Long Term Incentive Stock Option Plan
This Long-Term Incentive – Stock Option Plan is governed by the provisions below and the applicable legislation.
The expressions below, when used here with upper case initials, either in the singular or plural forms, will have the following meanings, except where expressly determined otherwise:
“Shares or Stock” are the common shares issued by the Company resulting from the exercise of the Options, under the terms of this Plan;
“Restricted Stock” refers to common shares issued by the Company that will be transferred by the Company to the beneficiaries of Smiles’ Long-Term Incentive – Stock Option Plan;
“Affiliated Company” refers to any entity that directly or indirectly: (i) Controls the Company; (ii) is Controlled by the Company; (iii) is under common control of the Company of its Controlling Companies; or (iv) is associated to any of them, in accordance with Article 243, paragraph 1 of Law 6404 of December 15, 1976;
“Beneficiaries” refers to the Company’s CEO and other selected directors and employees who work at the Company and Affiliated companies, as applicable, in favor of whom the Company grants Options, pursuant to this Plan, as suggested by the Committee;
“Committee” refers to the Company’s People Management and Corporate Governance Committee;
“Company” refers to Smiles S.A.;
“Subsidiary” refers to any Company subsidiary;
“Parent Company” refers to Gol Linhas Aéreas S.A., the Company’s controlling company;
“Control” refers to the power of any individual or legal entity, or group of people bound by a voting agreement, or under common control that: (i) holds partner rights that permanently grant the majority of votes in the resolutions of the annual shareholders meeting and the power to elect the majority of the Company‘s administrators; and (ii) effectively uses its/his/her power to administer the Company‘s corporate activities and monitor the activities of its bodies;
“Board of Directors” refers to the Company’s board of directors;
“Option Grant Criteria” refers to the criteria for granting the Option determined by the Committee, dependent upon the previous decision as described in item 4 hereof;
“Director” refers to any Company director;
“Grant Date”, except if expressly defined otherwise herein or in the Adhesion Instrument, refers to the date when the Board of Directors determines the number of Options to be granted to the Beneficiaries;
“Termination” refers to the end of the legal relationship as an administrator or employee between the Beneficiary and the Company or between the Beneficiary and the Affiliated companies, due to any reason, including but not limited to resignation, removal, replacement or end of term of office in a administrator position without reelection, volunteer resignation, termination with or without cause;
“Gol” refers to Gol Linhas Aéreas Inteligentes S.A.;
“Options” refer to the Stock options granted by the Company to the Beneficiaries, under the terms of this Plan;
“Eligible Persons” refers to the individuals who can be selected and approved as Beneficiaries by the Committee, as long as they hold a position as CEO or Company director or other selected positions in the Company or other Affiliated company;
“Plan” refers to this Long-Term Incentive – Stock Option Plan;
“Exercise Price” refers to the price paid by the Beneficiary to the Company for the Stock acquired due to the exercise of his/her Options;
“Premium” refers to the right to receive Restricted Stock granted to the beneficiaries of the Long-Term Incentive – Stock Option Plan of Smiles S.A.;
“Company Reorganization” refers to the incorporation, merger, spin-off or reorganization of the Company, where the remaining company is no longer Smiles S.A., or the substantial sale of all Company assets, or the transfer of the Company’s control;
“Smiles” refers to Smiles S.A.; and
“Adhesion Instrument” refers to the private instrument entered into between the Company and the Beneficiary, through which the Beneficiary adheres to the terms and conditions hereof.
2. OBJECTIVES OF THE PLAN
The Plan has the objective to allow the Eligible Persons to acquire Stock to: (a) encourage the expansion, success and the continuation of the Company’s corporate objectives; (b) align the interests of the Company’s shareholders with those of the Eligible Persons; and (c) enable the Company or other Affiliated companies to attract and maintain the Eligible Persons bound thereto.
3. ADMINISTRATION OF THE PLAN
Administration. The Plan will be administered by the Committee, respecting the guidelines established by the Board of Directors.
Advisors. To guarantee the perfect execution of its duties, one or more Company employees or administrators may assist the Committee, as deemed necessary.
Powers and Limitations. Upon compliance with the general conditions of the Plan and the guidelines established by the Board of Directors, the Committee will have full powers to take all the necessary measures to administer the Plan, including, but not limited to:
(i) establishing and applying general rules concerning the granting of Options under the Plan, and addressing issues regarding the interpretation of the Plan;
(ii) electing the Beneficiaries and authorizing the grant of the Options in favor thereof, establishing all the conditions of the Options to be granted, as well as the changes to said conditions when necessary or convenient; and
(iii) transfering the Company’s shares held in treasury to which the Beneficiaries are entitled, if applicable.
The Committee’s and the Board of Directors’ resolutions regarding the administration of the Plan are final and binding to the Company. In the exercise of its competence, the Committee’s resolutions will be subject to ratification by the Board of Directors and to the limits established by law and applicable regulations. Omissions will be governed by the Board of Directors, which will submit them to the annual shareholders meeting when deemed necessary by said Board.
Issue of new common shares. The issue of new common shares by the Company, within the limit of the authorized capital, to meet the needs due to the exercise of the Beneficiary’s right to receive Shares under the scope of the Plan should be authorized by the Company’s Board of Directors.
Changes. The Company’s annual shareholders’ meeting has the exclusive right to modify this Plan as well as create new stock option-backed performance-based plans or incentives.
4. OPTION GRANT CRITERIA
Grant Date. The Options should be granted to the Beneficiaries on the date determined by the Committee or the Board of Directors.
Right. Each Option will entitle its Beneficiary to acquire one (1) Share, subject to the terms and conditions established in the respective Adhesion Instrument.
Option Grant Criteria. On an annual basis or whenever deemed convenient and upon approval by the Board of Directors, the Committee will establish the Option Grant Criteria for each category of Beneficiaries to meet the objectives of this Plan.
Unless resolved otherwise by the Committee or the Board of Directors, the Option Grant Criteria should establish the following, within the general criteria established in this Plan:
(i) the maximum number of Options to be granted to the Beneficiaries in each fiscal year;
(ii) the Beneficiaries in favor of whom the Options under the Plan will be granted;
(iii) the Exercise Price of the Options, based on item 6 below, and payment conditions;
(iv) any additional restrictions other than those established in this Plan to the shares subscribed through the exercise of the Options; and
(v) eventual penalties.
Interpretation of the Option Grant Criteria. In the event of a conflict between the Option Grant Criteria and the provisions of this Plan or any instrument or agreement entered into as a result of the Plan, the provisions in this Plan shall prevail.
Adhesion Instrument. In addition to the general terms and conditions established in this Plan and the Option Grant Criteria, the terms and conditions of the Options granted to each Beneficiary will be determined through the signature of Adhesion Instruments between the Company and the Beneficiaries.
Differentiated Treatment. The Adhesion Instruments will be signed individually with each Beneficiary. Upon approval by the Board of Directors, the Committee is entitled to treat Beneficiaries in similar situation differently, not being obliged by any rule of equality or analogy to extend to other Beneficiaries any condition, benefit or resolution it deems applicable only to certain Beneficiaries and/or group of Beneficiaries subject to individual circumstances. The Committee may also establish, for exceptional cases, a special treatment for the rights resulting from the Options, as long as the rights already granted to the Beneficiaries or the basic principles of the Plan are not affected. Such exceptional discipline will not be considered precedent for other Beneficiaries and is also subject to approval by the Board of Directors. The Committee may also include new Beneficiaries to the approved Plan in force, granting them the Options it deems appropriate, respecting the annual maximum number of Options established by the Committee and the other conditions provided for in this Plan.
Subordination of the Exercise of the Option. Upon approval by the Board of Directors, the Committee may subordinate the exercise of the Option to certain conditions, as well as impose restrictions to the transfer of Stock acquired through the exercise of the Options, and can also grant the Company buyback options and/or preemptive rights in the event of sale of these Shares by the Beneficiary.
Not bound to Remuneration. The Options granted under the Plan, as well as their exercise by the Beneficiaries, have no relationship and are not linked to their fixed or variable remuneration or eventual profit sharing.
5. EXERCISE OF THE OPTION
Vesting. Without prejudice to the other terms and conditions established in the respective Adhesion Instruments, the Options will become exercisable from the Grant Date to the dates specified below, as follows:
(i) one third (1/3) of the Options may be exercised after the 1st anniversary of the Grant Date;
(ii) one third (1/3) of the Options may be exercised after the 2nd anniversary of the Grant Date; and
(iii) one third (1/3) of the Options may be exercised after the 3rd anniversary of the Grant Date.
The exercise of all Options granted will only be allowed after a period of at least 3 (three) years as of the Grant Date.
Communication between the Company and the Beneficiary. The Beneficiary who wishes to exercise his/her Option must notify the Company of the intention to do so through a letter addressed to the Company’s Human Resources Department, specifying the amount of Options he/she wishes to exercise.
Extinction of the Options. The Options that are not exercised under the established terms and conditions will be considered automatically extinguished, without the right to compensation and subject to the Options’ maximum exercise period.
Suspension of the Options. The Board of Directors may determine the suspension of the right to exercise the Options whenever, pursuant to the applicable law or regulations, there is a restriction or impossibility of Stock trading by the Beneficiaries.
6. EXERCISE PRICE
Exercise Price. The Exercise Price of the Options to be granted in the year will be calculated based on the average weighted price of the shares of the same type in the 60 (sixty) trading sessions prior to the Grant Date. In case of options related to the Company’s IPO, use the price registered in the initial public offering.
Payment Method. The Exercise Price will be paid by the holders of the Options in cash or, exceptionally, in accordance with other conditions established by the Committee, always respecting the minimum sale amount provided by law in the case of a new share issue.
7. SHARES INCLUDED IN THE PLAN
Number of Shares Included in the Plan. The Options granted under the Plan, added to Premiums granted under the Long-Term Incentive – Restricted Stock Plan of Smiles S.A. approved by the Company’s extraordinary shareholders’ meeting on the same date that this Plan was approved, may grant rights over a volume of shares that may not, at any time, exceed 5% (five percent) of the shares issued by the Company. If the Options granted are not exercised, the corresponding shares will not return to the amount of shares included in the Plan.
Type of Shares Included in the Plan. The Plan will grant the right to acquire common shares issued by the Company.
Mandatory Adjustments. If the number of Shares increases or decreases as a result of bonuses, splits, reverse splits and other capital remunerations (except in the case of payment of dividends), the Committee should make the appropriate adjustments to the number of shares and the Exercise Price based on the Options granted, either exercised or not, in order to avoid distortions in the implementation of this Plan.
Optional Adjustments. Whenever deemed necessary or advisable due to transactions with effects similar to those that generate mandatory adjustments, as defined in the paragraph above, the Committee may, at its discretion, adjust the number of shares and the Exercise Price of the shares issued as a result of the Options that were exercised and those granted but not exercised.
Fraction of Shares. There will be no share fractions granted as Options, sold or issued under the Plan or any mandatory or optional adjustments, as detailed above.
8. DELIVERY OF THE SHARES AND RESTRICTIONS TO TRANSFER
Option Transfer. The Options granted under this Plan are personal and non-transferable, and Beneficiaries are not entitled, under any circumstances, to assign, transfer or otherwise sell, to any third party, the Options, or rights or obligations arising therefrom.
Delivery of the Shares. No Share will be delivered to the holder as a result of the exercise of the Options unless all legal requirements and regulations of this Plan have been fully complied with.
Transfer of Shares Acquired due to the Exercise of the Options. The Committee may establish restrictions on the transfer of Shares, as well as establish preemptive rights, the price and conditions for share buyback, including those shares that are acquired due to bonuses, split, subscription, or any other type of acquisition, provided that said rights granted to the shareholder have originated from the Plan.
Dismissal without Cause. In the event of Dismissal of the Beneficiaries by the Company, for any reason, except with due cause, all Options granted and not exercised will be automatically extinguished, regardless of prior notice or indemnity. Nevertheless, the Beneficiary will have the right to exercise the Options that were already exercisable on the Dismissal date, within a non-extendable period of 90 (ninety) days as from the Dismissal date and upon payment on demand.
Dismissal with Justification or Resignation. In the event of justifiable Dismissal of the Beneficiary or due to his/her resignation, all Options granted and not exercised will be automatically extinguished, regardless of prior notice or indemnity. Nevertheless, the Beneficiary will have the right to exercise the Options that were already exercisable on the Dismissal date upon payment on demand.
10. DEATH, PERMANENT DISABILITY OR RETIREMENT OF THE BENEFICIARY
Death. In the event of death of an Option holder, all not yet exercisable Options become immediately exercisable. The Options will be transferred to the Option holder’s heirs or successors, by legal succession or will. The Options may be exercised in whole or in part by the heirs and/or successors of the Option holder, with the Exercise Price payable on demand within 90 (ninety) days as of the Beneficiary’s death.
Permanent Disability. In the event of permanent disability of a Beneficiary, all not yet exercisable Options will become immediately exercisable, regardless of prior notice or indemnity. The exercisable Options must be exercised within a period of 90 (ninety) days as of the notice of Termination due to disability, upon payment on demand of the Exercise Price.
Retirement. In the event of the retirement of a Beneficiary and the consequent Termination from the Company, all not yet exercisable Options will become immediately exercisable, regardless of prior notice or indemnity. The exercisable Options must be exercised within a period of 90 (ninety) days as of the notice of Termination due to retirement, upon payment on demand of the Exercise Price.
11. APPLICABLE REGULATIONS
Applicable Regulations. This Plan, the Options granted hereunder and the acquisition of Shares due to the Options should comply with: (i) the applicable regulations of the Brazilian Securities and Exchange Commission, and (ii) eventual restrictions that may be imposed by the Share Trading Policy of Smiles S.A.
Shareholders’ Preemptive Right. In accordance with the Article 171, paragraph 3 of Law nº 6404/76 and its amendments, the shareholders will have no preemptive rights in the acquisition of Shares from the exercise of Options.
12. EFFECTIVE DATE AND END OF THE PLAN
Effectiveness Period. The plan will come into force and effect upon approval by the Company’s annual shareholders’ meeting and will remain in force for a period of 10 (ten) years from the Grant Date, and may, however, be terminated at any time by decision of the Company’s annual shareholders’ meeting or due to the following events: reorganization, dissolution or winding-up of the Company or by the delisting as a publicly-held company.
Termination due to the End of the Effectiveness Period. The end of the Plan’s effectiveness period due to the expiry of the established term will not affect the validity of the Options previously granted and still in force, or the prevalence of the Plan’s restrictions regarding the negotiability of the Shares and/or preemptive rights.
Termination due to Shareholders’ Resolution. The effectiveness period of the Plan terminated under a resolution of the Company shareholders will not affect the validity of the Options previously granted and still in force, or the prevalence of the Plan’s restrictions regarding the negotiability of the Shares and/or preemptive rights.
Termination due to the Company’s Reorganization. In the event of the Company‘s Reorganization, the Plan will be terminated and previously granted Options can be fully exercised. If the deliberative documents of the Company’s reorganization have established in writing, in connection with said transaction, that the Plan should remain in effect and the Options hitherto granted should be assumed with the replacement of said Options by new Options, the successor company or its affiliated company or companies under its control will make the necessary adjustments to the number, type and price of the shares and, in this case, the Plan will continue in its envisaged format.
Termination due to Dissolution, Winding-up or Delisting as a Publicly Held Company. In the case of delisting as a publicly held company, dissolution or winding-up of the Company, the Plan and all the Options thereunder will be immediately exercisable, and any remaining options will be automatically extinguished.
13. GENERAL PROVISIONS
Change in the Eligibility Category. If a Beneficiary has changed from one eligibility category to another before a determined Grant Date, he/she will qualify for the grant under the Option Grant Criteria applicable to the category to which he/she belonged for more than 6 (six) months prior to said date. However, if a Beneficiary has changed from one eligible category to a non-eligible category and, therefore, he/she is in a non-eligible category on the Grant Date, he/she will not qualify for the grant.
Maintenance of Employment or Position. No provision in the Plan will guarantee that Beneficiaries will remain as an administrator of the Company or companies under its control or will interfere in any way with the right of the Company or companies under its control, subject to legal and employment conditions, to terminate the relationship with the Beneficiaries at any time. No provision of the Plan will grant the Beneficiaries rights regarding their remaining in office until the end of their term as CEO, director or administrator, or interfere in any way with the right of the Company or companies under its control to remove them, nor will it ensure the right to their re-election to the position.
Shareholder’s Rights. No Beneficiary will have any rights or privileges as a Company shareholder until their Options are dully exercised and the respective shares are acquired or subscribed, in accordance with the Plan and the respective Adhesion Instrument.
Legal Changes. Any significant legal change regarding regulations of corporations, listed companies, labor law and/or the tax effects of a stock option plan will lead to the full review of the Plan.