1996 STOCK INCENTIVE PLAN
OF
US AIRWAYS GROUP, INC.
(as amended and restated as of May 23, 2000)
1. PURPOSE. The purpose of this Stock Incentive
Plan is to advance the interests of the Corporation by
encouraging the acquisition of a larger personal proprietary
interest in the Corporation by key employees of the Corporation
and of its Subsidiaries upon whose judgment and dedication the
Corporation is largely dependent for the successful conduct of
its business. It is anticipated that the acquisition of such
proprietary interest in the Corporation will stimulate the
efforts of such key employees on behalf of the Corporation and
strengthen their desire to remain with the Corporation or its
Subsidiaries and that the opportunity to acquire such a
proprietary interest will enable the Corporation and its
Subsidiaries to attract and retain desirable personnel.
2. DEFINITIONS. When used in this Plan, unless the
context otherwise requires:
(a) "Affiliate" shall mean a person or entity that
directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is
under common control with, the Corporation.
(b) "Board" shall mean the Board of Directors of the
Corporation.
(c) "Cause" shall mean an act or acts of personal
dishonesty taken by optionee and intended to result in
substantial personal enrichment at the expense of the
Corporation or any of its Subsidiaries or the
conviction of optionee of a felony.
(d) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or
group (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 20% or more of either (A) the then
outstanding shares of common stock of the Corporation
(the "Outstanding Group Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Corporation entitled to vote
generally in the election of directors (the
"Outstanding Group Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change of Control: (w) any acquisition
directly from the Corporation, (x) any acquisition by
the Corporation or any of its Subsidiaries, (y) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or
any of its Subsidiaries, or (z) any acquisition by any
corporation with respect to which, following such
acquisition, more than 85% of, respectively, the then
outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding Group Common Stock and Outstanding Group
Voting Securities immediately prior to such
acquisition, in substantially the same proportions as
their ownership, immediately prior to such acquisition,
of the Outstanding Group Common Stock and Outstanding
Group Voting Securities, as the case may be; or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose
election, or nomination for election by the
Corporation's shareholders, was approved by a vote of
at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of
either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents; or
(iii) Consummation of a reorganization, merger or
consolidation, in each case, with respect to which all
or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Group Common Stock and Outstanding Group
Voting Securities immediately prior to such
reorganization, merger or consolidation do not
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 85%
of, respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, as the case may
be, of the corporation resulting from such
reorganization, merger or consolidation in
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substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation of the Outstanding Group Common Stock and
Outstanding Group Voting Securities, as the case may
be; or
(iv) Approval by the shareholders of the
Corporation of (x) a complete liquidation or
dissolution of the Corporation or (y) the sale or other
disposition of all or substantially all of the assets
of the Corporation, other than to a corporation, with
respect to which following such sale or other
disposition, more than 85% of, respectively, the then
outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding Group Common Stock and Outstanding Group
Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion
as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Group Common
Stock and Outstanding Group Voting Securities, as the
case may be; or
(v) The acquisition by an individual, entity or
group of beneficial ownership of 20% or more of the
then outstanding securities of the Corporation,
including both voting and non-voting securities,
provided, however, that such acquisition shall only
constitute a change of control in the event that such
individual, entity or group also obtains the power to
elect by class vote, cumulative voting or otherwise to
appoint 20% or more of the total number of directors to
the Board.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Committee" shall mean the Human Resources Committee of
the Board or such other committee as may be designated
by the Board.
(g) "Corporation" shall mean US Airways Group, Inc.
(h) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations
promulgated thereunder.
(i) "Fair Market Value" shall mean the average of the high
and low sales
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prices of the Shares as reported on the New York Stock
Exchange Composite Tape on the date as of which such
value is being determined or, if there shall be no sale
on that date, then on the last previous day on which a
sale was reported, provided, however, that during the
60-day period from and after a Change of Control, "Fair
Market Value" shall mean the higher of (X) the highest
reported sales price, regular way, of Shares on the New
York Stock Exchange Composite Tape during the 60-day
period prior to the Change of Control and (Y) if the
Change of Control is the result of a transaction or
series of transactions described in paragraphs (i),
(iii) or (iv) of the definition of "Change of Control"
herein, the highest price for Shares paid in such
transaction or series of transactions which in the case
of such paragraph (i) shall be the highest price for
Shares as reflected in a Schedule 13D filed under the
Exchange Act by the person having made the acquisition.
(j) "Options" shall mean the stock options issued pursuant
to Section 5 hereof.
(k) "Plan" shall mean the 1996 Stock Incentive Plan of US
Airways Group, Inc., as such Plan may be amended from
time to time.
(l) "Restricted Period" means the period selected by the
Committee pursuant to Section 6 hereof.
(m) "Restricted Stock" means Shares which have been awarded
to a grantee subject to the restrictions referred to in
Section 6 hereof so long as such restrictions are in
effect.
(n) "Share" shall mean a share of common stock of the
Corporation.
(o) "Subsidiary" shall mean any corporation more than 50%
of whose stock having general voting power is owned by
the Corporation or by a Subsidiary of the Corporation.
3. ADMINISTRATION. The Plan shall be administered
by the Committee which, unless otherwise determined by the Board,
shall consist of not less than two directors of the Corporation,
each of whom shall qualify as a "disinterested director" (within
the meaning of Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act) and as an "outside director" (within the meaning of
Section 162(m)(4)(c) of the Code). No more than 8,100,000
Shares, which may be either treasury Shares or
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authorized but unissued Shares, of the Corporation's common stock
in the aggregate, except to the extent of adjustments authorized
by Section 11 hereof, may be issued pursuant to Options and
Restricted Stock awards granted under this Plan. Any Shares
subject to Options or Restricted Stock awards may thereafter be
subject to new grants under this Plan if there is a lapse,
expiration or termination of any such Options or Restricted Stock
awards prior to issuance of the Shares or if Shares are issued
hereunder and thereafter reacquired by the Corporation pursuant
to rights reserved by the Corporation in connection with the
issuance thereof. No individual may be granted Options or
Restricted Stock awards with respect to more than an aggregate of
1,650,000 Shares in any one calendar year.
The Committee may authorize and establish such rules,
regulations and revisions thereof not inconsistent with the
provisions of the Plan, as it may determine advisable to make the
Plan, Options, and Restricted Stock effective or provide for
their administration, and may take such other action with regard
to the Plan, Options, and Restricted Stock as it shall deem
desirable to effectuate their purpose. The Committee may require
that any Options granted be exercisable in installments. A
determination of the Committee as to any questions which may
arise with respect to the interpretation of the provisions of the
Plan, Options and Restricted Stock shall be final.
This Plan shall constitute an amendment and restatement
of the Corporation's 1988 Stock Incentive Plan with respect to
the Shares reserved thereunder for which awards had not yet been
granted thereunder as of the date of adoption of this Plan by the
Board (or which again become available upon the lapse, expiration
or termination of any award previously made thereunder). Options
and other awards with respect to such Shares may be granted
hereunder by the Committee in accordance with the terms of this
Plan.
4. PARTICIPANTS. Options and Restricted Stock may
be granted under the Plan to any key employee of the Corporation
or any Subsidiary or to any individual in contemplation of
becoming a key employee of the Corporation or any Subsidiary.
The individuals to whom Options and Restricted Stock are to be
offered under the Plan and the number of Shares to be optioned
and Restricted Stock to be issued to each such individual shall
be determined by the Committee in its sole discretion, subject,
however, to the terms and conditions of the Plan.
5. OPTIONS. The number of Shares to be optioned to
any eligible person shall be determined by the Committee in its
sole discretion. The Committee shall be entitled to issue
Options at different times to the same person. Options shall be
subject to such terms and conditions and evidenced by agreements
in such form as shall be
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determined from time to time by the Chief Executive Officer,
provided that the terms and conditions of each such agreement are
not inconsistent with this Plan.
The purchase price per Share for the Shares to be
purchased pursuant to the exercise of any Option shall be fixed
by the Committee, but shall not be less than 100% of the Fair
Market Value of the Shares on the date such Option is granted;
provided, however, for purposes of any grant of Options by the
Committee the meaning of Fair Market Value shall be as defined in
Section 2(i) hereof without regard to the proviso in such
definition. No Option granted under the Plan shall be
exercisable after ten years and one month from the date it was
granted or such earlier date as shall be established by the
Committee in granting the Option.
Except as otherwise provided herein, an Option shall be
exercisable by the holder at such rate and times as may be fixed
by the Committee, but not sooner than approval of the Plan by the
stockholders of the Corporation; provided, however, upon a Change
of Control, all Options shall become immediately exercisable.
The Committee may provide that the Option shall not be
exercisable, in whole or in part, except upon the fulfillment of
specific defined conditions. No Option may at any time be
exercised in part with respect to fewer than 100 Shares unless
fewer than 100 Shares remain in the Option grant being exercised.
Options shall be exercised by written notice to the
Secretary of the Corporation (or the Secretary's designated
agent) in such form as is from time to time prescribed by the
Committee and by the payment in full of the aggregate exercise
price of the Options being exercised. Payment of the purchase
price upon exercise of any Option shall be made (A) in cash or
(B) in whole or in part, (i) in Shares valued at Fair Market
Value on the date of exercise or (ii) with respect to the
exercise of Options which are not incentive stock options, as
defined in Section 422 of the Code, by electing to have the
Corporation withhold a number of shares of common stock otherwise
receivable upon exercise, the value of such withheld shares
determined by the Fair Market Value on the date of exercise;
provided, however, that during the 60-day period from and after a
Change of Control all optionees with respect to any or all of
their respective Options shall, unless the Committee shall
determine otherwise at the time of grant, have the right, in lieu
of the payment of the full option price of the Shares being
purchased under the Options and by giving written notice to the
Corporation in form satisfactory to the Committee, to elect
(within such 60-day period) to surrender all or part of the
Options to the Corporation and to receive in cash an amount equal
to the amount by which the Fair Market Value of Shares on the
date of exercise exceeds the option price per Share under the
Options multiplied by the number of Shares granted under the
Options as to which the right granted by this proviso shall have
been exercised. Such written notice shall specify
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the optionee's election to purchase Shares granted under the
Options or to receive the cash payment referred to in the proviso
to the immediately preceding sentence.
6. RESTRICTED STOCK. Subject to the terms of the
Plan, the Committee shall determine and designate the recipients
of Restricted Stock awards, the dates on which such awards are to
be granted, the number of Shares subject to such awards, and the
restrictions applicable to such awards. Restricted Stock awards
shall be subject to such terms and conditions and evidenced by
agreements in such form as shall be determined from time to time
by the Chief Executive Officer, provided that the terms and
conditions of each such agreement are not inconsistent with this
Plan. Notwithstanding any provision of the Plan or of any
agreement evidencing the grant of Restricted Stock hereunder to
the contrary, all restrictions on shares of Restricted Stock
awarded prior to May 16, 2000 shall lapse upon the consummation
of any reorganization, merger or consolidation described in
Section 2(d)(iii), irrespective of the termination of the
Participant's employment as a result of such reorganization,
merger or consolidation.
7. NONTRANSFERABILITY OF OPTIONS AND RESTRICTED
STOCK. Options and Restricted Stock shall not be transferable by
the holder thereof otherwise than by will or the laws of descent
and distribution to the extent provided herein, and Options may
be exercised during the holder's lifetime only by the holder
thereof.
8. TAX WITHHOLDING. If as a result of: (a) the
exercise of any Options or the disposition of any Shares acquired
pursuant to such exercise, or (b) the lapse of any restrictions
on the disposition of Restricted Stock, the Corporation or
Subsidiary shall be required to withhold any amounts by reason of
any Federal, state or local tax rules or regulations, the
Corporation or Subsidiary shall be entitled to deduct and
withhold such amounts from any cash payments to be made to the
holder. In any event, the holder shall make available to the
Corporation or Subsidiary, promptly when required, sufficient
funds to meet the requirement for such withholding; and the
Committee shall be entitled to take and authorize such steps as
it may deem advisable in order to have such funds available to
the Corporation or Subsidiary when required. Notwithstanding the
foregoing, the holder shall have the right to satisfy such
withholding, in whole or in part, in Shares (including by having
the Corporation withhold Shares otherwise issuable in respect of
such Options or Restricted Stock) valued at Fair Market Value on
the date of exercise or lapse of restrictions, as applicable.
9. TAX LIABILITY. Subject to the Committee's
discretion, agreements between the Corporation and grantees in
connection with awards of Options or Restricted Stock may provide
for the payment by the Corporation of a supplemental
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cash payment to grantees promptly after the exercise of an
Option, or promptly after the date on which the shares of
Restricted Stock awarded are included in the gross income of the
grantee under the Code. Such supplemental cash payments, to the
extent determined by the Committee, shall provide for the payment
of such amounts as may be necessary to result in the grantee not
having any incremental tax liability as a result of such exercise
or inclusion in grantee's gross income. The determination of the
amount of any supplemental cash payments by the Committee shall
be conclusive.
10. TERMINATION OF EMPLOYMENT. Notwithstanding any
provision of the Plan to the contrary, (i) upon the termination
of employment of an Optionee with the Corporation and all
Subsidiaries other than for Cause, the optionee (or the
optionee's estate in the event of the optionee's death) shall
have the privilege of exercising any unexercised Options which
the optionee could have exercised at the time of such termination
of employment at any time until the end of six months following
such termination of employment and (ii) upon the termination of
employment of an optionee with the Corporation and all
Subsidiaries for Cause, all unexercised Options of such optionee
shall terminate ten days after such termination of employment.
The Committee may permit individual exceptions to the
requirements of this section by extending the period in which
Options may be exercised, provided, however, that no Options may
be extended past the earlier to occur of (i) their expiration
date or (ii) three years following termination of employment.
11. ADJUSTMENT OF OPTIONED SHARES. If prior to the
complete exercise of any Option there shall be declared and paid
a stock dividend upon the Shares of the Corporation or if the
Shares shall be split-up, converted, reclassified, or changed
into, or exchanged for, a different number or kind of securities
of the Corporation, the Option, to the extent that it has not
been exercised, shall entitle the holder upon the future exercise
of such Option to such number and kind of securities or other
property subject to the terms of the Option to which he would be
entitled had he actually owned the Shares subject to the
unexercised portion of the Option at the time of the occurrence
of such stock dividend, split-up, conversion, reclassification,
change or exchange; and the aggregate purchase price upon the
future exercise of the Option shall be the same as if originally
optioned Shares were being purchased thereunder. If any such
event should occur, the number of Shares with respect to which
Options remain to be issued, or with respect to which Options may
be reissued, shall be similarly adjusted.
In the event the outstanding Shares shall be changed
into or exchanged for any other class or series of capital stock
or cash, securities or other property pursuant to a
recapitalization, reclassification, merger, consolidation,
combination or similar
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transaction, then each Option shall thereafter become exercisable
for the number and/or kind of capital stock, and/or the amount of
cash, securities or other property so distributed, into which the
Shares subject to the Option would have been changed or exchanged
had the Option been exercised in full prior to such transaction,
provided that, if the kind or amount of capital stock or cash,
securities or other property received in such transaction is not
the same for each outstanding Share, then the kind or amount of
capital stock or cash, securities or other property for which the
Option shall thereafter become exercisable shall be the kind and
amount so receivable per Share by a plurality of the Shares, and
provided further that, if necessary, the provisions of the Option
shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to any shares of capital stock, cash,
securities or other property thereafter issuable or deliverable
upon exercise of the Option.
12. ISSUANCE OF SHARES AND COMPLIANCE WITH
SECURITIES ACT. The Corporation may postpone the issuance and
delivery of Shares upon any exercise of an Option, or upon any
lapsing of restriction on any shares of Restricted Stock until
(a) the admission of such Shares to listing on any stock exchange
on which Shares are then listed and (b) the completion of such
registration or other qualification of such Shares under any
state or Federal law, rule or regulation as the Corporation shall
determine to be necessary or advisable. Any person exercising an
Option and any grantee of Restricted Stock shall make such
representations and furnish such information as may, in the
opinion of counsel for the Corporation, be appropriate to permit
the Corporation, in light of the then existence or nonexistence
with respect to such Shares of an effective registration
statement under the Securities Act of 1933, as from time to time
amended, to issue the Shares in compliance with the provisions of
that or any comparable act.
13. AMENDMENT OF THE PLAN. The Committee may at
any time discontinue the Plan or the grant of any additional
Options or Restricted Stock under the Plan. Except as
hereinafter provided, the Committee may from time to time amend
the Plan and the terms and conditions of any Options or
Restricted Stock not theretofore issued, and the Committee, with
the consent of the affected holder of an Option or Restricted
Stock, may at any time withdraw or from time to time amend the
Plan and the terms and conditions of such Option or Restricted
Stock as have been theretofore granted.
14. EFFECTIVENESS AND TERM OF THE PLAN. The Plan
shall become effective and in full force and effect upon its
approval by the holders of a majority of the Shares present or
represented and entitled to vote at the 1996 annual meeting of
the stockholders of the Corporation and, unless sooner terminated
by the Committee pursuant to Section 13 hereof, the Plan shall
terminate on the date ten years
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after such approval. No Option or Restricted Stock may be
granted or awarded after termination of the Plan. Termination of
the Plan shall not affect the validity of any Option or
Restricted Stock outstanding on the date of such termination.
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