Value of
one Share on such date of grant of the right or the related Option, as the case
may be.


 


(b)                                 Upon
the exercise of a Stock Appreciation Right, the Committee shall determine in
its sole discretion whether payment shall be made in cash, in whole Shares or
other property, or any combination thereof.


 


(c)                                  Any
Tandem Stock Appreciation Right may be granted at the same time as the related
Option is granted or at any time thereafter before exercise or expiration of
such Option.


 


(d)                                 Any
Tandem Stock Appreciation Right related to an Option may be exercised only when
the related Option would be exercisable and the Fair Market Value of the Shares
subject to the related Option exceeds the option price at which Shares can be
acquired pursuant to the Option. In addition, (i) if a Tandem Stock
Appreciation Right exists with respect to less than the full number of Shares
covered by a related Option, then an exercise or termination of such Option
shall not reduce the number of Shares to which the Tandem Stock Appreciation
Right applies until the number of Shares then exercisable under such Option
equals the number of Shares to which the Tandem Stock Appreciation Right
applies, and (ii) no Tandem Stock Appreciation Right granted under the Plan to
a person then subject to Section 16 of the 


 


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Exchange Act shall be exercised during the first six (6) months of its
term for cash, except as provided in Article 11.


 


(e)                                  Any
Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been
exercised.


 


(f)                                    The
provisions of Stock Appreciation Rights need not be the same with respect to
each recipient.


 


(g)                                 The
Committee may impose such other conditions or restrictions on the terms of
exercise and the exercise price of any Stock Appreciation Right, as it shall
deem appropriate. Notwithstanding the foregoing provisions of this Section
6.2(g), but subject to Section 12.2, a Freestanding Stock Appreciation
Right shall have the same terms and conditions as Options, including (i) a Base
Amount per Share not less than Fair Market Value of a Share on the date of
grant to an employee of the Company or a Subsidiary, and (ii) a term not
greater than seven (7) years. In addition to the foregoing, but subject to
Section 12.2, the Committee shall not without approval of the Company’s stock
holders (a) reduce the Base Amount per Share under any Stock Appreciation Right
after it is granted, (b) cancel a Stock Appreciation Right when the Base Amount
per Share exceeds the Fair Market Value of the underlying Shares in exchange
for another Award (other than in connection with Substitute Awards), and (c)
take any other action with respect to a Stock Appreciation Right that may be
treated as a repricing under the rules and regulations of the NASDAQ Stock
Market (or such other principal securities market on which the Shares are
traded).


 


(h)                                 The
Committee may impose such terms and conditions on Stock Appreciation Rights
granted in conjunction with any Award (other than an Option) as the Committee
shall determine in its sole discretion.


 


7.                                      RESTRICTED
STOCK AWARDS


 


7.1.                            Grants. Awards of Restricted Stock may be
issued hereunder to Participants either alone or in addition to other Awards
granted under the Plan (a “Restricted Stock Award”), and such Restricted Stock
Awards shall also be available as a form of payment of Performance Awards and
other earned cash-based incentive compensation. A Restricted Stock Award shall
be subject to vesting restrictions imposed by the Committee covering a period
of time specified by the Committee (the “Vesting Period”). The Committee has
absolute discretion to determine whether any consideration (other than
services) is to be received by the Company or any Subsidiary as a condition
precedent to the issuance of Restricted Stock.


 


7.2.                            Award
Agreements. The terms of any Restricted Stock Award granted under the Plan
shall be set forth in a written Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan. The terms of
Restricted Stock Awards need not be the same with respect to each Participant


 


7.3.                            Rights
of Holders of Restricted Stock. Beginning on the date of grant of the
Restricted Stock Award and subject to execution of the Award Agreement, the
Participant shall become a shareholder of the Company with respect to all
Shares subject to the Award Agreement and shall have all of the rights of a
shareholder, including the right to vote such Shares and the right to receive
distributions made with respect to such Shares; provided, however, that except as


 


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otherwise provided in an Award Agreement any Shares or any other
property (other than cash) distributed as a dividend or otherwise with respect
to any Restricted Stock as to which the restrictions have not yet lapsed shall
be subject to the same restrictions as such Restricted Stock.


 


7.4.                            Minimum Vesting Period. Except for certain
limited situations (including the death, disability or retirement of the
Participant, or a Change in Control as defined in Article 11), or special
circumstances determined by the Committee, such as the achievement of
performance objectives, Restricted Stock Awards subject solely to the continued
employment of employees of the Company or a Subsidiary shall have a Vesting
Period of not less than three (3) years from date of grant (but permitting pro
rata vesting over such time); provided that such minimum Vesting Period shall
not be applicable to (i) grants to new hires to replace forfeited awards from a
prior employer, or (ii) grants of Restricted Stock in payment of Performance
Awards and other earned cash-based incentive compensation. Subject to the
foregoing minimum Vesting Period requirements, the Committee may, in its sole
discretion and subject to the limitations imposed under Section 162(m) of the
Code and the regulations thereunder in the case of a Restricted Stock Award
intended to comply with the performance-based exception under Code Section
162(m), waive the forfeiture period and any other conditions set forth in any
Award Agreement subject to such terms and conditions as the Committee shall
deem appropriate. The minimum Vesting Period requirements of this Section shall
not apply to Restricted Stock Awards granted to Directors or to any consultants
or advisors who provide services to the Company or any Subsidiary.


 


8.                                      OTHER
STOCK UNIT AWARDS


 


8.1.                            Grants. Other Awards of units having a
value equal to an identical number of Shares (“Other Stock Unit Awards”) may be
granted hereunder to Participants, in addition to other Awards granted under
the Plan. Other Stock Unit Awards shall also be available as a form of payment
of other Awards granted under the Plan and other earned cash-based incentive
compensation.


 


8.2.                            Award
Agreements. The terms of Other Stock Unit Award granted under the Plan
shall be set forth in a written Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan. The terms of
such Awards need not be the same with respect to each Participant.


 


8.3.                            Vesting.
Except for certain limited situations (including the death, disability or
retirement of the Participant, or a Change in Control as defined in Article
11), or special circumstances determined by the Committee, such as the
achievement of performance objectives, Other Stock Unit Awards subject solely
to the continued employment of employees of the Company or any Subsidiary shall
be subject to a vesting period determined by the Committee of not less than
three (3) years from date of grant (but permitting pro rata vesting over such
time); provided, that such minimum vesting period shall not be applicable to
(i) grants to new hires to replace forfeited awards from a prior employer, or
(ii) grants of Other Stock Unit Awards in payment of Performance Awards and
other earned cash-based incentive compensation. Subject to the foregoing
minimum vesting period requirements, the Committee may, in its sole discretion
and subject to the limitations imposed under Section 162(m) of the Code and the
regulations thereunder in the case of a Other Stock Unit Award intended to
comply with the performance-based exception under Code Section 162(m), waive
the forfeiture period and any other


 


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conditions set forth in any Award Agreement subject to such terms and
conditions as the Committee shall deem appropriate. The minimum vesting period
requirements of this Section shall not apply to Other Stock Unit Awards granted
to Directors or to any consultants or advisors who provide services to the
Company or any Subsidiary.


 


8.4.                            Payment.
Except as provided in Article 10 or as maybe provided in an Award
Agreement, Other Stock Unit Awards may be paid in cash, Shares, other property,
or any combination thereof, in the sole discretion of the Committee at the time
of payment. Other Stock Unit Awards may be paid in a lump sum or in
installments or, in accordance with procedures established by the Committee, on
a deferred basis subject to the requirements of Section 409A of the Code.


 


9.                                      PERFORMANCE
AWARDS


 


9.1.                            Grants.
Performance Awards in the form of Performance Shares or Performance Units, as
determined by the Committee in its sole discretion, may be granted hereunder to
Participants, for no consideration or for such minimum consideration as may be
required by applicable law, either alone or in addition to other Awards granted
under the Plan. The performance goals
to be achieved for each Performance Period shall be conclusively determined by
the Committee and may be based upon the criteria set forth in Section 10.2.


 


9.2.                            Award Agreements. The terms of any Performance Award granted
under the Plan shall be set forth in a written Award Agreement which shall
contain provisions determined by the Committee and not inconsistent with the
Plan, including whether such Awards shall have Dividend Equivalents. The terms
of Performance Awards need not be the same with respect to each Participant.


 


9.3.                            Terms and Conditions. The performance criteria to be achieved
during any Performance Period and the length of the Performance Period shall be
determined by the Committee upon the grant of each Performance Award. The
amount of the Award to be distributed shall be conclusively determined by the
Committee.


 


9.4.                            Payment. Except as provided in Article 11 or as may
be provided in an Award Agreement, Performance Awards will be distributed only
after the end of the relevant Performance Period. Performance Awards may be
paid in cash, Shares, other property, or any combination thereof, in the sole
discretion of the Committee at the time of payment. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance
Period or, in accordance with procedures established by the Committee, on a
deferred basis subject to the requirements of Section 409A of the Code.


 


10.                               CODE
SECTION 162(m) PROVISIONS


 


10.1.                     Covered Employees. Notwithstanding any
other provision of the Plan, if the Committee determines at the time a
Restricted Stock Award, a Performance Award or an Other Stock Unit Award is
granted to a Participant who is, or is likely to be, as of the end of the tax
year in which the Company would claim a tax deduction in connection with such Award,
a Covered Employee, then the Committee may provide that this Article 10 is
applicable to such Award.


 


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10.2.                     Performance Criteria. If the Committee
determines that a Restricted Stock Award, a Performance Award or an Other Stock
Unit Award is subject to this Article 10, the lapsing of restrictions thereon
and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be subject to the achievement of one or more objective
performance goals established by the Committee, which shall be based on the
attainment of specified levels of one or any combination of the following: net
sales; revenue; revenue growth; operating income; pre- or after-tax income
(before or after allocation of corporate overhead and bonus); net earnings;
earnings per share; net income; division, group or corporate financial goals;
return on equity; total shareholder return; return on assets or net assets;
attainment of strategic and operational initiatives; appreciation in and/or
maintenance of the price of the Shares or any other publicly-traded securities
of the Company; market share; gross profits; earnings (including earnings
before taxes, earnings before interest and taxes or earnings before interest, taxes,
depreciation and amortization); economic value-added models; comparisons with
various stock market indices; reductions in costs; cash flow (before or after
dividends) cash flow per share (before or after dividends); return on capital
(including return on total capital or return on invested capital; cash flow
return on investment; improvement in or attainment of expense levels or working
capital levels; cash margins; cost per available seat mile; revenue per
available seat mile; revenue per revenue seat mile; operating margin adjusted
for total interest expense; percentage of flights completed on time; percentage
of scheduled flights completed; lost passenger baggage; aircraft utilization;
and revenue per employee. Such performance goals also may be based solely by
reference to the Company’s performance or the performance of a Subsidiary,
division, business segment or business unit of the Company, or based upon the
relative performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies. The Committee may also
exclude charges related to an event or occurrence which the Committee
determines should appropriately be excluded, including (a) reorganizations,
restructurings and discontinued operations, (b) other extraordinary
non-recurring items, (c) an event either not directly related to the operations
of the Company or not within the reasonable control of the Company’s
management, or (d) the cumulative effects of tax or accounting changes in
accordance with generally accepted accounting principles. Such performance
goals shall be set by the Committee within the time period prescribed by, and
shall otherwise comply with the requirements of, Section 162(m) of the
Code, and the regulations thereunder.


 


10.3.                     Adjustments.
Notwithstanding any provision of the Plan (other than Article 11), with respect
to any Restricted Stock, Performance Award or Other Stock Unit Award that is
subject to this Section 10, the Committee may adjust downwards, but not
upwards, the amount payable pursuant to such Award, and the Committee may not
waive the achievement of the applicable performance goals, except in the case
of the death or disability of the Participant or as otherwise determined by the
Committee in special circumstances.


 


10.4.                     Restrictions.
The Committee shall have the power to impose such other restrictions on Awards
subject to this Article as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation” within
the meaning of Section 162(m) of the Code.


 


10.5.                     Limitations on Grants to Individual Participants.
Subject to adjustment as provided in Section 12.2, no Participant may be
granted (i) Options or Stock Appreciation Rights during any rolling 36-month
period with respect to more than 1,000,000 Shares or (ii) Restricted 


 


11

















 


Stock, Performance Awards and/or Other Stock Unit Awards that are
denominated in Shares in any rolling 36-month period with respect to more than
500,000 Shares (the “Limitations”). In addition to the foregoing, the maximum
dollar value payable to any Participant in any rolling 12-month period with
respect to Performance Awards is $5,000,000. If an Award is cancelled, the
cancelled Award shall continue to be counted toward the applicable Limitations.


 


11.                               CHANGE
IN CONTROL PROVISIONS


 


11.1.                     Impact on
Certain Awards. Award Agreements may provide that in the event of a Change
in Control of the Company (as defined in Section 11.3): (i) Options and Stock
Appreciation Rights outstanding as of the date of the Change in Control shall
be cancelled and terminated without payment therefore if the Fair Market Value
of one Share as of the date of the Change in Control is less than the per Share
Option exercise price or the Base Amount per Share of the Stock Appreciation
Right, and (ii) all Performance Awards shall be considered to be earned and
payable (either in full or pro rata based on the portion of Performance Period
completed as of the date of the Change in Control), and any deferral or other
restriction shall lapse and such Performance Awards shall be immediately
settled or distributed.


 


11.2.                     Assumption or
Substitution of Certain Awards. (a) 
Unless otherwise provided in an Award Agreement, in the event of a
Change in Control of the Company in which the successor company assumes or
substitutes for an Option, Stock Appreciation Right, Restricted Stock Award or
Other Stock Unit Award, if a Participant’s employment with such successor
company (or a subsidiary thereof) terminates within the time period following
such Change in Control set forth in the Award Agreement and under the
circumstances specified in the Award Agreement: (i) Options and Stock
Appreciation Rights outstanding as of the date of such termination of
employment will immediately vest, become fully exercisable, and may thereafter
be exercised for a period of time set forth in the Award Agreement, (ii)
restrictions and deferral limitations on Restricted Stock shall lapse and the
Restricted Stock shall become free of all restrictions and limitations and
become fully vested, and (iii) the restrictions and deferral limitations and
other conditions applicable to any Other Stock Unit Awards or any other Awards
shall lapse, and such Other Stock Unit Awards or such other Awards shall become
free of all restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the original grant. For the purposes of this
Section 11.1, an Option, Stock Appreciation Right, Restricted Stock Award
or Other Stock Unit Award shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to purchase or
receive, for each Share subject to the Option, Stock Appreciation Right, Restricted
Stock Award or Other Stock Unit Award immediately prior to the Change in
Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in Control by
holders of Shares for each Share held on the effective date of such transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the transaction
constituting a Change in Control is not solely common stock of the successor
company, the Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting of an
Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit
Award, for each Share subject thereto, will be solely common stock of the
successor company substantially equal in fair market value to the per share
consideration received by holders of Shares in the transaction constituting a
Change in Control.


 


12

















 


The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding.


 


(b)                                 Unless otherwise
provided in an Award Agreement, in the event of a Change in Control of the
Company in which the successor company does not assume or substitute for an
Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit
Award: (i) Options and Stock Appreciation Rights outstanding as of the date of
the Change in Control shall immediately vest and become fully exercisable, (ii)
restrictions and deferral limitations on Restricted Stock shall lapse and the
Restricted Stock shall become free of all restrictions and limitations and
become fully vested, and (iii) the restrictions and deferral limitations and
other conditions applicable to any Other Stock Unit Awards or any other Awards
shall lapse, and such Other Stock Unit Awards or such other Awards shall become
free of all restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the original grant.


 


(c)                                  Notwithstanding
any other provision of the Plan, the Committee, in its discretion, may
determine that, upon the occurrence of a Change in Control of the Company, each
Option and Stock Appreciation Right outstanding shall terminate within a
specified number of days after notice to the Participant, and/or that each
Participant shall receive, with respect to each Share subject to such Option or
Stock Appreciation Right, an amount equal to the excess of the Fair Market
Value of such Share immediately prior to the occurrence of such Change in
Control over the exercise price per share of such Option and/or Stock
Appreciation Right; such amount to be payable in cash, in one or more kinds of
stock or property (including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in its discretion,
shall determine.


 


11.3.                     Change in
Control. For purposes of the Plan, unless otherwise provided in an Award
Agreement, Change in Control means the occurrence of any one of the following
events:


 


(a)                                  During
any twenty-four (24) month period, individuals who, as of the beginning of such
period, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the
beginning of such period whose election or nomination for election was approved
by a vote of at least a majority of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director; provided, however,
that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;


 


(b)                                 any
“person” (as such term is defined in the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities eligible to
vote for the election of the Board (the “Company Voting Securities”); provided, however,
that the event described in this paragraph (b) shall not be 


 


13

















 


deemed to be a Change in Control by virtue of any of the following
acquisitions:  (i) by the Company or any subsidiary, (ii) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any subsidiary, (iii) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (iv) pursuant to a
Non-Qualifying Transaction, as defined in paragraph (c) below, or (v) by any
person of Voting Securities from the Company, if a majority of the Incumbent
Board approves in advance the acquisition of beneficial ownership of 50% or
more of Company Voting Securities by such person;


 


(c)                                  the
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its subsidiaries
that requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “Business Combination”),
unless immediately following such Business Combination:  (i) more than 60% of the total voting
power of (A) the corporation resulting from such Business Combination (the
“Surviving Corporation”),
or (B) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the “Parent Corporation”), is
represented by Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination; (ii) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation); and (iii) at least a
majority of the members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation) following
the consummation of the Business Combination were Incumbent Directors at the
time of the Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (i), (ii) and (iii) above shall be
deemed to be a “Non-Qualifying Transaction”);


 


(d)                                 the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of a sale of all or
substantially all of the Company’s assets; or


 


(e)                                  the
occurrence of any other event that the Board determines by a duly approved resolution
constitutes a Change in Control.


 


Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 50% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; provided, that
if after such acquisition by the Company such person becomes the beneficial
owner of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.


 


14

















 


12.                               GENERALLY APPLICABLE PROVISIONS


 


12.1.                     Amendment and
Termination of the Plan. The Board may, from time to time, alter, amend,
suspend or terminate the Plan as it shall deem advisable, subject to any
requirement for stockholder approval imposed by applicable law, including the
rules and regulations of the NASDAQ Stock Market (or such other principal
securities market on which the Shares are traded) provided that the Board may
not amend the Plan in any manner that would result in noncompliance with Rule
16b-3 of the Exchange Act; and further provided that the Board may not, without
the approval of the Company’s stockholders, amend the Plan to (a) increase the
number of Shares that may be the subject of Awards under the Plan (except for
adjustments pursuant to Section 12.2), (b) expand the types of awards available
under the Plan, (c) materially expand the class of persons eligible to
participate in the Plan, (d) amend any provision of Section 5.3, (e) increase
the maximum permissible term of any Option specified by Section 5.4 or the
maximum permissible term of a Freestanding Stock Appreciation Right specified
by Section 5.5(g), (f) amend any provision of Section 10.5, or (g) take any
action with respect to an Option or Stock Appreciation Right that may be
treated as a repricing under the rules and regulations of the NASDAQ Stock
Market (or such other principal securities market on which the Shares are
traded), including reducing the exercise price or Base Amount (as applicable)
or exchanging an Option or Stock Appreciation Right for cash or another Award. In
addition, no amendments to, or termination of, the Plan shall in any way impair
the rights of a Participant under any Award previously granted without such
Participant’s consent.


 


12.2.                     Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization, dividend or distribution
(whether in cash, shares or other property, other than a regular cash
dividend), stock split, reverse stock split, spin-off or similar transaction or
other change in corporate structure affecting the Shares or the value thereof,
such adjustments and other substitutions shall be made to the Plan and to
Awards as the Committee, in its sole discretion, deems equitable or appropriate
taking into consideration the accounting and tax consequences, including such
adjustments in the aggregate number, class and kind of securities that may be
delivered under the Plan, the Limitations, the maximum number of Shares that
may be issued under “incentive stock options” and, in the aggregate or to any
one Participant, in the number, class, kind and option or exercise price of
securities subject to outstanding Awards granted under the Plan (including, if
the Committee deems appropriate, the substitution of similar options to
purchase the shares of, or other awards denominated in the shares of, another
company) as the Committee may determine to be appropriate in its sole
discretion; provided, however, that the number of Shares subject to any Award
shall always be a whole number.


 


12.3.                     Transferability of Awards. Except as
provided below, and except as otherwise authorized by the Committee in an Award
Agreement, no Award and no Shares subject to Awards described in Article 8 that
have not been issued or as to which any applicable restriction, performance or
deferral period has not lapsed, may be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent and
distribution, and such Award may be exercised during the life of the
Participant only by the Participant or the Participant’s guardian or legal
representative. Notwithstanding the foregoing if provided for in an Award
Agreement, a Participant may assign or transfer an Award with the consent of
the Committee (each transferee thereof, a “Permitted Assignee”) (a) to the
Participant’s spouse, children, or grandchildren (including any adopted step
children and grandchildren); (b) to a trust or partnership for the benefit of
one or more person referred to in clause (a); or (c) for charitable 


 


15

















 


donations;  provided that such
Permitted Assignee shall be bound by and subject to all of the terms and
conditions of the Plan and the Award Agreement relating to the transferred
Award and shall execute an agreement satisfactory to the Company evidencing such
obligations; and provided further that such Participant shall remain bound by
the terms and conditions of the Plan. The Company shall cooperate with any
Permitted Assignee and the Company’s transfer agent in effectuating any
transfer permitted under this Section. Any transfer of an Award or Shares in
violation of this Section 12.3 shall be null and void.


 


12.4.                     Termination of Employment. The Committee
shall determine and set forth in each Award Agreement whether any Awards
granted in such Award Agreement will continue to be exercisable, and the terms
of such exercise, on and after the date that a Participant ceases to be
employed by or to provide services to the Company or any Subsidiary (including
as a Director), whether by reason of death, disability, voluntary or
involuntary termination of employment or services, or otherwise. The date of
termination of a Participant’s employment or services will be determined by the
Committee, which determination will be final.


 


12.5.                     Deferral;
Dividend Equivalents. The
Committee shall be authorized to establish procedures pursuant to which the
payment of any Award may be deferred. Subject to the provisions of the Plan and
any Award Agreement, the recipient of an Award (including any deferred Award)
other than an Option or Stock Appreciation Right may, if so determined by the
Committee, be entitled to receive, currently or on a deferred basis, cash,
stock or other property dividends, or cash payments in amounts equivalent to
cash, stock or other property dividends on Shares (“Dividend Equivalents”) with
respect to the number of Shares covered by the Award, as determined by the
Committee, in its sole discretion. The Committee may provide that such amounts
and Dividend Equivalents (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested and may provide that such amounts and
Dividend Equivalents are subject to the same vesting or performance conditions
as the underlying Award.


 


13.                               MISCELLANEOUS


 


13.1.                     Tax
Withholding. The Company shall have the right to make all payments or
distributions pursuant to the Plan to a Participant (or a Permitted Assignee
thereof) (any such person, a “Payee”) net of any applicable federal, state and
local taxes required to be paid or withheld as a result of (a) the grant of any
Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the
delivery of Shares or cash, (d) the lapse of any restrictions in connection
with any Award or (e) any other event occurring pursuant to the Plan. The
Company or any Subsidiary shall have the right to withhold from wages or other
amounts otherwise payable to such Payee such withholding taxes as may be
required by law, or to otherwise require the Payee to pay such withholding
taxes. If the Payee shall fail to make such tax payments as are required, the
Company or its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
such Payee or to take such other action as may be necessary to satisfy such
withholding obligations. The Committee shall be authorized to establish
procedures for election by Participants to satisfy such obligation for the
payment of such taxes by tendering previously acquired Shares (either actually
or by attestation, valued at their then Fair Market Value) that have been owned
for a period of at least six months (or such other period to avoid accounting
charges against the Company’s earnings), or by directing the Company to retain
Shares (up to the Participant’s minimum required tax


 


16

















 


withholding rate or such other rate that will not trigger a negative
accounting impact) otherwise deliverable in connection with the Award.


 


13.2.                     Right of
Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of
an Award hereunder shall confer upon any Employee or Director the right to
continue in the employment or service of the Company or any Subsidiary or
affect any right that the Company or any Subsidiary may have to terminate the
employment or service of (or to demote or to exclude from future Awards under
the Plan) any such Employee or Director at any time for any reason “at will.”  Except as specifically provided by the
Committee, the Company shall not be liable for the loss of existing or
potential profit from an Award granted in the event of termination of an
employment or other relationship. No Employee or Participant shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Employees or Participants under the Plan.


 


13.3.                     Prospective
Recipient. The prospective recipient of any Award under the Plan shall not,
with respect to such Award, be deemed to have become a Participant, or to have
any rights with respect to such Award, until and unless such recipient shall
have executed an agreement or other instrument evidencing the Award and
delivered a copy thereof to the Company, and otherwise complied with the then
applicable terms and conditions of the Plan and Award Agreement.


 


13.4.                     Substitute Awards. Notwithstanding any
other provision of the Plan, the terms of Substitute Awards may vary from the
terms set forth in the Plan to the extent the Committee deems appropriate to
conform, in whole or in part, to the provisions of the awards in substitution
for which they are granted.


 


13.5.                     Cancellation
of Award. Notwithstanding anything to the contrary contained herein, all
outstanding Awards granted to any Participant shall be canceled if the
Participant, without the consent of the Company, while employed by the Company
or any Subsidiary or after termination of such employment or service,
establishes a relationship with a competitor of the Company or any Subsidiary
or engages in activity that is in conflict with or adverse to the interest of
the Company or any Subsidiary, as determined by the Committee in its sole
discretion. The Committee may provide in an Award Agreement that if within the
time period specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred to in the
preceding sentence, the Participant will forfeit any gain realized on the
vesting or exercise of the Award and must repay such gain to the Company.


 


13.6.                     Stop Transfer
Orders. All certificates for Shares delivered under the Plan pursuant to
any Award shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions. Any
provision herein to the contrary notwithstanding, the Company shall have no
obligation to issue any Shares pursuant to an Award if the Committee determines
in good faith that such issuance would violate applicable federal, state or
foreign securities laws.


 


17

















 


13.7.                     Nature of
Payments. All Awards made pursuant to the Plan are in consideration of
services performed or to be performed for the Company or any Subsidiary,
division or business unit of the Company. Any income or gain realized pursuant
to Awards under the Plan and any Stock Appreciation Rights constitute a special
incentive payment to the Participant and shall not be taken into account, to
the extent permissible under applicable law, as compensation for purposes of
any of the employee benefit plans of the Company or any Subsidiary except as
may be determined by the Committee or by the Board or board of directors of the
applicable Subsidiary.


 


13.8.                     Other Plans. Nothing contained in the Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.


 


13.9.                     Severability.
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (a) be deemed limited to the extent that such court of
competent jurisdiction deems it lawful, valid and/or enforceable and as so
limited shall remain in full force and effect, and (b) not affect any other
provision of the Plan or part thereof, each of which shall remain in full force
and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full
would be unlawful or otherwise invalid or unenforceable, then such
unlawfulness, invalidity or unenforceability shall not prevent such payment or
benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that
would not be unlawful, invalid or unenforceable shall be made or provided under
the Plan.


 


13.10.              Construction. As
used in the Plan, the words “include” and “including,” and variations thereof, shall not be deemed to
be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”


 


13.11.              Unfunded Status of
the Plan. The Plan is intended to constitute an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver the Shares or payments in lieu of or with respect to Awards hereunder;
provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.


 


13.12.              Governing Law. The
Plan and all determinations made and actions taken thereunder, to the extent
not otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Utah, without reference to principles of
conflict of laws, and construed accordingly.


 


18

















 


13.13.              Effective Date of
Plan; Termination of Plan. The Plan shall be effective on the date of the
approval of the Plan by the holders of a majority the shares voted at a duly
constituted meeting of the stockholders of the Company. The Plan shall be null and
void and of no effect if the foregoing condition is not fulfilled and no Award
shall be granted until the stockholders of the Company approve the Plan. Awards
may be granted under the Plan at any time and from time to time following
stockholder approval of the Plan until the tenth anniversary of the effective
date of the Plan, on which date the Plan will expire except as to Awards then
outstanding under the Plan. Such outstanding Awards shall remain in effect
until they have been exercised or terminated, or have expired.


 


13.14.              Foreign Employees.
Awards may be granted to Participants who are foreign nationals or employed
outside the United States, or both, on such terms and conditions different from
those applicable to Awards to Employees employed in the United States as may,
in the judgment of the Committee, be necessary or desirable in order to
recognize differences in local law or tax policy. The Committee also may impose
conditions on the exercise or vesting of Awards in order to minimize the
Company’s obligation with respect to tax equalization for Employees on
assignments outside their home country.


 


13.15.              Compliance with
Section 409A of the Code. This Plan is intended to comply and shall be
administered in a manner that is intended to comply with Section 409A of the
Code and shall be construed and interpreted in accordance with such intent. To
the extent that an Award or the payment, settlement or deferral thereof is
subject to Section 409A of the Code, the Award shall be granted, paid, settled
or deferred in a manner that will comply with Section 409A of the Code,
including regulations or other guidance issued with respect thereto, except as
otherwise determined by the Committee. Any provision of this Plan that would
cause the grant of an Award or the payment, settlement or deferral thereof to
fail to satisfy Section 409A of the Code shall be amended to comply with
Section 409A of the Code on a timely basis, which may be made on a retroactive
basis, in accordance with regulations and other guidance issued under Section
409A of the Code.


 


13.16.              Captions. The
captions in the Plan are for convenience of reference only, and are not
intended to narrow, limit or affect the substance or interpretation of the
provisions contained herein.


 


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