Registration of Securities to be Offered to Employees Pursuant to an Employee Benefit Plan — Form S-8
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-8 Registration of Securities to be Offered to 7 35K
Employees Pursuant to an Employee
Benefit Plan
2: EX-4.1 2002 Swapia Non-Qualified Stock Option Plan 10 36K
3: EX-4.2 2002 Mechanics Non-Qualified Stock Option Plan 9 39K
4: EX-5 Opinion/Consent of Deborah Ackerman 1 8K
5: EX-23.1 Consent of Ernst & Young LLP 1 6K
EX-4.1 — 2002 Swapia Non-Qualified Stock Option Plan
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EXHIBIT 4.1
SOUTHWEST AIRLINES CO.
2002 SWAPIA NON-QUALIFIED STOCK OPTION PLAN
SOUTHWEST AIRLINES CO., a Texas corporation (the "Company"), hereby
formulates and adopts the following 2002 SWAPIA Non-Qualified Stock Option Plan.
1. PURPOSE. This Plan is adopted pursuant to Amendment No. 1 to the
Collective Bargaining Agreement (the "Agreement") between the Company and the
Southwest Airlines Professional Instructors Association ("SWAPIA").
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 the President of SWAPIA or his or her designee.
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. 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 fulltime flight crew training instructors (including flight crew training
instructors in management positions retaining seniority numbers) by the Company
pursuant to the Agreement and as set forth in the schedule attached as Exhibit A
and made a part hereof. Initial Grants (as defined in Exhibit A) shall be
granted at an exercise price of equal to the fair market value of the Common
Stock of the Company on the date of grant; 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
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the grant of the option plus five percent (5%). Only persons who are employed as
fulltime flight crew training instructors 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.
Southwest Airlines employees who enter the instructor work force
without a break in company service and who are participants in another
collectively bargained stock option plan (an "existing plan") will either retain
stock option grants established in accordance with such existing plan, or will
receive grants in accordance with this Plan, whichever is chosen by the employee
involved, if such a choice is allowed by the other plan, 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 step
level 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.
Southwest Airlines flight crew training instructors who transfer to
another collective bargaining work group covered by an existing stock option
plan will either retain stock option grants established in accordance with this
plan, or will receive grants in accordance with such other existing 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 next scheduled grant date for options under the other stock option
plan. If the employee does not make a timely election, options previously
granted under this Plan will remain in effect and no grant will be made under
the other stock option plan. At such time as the employee no longer holds any
vested or unvested options under this plan, the employee will receive an initial
grant under the other plan on the next scheduled grant date. Unless prohibited
under the other plan, the total grant shall be based on the employee's step
level 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.
4. DEFINITIONS. An employee receiving any option under this Plan is
hereinafter referred to as an "Optionee." Any
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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 250,000 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
December 31, 2012, except as to any options then outstanding under this Plan,
which shall remain in effect until they have been exercised or expired.
No modification, extension, renewal or other change in any option
granted under this Plan shall be made after the grant of
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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) the later of ten years from the date of grant of the
option or December 31, 2012;
(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 subparagraphs (3)
or (4) below); provided that if the Optionee shall die during such 3-month
period the provisions of subparagraph (3) below shall apply;
(3) The expiration of 12 months following the issuance of
letters testamentary or letters of administration to the executor or
administrator of a deceased Optionee, or admitting testator's will into probate,
if the Optionee's death occurs either during his employment with the Company,
during the three-month period following the date of termination of such
employment, or during the 24-month period following retirement at age 65; or
(4) The expiration of 24 months following the retirement of
the Optionee at or after age 65; provided that if the Optionee shall die during
such 24-month period, the provisions of subparagraph (3) above shall apply.
In the case of subparagraphs (2), (3) and (4) 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 option granted herein shall be exercised by the
Optionee (or by the person who acquires such
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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
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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, or during the 24-month period following retirement at age 65,
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
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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.
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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 August
19, 2002, subject to its adoption by the Board of Directors of the Company.
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EXHIBIT A
INITIAL GRANTS
On the Effective Date of the Plan, options to purchase 2,400 shares of
Common Stock of Southwest Airlines Co. will be granted to all current Flight
Instructors, at an exercise price equal to the Fair Market Value of the stock as
of the Effective Date, vesting as follows:
[Enlarge/Download Table]
STOCK OPTION VESTING SCHEDULE
-------------------------------------------------------------------------------------------------------------
JANUARY 1,
Step Level As Of ----------------------------------------------
Effective Date of Plan TOTAL GRANT 2009 2010 2011 2012
--------------------------- ----------- ---- ---- ---- ----
All Steps 2,400 600 600 600 600
SUBSEQUENT GRANTS
For all subsequently hired Flight Instructors, a grant will be made on
the January 1 following their date of hire, at an exercise price 5% above fair
market value, in the following amounts:
[Enlarge/Download Table]
STOCK OPTION VESTING SCHEDULE
Grant --------------------------------------------------------------------------------------
Date JANUARY 1,
------ --------------------------------------------------------------------------------------
JAN. 1 2009 2010 2011 2012 TOTAL GRANT
------ ---- ---- ---- ---- -----------
2003 600 600 600 600 2,400
2004 600 600 600 600 2,400
2005 600 600 600 600 2,400
2006 600 600 600 600 2,400
2007 600 600 600 600 2,400
2008 600 600 600 600 2,400
2009 600 600 600 600 2,400
2010 0 600 600 600 1,800
2011 0 0 600 600 1,200
2012 0 0 0 600 600
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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
as of the applicable vesting date; and
(b) For Optionees who are employees of the Company on unpaid
status as of the applicable vesting date (e.g., medical leave,
military 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 January 1, 2000, but during
calendar year 1999 accrues sufficient hours of service to
qualify for a profitsharing contribution for 1999, such
Optionee's options will vest on January 1, 2000, as if that
Optionee had been on paid status as of January 1, 2000.
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Dates Referenced Herein and Documents Incorporated by Reference
2 Subsequent Filings that Reference this Filing
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