ex10-1.htm


     

    
      	
               Exhibit
                10.1

            
	 


    

    REPUBLIC
      AIRWAYS HOLDINGS INC.

     

    EQUITY
      INCENTIVE PLAN

     

    ARTICLE
      1

     

    GENERAL
      PLAN INFORMATION

     

    1.1  Background.
      The Plan permits the grant to Employees and Non-Employee Directors of cash
      and
      equity-based incentive compensation opportunities, including Restricted Stock,
      Restricted Stock Units, Performance Shares, Performance Units, Options,
      including ISOs, NQSOs, and Other Awards such as Stock Appreciation Rights and
      Cash Incentive Awards.  In addition, Non-Employee Directors shall
      receive automatic grants of NQSOs pursuant to Section 9.6 hereof.

     

    1.2  Objectives.
      The objectives of the Plan are to optimize the profitability and growth of
      the
      Company through long-term incentives that are consistent with the Company’s
      goals and that link the interests of Participants to those of the Company’s
      stockholders; to provide Participants with incentives for excellence in
      individual performance; to provide flexibility to the Company in its ability
      to
      motivate, attract, and retain the services of Participants who make significant
      contributions to the Company’s success; and to allow Participants to share in
      the success of the Company.

     

    1.3  Duration
      of the Plan. The Plan shall be effective on the date on which it is approved
      by shareholders.  The Plan shall remain in effect, subject to the
      right of the Committee to amend or terminate the Plan at any time, until there
      are no more Shares available for issuance under the Plan and all cash Awards
      have been paid or forfeited, pursuant to the Plan’s provisions. In no event,
      however, may an Award be granted more than ten years after the Effective
      Date.

     

    ARTICLE
      2

     

    DEFINITIONS

     

    As
      used
      herein, the masculine includes the feminine and the singular includes the
      plural, and vice versa, and the following terms shall have the meanings set
      forth below, unless otherwise clearly required by the context.

     

    2.1  “Award”
      means a grant under the Plan of Options, Restricted Stock, Restricted Stock
      Units, Performance Shares, Performance Units, and Other Awards.

     

    2.2  “Award
      Agreement” means an agreement entered into by the Company and a Participant, or
      another instrument prepared by the Company in lieu of such an agreement, setting
      forth the terms and conditions applicable to an Award pursuant to the Plan.
      An
      Award Agreement may be in hard copy, electronic form or such other form as
      the
      Company may permit.

     

    2.3  “Board”
      means the Board of Directors of the Company.

     

    2.4  “Cash
      Incentive Award” means a performance-based cash incentive Award granted pursuant
      to Section 9.5.

     

    2.5  “Change
      in Control” unless otherwise defined by the Committee shall be deemed to have
      occurred if and when, after the Effective Date—

     

    (a)  there
      occurs (1) any consolidation or merger in which the Company is not the
      continuing or surviving entity or pursuant to which shares of the common stock
      would be converted into cash, securities or other property, other than (i)
      a
      consolidation or merger of the Company in which the holders of the common stock
      immediately prior to the consolidation or merger have the same proportionate
      ownership of common stock of the surviving corporation immediately after the
      consolidation or merger, or (ii) a consolidation or merger which would result
      in
      the voting securities of the Company outstanding immediately prior thereto
      continuing to represent (by being converted into voting securities of the
      continuing or surviving entity) more than fifty percent (50%) of the combined
      voting power of the voting securities of the surviving or continuing entity
      immediately after such consolidation or merger and which would result in the
      members of the Board immediately prior to such consolidation or merger
      (including, for this purpose, any individuals whose election or nomination
      for
      election was approved by a vote of at least two-thirds of such members),
      constituting a majority of the board of directors (or equivalent governing
      body)
      of the surviving or continuing entity immediately after such consolidation
      or
      merger, or (2) any sale, lease, exchange or other transfer (in one transaction
      or a series of related transactions) of all or substantially all the Company’s
      assets;

     

    (b)  the
      Company’s stockholders approve any plan or proposal for the liquidation or
      dissolution of the Company;

     

    (c)  any
      person (as such term is used in Sections 13(d) and 14(d)2 of the Exchange Act)
      shall become the beneficial owner (within the meaning of Rule 13d-3 under the
      Exchange Act) of forty percent (40%) or more of the common stock other than
      pursuant to a plan or arrangement entered into by such person and the Company;
      or

     

    (d)  during
      any period of two (2) consecutive years, individuals who at the beginning of
      such period constitute the entire Board shall cease for any reason to constitute
      a majority of the Board unless the election or nomination for election by the
      Company’s stockholders of each new director was approved by a vote of at least
      two-thirds of the directors then still in office who were directors at the
      beginning of the period.

     

    2.6  “Code”
      means the Internal Revenue Code of 1986, as amended.

     

    2.7  “Committee”
      means the Compensation Committee of the Board or any other committee appointed
      by the Board to administer the Plan and Awards to Participants who are
      Employees.

     

    2.8  “Company”
      means Republic Airways Holdings Inc., a Delaware corporation, and any successor
      thereto.

     

    2.9  “Disability”
      means, unless otherwise determined by the Committee, a recipient’s absence from
      employment or other service for at least one hundred eighty (180) days in any
      twelve (12) month period as a result of his or her incapacity due to physical
      or
      mental illness, as determined by the Committee.

     

    2.10  Effective
      Date” means the date the Plan becomes effective in accordance with Section
      1.3.

     

    2.11  “Employee”
      means any employee or consultant of the Company or a Subsidiary.

     

    2.12  “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    2.13  “Fair
      Market Value” means the fair market value of a share of common stock on any date
      as determined by the Committee in its sole discretion; provided that (a) if
      the
      shares of common stock are admitted to trading on a national securities
      exchange, fair market value of a share of common stock on any date shall be
      the
      closing sale price reported for such share on such exchange on such date, or
      (b)
      if the shares of common stock are not so admitted but are subject to quotation
      on the OTC Bulletin Board or another comparable quotation system administered
      by
      the National Association of Securities Dealers, the fair market value of a
      share
      of common stock on any date shall be the average of the highest bid and lowest
      asked prices of such share on such system on such date provided that both bid
      and ask prices were reported on such date.

     

    2.14  “ISO”
      means an Option that is designated by the Committee as an “incentive stock
      option” within the meaning of Section 422 of the Code.

     

    2.15  “Non-Employee
      Director” means any individual who is a member of the Board or of the board of
      directors (or comparable governing body) of a Subsidiary, and who is not an
      Employee.

     

    2.16  “NQSO”
      means an Option that is not designated by the Committee as an ISO.

     

    2.17  “Option”
      means an incentive stock option or a nonqualified stock option granted pursuant
      to the Plan.

     

    2.18  “Other
      Award” means an Award granted to a Participant pursuant to Article
      9.

     

    2.19  “Participant”
      means an Employee or Non-Employee Director who has been selected to receive
      an
      Award or who holds an outstanding Award.

     

    2.20  “Performance-Based
      Exception” means the performance-based exception from the tax deductibility
      limitation imposed by Code Section 162(m), as set forth in Code Section
      162(m)(4)(C).

     

    2.21  “Performance
      Share” means an Award granted pursuant to Article 8, which, on the date of
      grant, shall have a value equal to the Fair Market Value of a Share on that
      date.

     

    2.22  “Performance
      Unit” means an Award granted pursuant to Article 8, which shall have an initial
      value established by the Committee on the date of grant.

     

    2.23  “Plan”
      means the Republic Airways Holdings Inc. Equity Incentive Plan, as it is set
      forth herein and as it may be amended from time to time.

     

    2.24  “Restricted
      Stock” means an Award granted pursuant to Section 7.1.

     

    2.25  “Restricted
      Stock Unit” means an Award granted pursuant to Section 7.5.

     

    2.26  “Restricted
      Period” means the period during which the transfer of Shares of Restricted Stock
      is limited in some way (based on the passage of time, the achievement of
      performance goals, or the occurrence of other events determined by the Committee
      in its discretion) and the Shares are subject to a substantial risk of
      forfeiture, as provided in Article 7.

     

    2.27  “Share”
      means a share of the Company’s common stock, $.001 par value.

     

    2.28  “Share
      Pool” means the number of Shares available under Section 4.1, as adjusted
      pursuant to Section 4.3.

     

    2.29  “Stock
      Appreciation Right” or “SAR” means an Award, granted either alone or in
      connection with a related Option, pursuant to the terms of Article
      9.

     

    2.30  “Subsidiary”
      means (a) a corporation, partnership, joint venture, or other entity in which
      the Company has an ownership interest of at least fifty percent (50%), and
      (b)
      any corporation, partnership, joint venture, or other entity in which the
      Company holds an ownership interest of less than fifty percent (50%) but which,
      in the discretion of the Committee, is treated as a Subsidiary for purposes
      of
      the Plan; provided that the Shares subject to any Award constitute “service
      recipient” stock” for purposes of Section 409A of the Code or otherwise do not
      subject the Award to Section 409A of the Code.

     

    2.31           “Ten
      Percent Shareholder” means a Participant who owns stock of the Company
      possessing more than ten percent of the total combined voting of all classes
      of
      stock of the Company or its parent or subsidiary corporation (within the meaning
      of Section 422(b) of the Code).

     

    ARTICLE
      3

     

    ADMINISTRATION

     

    3.1  General.  Except
      as otherwise determined by the Board in its discretion, the Plan shall be
      administered by the Committee; provided however that, the Board may, in its
      sole
      discretion, make awards under the Plan.  The Committee shall consist
      exclusively of two (2) or more non-employee directors within the meaning of
      the
      rules promulgated by the Securities and Exchange Commission under Section 16
      of
      the Exchange Act who also qualify as outside directors within the meaning of
      Code Section 162(m) and the related regulations under the Code. The members
      of
      the Committee shall be appointed from time to time by, and shall serve at the
      discretion of, the Board.

     

    3.2  Authority
      of the Committee.  Except as limited by law or by the Certificate
      of Incorporation or Bylaws of the Company, and subject to the provisions hereof,
      the Committee shall have full power in its discretion to select Employees who
      shall participate in the Plan; determine the sizes and types of Awards;
      determine the terms and conditions of Awards in a manner consistent with the
      Plan; construe and interpret the Plan and any Award Agreement or other agreement
      or instrument entered into or issued under the Plan; establish, amend, or waive
      rules and regulations for the Plan’s administration; amend the terms and
      conditions of any outstanding Award; determine whether and on what terms and
      conditions outstanding Awards will be adjusted for dividend equivalents (i.e.,
      a
      credit, made at the discretion of the Committee, to the account of a Participant
      in an amount equal to the cash dividends paid on one Share for each Share
      represented or covered by an outstanding Award held by the Participant); and
      establish a program pursuant to which designated Participants may receive an
      Award under the Plan in lieu of compensation otherwise payable in cash. Further,
      the Committee shall make all other determinations that may be necessary or
      advisable for the administration of the Plan.

     

    3.3  Delegation
      of Authority.  Subject to the requirements of applicable law, the
      Committee may delegate to any person or group or subcommittee of persons (who
      may, but need not be members of the Committee) such Plan-related functions
      within the scope of its responsibility, power and authority as it deems
      appropriate. Without limiting the foregoing, the Committee may delegate
      administrative duties to such person or persons as it deems appropriate. The
      Committee may not delegate its authority with respect to (a) non-ministerial
      actions with respect to individuals who are subject to the reporting
      requirements of Section 16(a) of the Exchange Act; (b) non-ministerial actions
      with respect to Awards that are intended to qualify for the Performance-Based
      Exception; and (c) certifying the satisfaction of performance goals and other
      material terms attributable to Awards intended to qualify for the
      Performance-Based Exception.

     

    3.4  Decisions
      Binding.  All determinations and decisions made by the Committee,
      and all related orders and resolutions of such committee shall be final,
      conclusive, and binding on all persons.

     

    3.5  Performance-Based
      Awards.  For purposes of the Plan, it shall be presumed, unless
      the Committee indicates to the contrary, that all Awards to Employees are
      intended to qualify for the Performance-Based Exception. If the Committee does
      not intend an Award to an Employee to qualify for the Performance-Based
      Exception, the Committee shall reflect its intent in its records in such manner
      as the Committee determines to be appropriate.

     

    ARTICLE
      4

     

    SHARES
      SUBJECT TO THE PLAN

     

    AND
      MAXIMUM AWARDS

     

    4.1  Number
      of Shares Issuable under the Plan.  Shares that may be issued
      pursuant to Awards may be either authorized and unissued Shares, or authorized
      and issued Shares held in the Company’s treasury, or any combination of the
      foregoing. Subject to adjustment as provided in Section 4.3, there shall be
      reserved for issuance under Awards 5,000,000 Shares. For the purposes hereof,
      the following Shares covered by previously-granted Awards will be deemed not
      to
      have been issued under the Plan and will remain in the Share Pool: (a) Shares
      covered by the unexercised portion of an Option or SAR that terminates, expires,
      is canceled or is settled in cash, (b) Shares forfeited or repurchased under
      the
      Plan, (c) Shares covered by Awards that are forfeited, canceled, terminated
      or
      settled in cash, (d) Shares withheld in order to pay the exercise or purchase
      price under an Award or to satisfy the tax withholding obligations associated
      with the exercise, vesting or settlement of an Award, and (e) Shares subject
      to
      SARs or a similar Award but not actually delivered in connection with the
      exercise or settlement of the Award.

     

    4.2  Individual
      Award Limitations.  The maximum aggregate number of Shares with
      respect to which Awards may be granted in a single calendar year to an
      individual Participant may not exceed 200,000 Shares. The maximum amount an
      Employee may earn for any calendar year under Cash Incentive Awards granted
      to
      such Employee is the lesser of (a) $2,000,000 or (b) an amount equal to three
      times the Employee’s annual salary for such calendar year.

     

    4.3  Adjustments
      in Authorized Shares.  In the event of any change in corporate
      capitalization, such as a stock split, or a corporate transaction, such as
      any
      merger, consolidation, separation, including a spin-off, or other distribution
      of stock or property of the Company, any reorganization (whether or not such
      reorganization comes within the definition of such term in Code Section 368)
      or
      any partial or complete liquidation of the Company, such adjustment shall be
      made in the number and class of Shares available for grants under Section 4.1,
      in the number and class of and/or price of Shares subject to outstanding Awards,
      and in the per-Participant Award limit set forth in Section 4.2 hereof, as
      may
      be determined to be appropriate and equitable by the Committee, in its
      discretion, to prevent dilution or enlargement of the benefits available under
      the Plan and of the rights of Participants; provided that the number of Shares
      subject to any Award shall always be a whole number. In a stock-for-stock
      acquisition of the Company, the Committee may, in its discretion, substitute
      securities of another issuer for any Shares subject to outstanding
      Awards.

     

    ARTICLE
      5

     

    ELIGIBILITY
      AND PARTICIPATION

     

    5.1  Eligibility.  All
      Employees and Non-Employee Directors are eligible to participate in the
      Plan.  Only employees of the Company or a Subsidiary may be granted
      ISOs.

     

    5.2  Actual
      Participation.  Subject to the provisions of the Plan, the
      Committee may, from time to time, select from all Employees those to whom Awards
      shall be granted and shall determine the nature and size of each Award. Subject
      to Article 10 of the Plan, the Board shall determine the Awards to be granted
      to
      the Non-Employee Directors in accordance with the Company’s compensation program
      for Non-Employee Directors.

     

    ARTICLE
      6

     

    STOCK
      OPTIONS

     

    6.1  Grant
      of Options.  Subject to the terms of the Plan, Options may be
      granted to Participants in such number, and upon such terms, and at any time
      and
      from time to time as shall be determined by the Committee.

     

    6.2  Option
      Exercise Price.  The Option exercise price under each Option shall
      not be less than one hundred percent (100%) of the Fair Market Value of a Share
      on the date the Option is granted. Notwithstanding the foregoing, in the case
      of
      an ISO granted to a Ten Percent Shareholder, the Option exercise price under
      each ISO shall not be less than one hundred percent (110%) of the Fair Market
      Value of a Share on the date the Option is granted. The Committee may not
      re-price a previously granted Option.  The Board and the Committee may
      not reprice Options or SARs granted under the Plan, either by amending an
      existing award agreement or by substituting a new Award at a lower
      price.

     

    6.3  Term
      of Options.  Each Option granted to a Participant shall expire at
      such time as the Committee shall determine at the time of grant; provided that
      no Option shall be exercisable after the tenth (10th) anniversary of its date
      of
      grant. Notwithstanding the foregoing, in the case of an ISO granted to a Ten
      Percent Shareholder, the Option shall not be exercisable after the fifth (5th) anniversary
      of
      its date of grant.

     

    6.4  Exercise
      of Options. Options granted under the Plan shall be exercisable at such
      times and be subject to such restrictions and conditions as the Committee shall
      in each instance approve, which need not be the same for each grant or for
      each
      Participant. Options shall be exercised by the delivery of a written notice
      of
      exercise to the Company, setting forth the number of Shares with respect to
      which the Option is to be exercised, accompanied by full payment for the
      Shares.

     

    6.5  Payment.  When
      an Option is exercised, the Option exercise price shall be payable to the
      Company in full either:

     

    (a)  In
      cash
      or its equivalent; or

     

    (b)  if
      allowed by the Committee, by tendering previously acquired Shares having an
      aggregate Fair Market Value at the time of exercise equal to the total Option
      exercise price (provided that the Shares that are tendered must have been held
      by the Participant for at least six (6) months prior to their tender to satisfy
      the Option exercise price); or

     

    (c)  if
      allowed by the Committee, by a combination of (a) and (b).

     

    The
      Committee also may allow broker-assisted exercise as permitted under Federal
      Reserve Board’s Regulation T, subject to applicable securities law restrictions,
      or by any other means that the Committee determines to be consistent with the
      Plan’s purpose and applicable law. Subject to any governing rules or
      regulations, as soon as practicable after receipt of a written notification
      of
      exercise and full payment of the Option exercise price, the Company shall
      deliver to the Participant, in the Participant’s name (or, at the direction of
      the Participant, jointly in the names of the participant and the Participant’s
      spouse), one or more Share certificates for the Shares purchased under the
      Option(s).

     

    6.6  Limitations
      on ISOs.  Notwithstanding anything in the Plan to the contrary, to
      the extent required from time to time by the Code and/or applicable regulations,
      the following additional provisions shall apply to the grant of Options that
      are
      intended to qualify as ISOs:

     

    6.6.1  Fair
      Market Value Limitation.  The aggregate Fair Market Value
      (determined as of the date the ISO is granted) of the Shares with respect to
      which ISOs are exercisable for the first time by any Participant during any
      calendar year (under all plans of the Company (or any parent or subsidiary
      corporation within the meaning of Code Section 424) shall not exceed one hundred
      thousand dollars ($100,000) or such other amount as may subsequently be
      specified by the Code and/or applicable regulations; provided that, to the
      extent that such limitation is exceeded, any Options on Shares with a Fair
      Market Value in excess of such amount shall be deemed to be NQSOs.

     

    6.6.2  Code
      Section 422.  ISOs shall contain such other provisions as the
      Committee shall deem advisable, but shall in all events be consistent with
      and
      contain or be deemed to contain all provisions required in order to qualify
      as
      incentive stock options under Section 422 of the Code. Moreover, no ISOs may
      be
      granted more than ten years from the earlier of the date on which the Plan
      was
      adopted by the Board or the date the Plan received shareholder
      approval.

     

    ARTICLE
      7

     

    RESTRICTED
      STOCK AND

     

    RESTRICTED
      STOCK UNITS

     

    7.1  Grant
      of Restricted Stock.  Subject to the terms and provisions of the
      Plan, the Committee, at any time and from time to time, may grant Shares of
      Restricted Stock to Participants in such amounts as the Committee shall
      determine.

     

    7.2  Restrictions.

     

    (a)  The
      Committee shall impose such conditions and/or restrictions on any Shares of
      Restricted Stock as the Committee may determine including, without limitation,
      a
      requirement that Participants pay a stipulated purchase price for each Share
      of
      Restricted Stock, transfer restrictions, restrictions based upon the achievement
      of specific performance goals (Company-wide, divisional, and/or individual),
      time-based restrictions, and/or restrictions under applicable federal or state
      securities laws.

     

    (b)  The
      Company may retain the certificates representing Shares of Restricted Stock
      in
      the Company’s possession until such time as all conditions and/or restrictions
      applicable to such Shares have been satisfied.

     

    (c)  Except
      as
      otherwise provided in this Article, Shares of Restricted Stock that have not
      yet
      been forfeited or canceled shall become freely transferable (subject to any
      restrictions under applicable securities laws) by the Participant after the
      last
      day of the applicable Restriction Period.

     

    7.3  Voting
      Rights.  Participants holding Shares of Restricted Stock may be
      granted full voting rights with respect to those Shares during the Restriction
      Period.

     

    7.4  Dividends
      and other Distributions.  At the discretion of the Committee,
      during the Restriction Period, Participants holding Shares of Restricted Stock
      may be credited with regular cash dividends paid with respect to such Shares
      while they are so held. The Committee may apply any restrictions to the
      dividends that the Committee deems appropriate. Without limiting the generality
      of the preceding sentence, if the grant or vesting of Restricted Stock is
      designed to comply with the requirements of the Performance-Based Exception,
      the
      Committee may apply any restrictions it deems appropriate to the payment of
      dividends declared with respect to such Restricted Stock, so that the dividends
      and/or the Restricted Stock shall be eligible for the Performance-Based
      Exception.

     

    7.5  Restricted
      Stock Units.  In lieu of or in addition to any Awards of
      Restricted Stock, the Committee may grant Restricted Stock Units to any
      Participant, subject to the terms and conditions of this Article being applied
      to such Awards as if those Awards were for Restricted Stock and subject to
      such
      other terms and conditions as the Committee may determine (including, but not
      limited to, requiring or permitting deferral of the payment of such Awards
      after
      the time that Participants become vested in them, notwithstanding any provision
      to the contrary in Section 6.2 above). Each Restricted Stock Unit shall have
      the
      value of one Share. Restricted Stock Units may be paid at such time as the
      Committee may determine in its discretion, and payments may be made in a lump
      sum or in installments, in cash, Shares, or a combination thereof, as determined
      by the Committee in its discretion.

     

    ARTICLE
      8

     

    PERFORMANCE
      UNITS AND PERFORMANCE SHARES

     

    8.1  Grant
      of Performance Units/Shares.  Subject to the terms of the Plan,
      Performance Units, and/or Performance Shares may be granted to Participants
      in
      such amounts and upon such terms, and at any time and from time to time, as
      shall be determined by the Committee.

     

    8.2  Value
      of Performance Units/Shares.  Each Performance Unit shall have an
      initial value that is established by the Committee at the time of grant. Each
      Performance Share shall have an initial value equal to the Fair Market Value
      of
      a Share on the date of grant. The Committee shall set performance goals in
      its
      discretion that, depending on the extent to which they are met, shall determine
      the number and/or value of Performance Units/Shares that shall be paid out
      to
      the Participant.

     

    8.3  Earning
      Performance Units/Shares.  Subject to the terms of the Plan, after
      the applicable performance period has ended, the holder of Performance
      Units/Shares shall be entitled to receive payout with respect to the number
      and
      value of Performance Units/Shares earned by the Participant over the performance
      period, to be determined as a function of the extent to which the corresponding
      performance goals have been achieved.

     

    8.4  Form
      and Timing of Payment of Performance Units/Shares.

     

    8.4.1  Distributions.  Unless
      the Committee determines otherwise in its discretion, payment of earned
      Performance Units/Shares shall be made in a single lump sum following the close
      of the applicable performance period. Subject to the terms of the Plan, the
      Committee, in its discretion, may direct that earned Performance Units/Shares
      be
      paid in the form of cash or Shares (or in a combination thereof) that have
      an
      aggregate Fair Market Value equal to the value of the earned Performance
      Units/Shares on the last trading day immediately before the close of the
      applicable performance period. Such Shares may be granted subject to any
      restrictions deemed appropriate by the Committee.

     

    8.4.2  Dividends.  At
      the discretion of the Committee, Participants may be entitled to receive any
      dividends declared with respect to Shares that have been earned in connection
      with grants of Performance Units and/or Performance Shares, but not yet
      distributed to Participants; such dividends may be subject to the same accrual,
      forfeiture, and payout restrictions as apply to dividends earned with respect
      to
      Shares covered by Restricted Stock Awards. In addition, Participants may, at
      the
      discretion of the Committee, be entitled to exercise voting rights with respect
      to such Shares.

     

    ARTICLE
      9

     

    OTHER
      AWARDS

     

    9.1  General.  Subject
      to the terms of the Plan, the Committee may grant any types of Awards other
      than
      those that are specifically set forth in Articles 6 through 8 hereof, including,
      but not limited to, SARs, Cash Incentive Awards and the payment of Shares in
      lieu of cash under any Company incentive bonus plan or program. Subject to
      the
      terms of the Plan, the Committee, in its sole discretion, shall determine the
      terms and conditions of such Other Awards.

     

    9.2  Grant
      of SARs.  Subject to the terms and conditions of the Plan, SARs
      may be granted to Participants at any time and from time to time as shall be
      determined by the Committee provided that the SAR exercise price under each
      SAR
      shall not be less than one hundred percent (100%) of the Fair Market Value
      of a
      Share on the date the SAR is granted. The Committee shall have complete
      discretion in determining the number of SARs granted to each Participant
      (subject to Article 4 hereof) and, consistent with the provisions of the Plan,
      in determining the terms and conditions pertaining to such SARs. The grant
      price
      of an SAR shall equal the Fair Market Value of a Share on the date of grant
      of
      the SAR.

     

    9.3  Term
      of SARs.  The term of an SAR shall be determined by the Committee,
      in its discretion; provided that such term shall not exceed ten
      years.

     

    9.4  Payment
      of SAR Amount.  Upon exercise of an SAR, a Participant shall be
      entitled to receive payment from the Company in an amount determined by
      multiplying:

     

    (a)  the
      excess of the Fair Market Value of a Share on the date of exercise over the
      grant price, by

     

    (b)  the
      number of Shares with respect to which the SAR is exercised.

     

    At
      the
      discretion of the Committee, the payment upon exercise of an SAR may be in
      cash,
      in Shares of equivalent Fair Market Value, or in some combination
      thereof.

     

    9.5  Cash
      Incentive Awards.  Incentive Awards, including annual incentive
      Awards and long-term incentive Awards, denominated as cash amounts, may be
      granted under the Plan, subject to achievement of specified performance goals
      established by the Committee. At the expiration of the applicable performance
      period, the Committee shall determine whether and the extent to which the
      performance goals are achieved and the extent to which each Cash Incentive
      Award
      has been earned. The amount (if any) payable to a Participant in respect of
      a
      Cash Incentive Award will be paid in cash as soon as practicable after such
      amount is determined, subject to such deferral conditions as may be permitted
      or
      prescribed consistent with the requirements of Section 409A of the
      Code.

     

    ARTICLE
      10

     

    NON-EMPLOYEE
      DIRECTOR STOCK OPTIONS

     

    10.1  Option
      to Purchase Shares.  Subject to adjustments pursuant to Section
      4.3 hereof, without further action by the Board or the stockholders of the
      Company:

     

    (a)           each
      director who first becomes a Non-Employee Director after the Effective Date
      shall automatically be granted an option to purchase 10,000 shares of common
      stock on the first trading day following the date he or she commences service
      as
      a Non-Employee Director (the “Initial Options”); and

     

    (b)           each
      Non-Employee Director shall automatically be granted an option to purchase
      2,500
      shares of common stock on the first trading day following each Annual Meeting
      of
      Stockholders after the Effective Date at which such director is re-elected
      to
      the Board, provided that such Non-Employee Director did not receive an Initial
      Option during the one hundred eighty (180) day period ending on the date of
      such
      Annual Meeting of Stockholders (the “Annual Options” and, collectively with the
      Initial Options, the” Director Options”).

     

    10.2  Exercise
      Price. The exercise price per share covered by a Director Option shall be
      equal to the Fair Market Value of the common stock on the date of
      grant.

     

    10.3  Term
      of Director Options. Except as otherwise provided herein, if not previously
      exercised, each Director Option shall expire on the tenth (10th) anniversary
      of
      its date of grant.

     

    10.4  Vesting
      of Director Options. Each Initial Option shall, subject to the optionee
      remaining in continuous service as a director of the Company through each
      applicable vesting date, become vested and exercisable with respect to 1/24
      of
      the shares of common stock covered thereby on the first day of each month for
      the first (12) twelve months commencing after the date of the grant, and with
      respect to 1/48 of the shares of common stock covered thereby on the first
      day
      of each month for the next twenty-four (24) months commencing thereafter. Each
      Annual Option shall, subject to the optionee Remaining in continuous service
      as
      a director of the Company through each applicable vesting date, become vested
      and exercisable with respect to 1/12 of the shares of common stock covered
      thereby on the first day of each month for the first twelve (12) months
      commencing after the date of the grant. Each Director Option shall become fully
      vested and exercisable upon the occurrence of a Change in Control of the
      Company, subject to Article 16 hereof.

     

    10.5  Method
      of Exercise.  Once vested and exercisable, a Director Option may
      be exercised by transmitting to the Company (a) a notice specifying the number
      of shares to be purchased and (b) payment of the aggregate exercise price of
      the
      shares so purchased in cash or its equivalent. Payment, in whole or in part,
      of
      the exercise price of a Director Option may also be made (i) if the common
      stock
      is publicly traded, by means of a cashless exercise procedure approved by the
      Committee, (ii) to the extent permitted by the Committee, in the form of
      unrestricted shares of common stock which, (x) in the case shares acquired
      upon
      exercise of an option, have been owned by the optionee for more than six (6)
      months on the date of surrender, and (y) have a Fair Market Value on the date
      of
      surrender equal to the aggregate exercise price of the shares of common stock
      as
      to which such option shall be exercised, or (iii) to the extent permitted by
      the
      Committee, any combination of the foregoing.

     

    10.6  Effect
      of Termination of Service as a Director:

     

    10.6.1  (a)           Termination
      by reason of death or disability.  If an optionee’s service as a
      director of the Company terminates by reason of his or her death or Disability,
      then: (i) any portion of a Director Option that is exercisable on the date
      of
      termination shall remain exercisable by the optionee (or, in the event of death,
      the optionee’s beneficiary) during the one year period following the date of
      termination but in no event after expiration of the stated term thereof and,
      to
      the extent not exercised during such period, shall thereupon terminate, provided
      that, in the event of a termination due to Disability, if the optionee dies
      during such one-year period, then the deceased optionee’s beneficiary may
      exercise the Director Option, to the extent exercisable by the deceased optionee
      immediately prior to his or her death, for a period of one year following the
      date of death but in no event after expiration of the stated term thereof,
      and
      (ii) any portion of a Director Option that is not exercisable on the date of
      termination shall thereupon terminate.

     

    10.6.2  (b)           Other
      Termination.  If an optionee’s service as a director of the
      Company terminates for any other reason (other than those described in Section
      10.6(a) above), then: (i) any portion of a Director Option that is exercisable
      on the date of termination shall remain exercisable by the optionee during
      the
      one hundred eighty (180) day period following the date of termination but in
      no
      event after expiration of the stated term thereof and, to the extent not
      exercised during such period, shall thereupon terminate, and (ii) any portion
      of
      a Director Option that is not exercisable on the date of termination shall
      thereupon terminate.

     

    ARTICLE
      11

     

    AWARD
      AGREEMENTS

     

    11.1  In
      General.  Each Award shall be evidenced by an Award Agreement that
      shall include such provisions as the Committee shall determine and that shall
      specify—

     

    (a)  in
      the
      case of an Option or SAR, the number of the Shares to which the Option or SAR
      pertains, the Option exercise price or SAR grant price, the term of the Option
      or SAR, the schedule on which the Option or SAR becomes exercisable, and, in
      the
      case of an Option, whether it is intended to be an ISO or an NQSO;

     

    (b)  in
      the
      case of Restricted Stock or Restricted Stock Units, the number of Shares of
      Restricted Stock or Restricted Stock Units granted, the applicable restrictions,
      and the Restriction Period(s);

     

    (c)  in
      the
      case of Performance Units or Performance Shares, the number of Performance
      Units
      or Performance Shares granted, the initial value of a Performance Unit (if
      applicable), and the performance goals; and

     

    (d)  in
      the
      case of a Cash Incentive Award, the amount that may be earned and the
      performance goals.

     

    11.2  Severance
      from Service.  Each Award Agreement shall set forth the extent to
      which the Participant shall have rights under the Award following the
      Participant’s severance from service with the Company and its Subsidiaries. The
      Award Agreement may make distinctions based on the reason for the Participant’s
      severance from service.

     

    11.3  Restrictions
      on Transferability.  Subject to the provisions of the Plan, each
      Award Agreement shall set forth such restrictions on the transferability of
      the
      Award and on the transferability of Shares acquired pursuant to the Award as
      the
      Committee may deem advisable, including, without limitation, restrictions under
      applicable securities laws, under the requirements of any stock exchange or
      market upon which such Shares are then listed and/or then traded, and under
      any
      blue sky or state securities laws applicable to such Shares. In the case of
      an
      ISO (and in the case of any other Award, except as otherwise provided in the
      Award Agreement), a Participant’s Award may not be sold, transferred, pledged,
      assigned, or otherwise alienated or hypothecated, other than by will or by
      the
      laws of descent and distribution, and shall be exercisable during the
      Participant’s lifetime only by the Participant.

     

    11.4  Uniformity
      Not Required.  The provisions of the Award Agreements need not be
      uniform among all Awards, among all Awards of the same type, among all Awards
      granted to the same Participant, or among all Awards granted at the same
      time.

     

    ARTICLE
      12

     

    PERFORMANCE
      MEASURES

     

    12.1  Performance
      Criteria.  Unless and until the Company’s stockholders approve a
      change in the general performance measures set forth in this Article 12, the
      attainment of which may determine the degree of payout and/or vesting with
      respect to Awards that are designed to qualify for the Performance-Based
      Exception, the performance measure(s) to be used for purposes of such grants
      may
      be measured at the Company level, at a subsidiary level, or at an operating
      unit
      level, and may be applied to an individual or a group of persons, and shall
      be
      chosen from among, and may include any combination of, the
      following:

     

    (a)  Income
      measures (including, but not limited to, gross profit, operating income,
      earnings before or after taxes, profits before or after taxes, net income or
      earnings per share);

     

    (b)  Return
      measures (including, but not limited to, return on assets, investment, equity,
      or sales or pre-tax margin);

     

    (c)  Cash
      flow
      return on investments, which equals net cash flows divided by owners
      equity;

     

    (d)  Gross
      revenues;

     

    (e)  Debt
      measures (including, without limitation, debt multiples);

     

    (f)  Marked
      value added;

     

    (g)  Economic
      value added;

     

    (h)  Share
      price (including, but not limited to, growth measures and total shareholder
      return);

     

    (i)           Cost
      measures, (including, but not limited to, cost per available seat mile);
      and

     

    (j)           Operational
      measures (including, but not limited to, the number of aircraft at year end,
      the
      number of departures, the number of block hours, the number of enplanements,
      and
      the number of additions to our fleet of aircraft).

     

    12.2  Adjustments.  The
      Committee shall have the discretion to adjust the determinations of the degree
      of attainment of the pre-established performance goals; provided that Awards
      that are designed to qualify for the Performance-Based Exception may not be
      adjusted upward (although the Committee shall retain the discretion to adjust
      such Awards downward).

     

    12.3  Certification.  In
      the case of any Award that is granted subject to the condition that a specified
      performance measure be achieved, no payment under such Award shall be made
      prior
      to the time that the Committee certifies in writing that the performance measure
      has been achieved. For this purpose, approved minutes of the Committee meeting
      at which the certification is made shall be treated as a written certification.
      No such certification is required, however, in the case of an Award that is
      based solely on an increase in the value of a Share from the date such Award
      was
      made.

     

    ARTICLE
      13

     

    BENEFICIARY
      DESIGNATION

     

    Each
      Participant may, from time to time, name any beneficiary or beneficiaries to
      whom any benefit under the Plan is to be paid in case of the Participant’s death
      before the Participant receives any or all of such benefit. Each such
      designation shall revoke all prior designations by the same Participant with
      respect to such benefit, shall be in a form prescribed by the Company, and
      shall
      be effective only when filed by the Participant in writing with the Company
      during the Participant’s lifetime. In the absence of any such designation, any
      benefits remaining unpaid under the Plan at the Participant’s death shall be
      paid to the Participant’s estate unless otherwise provided in the Award
      Agreement.

     

    ARTICLE
      14

     

    DEFERRALS

     

    The
      Committee may permit or require a Participant to defer receipt of the payment
      of
      cash or the delivery of Shares that would otherwise be due pursuant to the
      exercise of an Option or SAR, the lapse or waiver of restrictions with respect
      to Restricted Stock or Restricted Stock Units, the satisfaction of any
      requirements or goals with respect to Performance Units/Shares, or in connection
      with any Other Awards, all in accordance with such procedures and upon such
      terms and conditions as the Committee, acting in its discretion, may prescribe,
      subject to, and in accordance with, Section 409A of the
      Code.



     

    ARTICLE
      15

     

    NO
      RIGHT TO EMPLOYMENT OR PARTICIPATION

     

    15.1  Employment.  The
      Plan shall not interfere with or limit in any way the right of the Company
      or of
      any Subsidiary to terminate any Employee’s employment at any time, and the Plan
      shall not confer upon any Employee the right to continue in the employ of the
      Company or of any Subsidiary.

     

    15.2  Participation.  No
      Employee or Non-Employee Director shall have the right to be selected to receive
      an Award or, having been so selected, to be selected to receive a future
      Award.

     

    ARTICLE
      16

     

    CHANGE
      IN CONTROL

     

    In
      the
      event of a Change in Control, the Board may in its sole discretion direct that
      (a) all option holders shall be permitted to exercise their outstanding options
      and SARs in whole or in part (whether or not otherwise exercisable) immediately
      prior to such Change in Control; or (b) if, as part of a Change in Control
      transaction, the stockholders of the Company receive capital stock of another
      corporation (“Exchange Stock”) in exchange for their shares of common stock
      (whether or not such Exchange Stock is the sole consideration), all options
      and
      SARs for common stock that are outstanding at the time of the Change in Control
      transaction shall be converted into options or SARs (as the case may be) for
      shares of Exchange Stock, such that the vesting and other terms and conditions
      of the converted options and SARs shall be substantially the same as the vesting
      and corresponding other terms and conditions of the original options and SARs.
      The  Board, acting in its discretion, may accelerate vesting of other
      non-vested awards, and cause cash settlements and/or other adjustments to be
      made to any outstanding awards (including, without limitation, options and
      SARs)
      as it deems appropriate in the context of a Change in Control transaction,
      taking into account with respect to other awards the manner in which outstanding
      options and SARs are being treated.  Any outstanding options and SARs
      which are not exercised before a Change in Control described in Section 2.5(a)
      or (b) shall thereupon terminate.

     

    ARTICLE
      17

     

    AMENDMENT
      AND TERMINATION

     

    17.1  Amendment
      and Termination.  Subject to the terms of the Plan, the Committee
      may at any time and from time to time, alter, amend, suspend, or terminate
      the
      Plan in whole or in part; provided that, unless the Committee specifically
      provides otherwise, any revision or amendment that would cause the Plan to
      fail
      to comply with any requirement of applicable law, regulation, or rule if such
      amendment were not approved by the stockholders of the Company shall not be
      effective unless and until shareholder approval is obtained.

     

    17.2  Outstanding
      Awards.  Notwithstanding any other provision of the Plan to the
      contrary, no termination, amendment, or modification of the Plan shall cause,
      without the consent of the Participant, any previously granted Awards to be
      forfeited or altered in a way that adversely affects the Participant. After
      the
      termination of the Plan, any previously granted Award shall remain in effect
      and
      shall continue to be governed by the terms of the Plan, the Award, and any
      applicable Award Agreement.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
      18

     

    TAX
      WITHHOLDING

     

    18.1  Tax
      Withholding.  The Company and its Subsidiaries shall have the
      power and the right to deduct or withhold, or to require a Participant to remit
      to the Company or to a Subsidiary, an amount that the Company or a Subsidiary
      reasonably determines to be required to comply with federal, state, local,
      or
      foreign tax withholding requirements.

     

    18.2  Share
      Withholding.  With respect to withholding required upon the
      exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
      or upon any other taxable event arising as a result of Awards granted hereunder,
      Participants may elect, subject to the approval of the Committee, to satisfy
      the
      withholding requirement, in whole or in part, by having the Company withhold
      Shares having a Fair Market Value on the date the tax is to be determined equal
      to the minimum statutory withholding tax that could be imposed on the
      transaction. All such elections shall be irrevocable, made in writing, signed
      by
      the Participant, and shall be subject to any restrictions or limitations that
      the Committee, in its discretion, deems appropriate.

     

    ARTICLE
      19

     

    SUCCESSORS

     

    All
      obligations of the Company under the Plan with respect to Awards granted
      hereunder shall be binding on any successor to the Company, whether the
      existence of such successor is the result of a direct or indirect purchase,
      merger, consolidation, or otherwise, of all or substantially all of the business
      and/or assets of the Company.

     

    ARTICLE
      20

     

    LEGAL
      CONSTRUCTION

     

    20.1  Severability.  If
      any provision of the Plan shall be held illegal or invalid for any reason,
      such
      illegality or invalidity shall not affect the remaining parts of the Plan,
      and
      the Plan shall be construed and enforced as if the illegal or invalid provision
      had not been included.

     

    20.2  Requirements
      of Law.  The granting of Awards and the issuance of Shares under
      the Plan shall be subject to all applicable laws, rules, and regulations, and
      to
      such approvals by any governmental agencies or national securities exchanges
      as
      may be required.

     

    20.3  Section
      409A Compliance.  Except as otherwise specifically provided by the
      Committee at the time an Award is made, any Award providing for a deferral
      of
      compensation must satisfy the requirements of Section 409A. Toward that end,
      if
      any payment or benefit received or to be received by a Participant pursuant
      to
      an Award would cause the Participant to incur a penalty tax or interest under
      Section 409A of the Code or any regulations or Treasury Department guidance
      promulgated thereunder, the Committee may reform the provision(s) of such Award
      in order to avoid to the maximum extent practicable the incurrence of any such
      penalty tax or interest.

     

     

        Governing
      Law.  The Plan and all Award Agreements shall be construed in
      accordance with and governed by the laws of the State of Delaware (without
      regard to the legislative or judicial conflict of laws rules of any state),
      except to the extent superseded by federal law.