Frontier Airlines, Inc Proxy Statement

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M6cV/E8aSUdBCyN2SFrr7yp614rQWXoJcX7fv/a9RmNndVP9/yLDUN9Z3f89QNxH LouzmpRCeULTntq2bHbomA== 0000921929-03-000022.txt : 20030718 0000921929-03-000022.hdr.sgml : 20030718 20030718163033 ACCESSION NUMBER: 0000921929-03-000022 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030718 EFFECTIVENESS DATE: 20030718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONTIER AIRLINES INC /CO/ CENTRAL INDEX KEY: 0000921929 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 841256945 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12805 FILM NUMBER: 03793280 BUSINESS ADDRESS: STREET 1: 7001 TOWER ROAD CITY: DENVER STATE: CO ZIP: 80249 BUSINESS PHONE: 7203744200 MAIL ADDRESS: STREET 1: 7001 TOWER ROAD CITY: DENVER STATE: CO ZIP: 80249 DEF 14A 1 proxy2003.htm PROXY Frontier Airlines, Inc Proxy Statement

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement (definitive proxy to be filed on or about July 22, 2002)
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss. 240.14a-11(c) orss. 240.14a-12

FRONTIER AIRLINES, INC.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14-a(6)(i)(2), or Item
22(a)(2) of Schedule 14A
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11,

1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange act
Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:

FRONTIER AIRLINES, INC.
7001 Tower Road
Denver, CO 80249-7312

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF FRONTIER AIRLINES, INC.:

You are invited to attend the 2003 Annual Meeting of Shareholders of Frontier
Airlines, Inc., a Colorado corporation, which will be held on Thursday, September 4, 2003
at 9:30 a.m. local time at the Doubletree Hotel, 3203 Quebec Street, Denver, Colorado for
the following purposes:

1. To elect eight directors to the Company's Board of Directors.

2. To consider and vote upon a proposal to approve the Frontier Airlines, Inc.
2003 Long-Term Incentive and Equity Compensation Plan.

3. To transact any other business which is properly presented at the Annual
Meeting or any adjournment of that meeting.

All shareholders of record on July 1, 2003 are invited to attend and vote at the
meeting. A complete list of shareholders entitled to vote at the Annual Meeting will be
available for examination by any Company shareholder at the Company's principal offices
located at Frontier Center One, 7001 Tower Road, Denver, Colorado 80249-7312 for purposes
germane to the Annual Meeting, during normal business hours from July 8, 2003 until the
Annual Meeting.

We invite you to attend the meeting and look forward to seeing you there.
Representation of at least a majority of all outstanding shares is required to conduct
the meeting. Accordingly, it is important that your shares be represented at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING PLEASE READ THE ATTACHED PROXY STATEMENT
CAREFULLY AND FOLLOW THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD TO VOTE BY INTERNET, TELEPHONE,
OR BY SIGNING, DATING AND RETURNING PROMPTLY THE ENCLOSED PROXY CARD. Even if you have given
your proxy, you may still attend the meeting, revoke your proxy, and vote in person. Your
vote is important and we appreciate your cooperation in considering and acting upon these matters.

By order of the Board of Directors

July 18, 2003 FRONTIER AIRLINES, INC.

David Sislowski
Secretary

SHAREHOLDER COMMUNICATIONS

Our Proxy Statement and Annual Report on Form 10-K are available electronically. You can elect
to receive and access these materials and other shareholder communications electronically
instead of by mail. With electronic delivery, you can receive shareholder communications as
soon as they are available without waiting for them to arrive in the mail. Electronic delivery
of these materials also allows us to conserve our natural resources, significantly reduce our
printing and mailing costs, eliminates duplicate mailings, and reduces the number of bulky documents
in your personal files. If you would like electronic delivery in the future, please vote online
at WWW.PROXYVOTE.COM and when prompted, indicate that you agree to receive future shareholder
communications electronically.

The Securities and Exchange Commission allows companies, brokers, and other intermediaries to
satisfy the proxy statement delivery requirements by delivering only one copy of the proxy statement
materials, other than the proxy card, to two or more shareholders sharing the same address. This is
commonly referred to as "householding" and potentially results in extra convenience for you and cost
savings to us. Through householding, shareholders of record with the same address and same last name
will receive only one copy of our Proxy Statement and Annual Report unless you notify us that you want
to continue receiving individual copies.

If you participate in householding, you will continue to receive separate proxy cards. If you are
eligible for householding, but you and other shareholders of record sharing an address receive multiple
copies of Proxy Statement and Annual Reports, or if you hold stock in more than one account, and you
want to receive only one copy of the Proxy Statement and Annual Report for your household, please contact
the Corporate Secretary, Frontier Airlines, 7001 Tower Road, Denver, Colorado 80249-7312. Beneficial
shareholders can request information on householding from their banks, brokers, or other holders of record.
If at any time you do not want to participate in householding and want to receive separate copies of the
Proxy Statement and Annual Report, please contact the Company Corporate Secretary or your broker if you
hold your shares through a brokerage account.

WEBCAST OF ANNUAL MEETING

Frontier is pleased to offer a webcast of its 2003 Annual Meeting. You can access the webcast through
the "Investor Relations" section of Frontier's Web site at WWW.FRONTIERAIRLINES.COM. Please
access the website prior to the meeting and allow time to register for the webcast and download any
necessary software. The webcast replay and the accompanying PowerPoint slide presentation will be
available on the site for seven days following the meeting.

You will not be able to vote your shares via the webcast. If you plan to listen to the webcast, please
submit your vote before the meeting using one of the methods described in the Proxy Statement materials.

Please Read the Entire Proxy Statement Carefully
Prior to Returning Your Proxy

FRONTIER AIRLINES, INC.
7001 Tower Road
Denver, CO 80249-7312

PROXY STATEMENT
for
2003 Annual Meeting of Shareholders

GENERAL

The Board of Directors of Frontier Airlines, Inc. (the "Company") is furnishing this Proxy
Statement and form of proxy in connection with its solicitation of your proxy for the 2003 Annual
Meeting of Shareholders and any adjournment of that meeting. This Proxy Statement and form of proxy,
together with the Company's Annual Report on Form 10-K, are being sent to shareholders on or about
July 18, 2003.

The Company will pay the costs of soliciting proxies. In addition to solicitation by mail,
our regular employees may solicit proxies by personal interview, telephone, facsimile, e-mail, or other
electronic means. These employees will not receive any additional compensation for soliciting activities.
The Company will reimburse brokers and other nominees their reasonable expenses for soliciting proxies or
authorizations from beneficial owners or forwarding proxy material to beneficial owners.

SHARES OUTSTANDING, VOTING RIGHTS AND REVOCABILITY OF PROXY

Shareholders of record at the close of business on July 1, 2003 may vote at the Annual Meeting.
On July 1, 2003, 30,022,018 shares of the Company's common stock were outstanding and entitled to vote
at the Annual Meeting. Shareholders of record will have one vote for each share they hold on the matters
to be voted on.

You may vote either in person or by proxy using one of the following methods:

Vote through the Internet at WWW.PROXYVOTE.COM.
Vote by telephone using the toll free number listed on the proxy card.
Complete and return the written proxy card by mail.

Internet and telephone voting are available 24 hours a day, and if you use one of these methods,
you do not need to return a proxy card. The deadline for voting through the Internet or by telephone is
11:59 p.m., Eastern Time, on September 3, 2003. The Internet voting procedures are designed to authenticate
your identity, allow you to vote your shares, and confirm your instructions were properly recorded. If you
have Internet access, we encourage you to vote by Internet. It is convenient and saves the Company
significant postage and processing costs. For additional instructions on voting, please see your enclosed
proxy card.

The presence of a majority of the total outstanding shares of common stock entitled to vote, in
person or by proxy, constitutes a quorum and is necessary to conduct business at the Annual Meeting.
Abstentions and broker-dealer non-votes will be counted as "shares present" in determining whether this
quorum has been reached. Assuming a quorum exists, the affirmative vote of a majority of the shares
represented and entitled to vote at the meeting is necessary to elect directors, approve the 2003 Long-Term
Incentive and Equity Compensation Plan, and to approve other matters subject to vote at the Annual Meeting.

Submitting your proxy will not affect your right to attend the meeting and vote in person. You
may vote all your eligible shares in person at the meeting, and your vote will revoke any proxy you
previously granted. You may also revoke your proxy by sending written notice to the Secretary of the
Company or by submitting a subsequent proxy before the Annual Meeting.

Your proxy authorizes the persons named to vote your shares in the manner you direct. You may
vote for all, some, or none of our director nominees and you may choose to vote for the approval of the
2003 Long-Term Incentive and Equity Compensation Plan or choose to withhold your shares. If you return
your proxy without specifying how to vote, the persons named as proxies will vote your shares for the
election of directors as described in Proposal 1 - Election of Directors and for the approval of the 2003
Long-Term Incentive and Equity Compensation Plan as described in Proposal 2 - Approval of the 2003 Long-Term
Incentive and Equity Compensation Plan. The proxies will use their best judgment regarding other matters
that properly come before the meeting. We are not aware of any matters, other then those discussed in this
proxy statement, which will be presented at the meeting.

PROPOSAL 1
ELECTION OF DIRECTORS

Eight directors are standing for election or re-election to the Frontier Airlines, Inc. Board of
Directors (the "Board"). The nominees for the Board are Samuel D. Addoms, Hank Brown, D. Dale Browning,
Paul S. Dempsey, William B. McNamara, B. LaRae Orullian, Jeff S. Potter, and James B. Upchurch. Each of
these nominees is a member of the existing Board of Directors and, with the exception of Mr. Brown, was
elected to the Board of Directors at the Company's 2002 Annual Meeting of Shareholders. The Company's
Articles of Incorporation and Bylaws authorize the Board to increase or decrease its size. In May 2003,
the Board increased its size to eight members and appointed Mr. Brown to fill the new position.

Each of these nominees, if elected, will serve a one-year term from the date of election until
the next annual meeting of shareholders and thereafter until their successor is elected and qualified. If
there is a vacancy or addition of members to the Board, the Company's Bylaws allow the Board to appoint new
members to fill the positions.

The Board of Directors recommends a vote "FOR" all nominees. As of the date of this Proxy
Statement, the Board is not aware that any nominee is unable or will decline to serve as a director. If a
nominee is unable to or declines to serve as a director, the Board will designate a substitute nominee. If
you submitted a proxy and a substitute nominee is designated, the proxy holders will vote for the election
of the substitute nominee.

Under the Company's Bylaws, the election of directors requires the affirmative vote of a majority
of the shares represented and entitled to vote at the meeting.

Nominees to Board of Directors

The following is biographical and other information as of July 1, 2003, about the persons who will
comprise the Board following the Annual Meeting, assuming election of the nominees.

Samuel D. Addoms
Age 63
Director since May 1994

Mr. Addoms became Chairman of the Board of the Company in 2001, having previously served as
President, Chief Executive Officer, and Chief Financial Officer of the Company. Mr. Addoms served as
Executive Vice President, Treasurer and a director of the Company during its early development in 1993
through September 1994, when he became President of the Company. He became Chief Executive Officer
effective January 1, 1995, and assumed the position of Chief Financial Officer upon resignation of the
Company's prior Chief Financial Officer on June 30, 2001. He retired from his executive positions in
April 2002. His 40 years of management experience include positions as President and Vice President-Finance
of Monfort of Colorado, President of the Denver National Bank and Vice President of Continental Illinois
National Bank in Chicago.

Hank Brown
Age 63
Director since May 2003

Mr. Brown is the President and Chief Executive Officer of the Daniels Fund, a charitable
foundation. Prior to that position, he served as President of the University of Northern Colorado from
1998 to 2002. From January 1997 to July 1998, Mr. Brown served as Director of the Center for Public
Policy at the University of Denver. From 1990 to 1997, Mr. Brown served as a United States Senator from
the State of Colorado. From 1980 to 1990, Mr. Brown served five consecutive terms in the U. S. House of
Representatives, representing Colorado's 4th Congressional District. Mr. Brown's public service also
included serving in the Colorado Senate from 1972-1976. He served as a vice president for Monfort of
Colorado for 11 years from 1969 to 1980, and holds a Bachelor of Science degree in accounting, a Juris
Doctor degree from the University of Colorado, and a Master of Law degree from George Washington University.
Mr. Brown is a certified public accountant and also serves on the board of directors of Alaris Medical,
Inc., StarTek, Inc., and Sealed Air Corporation.

D. Dale Browning
Age 66
Director since July 1996

Mr. Browning is a retired bank and bankcard executive. Mr. Browning served from 1995 to 2001 as
President and Chief Executive Office of ProCard, Inc., Golden, Colorado, and from 1993 to 1995 as a Senior
Consultant to Visa International. He was President and Chief Executive Officer of the Colorado National
Bank of Denver from 1986 through 1993, having concurrently served as Vice Chairman and Chief Operating
Officer of Colorado National Bankshares and as Chief Executive Officer of Rocky Mountain BankCard System.
In 1982 he founded Plus System, Inc., an international automatic teller machine network, and served as
President of that company until 1993. Mr. Browning has served as a director of Central States Indemnity
Company of Omaha since 1995.

Paul S. Dempsey
Age 52
Director since July 1994

Dr. Dempsey has been Vice-Chair of the Board of Directors since 1996. Dr. Dempsey is the
Tomlinson Professor of Global Governance in Air & Space Law, and Director of the Institute of Air & Space
Law at McGill University in Montreal, Canada. Dr. Dempsey previously served as Professor of Law and
Director of the Transportation Law Program at the University of Denver in Colorado and Director of the
National Center for Intermodal Transportation. He served as Legal Advisor to the Chairman, U.S. Interstate
Commerce Commission, in 1981 and 1982; Attorney-Advisor to the former Civil Aeronautics Board's Office of
General Counsel, and its Bureau of Pricing and Domestic Aviation, 1977-1979; and Attorney-Advisor to the
Interstate Commerce Commission's Office of Proceedings, 1975-1977. Dr. Dempsey holds the following degrees:
A.B.J., J.D., University of Georgia; LL.M., George Washington University; and D.C.L., McGill University.
A Fulbright Scholar, he has authored in excess of 50 law review articles, numerous editorials for the news
media and various books on topics relating to air transportation.

William B. McNamara
Age 70
Director since May 1996

Mr. McNamara is a retired executive with 35 years' of airline experience, specializing in
financial management. He most recently served with Continental Airlines, Inc. from 1987 to 1994 as Vice
President-Finance. From 1983 to 1987 he was Staff Vice President-Finance with New York Air, Inc. From
1961 to 1983 he served in a succession of positions with Trans World Airlines, Inc., including service as
Staff Vice President-Marketing Administration.

B. LaRae Orullian
Age 70
Director since July 1994

Ms. Orullian served as Chair of the Board of Directors from 1995 until 2001, when she became
Vice-Chair. A long time banker, she is Vice Chair of the Board of Guaranty Bank, a Denver, Colorado based
commercial bank, and a director of The Guaranty Corporation, a bank holding company. From 1999 to May 2003,
she served on the Board of Directors and as a member of the Audit Committee of Anthem, Inc., a publicly
traded company headquartered in Indiana and doing business in several states throughout the United States.
She is on the Board of Directors of several other non-publicly traded companies in Colorado and Utah, and
is past National President and former Chair of Girl Scouts of the USA. She is currently First Vice Chair
of the World Board of Girl Guides and Girl Scouts, based in London, England. Among numerous business and
civic activities, currently she sits on the Colorado Supreme Court Disciplinary Hearing Board.

Jeff S. Potter
Age 44
Director since May 2001

Mr. Potter has been the President and Chief Executive Officer of the Company since April 2002.
Mr. Potter rejoined the Company as Executive Vice President and Chief Operating Officer in May 2001 and
was appointed President of the Company in August 2001. Before re-joining the Company in May 2001, he
served as Chief Executive Officer of Vanguard Airlines from May 2000 to April 2001. Prior to working for
Vanguard Airlines, he was Vice President of Marketing for the Company from 1995 to April 2000. He has
over 18 years of airline and airline related experience, including regional director of commercial marketing
for McDonnell Douglas Corporation and various positions with Pacific Southwest Airlines, Continental
Airlines, Northwest Airlines, and the former Frontier Airlines.

James B. Upchurch
Age 44
Director since October 1998

Mr. Upchurch is the President and Chief Executive Officer of Caltius Capital Management, LP, an
alternative asset management company. He actively manages the investing and lending of approximately $270
million of capital targeted toward investments in lower middle market companies. Mr. Upchurch is also a
member of the Boards of several Caltius portfolio companies.

Board Meetings and Committees

During the fiscal year ended March 31, 2003, the Board of Directors held a total of 7 meetings
and authorized 3 additional actions by written consent in lieu of meeting. The Audit Committee met 4
times. All directors attended at least 75% of the meetings of the full board and the meetings of the
committees on which they served.

Committees

The Company's Board of Directors has an Audit Committee, a Compensation Committee, and a
Nominating Committee.

Audit Committee. The Audit Committee monitors the integrity of the Company's financial
reporting process and systems of internal control regarding finance, accounting and legal compliance,
monitors the independence and performance of the Company's independent auditors and internal auditing
department, and provides an avenue of communication among the independent auditors, management, the
internal auditing department, and the Board of Directors. During the fiscal year ended March 31, 2003,
the members of the Audit Committee were B. LaRae Orullian, Paul S. Dempsey, William B. McNamara, D. Dale
Browning, and James B. Upchurch, each of whom is an "independent director" as currently defined by
applicable law and Nasdaq listing requirements. The Board will continue to monitor the standards for
director independence established by applicable law or Nasdaq listing requirements and will ensure Audit
Committee members continue to meet those standards.

Compensation Committee. The duties of the Compensation Committee include recommending to
the Board of Directors the compensation to be provided to the executive officers of the Company and the
grant of stock options to eligible individuals under the Company's stock option plan. During the fiscal
year ended March 31, 2003, the members of the Compensation Committee were Samuel D. Addoms, B. LaRae
Orullian, Paul S. Dempsey, William B. McNamara, D. Dale Browning, and James B. Upchurch. The Compensation
Committee did not separately meet during the fiscal year as its functions were preformed by action of the
entire Board of Directors. However, Jeff Potter, an executive officer who is also a director, did not
participate in discussions regarding his individual compensation.

Nominating Committee. The duties of the Nominating Committee include the recommendation to
the Board of Directors of nominees to be proposed for election to the Board at annual meetings of share-
holders and at other appropriate times, determination of the size of the Board of Directors, and the
qualifications warranting appointment as a director. During the fiscal year ended March 31, 2003, the
members of the Nominating Committee were Samuel D. Addoms, B. LaRae Orullian, William B. McNamara, Paul S.
Dempsey, James B. Upchurch, and D. Dale Browning. The Nominating Committee did not separately meet during
the fiscal year, as its functions were performed by action of the entire Board of Directors.

Director Compensation

Mr. Potter is the only director who is also an employee of the Company. Mr. Potter does not
receive any additional compensation for serving as a director. Mr. Addoms retired from the Company in
April 2002 and receives compensation under the terms of his severance agreement as detailed below, but
does not otherwise currently receive any additional compensation for serving as a director.

During the fiscal year ending March 31, 2003, each director, other than Mr. Potter and Mr. Addoms,
received an annual fee of $20,000 and an option for the purchase of 5,000 shares of the Company's common
stock. The Company reimburses all of its directors for travel and out-of-pocket expenses in connection
with their attendance at meetings of the Board of Directors and Committees on which they serve, and
permits them, their spouses, and dependent children to fly without charge on the Company's scheduled
flights on a stand-by basis.

Samuel D. Addoms Severance Agreement. On April 1, 2002, the Company entered into a Director
Compensation Agreement with Samuel D. Addoms, Chairman of the Board of Directors and former President and
Chief Executive Officer of the Company. The agreement provides that he is entitled to (a) compensation of
$75,000 per year for five years as long as he remains a member of the Company's Board of Directors, (b) a
warrant to purchase 200,000 shares of the Company's stock at an exercise price of $17.00 set on April 1,
2002, which become exercisable in three equal installments on April 1, 2002, December 31, 2003, and April
1, 2004, (c) free lifetime air travel on the Company's airline for Mr. Addoms and his spouse, (d) such
group health, life insurance and other benefits for Mr. Addoms and his eligible dependents as are provided
to, and for the same rates as, the Company's officers, and (e) continued employment by the Company for
five years at an annual salary of $25,000. In connection with this agreement Mr. Addoms agreed not to
become employed by or provide consulting services to any air carrier that competes with the Company for so
long as he remains an employee or Director of the Company. This agreement supersedes the termination
agreement executed by Mr. Addoms and the Company during the fiscal year ended March 31, 1999.

PROPOSAL 2
APPROVAL OF 2003 LONG-TERM INCENTIVE
AND EQUITY COMPENSATION PLAN

The Board of Directors is proposing for shareholder approval the Frontier Airlines, Inc. 2003
Long-Term Incentive and Equity Compensation Plan (the "Plan"). In May 2003, the Board unanimously
approved and adopted the Plan to govern stock awards to directors, officers, managers, and other employees,
and to replace the 1994 Stock Option Plan.

The purposes of the Plan are (i) to align the interests of the Company's shareholders and
recipients of awards under the Plan by increasing the proprietary interest of these recipients in the
Company's growth and success, (ii) to advance the interests of the Company by attracting and retaining
directors, officers, managers and other employees, and (iii) to motivate these persons to act in the
long-term best interests of the Company and its shareholders. Under the Plan, the Company may grant non-
qualified stock options, "incentive stock options" (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")), restricted stock, bonus stock, and performance share
awards. In addition, the Committee administering the Plan, with the approval of the Board of Directors,
may (i) award restricted stock to a director for service in other capacities to the Board, such as serving
as the Chairman of the Board, and (ii) allow each non-employee director to elect to receive non-qualified
stock options and/or restricted stock in lieu of all or part of the director's cash meeting fees. The
Committee (as defined below) in its sole discretion determines the directors, officers, managers, and
other employees who are eligible to participate in the Plan. Assuming the Committee determines Plan
eligibility in the same manner as it has determined eligibility under the Company's 1994 Stock Option Plan,
seven non-employee directors and approximately 40 officers and managers would be eligible to participate
in the Plan.

The Board of Directors recommends that you vote FOR the approval of the 2003 Long Term Incentive
and Equity Compensation Plan. Approval of the Plan requires the affirmative vote of the majority of the
shares represented and entitled to vote at the meeting.

Description of the Plan

The following is a brief summary of the material features of the Plan. Please refer to Exhibi
A to this Proxy Statement for the complete text of the Plan.

Administration. The Plan will be administered by a committee designated by the Board of Directors
(the "Committee") consisting of at least two members of the Board who are each (i) a non-employee director
within the meaning of Rule 16(b)-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and (ii) an "outside director" within the meaning of Section 162(m) of the Code. The Board of
Directors has designated its Compensation Committee to serve as the Committee to administer the Plan.

The Committee will, subject to the terms of the Plan, select eligible persons for participation
in the Plan and determine all of the terms and conditions of each award. Each award will be evidenced by
a written agreement containing provisions consistent with the Plan terms as the Committee approves. The
Committee can establish rules and regulations for administering the Plan and decide questions of interpre-
tation or application of any provision of the Plan. The Committee may delegate some or all of its power
and authority to administer the Plan to the Chief Executive Officer and President or other executive
officers of the Company. The Committee may not, however, (i) delegate its power and authority with regard
to the grant of an award to any person who is or is likely to become a "covered employee" within the
meaning of Section 162(m) of the Code, or (ii) delegate its power and authority with regard to the selection
for participation in the Plan of an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning awards to such persons.

The members of the Committee serve at the pleasure of the Board of Directors and may be removed
from time to time at the direction of the Board of Directors. The term of office of each Committee member
commences upon election to the Board of Directors and continues until a successor is elected.

Available Shares. Under the Plan, 3,500,000 shares of common stock are available for awards,
subject to adjustment in the event of a stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, spin-off or other similar event or change in
capitalization. The shares may be issued from the authorized and unissued shares of common stock or treasury
shares, or a combination thereof. The maximum number of shares of common stock with respect to which options
may be granted during any calendar year to any person is 250,000, subject to adjustment as described above.

Change in Control. In the event of certain acquisitions of 30% or more of the common stock, a
change in a majority of the Board of Directors, or the approval by shareholders of a reorganization, merger,
consolidation, or sale or disposition of all or substantially all of the assets of the Company (unless
among other conditions, the Company's shareholders receive 60% or more of the stock of the surviving company)
or the approval by shareholders of a liquidation or dissolution of the Company, all outstanding options will
be exercisable in full, the restriction periods applicable to outstanding restricted stock and the
performance periods applicable to outstanding performance stock will lapse, and the performance measures
applicable to outstanding restricted stock and performance share awards shall be deemed to be satisfied at
the maximum level.

Effective Date, Termination and Amendment. If the shareholders approve the Plan at the Annual
Meeting, the Plan will be effective on September 4, 2003, and will terminate ten years thereafter, unless
terminated earlier by the Board of Directors. The Board of Directors may amend the Plan at any time,
subject to any requirement of shareholder approval under applicable law, rule or regulation. However, no
amendment may be made without shareholder approval if the amendment would, among other things, (i) increase
the maximum number of shares of common stock available under the Plan (subject to adjustments under the
terms of the Plan), (ii) effect any change inconsistent with Section 422 of the Code, (iii) materially
increase benefits to the Plan participants, including permitting any repricing of outstanding options or
reducing the price at which shares or options are offered, (iv) materially expand the class of eligible
participants or the types of awards provided under the Plan, or (v) extend the term of the Plan.

Stock Options-General. The Committee will determine the conditions for the exercise of each
option. Upon exercise of an option, including an incentive stock option, the purchase price may be made in
cash or by delivery of previously owned shares of common stock.

Non-Qualified Stock Options. The Committee will determine the exercise period for a non-qualified
stock option. The exercise price of a non-qualified stock option will be at least 100% of the fair market
value of the common stock on the date of grant. If an option holder terminates employment because of
disability, death, retirement under the Company's normal criteria or with the Company's consent, or for
any other reason, each non-qualified stock option can only be exercised to the extent exercisable on the
date of termination and for a period of no more than six months after the termination (or shorter period
as may be described in the award agreement), but in no event after the expiration of the option. If the
option holder dies during this period, each non-qualified stock option can be exercised only to the extent
exercisable on the date of death and for a period of 90 days after the date of death, but in no event after
the expiration of the option.

Incentive Stock Options. Each incentive stock option will be exercisable for up to 10 years after
its grant date, unless the option holder owns more than 10% of the voting power of all the shares of the
Company's common stock (a "ten percent holder"), in which case the option will be exercisable for up to
five years after the date of its grant. The exercise price of an incentive stock option will be at least
the fair market value of the common stock on the date of grant, unless the option holder is a ten percent
holder, in which case the option exercise price will be the price the Code requires, currently 110% of the
fair market value.

If an incentive stock option holder's employment is terminated because of permanent and total
disability (as defined in Section 22(e)(3) of the Code), or death, each incentive stock option will be
exercisable only to the extent exercisable on the termination date for a period of no more than six months
after termination (or shorter period as may be described in the award agreement), but in no event after
the expiration of the incentive stock option. If the incentive stock option holder's employment is
terminated for any other reason, including retirement, each incentive stock option will be exercisable
only to the extent exercisable on the termination date for a period of no more than three months after
termination (or shorter period as may be described in the award agreement), but in no event after the
expiration of the incentive stock option. If the incentive stock option holder dies during the specified
periods after termination of employment, each incentive stock option will be exercisable only to the extent
exercisable on the date of death and for a period of no more than 90 days after the date of death, but in
no event after the expiration of the incentive stock option.

Bonus Stock and Restricted Stock Awards. The Plan provides for the grant of (i) bonus stock
awards, which are vested upon grant, and (ii) stock awards that may be subject to a restriction period
("restricted stock"). An award of restricted stock may be subject to specified performance measures
during the applicable restriction period. Shares of restricted stock are non-transferable and subject to
forfeiture if the holder does not remain continuously in the employment of or service to the Company during
the restriction period or, if the restricted stock is subject to performance measures and the performance
measures are not attained. If the restricted stock holder's employment is terminated because of disability,
retirement, death, or any other reason, the portion of the restricted stock award then subject to a
restriction period will be forfeited and canceled by the Company. Unless otherwise provided in a restricted
stock award agreement, the holder of a restricted stock award will have rights as a shareholder of the
Company, including the right to vote and receive dividends with respect to the shares of restricted stock.

Grant of Restricted Stock to Non-Employee Directors. The Plan provides for the award of restricted
stock to non-employee directors. An award of restricted stock to non-employee directors will be restricted
as to sale or transfer for one year from the date of award and will vest (subject to earlier vesting in the
event of a change in control) if the holder remains continuously in the service of the Company as a non-
employee director during the one-year period, and will otherwise be forfeited. Notwithstanding the foregoing,
if the holder's service as a non-employee director terminates during the one-year period other than for
cause, the restricted stock will vest upon such termination of service.

Performance Share Awards. The Plan also provides for the grant of performance share awards. Each
performance share is a right, contingent upon the attainment of performance measures within a specified
performance period, to receive one share of common stock, which may be restricted stock, or the fair market
value of all or a portion of the performance share in cash. Prior to the settlement of a performance share
award in shares of common stock, the holder of the award will not have any rights as a shareholder of the
Company with respect to the shares of common stock subject to the award. Performance shares will be non-
transferable and subject to forfeiture if the specified performance measures are not attained; provided,
however, that termination of employment by reason of disability, retirement, death or any other reason will
result in the portion of a performance share award which is then subject to a performance period being
forfeited and canceled by the Company.

Elective Provisions for Non-Employee Directors. Under the Plan, the Committee may allow each
non-employee director to elect to receive non-qualified stock options and/or restricted stock in lieu of
all or part of the director's meeting fees. With respect to these options, the exercise price per share will
equal 100% of the fair market value of a share of common stock on the date of grant and the shares of
common stock subject to an option will have a fair market value equal to 100% of the amount of foregone
meeting fees. Each option will become exercisable in full beginning on the first anniversary of the date
of grant and will expire 10 years from the date of grant. Notwithstanding the foregoing, if a non-employee
director ceases to be a director of the Company by reason of disability, death, or any other reason, each
of the director's options shall be fully exercisable and may be exercised for a period of one year after
such termination, but in no event after termination of such option. If a non-employee director dies during
the one-year period following termination of service, each of the director's options will be exercisable
for a period of no more than one year after the date of death, but in no event after the expiration of
such option.

The restricted stock would have a fair market value equal to 100% of the amount of the foregone
meeting fees. Such restricted stock will vest on the first anniversary of the date of grant if the holder
of such award remains continuously in the service of the Company as a non-employee director. Notwithstanding
the foregoing, if the holder of such award ceases to be a non-employee director for any reason other than
cause, the restricted stock will vest immediately. Unless otherwise set forth in a restricted stock award
agreement, the holder of such award will have all rights of a shareholder of the Company, including the
right to vote and receive dividends with respect to the shares of restricted stock.

Federal Income Tax Consequences

Federal Income Tax Consequences. The following is a brief summary of certain U.S. federal income
tax consequences generally arising with respect to awards under the Plan. The Plan is not qualified under
Section 401 (a) of the Code.

A participant will not recognize taxable income at the time an option is granted and the Company
will not be entitled to a tax deduction at that time. A participant will recognize compensation taxable
as ordinary income (and, if an employee, subject to income tax withholding) upon exercise of a non-qualified
stock option equal to the excess of the fair market value of the shares purchased over their exercise price,
and the Company will be entitled to a corresponding deduction. A participant will not recognize income
(except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the
shares acquired by exercise of an incentive stock option are held for the longer of two years from the
date the option was granted and one year from the date it was exercised, any gain or loss arising from a
subsequent disposition of such shares will be taxed as long-term or mid-term capital gain or loss, and the
Company will not be entitled to any deduction. If, however, such shares are disposed of within the above-
described period, then in the year of the disposition the participant will recognize compensation taxable
as ordinary income equal to the excess of the lesser of (i) the amount realized upon the disposition and
(ii) the fair market value of such shares on the date of exercise over the exercise price, and the Company
will be entitled to a corresponding deduction.

A participant will not recognize taxable income at the time restricted stock is granted and the
Company will not be entitled to a tax deduction at such time, unless the participant makes an election to
be taxed at such time. If such election is not made, the participant will recognize compensation taxable
as ordinary income (and, if an employee, subject to income tax withholding) at the time the restrictions
lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount,
if any, paid for such shares. The amount of ordinary income recognized by making the above-described
election or upon the lapse of the restrictions is deductible by the Company as compensation expense,
except to the extent the deduction limits of Section 162(m) of the Code apply. In addition, a participant
receiving dividends with respect to restricted stock for which the above-described election has not been
made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income
(and, if an employee, subject to income tax withholding), rather than dividend income, in an amount equal
to the dividends paid and the Company will be entitled to a corresponding deduction, except to the extent
the deduction limits of Section 162(m) of the Code apply.

A participant will recognize compensation taxable as ordinary income (and, if an employee, subject
to income tax withholding) at the time bonus stock is granted in an amount equal to the then fair market
value of such stock. This amount is deductible by the Company as compensation expense, except to the extent
the deduction limits of Section 162(m) of the Code apply.

A participant will not recognize taxable income at the time performance shares are granted and
the Company will not be entitled to a tax deduction at such time. Upon the settlement of performance
shares, the participant will recognize compensation taxable as ordinary income (and, if an employee,
subject to income tax withholding) in an amount equal to the fair market value of any shares delivered
and any cash paid by the Company. This amount is deductible by the Company as compensation expense, except
to the extent the deduction limits of Section 162(m) of the Code apply.

New Plan Benefits

The Compensation Committee, in its discretion, determines the awards that will be paid to
participants under the Plan in any particular fiscal year. Accordingly, the awards under the Plan are
not determinable at this time.

EXECUTIVE OFFICERS OF THE COMPANY

In addition to Jeff Potter, the President and Chief Executive Officer, who is also a director
of the Company, the following executive officers are not directors and serve at the discretion of the
Board. Each of the officers devotes his or her full-time efforts to the affairs of the Company.

Name Age Position
Paul S. Tate 52 Senior Vice President - Chief Financial Officer
Ann E. Block 53 Vice President - Human Resources and In-Flight
Services
Michael J. Bowers 46 Vice President - Customer Care and Service
Elise R. Eberwein 38 Vice President - Communications
Ronald L. McClellan 54 Vice President - Maintenance and Engineering
William F. McKinney 63 Vice President - Flight Operations
Sean E. Menke 34 Vice President - Marketing and Planning
Thomas W. Nunn 45 Vice President - Aviation Safety and Security
Elissa A. Potucek 46 Vice President, Controller and Treasurer
David Sislowski 51 Vice President - Administration and General Counsel;
Secretary

Paul S. Tate joined the Company as Vice President and Chief Financial Officer in October 2001
and was appointed Senior Vice President in May 2003. Prior to joining the Company, he was Executive Vice
President & Chief Financial Officer for Colgan Air, Inc., a U.S. Airways express carrier. His 20 years of
aviation experience includes positions with Atlantic Coast Airlines Holdings, Inc., where he served as
Senior Vice President-Finance and Chief Financial Officer; Reno Air, Inc., where he served as Vice
President-Finance and Chief Financial Officer; and Midway Airlines, Inc., where he served as Vice
President-Information Systems and Vice President/Controller.

Ann E. Block has been Vice President-Human Resources since March 1999 and Vice President-Human
Resources and In-Flight Services since June 2000. Before joining the Company, she served as Director-
Human Resources Strategy and Services for BlueCross BlueShield of Colorado. From 1971 to 1996, she served
in various capacities with Public Service Company of Colorado. From 1996-1997, she served as Director-
Total Compensation for HR Source, Inc.

Michael J. Bowers has been Vice President-Customer Care and Service since August 2000. He has
spent 24 years in Airline Transportation management. From October 1990 until August 2000, he held the
position of Regional Director for Customer Service for Horizon Air. From August 1979 to October 1990, he
was the Customer Service Manager at several stations for Alaska Airlines. He holds a MBA from the
University of Washington and a Bachelor of Arts in Business Administration and Human Resources from
Central Washington University.

Elise R. Eberwein has served as Vice President-Communications of the Company since June 2000.
Prior to this appointment, she served as Director-Corporate Communications since joining the Company in
1998. From 1997 through 1998, she served as Director-Corporate Communications for Western Pacific
Airlines. Between 1986 and 1997, she served in various positions with Trans World Airlines, Inc.,
including Director, Communication Support Services, Sales Promotion Manager, In-Flight Services New Hire
Supervisor, Flight Service Manager and Flight Attendant.

Ronald L. McClellan has been Vice President-Maintenance and Engineering for the Company since
January 2002. He has over 30 years of aviation and maintenance experience. Prior to joining the Company,
Mr. McClellan was the Vice President of Maintenance and Engineering with Vanguard Airlines for five years.
Prior to joining Vanguard Airlines, he was the managing director of aircraft acquisitions at TransWorld
Airlines and held a number of key aircraft maintenance positions at Continental Airlines, People Express
Airlines and New Jersey based Executive Air Fleet. Mr. McClellan served two terms in the United States
Air Force, including service as a crew chief with the United States Air Force Thunderbirds from 1973 to 1975.

William F. McKinney has served as Vice President-Flight Operations since April 2001. Prior to
joining the Company, he was Vice President-Operations for Vanguard Airlines, a position he held from March
1996 to April 2001. Prior to Vanguard Airlines, he held a variety of positions with Trans World Airlines
ranging from pilot to General Manager-Flying, Western Region (Chief Pilot), from 1967 to 1996.

Sean E. Menke has served as Vice President-Marketing & Planning of the Company since June 2000.
Prior to this appointment and since joining the Company in January 1999, he served as Director-Planning
and Scheduling. He joined Frontier Airlines from United Airlines, where he served as Senior Planner,
Domestic Scheduling. From 1995 through 1998, he was employed by Western Pacific Airlines as Director,
Planning and Manager of Economic Analysis. Between 1992 and 1995, he held various positions with America
West Airlines, including Senior Analyst, Market Development; Economic Analyst and Customer Service Supervisor.

Thomas W. Nunn has served as Vice President-Aviation Safety and Security since May 2003. He
joined the Company in July 2001 as Director-Aviation Safety and Regulatory Compliance. Prior to joining
the Company, he was Director of Emergency Management for Northwest Airlines from 1996 to 2001. From 1991
to 1996, he served as Director of Operations Analysis and held various other positions with Northwest
Airlines from 1983 to 1991. Mr. Nunn also served in the United States Marine Corps.

Elissa A. Potucek has been Controller/Treasurer of the Company since June 1995 and Vice President
since September 1996. From 1991 to 1995, she was Controller of Richardson Operating Company and Richardson
Production Company, an oil and gas company based in Denver, Colorado. She served from 1990 to 1991 as
Controller of Coral Companies, Inc., Denver, Colorado, having earlier held accounting positions with US
West Paging, Inc. (1988-1989), and KPMG Peat Marwick LLP (1985-1988).

David Sislowski joined the Company in April 2002 as Vice President-Administration, General
Counsel and Secretary. Prior to joining the Company, he was general counsel at a number of Denver-based
asset finance institutions. From 1993 to 1999, he served as Vice President & Operations Manager and
Corporate Counsel for MetLife Capital Corporation in Bellevue, Washington. He was in private practice
with two Seattle-based law firms from 1988 to 1993, where his practice concentrated on aircraft finance
and asset-based structured finance. He has almost 15 years of experience in structured finance and asset-
based finance, with an emphasis in aircraft finance, and almost six years of experience as general counsel.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of the
Company's common stock as of July 1, 2003 by: (i) each director and nominee for director of the Company;
(ii) each named executive officer listed in the Executive Compensation Table; (iii) all directors and
executive officers as a group; and (iv) each person who is known to the Company to own beneficially more
than five percent of the Company's outstanding common stock. Unless otherwise specified, the address of
each person named is 7001 Tower Road, Denver Colorado 80249-7312.

Shares Beneficially Percentage of
Name and Address of Beneficial Owner Owned Ownership (1)

Directors and Named Executive Officers:

Samuel D. Addoms 364,134 (2) 1.21%
Paul S. Dempsey 50,500 (3) *
B. LaRae Orullian 40,225 *
William B. McNamara 25,000 (4) *
D. Dale Browning 50,000 (5) *
James B. Upchurch 93,000 (6) *
Hank Brown 6,000 (7) *
Ann E. Block 71,965 (8) *
William F. McKinney 23,517 (9) *
Sean Menke 50,965 (10) *
Jeff S. Potter 60,384 (11) *
Paul H. Tate 14,079 (12) *

All directors and named executive officers 854,986 (13) 2.84%
as a group (17 persons)

Five Percent and Greater Shareholders:

FMR Corp. 3,854,110 (14) 12.84%
Edward C. Johnson 3d
Abigail P. Johnson
Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02019

State Street Research & Management Co. 2,062,600 (15) 6.86%
One Financial Center, 30th Floor
Boston, Massachusetts 02111

T. Rowe Price & Associates 2,879,500 (16) 9.60%
100 E. Pratt Street
Baltimore, Maryland 21202

* Less than 1%
(1) Unless otherwise indicated, the Company believes that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially owned by them. A person is
deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from
July 15, 2003 upon the exercise of options, warrants or convertible securities that are held by such
person (but not those held by any other person). This table assumes a base of 30,022,018 shares of
common stock outstanding as of July 1, 2003, before any consideration is given to other outstanding
options, warrants or convertible securities.
(2) Includes 245,417 shares held under option, all of which are currently exercisable, and 5,455 vested
shares allocated under the Company's Employee Stock Ownership Plan ("ESOP").
(3) Includes 27,500 shares held under option, all of which are currently exercisable.
(4) Includes 22,500 shares held under option, all of which are currently exercisable.
(5) Includes 5,000 shares held under option, all of which are currently exercisable.
(6) Includes 20,000 shares held under option, all of which are currently exercisable.
(7) Includes 5,000 shares held under option, all of which are currently exercisable.
(8) Includes 71,000 shares held under option, all of which are currently exercisable, and 965 vested shares
allocated under the ESOP.
(9) Includes 23,000 shares held under option, all of which are currently exercisable, and 517 vested shares
allocated under the ESOP.
(10) Includes 50,000 shares held under option, all of which are currently exercisable, and 965 vested shares
allocated under the ESOP.
(11) Includes 34,000 shares held under option, all of which are currently exercisable, and 4,677 vested
shares allocated under the ESOP.
(12) Includes 11,000 shares held under option, all of which are currently exercisable and 79 vested shares
allocated under the ESOP.
(13) Includes 322,694 owned shares, 514,417 shares held under option which are exercisable within 60 days,
and 17,875 vested shares allocated under the ESOP.
(14) Reflects beneficial ownership as of December 31, 2002. Information with respect to FMR Corp., Edward C.
Johnson 3d, Abigail P. Johnson and Fidelity Management & Research Company is based on Schedule 13G, as
filed with the Securities and Exchange Commission on February 13, 2003.
(15) Reflects beneficial ownership as of February 14, 2003. Information with respect to State Street
Research & Management Co. is based on the Schedule 13G, as filed with the Securities and Exchange
Commission on February 14, 2003.
(16) Reflects beneficial ownership as of December 31, 2002. Information with respect to T. Rowe Price is
based on the Schedule 13G, as filed with the Securities and Exchange Commission on January 31, 2003.
These shares are owned by various individual and institutional investors that T. Rowe Price Associates,
Inc. (Price Associates) serves as investment adviser with power to direct investments and/or sole power
to vote the shares. For purposes of reporting requirements under the Exchange Act, Price Associates is
deemed to be a beneficial owner of these shares; Price Associates, however, expressly disclaims that it
is the beneficial owner of these shares.

EXECUTIVE COMPENSATION

The following table summarizes the cash and noncash compensation awarded to, earned by or paid to the
Chief Executive Officer of the Company and the top four other executive officers of the Company in the fiscal
years ended March 31, 2003, 2002, and 2001 who had total salary and bonus during fiscal year ending March 31,
2003 exceeding $100,000.

Long Term
Annual Compensation Compensation

Other Annual All Other Securities
Name and Principle Compen- Compen- Underlying Options/
Position Year Salary ($) Bonus($) sation ($)(1) sation ($)(2) SARs Granted (#)

Jeff S. Potter (3) 2003 240,385 0 11,911 0 50,000
2002 137,577 34,394 28,395 0 80,000
2001 20,000 0 1,400 16,091 0

William F. McKinney 2003 148,077 0 10,626 0 35,000
2002 120,615 30,153 5,218 40,868 30,000
2001 0 0 0 0 0

Paul H. Tate (4) 2003 148,077 0 4,626 0 35,000
2002 59,877 14,969 0 44,063 30,000
2001 0 0 0 0 0

Sean Menke 2003 143,629 0 9,762 0 35,000
2002 103,212 25,803 5,686 22,100 30,000
2001 85,926 42,970 2,031 5,108 18,000

Ann E. Block 2003 138,077 0 10,307 0 5,000
2002 119,173 29,793 11,884 0 30,000
2001 115,000 67,481 4,481 0 45,000

(1) Other annual compensation represents (i) shares contributed to the executive officers' accounts in the
Company's Employee Stock Ownership Plan ("ESOP") as of December 31 in each of the fiscal years
indicated; and (ii) the Company's contributions to the executive officers' 401(k) accounts as of
December 31 in each of the fiscal years indicated.

As of March 31, 2003, the respective officers' ESOP accounts held the following number of shares of
common stock with corresponding values based on the closing price of the common stock on that date: Mr.
Potter - 4,677 shares valued at $31,615; Mr. McKinney - 517 shares valued at $3,497; Mr. Tate - 394
shares valued at $2,664; Mr. Menke - 1,207 shares valued at $8,158; Ms. Block - 1,207 shares valued at
$8,158. Mr. Potter is 100% vested in his ESOP account, while Mr. McKinney is 100% vested, Mr. Tate is
20% vested, Mr. Menke is 80% vested, and Ms. Block is 80% vested.

For the calendar year ended December 31, 2003, the Company made cash contributions to the executive
officers' 401(k) accounts as follows: Mr. Potter - $5,500; Mr. McKinney - $6,000; Mr. Tate - $0; Mr.
Menke - $5,500; Ms. Block -- $6,000.

(2) All Other Compensation includes one-time payments to executive officers, including amounts paid for
relocation expenses and tuition reimbursement.

(3) Mr. Potter rejoined the Company in May 2001.

(4) Mr. Tate joined the Company in October 2001.

Option/SAR Grants in Last Fiscal Year

During the fiscal year ended March 31, 2003, the Company granted options to purchase shares of
its common stock to each of the Chief Executive Officer and the top four executives named above as shown in the
following table.

Percent of
Securities Total Exercise or
Options Granted In Base Price
SARs Granted Fiscal Year ($/S) Expiration Date Grant Date Present Value (1)

Name
Jeff S. Potter 50,000 7.49% $15.87 5/15/12 $499,891

William F. McKinney 30,000 4.49% $14.85 4/23/12 $279,523
5,000 .75% $15.87 5/15/12 $49,967

Paul H. Tate 5,000 .75% $15.87 5/15/12 $49,967
30,000 4.49% $ 4.98 10/2/12 $110,184

Sean E. Menke 5,000 .75% $15.87$ 5/15/12 $49,967
30,000 4.49% 8.13 6/28/12 $173,166

Ann E. Block 5,000 .75% $15.87 5/15/12 $49,967

(1) Calculated using the Black-Scholes method with the following assumptions and adjustments: a weighted-average
risk-free interest rate of 4.14%; a dividend rate of $0; a weighted-average volatility factor of the expected
market price of the Company's common stock of 82.06%; and a weighted-average expected life of 2.5 years. No
downward adjustments were made to the resulting grant-date option values to account for potential forfeiture or
non-transferability of the options in question. Because the Black-Scholes model was not developed for executive
options and requires the use of assumptions primarily based on conditions in effect at the time of grant (and not
over the term of the option), it provides only a theoretical estimate of the value of these options. The Company
is not aware of any option-pricing model that can provide a true assessment of the value of the executive stock
options. Over their lives, the options could have a greater or a lesser value than that shown in the table, and
under some circumstances they could have zero value.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

The following table sets forth certain information regarding options exercised during the fiscal year
ended March 31, 2003 by the Chief Executive Officer and other executive officers of the Company named in the
table above.

Number Value Number of Securities Value of Unexercised
on Realized Underlying Unexercised In-The-Money Options at March 31,
Name Exercise ($) Options at March 31, 2003 2003 ($)(1)

Exercisable Unexercisable Exercisable Unexercisable
Jeff S. Potter -0- -0- 16,000 114,000 -0- -0-
William F. McKinney -0- -0- 11,000 54,000 -0- -0-
Paul H. Tate -0- -0- 11,000 54,000 -0- -0-
Sean E. Menke -0- -0- 21,500 63,000 -0- -0-
Ann E. Block -0- -0- 47,000 51,000 -0- -0-

(1) The closing price of the Company's common stock on the Nasdaq National Market on March 31, 2003 was
$4.97 per share. None of the options listed have exercise prices at or below $4.97 and, accordingly,
none of the options were in-the-money as of March 31, 2003.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended March 31, 2003, the Company's Compensation Committee consisted of
Ms. Orullian and Messrs. Addoms, Dempsey, McNamara, Browning, and Upchurch. Mr. Addoms was the President
and Chief Executive Officer of the Company prior to his retirement in April 2002. There were no interlocking
business relationships between the Company and any member of the Compensation Committee created during the fiscal
year.

Report of the Compensation Committee on Executive Compensation

Overall Policy

The Compensation Committee in conjunction with the Company's entire Board of Directors
determines the salary and total compensation of the Company's executive officers. The Committee's
consideration of and decisions regarding executive compensation are guided by a number of factors
described below. The objectives of the Company's total executive compensation package are to attract
and retain executive talent, to provide an economic framework to motivate the Company's executives to
achieve goals consistent with the Company's business strategy, to provide an identity between executive
and shareholder interests through stock options and to provide a compensation package that recognizes
an executive's individual results and contributions in addition to the Company's overall business results.

Salaries

The key elements of the Company's executive compensation consist of salary, stock options,
and bonuses. The Compensation Committee, in conjunction with the Company's entire Board of Directors,
determines salary levels of officers and employee stock option awards. However, Jeff Potter, an
executive officer who is also a director, did not participate in discussions regarding his individual
compensation. Because the Compensation Committee did not intend to target the base salary levels in
effect for the executive officers at a designated percentile of the salary levels in effect for other
companies in the airline industry, there is no meaningful correlation between the Company's salary levels
and the rates of base salary in effect for those companies which are taken into account in the Peer Group
Index utilized for purposes of the stock price performance graph which follows this report.

Salaries for executive officers are determined by evaluating the responsibilities of the position
held and the experience of the individual, and by reference to the competitive marketplace for executive
talent, including a comparison of salaries for comparable positions at other airlines.

The salary levels of the executive officers of the Company for the next fiscal year are generally
established by the Compensation Committee at fiscal year-end and are reviewed and approved by the entire
Board of Directors. Specific individual performance and overall corporate or business segment performance
are reviewed in determining the compensation level of each individual officer.

Bonuses

In May 2002, the Compensation Committee and the Board of Directors adopted the Company's fiscal
year 2003 bonus plan for employees and executive officers. Under the plan, the President and Chief
Executive Officer was entitled to a bonus of up to a maximum of 75% of his base salary for the fiscal year,
and other executive officers were entitled to a bonus of up to a maximum of 50% of his or her base salary
for the fiscal year. The bonuses were to be awarded on a sliding scale based on the Company's pre-tax
profit margin for the fiscal year as set forth in the table below.

Pre-Tax Profit Margin Percent of Maximum Bonus

At least 6% up to 8% 50%
From 8% to 10% 75%
From 10% to 12% 90%
12% and above 100%

No bonuses were paid to executive officers for fiscal year 2003 because the Company did not
achieve the minimum pre-tax profit margin.

Compensation of the Chief Executive Officer.

The philosophy of the Committee and the Board of Directors is to directly tie the most
significant portion of the Chief Executive Officer's compensation to the Company's success in enhancing
shareholder value. The shareholders will benefit through the Chief Executive Officer's leadership in
establishing and meeting short-term and medium-term financial and operational goals and his initiative
in developing and implementing long-term strategy.

The above-described philosophy guided the Board of Directors in establishing Mr. Potter's
compensation. Mr. Potter's compensation consists of base salary, performance based bonus opportunity,
and stock options. Mr. Potter's base salary was $250,000 for fiscal year 2003 and is within the range
of salaries of CEO's in the airline industry. Because the Company did not meet its fiscal year 2003
pre-tax profit margin objective, Mr. Potter did not receive a bonus for fiscal year 2003. On May 15,
2002, Mr. Potter received options for 50,000 shares of common stock with an exercise price of $15.87.
The options will vest in five equal installments beginning May 15, 2003 and on each anniversary thereof
through May 15, 2007. The Compensation Committee believes that Mr. Potter's total compensation is
below the median level of comparable airlines with which the Company competes for executive talent.
The structure of Mr. Potter's compensation, in the view of the Board of Directors, aligns his interests
with the total return to shareholders.

COMPENSATION COMMITTEE

Samuel D. Addoms James B. Upchurch
B. LaRae Orullian D. Dale Browning
Paul S. Dempsey William B. McNamara

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Company's financial reporting process on behalf of the
Board of Directors. In May 2000, the Board of Directors adopted an Audit Committee Charter setting
forth the framework under which the Audit Committee carries out its functions and duties. In accordance
with the terms of the Charter, the Audit Committee reviewed the adequacy of the Charter at a meeting
held on May 15, 2002. After review and discussion, members of the Company's Audit Committee unanimously
adopted an amended and restated Audit Committee Charter, dated as of May 15, 2002.

The Audit Committee is aware of numerous changes and proposed changes in applicable law, SEC
Rules, and Nasdaq requirements affecting the Committee's role in the corporate governance process. The
Board and Audit Committee periodically reassess the adequacy of the Audit Committee Charter and will do
so again following the final adoption of new Nasdaq corporate governance standards and new rules on
audit committee responsibility contemplated by the Sarbanes-Oxley Act. Following adoption of the
Sarbanes-Oxley Act on July 30, 2002, the Audit Committee met with members of management, legal counsel,
and the Company's independent auditors. During those meetings the Audit Committee furthered its
understanding of the requirements of the Sarbanes-Oxley Act and the related rules. The Audit Committee
also reviewed processes that were already in place and new processes that will be implemented to comply
with the requirements of the Act as they become effective.

Management has the primary responsibility for the financial statements and the reporting process,
including the systems of internal controls of the Company. In fulfilling its oversight responsibilities,
the Audit Committee reviewed the audited financial statements contained in the Annual Report on Form 10-K
for the fiscal year ended March 31, 2003, with management and discussed with management the quality and
acceptability of the accounting principles, the reasonableness of significant estimates and judgments
made in preparing the financial statements, and the clarity of disclosures in the financial statements.
In addressing the quality of management's accounting judgments, members of the Committee asked for
management's representations that the audited financial statements of the Company have been prepared in
conformity with generally accepted accounting principles, and have expressed to management their general
preference for conservative policies when a range of accounting options is available.

The Committee reviewed with the independent auditors, who are responsible for expressing an
opinion on the conformity of the audited financial statements with generally accepted accounting principles,
their judgments as to the quality and the acceptability of the Company's accounting principles and such
other matters as are required to be discussed with the Committee under Statement on Auditing Standards
No. 61. In addition, the Committee has discussed with the independent auditors the auditors' independence
from management and the Company, including matters in the written disclosures required by the Independence
Standards Board Standard No. 1, Independent Discussions with Audit Committees, and considered the
compatibility of non-audit services with the auditors' independence.

The Committee also discussed with the Company's independent auditors, with and without management
present, the overall scope and plans for their audit. The Committee met with the independent auditors
to discuss the results of their examinations, their evaluations of the Company's internal controls, the
overall quality and the acceptability of the Company's financial reporting and other matters that the
Committee believed relevant to its oversight.

Based on these reviews and discussions, we recommend to the Board of Directors that the Company's
audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended March 31,
2003 for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE MEMBERS

B. LaRae Orullian D. Dale Browning
Paul S. Dempsey William B. McNamara
James B. Upchurch

ADDITIONAL INFORMATION

Performance Graph

The following graph shows the cumulative total shareholder return on the Company's common
stock compared to the cumulative total return of two other indices: (i) The Nasdaq National Market
Composite Index of U.S. Companies (IXICN), and (ii) the Peer Group Index of similar line-of-business
companies consisting of Midwest Express Airlines (MEH), AirTran Holdings, Inc. (AAI), and JetBlue
Airways Corporation (JBLU) (the "Peer Group"). JetBlue did not begin trading until April 2002, and
is not included in the Peer Group Index until fiscal year 2003. The graph shows the value at the end
of each of the last five fiscal years of $100 invested in the Company's common stock or the indices
on March 31, 1998, assumes reinvestment of dividends, and takes into account stock splits. Historical
stock price performance is not necessarily indicative of future stock price performance.

03/98 03/99 03/00 03/01 03/02 03/03
Frontier Airlines, Inc. 100.00 263.20 316.80 487.60 732.80 198.80
NASDAQ Market Index 100.00 134.38 269.98 111.68 104.56 75.55
Peer Group Index 100.00 74.89 70.71 80.20 71.20 60.91

Equity Compensation Plan Information

The following table sets forth certain information regarding the Company's Employee Stock Option Plan,
as amended, which was approved by the Company's shareholders, as well as equity compensation plans not approved
by the Company's shareholders.

Number of Shares to Weighted Average Number of Shares
be Issued on Exercise Price of Available for Future
Exercise of Outstanding Options Issuance Under Equity
Plan Category Outstanding Options ($) Compensation Plans

Plans approved by shareholders (1) 2,430,815 $10.28 475,075

Plans not approved by shareholders N/A N/A N/A

(1) Figures reflect the total options outstanding and available for issuance under the
Company's 1994 Stock Option Plan. Of the outstanding options listed, 1,168,815 are immediately
exercisable at a weighted average price of $10.01. These figures also include the warrants granted
to Samuel D. Addoms on April 1, 2002 pursuant to the Director Compensation Agreement that took effect
upon his resignation as Chief Executive Officer. See the section above entitled "Samuel D. Addoms
Severance Agreement." The Director Compensation Agreement was entered into without shareholder approval.

Section 16(a) Beneficial Ownership Reporting Compliance

In October 2002, Mr. Tate failed to timely report the award of options for 30,000 shares
of common stock. This failure was inadvertent and Mr. Tate reported this grant of options on a Form
4 filed in February 2003. In January 2003, Mr. McClellan failed to timely report the award of options
for 30,000 shares of common stock. This failure was inadvertent and Mr. McClellan reported this grant
of options on a Form 4 filed in February 2003. These failures resulted from the change in requirements
for reporting grants of options imposed by the Sarbanes-Oxley Act, which previously could be reported
at the end of the fiscal year on Form 5.

SHAREHOLDER PROPOSALS

Shareholders are entitled to submit proposals on matters appropriate for shareholder
action consistent with regulations of the Securities and Exchange Commission and the Company's bylaws.
If a shareholder wishes to have a proposal appear in the Company's proxy statement for next year's annual
meeting, under the regulations of the Securities and Exchange Commission the proposal must be received
by the Company's corporate secretary at 7001 Tower Road, Denver, Colorado 80249-7312 on or before March
19, 2004.

INDEPENDENT PUBLIC ACCOUNTANTS

KPMG LLP has acted as independent public accountants for the Company continuously
since 1994. A representative of KPMG LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she desires to do so, and will be available to respond to
appropriate questions.

KPMG LLP was selected by the Board of Directors to perform the audit function for
fiscal year 2003. No independent public accountant has yet been selected to perform the audit
function for fiscal year 2004. It is expected that the Audit Committee will approve the engagement of
an auditor at a meeting to be held in September 2003, or subsequent thereto.

Audit and Non-Audit Fees

The following table presents fees for audit services and other professional services provided by KPMG LLP for
fiscal 2003:

Amount
($)
Audit Fees(1) 336,200

Financial Information Systems Design and
Implementation Fees -

All Other Fees:

Audit Related -

Non-Audit Related(2) 47,400

(1) Audit Fees consist of $275,000 for the audit and quarterly reviews of the financial statements
and accounting and financial reporting consultations and research in connection with the audit
and reviews, $55,200 for audits required by governmental or regulatory bodies, and $6,000 for
consents and assistance with and review of registration statements filed with the SEC.

(2) Tax Fees include professional services provided for tax compliance and tax advice on proposed
or completed transactions.

The Audit Committee of the Board of Directors has considered whether the non-audit related services
provided by KPMG LLP during fiscal 2003 are compatible with maintaining the independence of KPMG LLP.

OTHER BUSINESS

This Proxy Statement describes all items of business that management will bring before the Annual
Meeting. Management knows of no other business to be presented. If other matters of business not presently
known to management are properly raised at the meeting, the proxies will vote on the matters in accordance
with their best judgment.

ANNUAL REPORT

The Company's 2003 Annual Report on Form 10-K, which includes financial statements, but which
does not constitute a part of the proxy solicitation material, accompanies this Proxy Statement. The
Annual Report on Form 10-K is also available on the Internet at www.frontierairlines.com in the Investor
Relations section.

NOTE: SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD,
USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.

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EX-99 4 proxysample.htm ATTACHMENT, PROXY CARD Frontier Airlines, Inc Proxy Card

(back)

FRONTIER AIRLINES, INC.
COMPUTERSHARE INVESTOR SERVICES
350 INDIANA STREET, SUITE 800
GOLDEN, CO 80401

VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information up until 11:59
P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you
access the web site. You will be prompted to enter
your 12-digit Control Number which is located below
to obtain your records and to create an electronic voting
instruction form.

VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy
card in hand when you call. You will be prompted to
enter your 12-digit Control Number which is located
below and then follow the simple instructions the Vote
Voice provides you.

VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
Frontier Airlines, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
For All Withhold All For All Except
To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

Vote On Directors

1. To elect eight directors to the Company's Board of Directors.
Nominees:
01) Samuel D. Addoms 05) William B. McNamara For Against Abstain
02) Hank Brown 06) B. LaRae Orullian
03) D. Dale Browning 07) Jeff S. Potter
04) Paul S. Dempsey 08) James B. Upchurch

Signature (Joint Owners) Signature [PLEASE SIGN WITHIN BOX]

Vote On Proposal

2. To consider and vote upon a proposal to approve the Frontier Airlines, Inc. 2003 Long-Term Incentive and
Equity Compensation Plan.

3. To transact any other business which properly comes before the meeting or any adjournment.

Signature (Joint Owners) Signature [PLEASE SIGN WITHIN BOX]

(front)

FRONTIER AIRLINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 4, 2003

The shareholder(s) hereby appoint(s) Jeff S. Potter, Paul H. Tate and David Sislowski,
or any one of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse side of
this ballot, all of the shares of Common Stock of Frontier Airlines, Inc. that the
shareholder(s) are entitled to vote at the Annual Meeting of Shareholders to be held
at 9:30 a.m., local time on September 4, 2003, at the Doubletree Hotel, 3203 Quebec
Street, Denver, Colorado, and any adjournment or postponement thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH
DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE
FOR THE BOARD OF DIRECTORS AND FOR THE PROPOSAL.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE

EX-99 5 proxyexhibit.htm LONG TERM COMP PLAN Frontier Airlines, Inc Proxy Exhibit

                                       EXHIBIT A

                                FRONTIER AIRLINES, INC.
                 2003 Long-term INCENTIVE AND equity compensation PLAN

                                        ARTICLE I
                                      INTRODUCTION

1.1      Purposes.   The   purposes  of  the  2003   Long-Term   Incentive   and  Equity
Compensation  Plan (the "Plan") of Frontier  Airlines,  Inc. (the  "Company") are (i) to
align the interests of the  Company's  stockholders  and the  recipients of awards under
this Plan by increasing the  proprietary  interest of these  recipients in the Company's
growth  and  success,  (ii)  to  advance  the  Company's  interests  by  attracting  and
retaining  directors,  officers,  managers,  and other employees,  and (iii) to motivate
these  persons  to  act  in  the  long-term  best  interests  of  the  Company  and  its
stockholders.

1.2      Effective  Date and Term of Plan.  This Plan will be submitted to the Company's
stockholders  for approval and, if approved by the affirmative  vote of the holders of a
majority  of the shares of Common  Stock  entitled  to vote and  present in person or by
proxy at the 2003 annual meeting of  stockholders,  will become effective on the date of
this  approval.  No award shall be made to any  individual  who is or who may be covered
by  Section  162(m)  of the  Code  and no  option  may be  exercised  until  the Plan is
approved.  This Plan will  terminate  ten (10) years after its  effective  date,  unless
terminated  earlier by the Board.  Termination  of the Plan will not affect the terms or
conditions of any award granted prior to termination.

                                        ARTICLE II
                                       DEFINITIONS

2.1      Definitions.  The following terms shall have the meanings set forth below:

         "Agreement"  means the written  agreement  evidencing an award under this Plan
between the Company and the recipient of the award.

         "Board" means the Board of Directors of Frontier Airlines, Inc.

         "Bonus  Stock"  means  shares  of  Common  Stock  which  are not  subject  to a
Restriction Period or Performance Measures.

         "Bonus Stock Award" means an award of Bonus Stock under this Plan.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Committee"  means a committee  the Board  designates,  consisting  of three or
more  members of the Board  each of whom must be (i) a  "Non-Employee  Director"  within
the meaning of Rule 16b-3 under the Exchange Act and (ii) an "outside  director"  within
the meaning of Section 162(m) of the Code.

         "Common Stock" means the common stock, no par value, of the Company.

         "Company" means Frontier Airlines, Inc.

         "Directors Options" has the meaning described in Section 9.5.

         "Directors Restricted Stock" has the meaning described in Section 9.4.

         "Disabled"  or  "Disability"  means the  inability of the holder of an award to
perform  substantially their duties and  responsibilities  for a continuous period of at
least six months, as determined solely by the Committee.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fair Market  Value" means the closing  transaction  price of a share of Common
Stock  reported  on the NASDAQ on the date as of which  such  value is being  determined
or, if there  shall be no reported  transactions  for such date,  on the next  preceding
date for which  transactions were reported;  provided,  however,  that Fair Market Value
may be  determined  by the Committee by whatever  means or method as the  Committee,  in
the good faith exercise of its discretion, shall at such time deem appropriate.

         "Incentive  Option"  means  an  option  designated  as  such  and  granted  in
accordance with Section 422 of the Code.

         "Non-Employee  Director"  means  any  director  of the  Company  who is not an
officer or employee of the Company or any Subsidiary.

         "Non-Statutory  Stock  Option"  means an  option to  purchase  shares of Common
Stock that is not an Incentive Stock Option.

         "Performance  Measures" means the criteria and objectives,  established by the
Committee,  which shall be  satisfied  or met (i) as a condition to the grant of a Stock
Award,  or (ii) during the  applicable  Restriction  Period or  Performance  Period as a
condition  to the holder's  receipt,  in the case of a  Restricted  Stock Award,  of the
shares of Common Stock  subject to such award,  or, in the case of a  Performance  Share
Award,  of the  shares of Common  Stock  subject to such  award  and/or of payment  with
respect to such award.  These criteria and  objectives may include,  but are not limited
to, the  attainment  by a share of Common  Stock of a specified  Fair Market Value for a
specified  period  of time,  earnings  per  share,  return  to  stockholders  (including
dividends),  return on equity,  earnings of the Company,  revenues,  market share,  cash
flow  or cost  reduction  goals,  or any  combination  of the  foregoing  and any  other
criteria and objectives established by the Board or the Committee.

         "Performance  Period" means any period designated by the Committee during which
the Performance Measures applicable to a Performance Share Award will be measured.

         "Performance  Share"  means a right,  contingent  upon  attaining  a  specified
Performance  Measure within the specified  Performance  Period,  to receive one share of
Common Stock,  which may be Restricted  Stock,  or in lieu of all or a portion  thereof,
the Fair Market Value of the Performance Share in cash.

         "Performance Share Award" means an award of Performance Shares under this Plan.

         "Permanent  and Total  Disability"  will have the  meaning set forth in Section
22(e)(3) of the Code or any successor to the Code.

         "Post  Termination  Exercise  Period"  means the period  specified  in or under
Section 6.2(a),  Section 6.2(b),  or Section 6.2(d) following  termination of employment
with the Company during which an option may be exercised.

         "Restricted  Stock"  means  shares of Common  Stock  subject  to a  Restriction
Period and includes Directors Restricted Stock.

         "Restricted Stock Award" means an award of Restricted Stock under this Plan.

         "Restriction  Period"  means any period the Committee  designates  during which
the  Common  Stock  under  a  Restricted  Stock  Award  may  not be  sold,  transferred,
assigned,  pledged,  hypothecated,  or otherwise  encumbered  or disposed of,  except as
provided for in this Plan or the Agreement relating to the award.

         "Retirement"  means  termination  of  employment  with the Company by reason of
retirement in accordance  with the Company's  normal criteria or with the consent of the
Company.

         "Stock Award" means a Restricted Stock Award or a Bonus Stock Award.

         "Subsidiary"  and  "Subsidiaries"  means the  subsidiaries  of the  Company the
Board  or  Committee  designates  and the  Committee  selects  in its  sole  discretion,
provided  that for the  purposes of  Incentive  Stock  Options,  it must be a subsidiary
within the meaning of Section 424 of the Code.

2.2      Gender  and  Number.  Except  when  otherwise  indicated  by the  context,  the
masculine  gender shall also  include the feminine  gender,  and the  definition  of any
term herein in the  singular  shall also  include the plural.  The verb "to  include" in
all of its form, tenses, and variations, is always used in the nonexclusive sense.

                                        ARTICLE III
                                  PLAN ADMINISTRATION

3.1      General.  The Committee shall  administer the Plan. Any one or a combination of
the  following  awards may be made under this Plan to eligible  persons:  (i) options to
purchase   shares  of  Common  Stock  in  the  form  of  Incentive   Stock   Options  or
Non-Statutory  Stock  Options,  (ii)  Stock  Awards in the form of  Restricted  Stock or
Bonus Stock,  and (iii)  Performance  Shares.  In accordance  with the provisions of the
Plan,  the  Committee  shall,  in its  sole  discretion,  select  eligible  persons  for
participation in this Plan,  determine the form,  amount, and timing of each award to be
made  pursuant  to the Plan,  and,  as  applicable,  the shares of Common  Stock and the
number of  Performance  Shares to be  issued  thereunder,  the  exercise  or base  price
associated  with the award,  the time and  conditions  of exercise or  settlement of the
award,  the duration and nature of Restricted  Stock Award  restrictions,  and all other
terms and conditions  the Committee may deem necessary or desirable and consistent  with
the  terms  of the  Plan.  The  Committee  shall  determine  the  form or  forms  of the
Agreements  evidencing the awards granted under the Plan,  which  provisions need not be
identical  except as may be provided  herein.  The Committee may in its sole  discretion
and for any reason at any time,  subject to the  requirements  of Section  162(m) of the
Code  and  its   regulations   in  the  case  of  an  award  intended  to  be  qualified
performance-based  compensation,  adopt such rules and  regulations for carrying out the
purposes of the Plan as it may deem  proper and in the best  interests  of the  Company.
The  Committee  may  correct  any  defect,   supply  any  omission,   or  reconcile  any
inconsistency  in the Plan or in any  Agreement in the manner and to the extent it shall
deem  expedient  and it  shall  be the sole and  final  judge  of such  expediency.  The
Committee  will,  subject to the terms of this Plan,  establish rules and regulations it
deems  necessary  or  desirable  for the  administration  of the  Plan  and may  impose,
incidental  to the  grant of an  award,  conditions  to the  award,  including  limiting
competitive  employment or other activities.  The determinations,  interpretations,  and
other actions of the Committee  pursuant to the  provisions of the Plan shall be binding
and conclusive for all purposes and on all persons.

3.2      Delegation  by  Committee.  The Committee may delegate some or all of its power
and authority under this Plan to the Board,  Chief Executive  Officer,  or other Company
executive  officers,  as the Committee  deems  appropriate.  The delegation  shall be as
broad or as narrow as the  Committee  determines.  To the extent that the  Committee has
delegated the  authority to determine  certain  terms and  conditions  of an award,  all
references  in the Plan to the  Committee's  exercise of authority in  determining  such
terms and  conditions  shall be construed to include the officer or officers to whom the
Committee  has  delegated  the  power and  authority  to make  such  determination.  The
Committee   shall  not  delegate  its  power  and  authority  to  grant  awards  to  any
participant  who is covered by Section 16 of the  Exchange Act or the  deductibility  of
whose  compensation  is, or may  become,  subject  to the  limitations  of Code  Section
162(m).

3.3      Committee  Liability.  No member of the Board,  Committee,  the Chief Executive
Officer,  nor any other  executive  officer to whom the  Committee  delegates any of its
power and authority  hereunder,  shall be liable for any act, omission,  interpretation,
construction or  determination  made in connection with this Plan in good faith, and the
members of the Board, the Committee,  the Chief Executive  Officer,  and other executive
officers are entitled to  indemnification  and  reimbursement  by the Company in respect
of any claim,  loss,  damage, or expense  (including  attorneys' fees) arising therefrom
to the full  extent  permitted  by law,  except  as  otherwise  may be  provided  in the
Company's  Articles  of  Incorporation  and/or  By-laws,  and under any  directors'  and
officers' liability insurance that may be in effect from time to time.

3.4      Quorum.  A majority of the  Committee  shall  constitute a quorum.  The acts of
the  Committee  shall be either (i) acts of a majority of the  members of the  Committee
present at any  meeting at which a quorum is  present or (ii) acts  approved  in writing
by all of the members of the Committee without a meeting.

3.5      Eligibility.   Participants   in  this  Plan  will  consist  of  the  directors
(including Non-Employee  Directors),  officers,  managers, and other employees,  persons
expected to become directors,  officers,  managers, and other employees, and consultants
of the  Company,  and its  Subsidiaries  as the  Committee  in its sole  discretion  may
select from time to time.  For purposes of this Plan,  references  to  employment by the
Company  shall also mean  employment  by a Subsidiary.  The  Committee's  selection of a
person to  participate  in this Plan at any time  shall not  require  the  Committee  to
select  such  person  to  participate  in this  Plan  at any  other  time.  Non-Employee
Directors of the Company  shall be eligible to  participate  in this Plan in  accordance
with Article IX.

                                        ARTICLE IV
                                  STOCK SUBJECT TO THE PLAN

4.1      Number of Shares.  Subject to  adjustment  as  provided in Section  4.3,  Three
Million,  Five  Hundred  Thousand  (3,500,000)  shares of Common Stock will be available
under this Plan,  reduced by the sum of the  aggregate  number of shares of Common Stock
that become subject to outstanding  options,  including  Directors Options,  outstanding
Stock  Awards,  and  outstanding  Performance  Shares.  The maximum  number of shares of
Common Stock that may be issued under  Incentive  Stock Options is Three  Million,  Five
Hundred  Thousand  (3,500,000)  shares of Common  Stock.  To the extent  that  shares of
Common Stock subject to an outstanding  option,  Stock Award,  or Performance  Share are
not issued or  delivered  by reason of the  expiration,  termination,  cancellation,  or
forfeiture  of such award or by reason of the  withholding  of shares of Common Stock to
pay all or a portion of the exercise  price of an award,  if any, or to satisfy all or a
portion of the tax  withholding  obligations  relating to an award,  then such shares of
Common  Stock shall again be  available  under this Plan.  Shares of Common  Stock shall
be made available from  authorized  and unissued  shares of Common Stock,  or authorized
and issued shares of Common Stock  reacquired  and held as treasury  shares or otherwise
or a  combination  thereof.  The Company  shall at all times during the term of the Plan
and while any options are  outstanding  retain as authorized  and unissued  Common Stock
at least the number of shares from time to time  required  under the  provisions  of the
Plan, or otherwise assure itself of its ability to perform its obligations hereunder.

4.2      Limit on Option  Grants.  To the extent  required by Section 162(m) of the Code
and the  regulations  thereunder,  the  maximum  number of shares of Common  Stock  with
respect to which  options may be granted  during any  calendar  year to any person shall
be 250,000, subject to adjustment as provided in Section 4.3 below.

4.3      Adjustments  for Stock Split,  Stock  Dividend,  Etc. In the event of any stock
split,  stock  dividend,   recapitalization,   reorganization,   merger,  consolidation,
combination,  exchange  of shares,  liquidation,  spin-off  or other  similar  change in
capitalization  or event,  or any  distribution  to holders of Common Stock other than a
regular cash  dividend,  the number and class of securities  available  under this Plan,
the number and class of securities  subject to each outstanding  option and the purchase
price per  security,  the number  and class of  securities  subject  to each  Restricted
Stock Award  granted to  Non-Employee  Directors  pursuant to Article IX, the number and
class  of  securities  subject  to each  outstanding  Stock  Award,  the  terms  of each
outstanding  Performance  Share, the maximum number of Shares available for grant to any
one person in a calendar  year  pursuant to Section  4.2,  the maximum  number of Shares
available for grant pursuant to Incentive  Options,  and the number of Shares subject to
a  delegation  of  authority  under  Section  3.2 of this  Plan  shall be  appropriately
adjusted  by the  Committee,  such  adjustments  to be made in the  case of  outstanding
options  without  an  increase  in the  aggregate  purchase  price  or base  price.  The
decision of the Committee  regarding  any such  adjustment  shall be final,  binding and
conclusive.  If any such  adjustment  would  result in a fractional  security  being (a)
available  under  this Plan,  such  fractional  security  shall be  disregarded,  or (b)
subject to an award  under this Plan,  the  Company  shall pay the holder of such award,
in connection  with the first vesting  (other than vesting of an option),  exercise,  or
settlement  of such  award in whole  or in part  occurring  after  such  adjustment,  an
amount in cash determined by multiplying  (i) the fraction of such security  (rounded to
the nearest  hundredth) by (ii) the excess,  if any, of (A) the Fair Market Value on the
vesting  (other than vesting of an option),  exercise,  or settlement  date over (B) the
exercise or base price, if any, of such award.

                                        ARTICLE V
                         CORPORATE REORGANIZATION; CHANGE IN CONTROL

5.1      Change  in  Control.  Notwithstanding  any  provision  in this Plan or any
Agreement,  in the event of a Change  in  Control,  (i) all  outstanding  options  shall
immediately  become  exercisable in full, (ii) the Restriction  Period applicable to any
outstanding   Restricted  Stock  Award  shall  lapse,   (iii)  the  Performance   Period
applicable  to  any  outstanding   Performance   Share  Award  shall  lapse,   (iv)  the
Performance  Measures applicable to any outstanding  Restricted Stock Award (if any) and
to any  outstanding  Performance  Share  Award  shall be deemed to be  satisfied  at the
maximum level.

5.2      Change in Control means

(a)      the acquisition by any individual, entity or group (a "Person"),  including any
         "person"  within the meaning of Section  13(d)(3)  or 14(d)(2) of the  Exchange
         Act,  of  beneficial  ownership  within the  meaning of Rule 13d-3  promulgated
         under  the  Exchange  Act,  of 30% or more of either  (i) the then  outstanding
         shares of common stock of the Company (the "Outstanding  Company Common Stock")
         or (ii) the combined  voting power of the then  outstanding  securities  of the
         Company   entitled  to  vote  generally  in  the  election  of  directors  (the
         "Outstanding  Company Voting Securities");  excluding,  however, the following:
         (A) any  acquisition  directly  from the  Company  (excluding  any  acquisition
         resulting  from the exercise of an exercise,  conversion or exchange  privilege
         unless the security  being so  exercised,  converted or exchanged  was acquired
         directly  from  the  Company),  (B) any  acquisition  by the  Company,  (C) any
         acquisition  by an  employee  benefit  plan (or  related  trust)  sponsored  or
         maintained by the Company or any corporation  controlled by the Company, or (D)
         any  acquisition by any  corporation  pursuant to a transaction  which complies
         with clauses (i), (ii), and (iii) of Section 5.2(c);

(b)      individuals  who, as of  September 4, 2003,  constitute  the Board of Directors
         (the  Incumbent  Board") cease for any reason to constitute at least a majority
         of such  Board;  provided  that any  individual  who  becomes a director of the
         Company  subsequent  to September 4, 2003 whose  election,  or  nomination  for
         election by the Company's stockholders,  was approved by the vote of at least a
         majority of the directors then  comprising the Incumbent  Board shall be deemed
         a member of the Incumbent Board; and provided further,  that any individual who
         was initially  elected as a director of the Company as a result of an actual or
         threatened  election  contest,  as  such  terms  are  used in  Rule  14a-11  of
         Regulation  14A  promulgated  under the  Exchange  Act, or any other  actual or
         threatened  solicitation  of proxies or  consents by or on behalf of any Person
         other than the Board shall not be deemed a member of the Incumbent Board;

(c)      approval  by the  stockholders  of the Company of a  reorganization,  merger or
         consolidation  of  the  Company  or  sale  or  other   disposition  of  all  or
         substantially  all of the assets of the  Company (a  "Corporate  Transaction");
         excluding,  however,  a  Corporate  Transaction  pursuant  to which  (i) all or
         substantially  all of the  individuals  or  entities  who  are  the  beneficial
         owners,  respectively,   of  the  Outstanding  Company  Common  Stock  and  the
         Outstanding  Company  Voting  Securities  immediately  prior to such  Corporate
         Transaction will beneficially  own,  directly or indirectly,  more than 60% of,
         respectively,  the outstanding  shares of common stock, and the combined voting
         power of the outstanding  securities entitled to vote generally in the election
         of  directors,  as the case may be,  of the  corporation  resulting  from  such
         Corporate Transaction (including,  without limitation, a corporation which as a
         result of such transaction owns the Company or all or substantially  all of the
         Company's  assets either  directly or  indirectly)  in  substantially  the same
         proportions  relative to each other as their  ownership,  immediately  prior to
         such Corporate  Transaction,  of the  Outstanding  Company Common Stock and the
         Outstanding  Company  Voting  Securities,  as the case may be,  (ii) no  Person
         (other  than:  the  Company;  any  employee  benefit  plan (or  related  trust)
         sponsored or  maintained  by the Company or any  corporation  controlled by the
         Company;  the corporation  resulting from such Corporate  Transaction;  and any
         Person  which   beneficially   owned,   immediately  prior  to  such  Corporate
         Transaction,  directly or indirectly,  30% or more of the  Outstanding  Company
         Common Stock or the Outstanding Company Voting Securities,  as the case may be)
         will beneficially own,  directly or indirectly,  30% or more of,  respectively,
         the outstanding  shares of common stock of the corporation  resulting from such
         Corporate   Transaction  or  the  combined  voting  power  of  the  outstanding
         securities of such  corporation  entitled to vote  generally in the election of
         directors,  and (iii)  individuals who were members of the Incumbent Board will
         constitute  at least a majority of the members of the board of directors of the
         corporation resulting from such Corporate Transaction;

(d)      approval by the  stockholders of the Company of a plan of complete  liquidation
         or dissolution of the Company; or

(e)      any other  transaction  that the Board  determines by resolution to be a Change
         in Control.



                                        ARTICLE VI
                                       STOCK OPTIONS

6.1      Stock  Options.  The  Committee  may,  in  its  discretion,  grant  options  to
purchase  shares of Common  Stock to such  eligible  persons the  Committee  may select.
Each option,  or portion  thereof,  that is not an Incentive  Stock  Option,  shall be a
Non-Statutory  Stock  Option.  An  Incentive  Stock  Option  may not be  granted  to any
person who is not an  employee of the  Company or any parent or  subsidiary  (as defined
in Section 424 of the Code).  Each  Incentive  Stock Option shall be granted  within ten
years of the effective  date of this Plan. To the extent that the aggregate  Fair Market
Value  (determined  as of the date of grant) of shares of Common  Stock with  respect to
which options  designated as Incentive  Stock Options are exercisable for the first time
by a  participant  during any  calendar  year  (under this Plan or any other plan of the
Company,  or any parent or  subsidiary  as defined in Section  424 of the Code)  exceeds
the amount (currently  $100,000)  established by the Code, such options shall constitute
Non-Statutory  Stock  Options.  Options  shall be  subject  to the  following  terms and
conditions and shall contain such  additional  terms and  conditions,  not  inconsistent
with the terms of this Plan, as the Committee shall deem advisable:

(a)      Number of Shares  and  Purchase  Price.  The  number of shares of Common  Stock
         subject  to an  option  and the  purchase  price  per  share  of  Common  Stock
         purchasable  upon  exercise of the option shall be  determined  in each case by
         the Committee and set forth in the Agreement,  but, in the case of an Incentive
         Stock Option,  in no event shall the price be less than 100 percent of the Fair
         Market Value of the Stock on the date the Incentive Stock Option is granted.

(b)      Duration of Options;  Restrictions  on Exercise.  The Committee  will determine
         the period  during  which an option may be  exercised;  provided  the  exercise
         period for an Incentive Stock Option must end, in all cases,  not more than ten
         years from the date the Incentive Stock Option is granted.  The Agreement shall
         also set forth any installment or other  restrictions on exercise of the option
         during  such  period,  if any,  as may be  determined  by the  Committee.  Each
         option shall  become  exercisable  (vest) over such period of time,  if any, or
         upon the  occurrence  of other  events,  as  determined  by the  Committee.  An
         exercisable  option, or portion thereof,  may be exercised only with respect to
         whole shares of Common Stock.

(c)      Manner of Exercise.  Subject to the applicable award  Agreement,  an option may
         be exercised by (i) giving written notice to the Company  specifying the number
         of whole shares of Common Stock to be purchased and  accompanied  by payment in
         full of the  exercise  price (A) by cash,  certified  or bank  check,  or other
         instrument or arrangement made for such payment to the Company's  satisfaction,
         (B)  by  delivery   (either  actual  delivery  or  by  attestation   procedures
         established by the Company) of previously  acquired  shares of Common Stock for
         which  the  holder  thereof  has good  title,  free and  clear of all liens and
         encumbrances,  which  were not  acquired  within  the six  months  prior to the
         exercise date, and having an aggregate Fair Market Value,  determined as of the
         date of exercise,  equal to the aggregate  purchase  price payable by reason of
         such  exercise,  (C) in cash by a  broker-dealer  acceptable  to the Company to
         whom the  optionee  has  submitted an  irrevocable  notice of exercise,  or (D)
         through a cashless  exercise  program  authorized by the Committee and Company,
         and (ii) by executing  such  documents as the Company may  reasonably  request.
         The Company shall have sole  discretion to disapprove of an election  under any
         of clauses  (B)-(D).  Any  fraction  of a share of Common  Stock which would be
         required to pay such  purchase  price shall be  disregarded  and the  remaining
         amount due shall be paid in cash by the optionee.  No certificate  representing
         Common  Stock shall be delivered  until the full  purchase  price  therefor has
         been  paid and the  amount  of  required  tax  withholding  has  been  paid (or
         arrangement   made  for  such   payment  or   withholding   to  the   Company's
         satisfaction).

(d)      Dividend  Equivalents.  The  Agreement  relating  to  any  Non-Statutory  Stock
         Option may  provide for the grant of  "dividend  equivalents"  with  respect to
         each  Non-Statutory  Stock Option.  Each dividend  equivalent shall entitle the
         optionee to receive a cash  payment  equal to the product of (i) the  dividends
         declared  with respect to a share of Common Stock and (ii) the number of shares
         of Common Stock  subject to such option.  Each cash payment shall be subject to
         tax withholding required by law.

6.2      Termination of Employment or Service.

         (a)  Disability.  Subject to Article V, and unless  otherwise  specified in the
         Agreement  relating  to an  option,  if the  employment  with or service to the
         Company  of the  holder  of an  option  terminates  by  reason  of  Disability,
         Permanent and Total Disability in the case of an Incentive Option,  each option
         held by such holder  shall be  exercisable  only to the extent that such option
         is  exercisable  on  the  effective  date  of  such  holder's   termination  of
         employment  or service and may  thereafter be exercised by such holder (or such
         holder's  legal  representative  or similar  person)  until and  including  the
         earliest  to occur of (i) the date  which is six (6)  months  (or such  shorter
         period  as set  forth in the  Agreement  relating  to such  option)  after  the
         effective  date of such holder's  termination of employment or service and (ii)
         the expiration date of the term of such option.

         (b)  Retirement.  Subject to Article V, and unless  otherwise  specified in the
         Agreement  relating  to an  option,  if the  employment  with or service to the
         Company of the holder of an option  terminates  by reason of  Retirement,  each
         option held by such holder  shall be  exercisable  only to the extent that such
         option is  exercisable  on the effective  date of such holder's  termination of
         employment  or service and may  thereafter be exercised by such holder (or such
         holder's  legal  representative  or similar  person)  until and  including  the
         earliest  to occur of (i) the date  which is six (6)  months,  three (3) months
         in the case of Incentive  Stock  Options,  (or such shorter period as set forth
         in the  Agreement  relating to such option)  after the  effective  date of such
         holder's  termination of employment or service and (ii) the expiration  date of
         the term of such option .

         (c) Death.  Unless otherwise  specified in the Agreement relating to an option,
         as the case  may be,  and  subject  to  Article  V, if the  employment  with or
         service  to the  Company  of the  holder of an option  terminates  by reason of
         death,  each option held by such holder shall be exercisable only to the extent
         that such option is  exercisable  on the date of such holder's  death,  and may
         thereafter  be  exercised  by  such  holder's  executor,  administrator,  legal
         representative,   beneficiary,  or  similar  person  until  and  including  the
         earliest  to occur of (i) the date  which is six (6)  months  (or such  shorter
         period as set forth in the  Agreement  relating to such option)  after the date
         of death and (ii) the expiration date of the term of such option

         (d) Other  Termination.  Subject to Article V, and unless  otherwise  specified
         in the Agreement  relating to an option,  if the employment  with or service to
         the  Company of the holder of an option  terminates  for any reason  other than
         Disability,  Retirement,  or death,  each option  held by such holder  shall be
         exercisable  only  to  the  extent  that  such  option  is  exercisable  on the
         effective  date of such holder's  termination  of employment or service and may
         thereafter be exercised by such holder (or such holder's  legal  representative
         or similar  person)  until and  including the earliest to occur of (i) the date
         which is six (6)  months,  three (3) months in the case of  Incentive  Options,
         (or such shorter period as set forth in the Agreement  relating to such option)
         after the effective date of such holder's  termination of employment or service
         and (ii) the expiration date of the term of such option .

         (e) Death  Following  Termination  of Employment or Service.  Unless  otherwise
         specified in the Agreement  relating to an option, and subject to Article V, if
         the holder of an option dies during the  applicable  Post-Termination  Exercise
         Period,  each  option  held by such  holder  shall be  exercisable  only to the
         extent that such option is  exercisable  on the date of such holder's death and
         may  thereafter  be exercised by the holder's  executor,  administrator,  legal
         representative,  beneficiary or similar person until and including the earliest
         to occur of (i) the date  which is 90 days after the date of death and (ii) the
         expiration date of the term of such option .

6.3      Restrictions on Incentive Stock Options.

(a)      Initial  Exercise.  The  aggregate  Fair  Market  Value of the shares of Common
Stock with respect to which  Incentive  Stock Options are exercisable for the first time
by a holder  in any  calendar  year,  under  the Plan or  otherwise,  shall  not  exceed
$100,000.  For  this  purpose,  the  Fair  Market  Value of the  Common  Stock  shall be
determined  as of the date of grant and  Incentive  Stock  Options  shall be taken  into
account in the order granted.

(b)      Ten  Percent  Stockholders.  Incentive  Stock  Options  granted  to a holder of
record  of 10% or more of the  outstanding  Stock of the  Company  shall  have an option
price equal to 110% of the Fair Market  Value of the shares of Common  Stock on the date
of grant of the option and the option  period for any such option  shall not exceed five
(5) years.







                                      ARTICLE VII
                                      STOCK AWARDS

7.1      Stock  Awards.  The  Committee  may, in its  discretion,  grant Stock Awards to
such eligible persons as may be selected by the Committee.  The Agreement  relating to a
Stock Award shall specify  whether the Stock Award is a Restricted  Stock Award or Bonus
Stock Award.

7.2      Terms of Stock Awards.  Stock Awards shall be subject to the  following  terms
and  conditions  and  shall  contain  such   additional   terms  and   conditions,   not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)      Number of Shares and Other Terms.  The Committee  will  determine the number of
         shares of Common  Stock  subject to a  Restricted  Stock  Award or Bonus  Stock
         Award and the Performance  Measures (if any) and Restriction  Period applicable
         to a Restricted Stock Award.

(b)      Vesting and  Forfeiture.  The  Agreement  relating to a Restricted  Stock Award
         shall provide,  in the manner  determined by the Committee,  in its discretion,
         and subject to the  provisions  of this Plan,  for the vesting of the shares of
         Common Stock  subject to such award (i) if specified  Performance  Measures are
         satisfied or met during the specified  Restriction Period or (ii) if the holder
         of such  award  remains  continuously  in the  employment  of or service to the
         Company during the specified  Restriction  Period and for the forfeiture of all
         or a portion  of the  shares  of  Common  Stock  subject  to such  award (x) if
         specified  Performance  Measures are not  satisfied or met during the specified
         Restriction  Period  or (y)  if the  holder  of  such  award  does  not  remain
         continuously  in the  employment  of or  service  to  the  Company  during  the
         specified  Restriction  Period.  Bonus Stock Awards shall not be subject to any
         Performance Measures or Restriction Periods.

(c)      Share   Certificates.   During  the  Restriction   Period,  a  certificate  or
         certificates  representing  a Restricted  Stock Award may be  registered in the
         holder's  name or a nominee name at the  discretion of the Company and may bear
         a legend,  in addition to any legend which may be required pursuant to Sections
         11.1 and 11.2,  indicating  that the  ownership  of the shares of Common  Stock
         represented by such  certificate  is subject to the  restrictions,  terms,  and
         conditions  of this Plan and the  Agreement  relating to the  Restricted  Stock
         Award.  All  certificates  registered  in the holder's  name shall be deposited
         with  the  Company,   together  with  stock  powers  or  other  instruments  of
         assignment  (including  a power of  attorney),  each  endorsed  in blank with a
         guarantee  of  signature if deemed  necessary  or  appropriate  by the Company,
         which  would  permit  transfer to the Company of all or a portion of the shares
         of Common Stock subject to the  Restricted  Stock Award in the event such award
         is  forfeited  in  whole  or  in  part.  Upon  termination  of  any  applicable
         Restriction   Period  (and  the   satisfaction   or  attainment  of  applicable
         Performance  Measures),  or upon the grant of a Bonus Stock Award, in each case
         subject to the  Company's  right to require  payment of any taxes in accordance
         with Article XIV, a certificate  or  certificates  evidencing  ownership of the
         requisite  number of shares of Common Stock shall be delivered to the holder of
         such award.

(d)      Rights with Respect to Restricted  Stock Awards.  Unless otherwise set forth in
         the Agreement  relating to a Restricted  Stock Award,  and subject to the terms
         and  conditions  of a Restricted  Stock  Award,  the holder of such award shall
         have all rights as a  stockholder  of the Company,  including,  but not limited
         to, voting rights,  the right to receive dividends and the right to participate
         in any capital adjustment applicable to all holders of Common Stock;  provided,
         however,  that a  distribution  with respect to shares of Common  Stock,  other
         than a regular cash dividend,  shall be deposited with the Company and shall be
         subject to the same  restrictions as the shares of Common Stock with respect to
         which such  distribution  was made. The Agreement  relating to Restricted Stock
         Award may provide  that  regular  cash  dividends  made with  respect to Common
         Stock in a Restricted  Stock Award prior to the  termination of the Restriction
         Period shall be  deposited  with the Company and such cash  dividends  shall be
         used to purchase  additional  shares of Common  Stock which shall be subject to
         the  same  restrictions,   vesting  period,  Performance  Measures,  and  other
         provisions  as the  shares of Common  Stock  with  respect  to which  such cash
         dividend was made.

7.3      Termination  of  Employment  or  Service.  Unless  otherwise  set  forth in the
Agreement  relating  to a  Restricted  Stock  Award,  and  subject  to Article V, if the
employment  with or service to the  Company  of the holder of such award  terminates  by
reason of  Disability,  Retirement,  death,  or any other  reason,  the  portion of such
award which is subject to a Restriction  Period on the  effective  date of such holder's
termination  of  employment  or  service  shall be  forfeited  by such  holder  and such
portion shall be canceled by the Company.

                                        Article VIII
                                   PERFORMANCE SHARE AWARDS

8.1      Performance  Share  Awards.  The  Committee  may,  in  its  discretion,   grant
Performance Share Awards to such eligible persons as may be selected by the Committee.

8.2      Terms of Performance  Share Awards.  Performance  Share Awards shall be subject
to the  following  terms and  conditions  and shall  contain such  additional  terms and
conditions,  not  inconsistent  with the terms of this Plan, as the Committee shall deem
advisable.

(a)      Number of Performance  Shares and  Performance  Measures.  The Committee  shall
         determine  the  number  of  Performance  Shares  subject  to any  award and the
         Performance Measures and Performance Period applicable to such award.

(b)      Vesting and  Forfeiture.  The Agreement  relating to a Performance  Share Award
         shall provide,  in the manner  determined by the Committee,  in its discretion,
         and subject to the provisions of this Plan,  for the vesting of such award,  if
         specified  Performance  Measures  are  satisfied  or met during  the  specified
         Performance  Period,  and for the forfeiture of all or a portion of such award,
         if  specified  Performance  Measures  are  not  satisfied  or  met  during  the
         specified Performance Period.

(c)      Settlement  of Vested  Performance  Share Awards.  The Agreement  relating to a
         Performance  Share Award (i) shall specify whether such award may be settled in
         shares of Common  Stock  (including  shares of  Restricted  Stock) or cash or a
         combination  thereof and (ii) may specify  whether the holder  thereof shall be
         entitled to  receive,  on a current or deferred  basis,  dividend  equivalents,
         and, if determined by the Committee,  interest on or the deemed reinvestment of
         any  deferred  dividend  equivalents,  with  respect to the number of shares of
         Common Stock subject to such award. If a Performance  Share Award is settled in
         shares of Restricted  Stock, a certificate or  certificates  representing  such
         Restricted  Stock shall be issued in  accordance  with  Section  7.2(c) and the
         holder of such Restricted  Stock shall have such rights of a stockholder of the
         Company as determined pursuant to Section 7.2(d).  Prior to the settlement of a
         Performance Share Award in shares of Common Stock,  including Restricted Stock,
         the holder of such award shall have no rights as a  stockholder  of the Company
         with  respect  to the  shares of Common  Stock  subject to such award and shall
         have rights as a stockholder of the Company in accordance with Section 10.4.

(d)      Termination  of  Employment.  Unless  otherwise  set  forth  in  the  Agreement
         relating  to a  Performance  Share  Award,  and  subject  to  Article V, if the
         employment  with  or  service  to the  Company  of the  holder  of  such  award
         terminates by reason of  Disability,  Retirement,  death,  or any other reason,
         the  portion of such award  which is  subject  to a  Performance  Period on the
         effective date of such holder's  termination  of employment  shall be forfeited
         and such portion shall be canceled by the Company.


                                        ARTICLE IX.
                        PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS

9.1      Eligibility.   The  Committee   may,  in  its   discretion,   grant  awards  to
Non-Employee Directors in accordance with this Article IX.

9.2      Terms of  Awards.  On the date on which a person is first  elected or begins to
serve as a Non-Employee  Director other than by reason of termination of employment,  or
on the date of each annual meeting of  stockholders  of the Company,  the Committee may,
in  its  discretion,  grant  each  person  who  is a  Non-Employee  Director  a  number,
determined by the Committee,  of shares of Restricted  Stock having the terms  described
in Section 9.4 ("Directors  Restricted  Stock") or options having the terms described in
Section 9.5 ("Directors Options").

9.3      Elective  Participation.  Each  Non-Employee  Director  may  from  time to time
elect,  in accordance  with  procedures to be specified by the Committee,  to receive in
lieu of all or part of the cash  retainer and any meeting  fees that would  otherwise be
payable to such Non-Employee  Director,  on each date on which such retainer and meeting
fees would  otherwise  be payable  during the period  that such  election  is in effect,
either (i) Directors  Restricted  Stock with a Fair Market Value as of such payment date
equal to 100% of the foregone  amount of such retainer  payment and meeting fees or (ii)
Directors  Options to purchase  shares of Common  Stock having a Fair Market Value as of
such  payment  date equal to 100% of the foregone  amount of such  retainer  payment and
meeting fees.

9.4      Directors  Restricted  Stock.  Shares of  Directors  Restricted  Stock shall be
subject  to a  Restriction  Period  commencing  on the date of grant of such  award  and
terminating  on the date of the first  anniversary  of the date of grant of such  award,
shall vest  (subject  to earlier  vesting  pursuant  to Article V) if the holder of such
award  remains  continuously  in the service of the Company as a  Non-Employee  Director
during the  Restriction  Period and shall be  forfeited if the holder of such award does
not remain  continuously  in the  service  of the  Company  as a  Non-Employee  Director
during the  Restriction  Period.  A certificate or certificates  representing  Directors
Restricted  Stock shall be issued in  accordance  with Section  7.2(c) and the holder of
such  award  shall  have such  rights of a  stockholder  of the  Company  as  determined
pursuant to Section  7.2(d).  Notwithstanding  the foregoing  paragraph,  if the service
to the Company as a Non-Employee  Director of the holder of Directors  Restricted  Stock
terminates  for any reason other than cause as determined in the sole  discretion of the
Committee,  the  Restriction  Period shall  terminate as of the  effective  date of such
holder's termination of service.

9.5      Directors  Options.  Each  Directors  Option shall be subject to the  following
terms and  conditions  and shall  contain  such  additional  terms and  conditions,  not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)      Exercise  Period  and  Exercisability.  Each  Directors  Option  shall  not  be
         exercisable  during  the first  year  following  its date of grant,  and may be
         exercised  in full  thereafter  and from and  after a Change in  Control.  Each
         Directors Option shall expire ten (10) years after its date of grant.

(b)      Purchase  Price.  The purchase  price for the shares of Common Stock subject to
         any  Directors  Option  shall be equal  to 100% of the Fair  Market  Value of a
         share  of  Common  Stock on the date of  grant  of such  Directors  Option.  An
         exercisable  Directors Option, or portion thereof, may be exercised in whole or
         in part only with respect to whole shares of Common  Stock.  Directors  Options
         shall be exercisable in accordance with Section 6.1(c).

(c)      Termination of Directorship.  If the holder of a Directors Option ceases to be
         a director of the  Company by reason of  Disability,  death,  or for any reason
         other than cause as determined in the sole  discretion of the  Committee,  each
         such option held by such holder shall be fully  exercisable  and may thereafter
         be exercised by such holder (or such holder's legal  representative  or similar
         person) until and including the expiration date of the term of such option.

9.6      Other Awards of Restricted  Stock to  Directors.  The  Committee,  with the
approval of the Board,  may award shares of Restricted  Stock for service as Chairman of
the Board (or for service in other  capacities to the Board).  The provisions of Section
9.4 shall govern any such award of  Restricted  Stock or such other  provisions as shall
be adopted by the Committee with the approval of the Board.

                                        ARTICLE X
                                  RIGHTS OF PARTICIPANTS

10.1     Service.  No  person  has  any  right  to  participate  in this  Plan.  Nothing
contained  in the Plan or in any award  granted  under the Plan  shall  confer  upon any
participant  any  right  with  respect  to the  continuation  of his  employment  by, or
consulting  relationship  with,  the Company,  or interfere in any way with the right of
the Company at any time to  terminate  such  services  or to  increase  or decrease  the
compensation of the  participant  from the rate in existence at the time of the grant of
an award. The Committee,  in its sole discretion,  shall determine whether an authorized
leave of absence,  or absence in military or  government  service,  shall  constitute  a
termination of service.

10.2     Nontransferability  of Awards.  Unless  otherwise  specified  in the  Agreement
relating to an award,  no award shall be  transferable  other than by will,  the laws of
descent and distribution or pursuant to beneficiary  designation  procedures approved by
the Company.  Except to the extent permitted by the foregoing  sentence or the Agreement
relating  to an award,  each  award may be  exercised  or settled  during  the  holder's
lifetime  only by the holder or the holder's  legal  representative  or similar  person.
Except to the  extent  permitted  by the  second  preceding  sentence  or the  Agreement
relating  to  an  award,  no  award  may  be  sold,  transferred,   assigned,   pledged,
hypothecated,  encumbered  or  otherwise  disposed of (whether  by  operation  of law or
otherwise) or be subject to execution,  attachment or similar process.  Upon any attempt
to so sell,  transfer,  assign,  pledge,  hypothecate,  encumber or otherwise dispose of
any such award, such award and all rights  thereunder shall immediately  become null and
void.  The holder of an Incentive  Stock Option may not  transfer  the  Incentive  Stock
Option during the holder's lifetime under any circumstances.

10.3     No Plan  Funding.  Obligations  to  participants  under  the  Plan  will not be
funded,  trusteed,  insured,  or secured in any manner.  The participants under the Plan
shall  have no  security  interest  in any  assets  of the  Company,  and  shall be only
general creditors of the Company.

10.4     Rights as  Stockholder.  No person shall have any right as a stockholder of the
Company  with  respect to any shares of Common  Stock or other  equity  security  of the
Company which is subject to an award  hereunder  unless and until such person  becomes a
stockholder of record with respect to such shares of Common Stock or equity security.

10.5     Designation of Beneficiary.  If permitted by the Company,  a holder of an award
may file  with the  Committee  a  written  designation  of one or more  persons  as such
holder's  beneficiary  or  beneficiaries  (both primary and  contingent) in the event of
the  holder's  death.  To  the  extent  an  outstanding   option  granted  hereunder  is
exercisable,  such  beneficiary  or  beneficiaries  shall be entitled  to exercise  such
option.  Each  beneficiary  designation  shall  become  effective  only  when  filed  in
writing with the  committee  during the holder's  lifetime on a form  prescribed  by the
Committee.   The  spouse  of  a  married  holder  domiciled  in  a  community   property
jurisdiction  shall join in any  designation  of a  beneficiary  other than such spouse.
The  filing  with the  Committee  of a new  beneficiary  designation  shall  cancel  all
previously  filed   beneficiary   designations.   If  a  holder  fails  to  designate  a
beneficiary,  or if all  designated  beneficiaries  of a holder  predecease  the holder,
then each outstanding  option hereunder held by such holder, to the extent  exercisable,
may be exercised by such  holder's  executor,  administrator,  legal  representative  or
similar person.

                                        ARTICLE XI
                                   GENERAL RESTRICTIONS

11.1     Investment  Representations.  The  Company  may  require  any person to whom an
award is  granted,  as a condition  of  exercising  or  receiving  such  award,  to give
written  assurances  in substance and form  satisfactory  to the Company and its counsel
to the effect that such  person is  acquiring  the Common  Stock for his own account for
investment and not with any present  intention of selling or otherwise  distributing the
same,  and to such other effects as the Company deems  necessary or appropriate in order
to comply with Federal and applicable  state securities  laws.  Legends  evidencing such
restrictions may be placed on the Stock certificates.

11.2     Compliance  with  Securities  Laws.  Each  award  made under this Plan shall be
subject  to the  requirement  that,  if at any  time  the  Company  determines  that the
listing,  registration,  or  qualification of the shares of Common Stock subject to such
award upon any  securities  exchange  or under any state or federal  law, or the consent
or approval of any  governmental or regulatory  body, is necessary as a condition of, or
in  connection  with,  the issuance or purchase of shares  thereunder,  such award grant
may not be  accepted  or  exercised  in  whole or in part and the  shares  shall  not be
delivered unless such listing, registration,  qualification,  consent, or approval shall
have been  effected or obtained  on  conditions  acceptable  to the  Committee.  Nothing
herein  shall be deemed to require the  Company to apply for or to obtain such  listing,
registration,  or qualification.  The Company may require that  certificates  evidencing
shares of Common  Stock  delivered  pursuant to any award made  hereunder  bear a legend
indicating  that the sale,  transfer,  or other  disposition  thereof  by the  holder is
prohibited  except in compliance  with the Securities  Act of 1933, as amended,  and the
rules and regulations thereunder.

11.3     Changes  in  Accounting  Rules.  Except as  provided  otherwise  at the time an
award is granted,  notwithstanding any other provision of the Plan to the contrary,  if,
during  the term of the Plan,  any  changes in the  financial  or tax  accounting  rules
applicable  to awards  shall occur which,  in the sole  judgment of the  Committee,  may
have a material adverse effect on the reported  earnings,  assets, or liabilities of the
Company,  the Committee shall have the right and power to modify as necessary,  any then
outstanding  and  unexercised   options,   outstanding   Stock  Awards,  or  outstanding
Performance  Share  Awards as to which the  applicable  services  or other  restrictions
have not been satisfied.

                                       ARTICLE XII
                                 OTHER EMPLOYEE BENEFITS

         The amount of any  compensation  deemed to be  received by a  participant  as a
result of the exercise of an option,  the sale of shares  received  upon such  exercise,
or the  vesting of any Stock  Award or  Performance  Share  Award  shall not  constitute
"earnings" or  "compensation"  with respect to which any other employee benefits of such
employee  are  determined,  including  without  limitation  benefits  under any pension,
profit sharing, 401(k), life insurance or salary continuation plan.



                                        ARTICLE XIII
                         PLAN AMENDMENT, MODIFICATION AND TERMINATION

         The Board may at any time terminate,  and from time to time may amend or modify
the Plan  provided,  however,  that no amendment or  modification  may become  effective
without  approval of the amendment or  modification  by the  shareholders if shareholder
approval  is  required  to  enable  the Plan to  satisfy  any  applicable  statutory  or
regulatory  requirements,  or if the Company, on the advice of counsel,  determines that
shareholder approval is otherwise necessary or desirable.

                                        ARTICLE XIV
                                        WITHHOLDING

14.1     Withholding  Requirement.  The Company's obligations to deliver shares
of Common  Stock upon the  exercise  of any option or the  vesting of any Stock Award or
Performance  Share  Award  shall be subject  to the  participant's  satisfaction  of all
applicable federal, state and local income and other tax withholding  requirements.  Any
cash  paid  to  a  participant  under  this  Plan,  including  dividend  equivalents  or
dividends paid on Restricted Stock prior to vesting, is subject to wage withholding.

14.2     Withholding  With Stock. At the time the Committee  grants an award or
at any time  thereafter,  it may,  in its sole  discretion,  grant  the  participant  an
election to pay all such amounts of tax  withholding,  or any part thereof,  by electing
(a) to have the Company  withhold  from shares  otherwise  issuable to the  participant,
shares of Common  Stock  having a value  equal to the amount  required to be withheld or
such lesser  amount as may be elected by the  participant;  provided  however,  that the
amount of Common Stock so withheld  shall not exceed the minimum  amount  required to be
withheld  under  the  method of  withholding  that  results  in the  smallest  amount of
withholding,  or (b) to transfer to the Company a number of shares of Common  Stock that
were acquired by the  participant  more than six (6) months prior to the transfer to the
Company  or such  other  period  that is  required  to avoid a charge  to the  Company's
earnings  for  financial  accounting  purposes and that have a value equal to the amount
required  to be withheld  or such  lesser  amount as may be elected by the  participant.
All elections  shall be subject to the approval or  disapproval  of the  Committee.  The
value of shares of Common  Stock to be withheld  shall be based on the Fair Market Value
of the  Common  Stock  on the  date  that  the  amount  of tax to be  withheld  is to be
determined  (the "Tax  Date").  Any such  elections  by  participants  to have shares of
Common Stock withheld for this purpose will be subject to the following restrictions:

(e)      All elections must be made prior to the Tax Date.

(f)      All elections shall be irrevocable.

(g)      If the  participant is an officer or director of the Company within the meaning
         of Section 16 of the Exchange Act ("Section 16"), the participant  must satisfy
         the  requirements of such Section 16 and any applicable  rules  thereunder with
         respect to the use of Common Stock to satisfy such tax withholding obligation.

                                        ARTICLE XV
                                    REQUIREMENTS OF LAW

15.1     Requirements  of Law.  The  issuance  of Common  Stock and the payment of
cash  pursuant  to  the  Plan  shall  be  subject  to all  applicable  laws,  rules  and
regulations.

15.2     Federal  Securities  Law  Requirements.  If a participant is an officer or
director of the  Company  within the meaning of Section  16,  awards  granted  hereunder
shall be subject to all  conditions  required  under Rule 16b-3,  or any successor  rule
promulgated  under the  Exchange  Act, to qualify the award for any  exception  from the
provisions  of Section  16(b) of the  Exchange  Act  available  under  that  Rule.  Such
conditions  shall be set forth in the agreement  with the  Participant  which  describes
the award or other document evidencing or accompanying the award.

15.3     Governing Law. The Plan, each award  hereunder and the related  Agreement,
and all  determinations  made and actions taken under this Agreement,  to the extent not
otherwise  governed  by the Code and the  federal  laws of the United  States,  shall be
construed in accordance  with and governed by the laws of the State of Colorado  without
giving effect to principles of conflicts of laws.

Dated: _________________, 2003

                                                     FRONTIER AIRLINES, INC.
                                                     a Colorado corporation


                                                     By:

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