Exhibit 4.1
SOUTHWEST AIRLINES CO.
2000 FLIGHT SIMULATOR TECHNICIANS
NON-QUALIFIED STOCK OPTION PLAN
SOUTHWEST AIRLINES CO., a Texas corporation (the "Company"), hereby
formulates and adopts the following 2000 Flight Simulator 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 Flight
Simulator Technicians of Southwest Airlines Co. (the "IBT") ratified on
December 14, 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 Flight Simulator 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 Flight Simulator
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 $29.795 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 Flight Simulator
Technicians. Except as provided in subparagraph (e) below, Southwest
Airlines Employees who enter the Flight Simulator 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 other 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) Flight Simulator Technicians Transferring to Another Work
Group. Except as provided in subparagraph (e) below, if a Southwest
Airlines Flight Simulator 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 Flight
Simulator 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.
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 200,000
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 November 1, 2008.
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) November 1, 2008;
(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 or 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 to 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 Flight Simulator Technicians by the Company according
to the following schedule. Initial Grants are based on the Flight
Simulator Technician's years of service for pay purposes as of the
Effective Date of the Agreement. Options will vest annually on November 1
of subsequent years.
STOCK OPTION VESTING SCHEDULE
Year of Effective
Service Date of Plan November 1,
as of TOTAL Date of 2001 2002 2003 2004 2005 2006 2007
Effective GRANT Ratification
Date of Plan
1st and 2nd 4,650 450 450 500 550 600 650 700 750
3rd 5,000 450 500 550 600 650 700 750 800
4th 5,400 500 550 600 650 700 750 800 850
5th 5,800 550 600 650 700 750 800 850 900
6th 6,150 600 650 700 750 800 850 900 900
7th 6,450 650 700 750 800 850 900 900 900
8th 6,700 700 750 800 850 900 900 900 900
9th 6,900 750 800 850 900 900 900 900 900
10th 7,050 800 850 900 900 900 900 900 900
11th 7,150 850 900 900 900 900 900 900 900
12 &Thereafter 7,200 900 900 900 900 900 900 900 900
Subsequent Grants
On November 1 of each year, commencing November 1, 2001, through
November 1, 2007, options will be granted to persons employed as Flight
Simulator Technicians by the Company who have completed probation during
the previous 12 months (excluding those who received an Initial Grant on
December 14, 2000). Options will vest annually on the anniversary of the
Grant Date as follows:
Grant STOCK OPTION VESTING SCHEDULE
Date
11/1 11/1/01 11/1/02 11/1/03 11/1/04 11/1/05 11/1/06 11/1/07 TOTAL
GRANT
2001 450 500 550 600 650 700 750 4,200
2002 0 450 500 550 600 650 700 3,450
2003 0 0 450 500 550 600 650 2,750
2004 0 0 0 450 500 550 600 2,100
2005 0 0 0 0 450 500 550 1,500
2006 0 0 0 0 0 450 500 950
2007 0 0 0 0 0 0 450 450
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 Flight Simulator 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 Flight Simulator 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 November 1, 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
November 1, 2001, as if that Optionee had been on paid status as of November 1,
2001.
Provided, however, that options may vest for former Flight Simulator
Technicians meeting the requirements set forth above (except for the
requirement of being on the seniority list), plus those set forth in
paragraph 3(e) of the Plan.
2000 FLIGHT SIMULATOR TECHNICIANS NON-QUALIFIED STOCK OPTION PLAN