Exhibit 4.1
SOUTHWEST AIRLINES CO.
2000 AIRCRAFT APPEARANCE TECHNICIANS
NON-QUALIFIED STOCK OPTION PLAN
SOUTHWEST AIRLINES CO., a Texas corporation (the "Company"), hereby
formulates and adopts the following 2000 Aircraft Appearance Technicians
Non-Qualified Stock Option Plan (the "Plan").
1. Purpose. This Plan is adopted pursuant to the Collective Bargaining
Agreement (the "Agreement") between the Company and the International
Brotherhood of Teamsters - Airline Division for Aircraft Appearance
Technicians of Southwest Airlines Co. (the "IBT") ratified on November 17,
2000.
2. Administration. This Plan shall be administered by an Administrative
Committee (the "Committee") consisting of not more than five (5) persons
designated from time to time by the Chief Executive Officer of the Company,
including as one of its members a representative of the IBT. Members of
the Committee may be removed or replaced at any time by the Chief Executive
Officer of the Company. The Administrative Committee shall select one of
its members as Chairman and shall adopt such rules and regulations as it
shall deem appropriate concerning the holding of its meetings, the
transaction of its business and the administration of this Plan. A majority
of the whole Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a quorum is
present shall be the act of the Committee; any decision or determination
reduced to writing and signed by a majority of the members of the
Administrative Committee shall be fully as effective as if made by a
majority vote at a meeting duly called and held.
3. Grant of Options; Persons Eligible.
(a) Persons Eligible. The Stock Option Committee of the Board of
Directors of the Company, or such other committee as may be appointed by
the Board, shall have the authority and responsibility, within the
limitations of this Plan, to grant options from time to time to persons
employed as Aircraft Appearance Technicians by the Company pursuant to the
Agreement and as set forth in the schedule attached as Exhibit A and made a
part hereof. Only persons who are employed as fulltime Aircraft Appearance
Technicians of SWA on the date of the grant may be granted options under
this Plan; under no circumstances shall executive officers of the Company be
eligible to receive options hereunder.
(b) Grant Price. Initial Grants (as defined in Exhibit A) shall be
granted at an exercise price of $29.72 per share; thereafter, Options shall
be granted at an exercise price equal to the fair market value of the Common
Stock of the Company on the date of the grant of the option plus five percent
(5%).
(c) Southwest Airlines Employees Becoming Aircraft Appearance
Technicians. Except as provided in subparagraph (e) below, Southwest
Airlines Employees who enter the Aircraft Appearance Technicians work force
without a break in company service and who are participants in another stock
option plan (an "existing plan") will either retain stock option grants
established in accordance with such existing plan (if permitted by such
existing plan), or will receive grants in accordance with this Plan,
whichever is chosen by the Employee involved, but the Employee shall not
hold grants under both plans simultaneously. The Employee must make the
election prior to the scheduled grant date for options under this Plan. If
the Employee does not make a timely election, options previously granted will
remain in effect, and no grant will be made under this Plan. Exercise of
options will be done in accordance with the Plan under which they were
awarded. At such time as the Employee no longer holds any vested or unvested
options under the other existing plan, the Employee will receive an initial
grant under this Plan on the next scheduled grant date. The total grant
shall be based on the Employee's years of service as of the grant date, and
shall be equal to the number of shares which have not vested prior to the
grant date for that step level, according to Exhibit A.
(d) Aircraft Appearance Technicians Transferring to Another Work Group.
Except as provided in subparagraph (e) below, if a Southwest Airlines
Aircraft Appearance Technician transfers to another work group, any unvested
portion of any option granted in accordance with this Plan, shall
automatically and without notice terminate and become null and void as of
the first day such Optionee is on the payroll for such position. Any vested
and unexercised portion of any such option shall remain exercisable under
this Plan.
(e) Employees Transferring between Groups Represented by the International
Brotherhood of Teamsters. Southwest Airlines Aircraft Appearance
Technicians who transfer between work groups represented by the
International Brotherhood of Teamsters and which are each covered by an
existing stock option plan will either retain stock option grants
established in accordance with their original plan or will receive grants
in accordance with the plan for their new group, whichever is chosen by the
Employee involved, but the Employee shall not hold grants under both plans
simultaneously; provided however, that if the Employee chooses to retain his
grants under his original plan, and the stock option plan for the group into
which he is moving would provide additional options (in the Total Grant) at
his entry, he may choose to retain his grants under his original plan, and,
in addition, receive a supplemental grant under the other plan in an amount
equal to the difference between those available under the other plan, and
the amount he has already received under his original plan. For example, an
Employee with two years of service at the Effective Date of the Agreement
receives options to purchase 4,700 shares of Southwest Airlines Co. Stock at
$25.00 (by way of example, only), and transfers to the Stock Clerk group on
February 15, 2001, would then be eligible under the Stock Clerk's plan for a
grant of 4,850 shares on August 16, 2001. If the fair market value of the
stock on August 16, 2001, is $30.00 per share, such Employee would choose to
retain his grant for 4,700 shares under this Plan, and receive a supplemental
grant under the Stock Clerk's Plan of 150 shares.
The Employee must make the election under this paragraph prior to the
next scheduled grant date for options under the stock option plan for the
group into which the Employee is moving. If the Employee does not make a
timely election, options previously granted under the Employee's original
plan will remain in effect and, if appropriate, an incremental grant will be
made under the other stock option plan.
4. Definitions. An Employee receiving any option under this Plan is
hereinafter referred to as an "Optionee." Any reference herein to the
employment of an Optionee with the Company shall include only employment
with the Company. The fair market value of the Common Stock on any day shall
be the mean between the highest and lowest quoted selling prices of the Common
Stock on such day as reported by the primary national stock exchange on which
such stock is listed. If no sale shall have been made on that day, or if the
Common Stock is not listed on a national exchange at that time, fair market
value will be determined on the most recent business day on which the stock
was traded, unless otherwise determined by the Committee.
5. Stock Subject to Options. Subject to the provisions of paragraph 12, the
number of shares of the Company's Common Stock subject at any one time to
options, plus the number of such shares then outstanding pursuant to
exercises of options, granted under this Plan, shall not exceed 1,500,000
shares. If, and to the extent the options granted under this Plan terminate
or expire without having been exercised, new options may be granted with
respect to the shares covered by such terminated or expired options; provided
that the granting and terms of such new options shall in all respects comply
with the provisions of this Plan.
Shares sold or distributed upon the exercise of any option granted
under this Plan may be shares of the Company's authorized and unissued
Common Stock, shares of the Company's issued Common Stock held in the
Company's treasury, or both.
There shall be reserved at all times for sale or distribution under
this Plan a number of shares of Common Stock (either authorized and unissued
shares or shares held in the Company's treasury, or both) equal to the
maximum number of shares which may be purchased or distributed upon the
exercise of options granted under this Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of shares of Common Stock which may thereafter be available, both
for purposes of this Plan and for sale to any one individual, by the number
of shares as to which the Option is exercised.
6. Expiration and Termination of the Plan. This Plan will expire on
February 16, 2009.
No modification, extension, renewal or other change in any option
granted under this Plan shall be made after the grant of such option unless
the same is consistent with the provisions of this Plan.
7. Exercisability and Duration of Options.
(a) Exercisability. Options granted under this Plan shall become
exercisable pursuant to the vesting schedule and requirements set forth
in Exhibit A attached hereto.
(b) Duration. The unexercised portion of any option granted under
this Plan shall automatically and without notice terminate and become null
and void at the time of the earliest to occur of the following:
(1) February 16, 2009;
(2) The expiration of three months from the date of termination
of the Optionee's employment with the Company (unless such termination was
as a result of the circumstances set forth in subparagraph (3) below);
provided that if the Optionee shall die during such 3-month period the
provisions of subparagraph (3) below shall apply; or
(3) The expiration of 12 months from the Optionee's death if
such death occurs during his employment with the Company.
In the case of subparagraphs (2) and (3) above, the Optionee shall
have the right to exercise any Option prior to such expiration to the extent
it was exercisable at the date of such termination of employment and shall
not have been exercised.
8. Exercise of Options.
(a) Procedure. The options granted herein shall be exercised by the
Optionee (or by the person who acquires such options by will or the laws of
descent and distribution or otherwise by reason of the death of the Optionee)
as to all or part of the shares covered by the option (but in no event less
than 100 shares, unless such exercise is for all remaining shares) by giving
written notice of the exercise thereof (the "Notice") to the Company. From
time to time the Committee may establish procedures relating to effecting
such exercises. No fractional shares shall be issued as a result of
exercising an Option.
(b) Payment. In the Notice, the Optionee shall elect whether he or
she is to pay for his or her shares in cash or in Common Stock of the
Company, or both. If payment is to be made in cash, the Optionee shall
deliver to the Company a cashier's check or electronic funds transfer in
the amount of the exercise price on or before the exercise date. If payment
is to be made in Common Stock, (a) it shall be valued at its fair market
value on the date of such notice, as determined pursuant to Paragraph 4
hereof; (b) such Common Stock must have been owned by the Optionee for at
least six months prior to the exercise date; and (c) the Notice shall be
accompanied by a certificate for at least the number of shares of Common
Stock to be used as payment.
(c) Irrevocable Election. The giving of such written notice to the
Company shall constitute an irrevocable election to purchase the number of
shares specified in the notice on the date specified in the notice.
(d) Withholding Taxes. To the extent that the exercise of any Option
granted pursuant to this Plan or the disposition of shares of Common Stock
acquired by exercise of an Option results in compensation income to the
Optionee for federal or state income tax purposes, the Optionee shall deliver
to the Company at the time of such exercise or disposition such amount of
money as the Company may require to meet its obligation under applicable tax
laws or regulations, and, if the Optionee fails to do so, the Company is
authorized to (a) withhold delivery of certificates upon exercise and (b)
withhold from remuneration then or thereafter payable to Optionee any tax
required to be withheld by reason of such resulting compensation income.
(e) Delivery of Shares. The Company shall cause shares to be delivered
to the Optionee (or the person exercising the Optionee's options in the event
of death) as soon as practicable after the exercise date.
9. Nontransferability of Options. No option granted under this Plan or any
right evidenced thereby shall be transferable by the Optionee other than by
will or the laws of descent and distribution. During the lifetime of an
Optionee, only the Optionee (or his or her guardian or legal representative)
may exercise his or her options.
In the event of the Optionee's death during his or her employment with
the Company, during the three-month period following the date of termination
of such employment, the Optionee's options shall thereafter be exercisable,
as provided in paragraph 7(b), by his or her executor or administrator, or by
the person who acquires such options by will or the laws of descent and
distribution or otherwise by reason of the death of the Optionee.
10. Rights of Optionee. Neither the Optionee nor his or her executors,
administrators, or legal representatives shall have any of the rights of a
shareholder of the Company with respect to the shares subject to an option
granted under this Plan until certificates for such shares shall have been
issued upon the exercise of such option.
11. Right to Terminate Employment. Nothing in this Plan or in any option
granted under this Plan shall confer upon any Optionee the right to continue
in the employment of the Company or affect the right of the Company or any
of its subsidiaries to terminate the Optionee's employment at any time;
subject, however, to the provisions of the Agreement.
12. Adjustment Upon Changes in Capitalization, Etc.
(a) The existence of the Plan and the options granted hereunder
shall not affect in any way the right or power of the Board of Directors or
the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Common Stock or
the rights thereof, the dissolution or liquidation of the Company or any
sale, lease, exchange or other disposition of all or any part of its assets
or business or any other corporate act or proceeding.
(b) The shares with respect to which options may be granted are shares
of Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a
stock dividend on Common Stock without receipt of consideration by the
Company, the number of shares of Common Stock with respect to which such
option may thereafter be exercised (i) in the event of an increase in the
number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the
event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be
proportionately increased; likewise, the number of shares to be granted
pursuant to the schedule set forth in Exhibit A shall be appropriately
adjusted. In the event of any such change in the outstanding Common Stock,
the aggregate number of shares available under the Plan shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be conclusive.
(c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an option theretofore granted
the Optionee shall be entitled to purchase under such option, in lieu of the
number of shares of Common Stock as to which such option shall then be
exercisable, the number and class of shares of stock and securities to which
the Optionee would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, the Optionee
had been the holder of record of the number of shares of Common Stock as to
which such option is then exercisable. If the Company shall not be the
surviving entity in any merger or consolidation (or survives only as a
subsidiary of an entity other than a previously wholly-owned subsidiary of
the Company) or if the Company is to be dissolved or liquidated, then unless
a surviving corporation assumes or substitutes new options for Options then
outstanding hereunder (i) the time at which such Options may be exercised
shall be accelerated and such Options shall become exercisable in full on or
before a date fixed by the Company prior to the effective date of such merger
or consolidation or such dissolution or liquidation, and (ii) upon such
effective date Options shall expire.
(d) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to options theretofore granted or to be
granted or the purchase price per share.
13. Purchase for Investment and Legality. The Optionee, by acceptance of
any option granted under this Plan, shall represent and warrant to the
Company that the purchase or receipt of shares of Common Stock upon the
exercise thereof shall be for investment and not with a view to distribution,
provided that such representation and warranty shall be inoperative if, in
the opinion of counsel to the Company, a proposed sale or distribution of
such shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933 or is, without such representation and
warranty, exempt from registration under such Act. The Company shall file a
Registration Statement on Form S-8 pursuant to the Securities Act of 1933, as
amended, covering the shares to be offered pursuant to the Plan and will use
its best efforts to maintain such registration at all times necessary to
permit holders of options to exercise them.
The obligation of the Company to issue shares upon the exercise of an
option shall also be subject as conditions precedent to compliance with
applicable provisions of the Securities Act of 1933, the Securities Exchange
Act of 1934, state securities laws, rules and regulations under any of the
foregoing and applicable requirements of any securities exchange upon which
the Company's securities shall be listed.
The Company may endorse an appropriate legend referring to the foregoing
restrictions upon the certificate or certificates representing any shares
issued or transferred o the Optionee upon the exercise of any option granted
under this Plan.
14. Effective Date of Plan. This Plan shall become effective on the latter
of the following to occur: (a) its adoption by the Board of Directors of the
Company and (b) ratification of the Agreement by the IBT membership.
EXHIBIT A
Initial Grants
On the Effective Date of the Agreement, options will be granted to
persons employed as Aircraft Appearance Technicians by the Company according
to the following schedule. Initial Grants are based on the Aircraft
Appearance Technician's years of service for pay purposes as of the
Effective Date of the Agreement. Options will vest annually on August 16 of
subsequent years.
STOCK OPTION VESTING SCHEDULE
Year of Service Effective Date August 16,
as of of Plan
Effective TOTAL (Date of 2001 2002 2003 2004 2005 2006 2007
Date of Plan GRANT Ratification)
1st 4,450 400 450 500 550 600 650 650 650
2nd 4,700 450 500 550 600 650 650 650 650
3rd 4,900 500 550 600 650 650 650 650 650
4th 5,050 550 600 650 650 650 650 650 650
5th 5,150 600 650 650 650 650 650 650 650
Thereafter 5,200 650 650 650 650 650 650 650 650
Subsequent Grants
On August 16 of each year, commencing August 16, 2001, through August
16, 2007, options will be granted to persons employed as Aircraft Appearance
Technicians by the Company who have completed probation during the previous
12 months (except those receiving an Initial Grant on November 17, 2000).
Options will vest annually on the anniversary of the Grant Date as follows:
Grant STOCK OPTION VESTING SCHEDULE
Date
8/16 8/16/01 8/16/02 8/16/03 8/16/04 8/16/05 8/16/06 8/16/07 TOTAL
GRANT
2001 400 450 500 550 600 650 650 3,800
2002 0 400 450 500 550 600 650 3,150
2003 0 0 400 450 500 550 600 2,500
2004 0 0 0 400 450 500 550 1,900
2005 0 0 0 0 400 450 500 1,350
2006 0 0 0 0 0 400 450 850
2007 0 0 0 0 0 0 400 400
Vesting Requirements
Options will vest on the applicable vesting date under the following
circumstances, and no other:
(a) For Optionees who are Employees of the Company on paid status and
on the Aircraft Appearance Technician seniority list as of the applicable
vesting date; and
(b) For Optionees who are Employees of the Company on unpaid status
and on the Aircraft Appearance Technician seniority list as of the applicable
vesting date (e.g., medical leave, military leave, union leave, maternity
leave etc.) who accrue hours of service during the calendar year prior to the
year in which the vesting date occurs sufficient to qualify for a
profitsharing contribution under the Company's Profitsharing Plan for such
calendar year. By way of example, if an Optionee is on unpaid medical leave
on August 16, 2001, but during calendar year 2000 accrues sufficient hours of
service to qualify for a profitsharing contribution for 2000, such Optionee's
options will vest on August 16, 2001, as if that Optionee had been on paid
status as of August 16, 2001.
Provided, however, that options may vest for former Aircraft Appearance
Technicians meeting the requirements set forth above (except the requirement
for being on the seniority list), plus those set forth in paragraph 3(e) of
the Plan.
2000 AAT NON-QUALIFIED STOCK OPTION PLAN