Profit Sharing Plan (2001)Full Document 

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                             SOUTHWEST AIRLINES CO.

                               PROFIT SHARING PLAN


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                             SOUTHWEST AIRLINES CO.
                              PROFIT SHARING PLAN

                               TABLE OF CONTENTS



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ARTICLE I PURPOSE.............................................................1

ARTICLE II DEFINITIONS AND CONSTRUCTION.......................................2
2.1 Definitions ..............................................................2
2.2 Construction .............................................................8

ARTICLE III ELIGIBILITY AND PARTICIPATION.....................................8
3.1 Eligibility Requirements..................................................8
3.2 Notification of Eligibility...............................................9
3.3 Reentry of Prior Members..................................................9

ARTICLE IV CONTRIBUTIONS.....................................................10
4.1 Company Contributions....................................................10

ARTICLE V ADJUSTMENT OF INDIVIDUAL ACCOUNTS..................................11
5.1 Individual Accounts......................................................11
5.2 Method of Adjustment.....................................................12

ARTICLE VI ALLOCATIONS.......................................................13
6.1 Company Contribution.....................................................13
6.2 Allocation of Forfeitures................................................13
6.3 Notification to Members..................................................14
6.4 Maximum Annual Addition to Account or Benefit............................14

ARTICLE VII RETIREMENT.......................................................16
7.1 Normal or Late Retirement................................................16
7.2 Benefit 16

ARTICLE VIII DEATH...........................................................16
8.1 Designation of Beneficiary...............................................16
8.2 Benefit .................................................................17
8.3 No Beneficiary ..........................................................17

ARTICLE IX DISABILITY........................................................18
9.1 Benefit .................................................................18

ARTICLE X TERMINATION OF EMPLOYMENT AND FORFEITURES..........................18
10.1 Eligibility and Benefits................................................18
10.2 Time of Payment.........................................................19



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10.3 Forfeitures ............................................................19
10.4 Forfeiture for Cause....................................................19

ARTICLE XI WITHDRAWALS.......................................................20
11.1 Withdrawals ............................................................20

ARTICLE XII INVESTMENT OF THE TRUST FUND.....................................21
12.1 [deleted] ..............................................................21
12.2 Member Direction of Investment..........................................21
12.3 Conversion of Investments...............................................22

ARTICLE XIII ADMINISTRATION..................................................23
13.1 Appointment of Committee................................................23
13.2 Committee Powers and Duties.............................................24
13.3 Duties and Powers of the Plan Administrator.............................25
13.4 Rules and Decisions.....................................................26
13.5 Committee Procedures....................................................26
13.6 Authorization of Benefit Payments.......................................26
13.7 Payment of Expenses.....................................................26
13.8 Indemnification of Members of the Committee.............................27

ARTICLE XIV NOTICES..........................................................27
14.1 Notice to Trustee.......................................................27
14.2 Subsequent Notices......................................................27
14.3 Reliance upon Notice....................................................27

ARTICLE XV BENEFIT PAYMENTS..................................................28
15.1 Method of Payment.......................................................28
15.2 Time of Payment.........................................................28
15.3 Cash Out Distribution...................................................32
15.4 Minority or Disability Payments.........................................33
15.5 Distributions Under Domestic Relations Orders...........................33
15.6 Direct Rollover of Eligible Rollover Distributions......................35

ARTICLE XVI TRUSTEE..........................................................36
16.1 Appointment of Trustee..................................................36
16.2 Appointment of Investment Manager.......................................36
16.3 Responsibility of Trustee and Investment Manager........................37
16.4 Bonding of Trustee and Investment Manager...............................37

ARTICLE XVII AMENDMENT AND TERMINATION OF PLAN...............................38
17.1 Amendment of Plan.......................................................38
17.2 Termination of Plan.....................................................39
17.3 Suspension and Discontinuance of Contributions..........................39
17.4 Liquidation of Trust Fund...............................................39
17.5 Consolidation or Merger.................................................40



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ARTICLE XVIII GENERAL PROVISIONS.............................................40
18.1 No Employment Contract..................................................40
18.2 Manner of Payment.......................................................40
18.3 Nonalienation of Benefits...............................................41
18.4 Titles for Convenience Only.............................................41
18.5 Validity of Plan........................................................41
18.6 Plan Binding ...........................................................42
18.7 Return of Contributions.................................................42
18.8 Missing Members or Beneficiaries........................................42
18.9 Voting Rights ..........................................................43
18.10 Acquisition Loans......................................................45
18.11 Preretirement Diversification Rights...................................46
18.12 Qualified Military Service.............................................48

ARTICLE XIX TOP-HEAVY RULES..................................................49
19.1 Definitions ............................................................49
19.2 Determination of Top-Heavy Status.......................................50
19.3 Minimum Company Contribution............................................51
19.4 Minimum Vesting.........................................................52

ARTICLE XX FIDUCIARY PROVISIONS..............................................53
20.1 General Allocation of Duties............................................53
20.2 Fiduciary Duty .........................................................53
20.3 Fiduciary Liability.....................................................54
20.4 Co-Fiduciary Liability..................................................54
20.5 Delegation and Allocation...............................................54



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                             SOUTHWEST AIRLINES CO.
                               PROFIT SHARING PLAN

                                    PREAMBLE

         WHEREAS, SOUTHWEST AIRLINES CO., a corporation formed under the laws of
the State of Texas (the "Company") has previously adopted a plan and trust
designated as the Southwest Airlines Co. Profit Sharing Plan (the "Prior Plan"),
effective January 1, 1973, which was subsequently amended and restated in its
entirety, effective January 1, 1986, and again amended and restated in its
entirety, effective January 1, 1991, as amended from time to time thereafter;

         WHEREAS, the Company now desires to continue the plan by again amending
and restating the Prior Plan for compliance with the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and subsequent
legislation, and to incorporate amendments which have previously been made to
the plan;

         NOW, THEREFORE, in consideration of the premises and to carry out the
purposes and intent as set forth above, the Prior Plan is hereby restated and
amended in its entirety, superseded and replaced by this Plan, effective January
1, 1996, except as otherwise specifically provided herein. There will be no gap
or lapse in time or effect between such plans, and the existence of a qualified
plan and trust shall be continuous and uninterrupted.

         The terms and conditions of this restated Plan are as follows:

                                   ARTICLE I

                                    Purpose

         The purpose of this Plan is to reward Employees of the Company for
their loyal and faithful service, to provide the Employees with a retirement
benefit, and to provide funds for their beneficiaries in the event of death or
disability. The Plan is designed to invest primarily in

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qualifying employer securities, as such term is defined in Section 4975(e)(7) of
the Code, and is thus formally designated as an employee stock ownership plan
and a money purchase defined contribution plan. The benefits provided by this
Plan will be paid from a Trust Fund established by the Company and will be in
addition to the benefits Employees are entitled to receive under any other
programs of the Company and under the Social Security Act.

         This Plan and the separate related Trust forming a part hereof are
established and shall be maintained for the exclusive benefit of the Members
hereunder and their Beneficiaries. No part of the Trust Fund can ever revert to
the Company, except as hereinafter provided, or be used for or diverted to
purposes other than the exclusive benefit of the Members of this Plan and their
Beneficiaries.

                                  ARTICLE II

                         Definitions and Construction

         2.1 Definitions: Where the following words and phrases appear in this
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary:

                  (a) Affiliate: A member of a controlled group of corporations
         (as defined in Section 414(b) of the Code), a group of trades or
         businesses (whether or not incorporated) which are under common control
         (as defined in Section 414(c) of the Code), or an affiliated service
         group (as defined in Section 414(m) of the Code) of which the Company
         is a member, or any entity otherwise required to be aggregated with the
         Company pursuant to Section 414(o) of the Code and the regulations
         issued thereunder.

                  (b) Allocation Date: The date on which Company Contributions
         and forfeitures are to be allocated, such date to be the last day of
         each Plan Year.

                  (c) Annual Compensation: The total amounts paid by the Company
         or any Eligible Affiliate to an Employee as remuneration for personal
         services rendered during each Plan Year, including expense allowances
         (to the extent includible in the gross income of the Employee) and any
         amounts not includible in the gross income of the Employee pursuant to
         Sections 125 or 402(g)(1) of the Code, but excluding director's fees,
         expense reimbursements and nontaxable expense allowances, prizes and
         awards, items of imputed income contributions made by the Company under
         this Plan or any


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         other employee benefit plan or program it maintains, such as group
         insurance, hospitalization or like benefits, amounts realized or
         recognized from qualified or nonqualified stock options or when
         restricted stock or property held by the Employee either becomes freely
         transferable or is no longer subject to a substantial risk of
         forfeiture, and amounts, if any, paid to an Employee in lieu of a
         Company Contribution to this Plan in the event that such Company
         Contribution would constitute an annual addition, as defined in Section
         415(c)(2) of the Code, in excess of the limitations under Section
         415(c) of the Code. Annual Compensation shall include amounts otherwise
         includible, as provided above, which are paid by the Company or an
         Eligible Affiliate to the Employee through another person, pursuant to
         the common paymaster provisions of Sections 3121(s) and 3306(p) of the
         Code.

                  The Annual Compensation of each Member or former Member taken
         into account under the Plan for any Plan Year shall not exceed
         $150,000, as adjusted by the Secretary of the Treasury for increases in
         the cost of living at the time and in the manner set forth in Section
         401(a)(17)(B) of the Code. Furthermore, for purposes of an allocation
         under the Plan based on Annual Compensation, Annual Compensation shall
         only include amounts actually paid to an Employee during the period he
         is a Member of the Plan.

                  (d) Beneficiary: A person designated by a Member or former
         Member to receive benefits hereunder upon the death of such Member or
         former Member.

                  (e) Break in Service: An Employee shall have a Break in
         Service for each Plan Year in which he completes less than 501 Hours of
         Service with the Company or an Eligible Affiliate unless he is on a
         leave of absence authorized by the Company or an Eligible Affiliate in
         accordance with its leave policy.

                  (f) Code: The Internal Revenue Code of 1986, as amended.

                  (g) Committee: The persons who may be appointed to administer
         the Plan in accordance with Article XIII.

                  (h) Common Stock: The common stock of the Company.

                  (i) Company: Southwest Airlines Co., or its successor or
         successors.

                  (j) Company Contributions: Contributions which are made by the
         Company for each Plan Year pursuant to the provisions of Section 4.1
         hereof.

                  (k) Deductible Contributions: A Member's voluntary
         contributions, if any, to the Plan, made prior to January 1, 1987 and
         deductible by such Member for federal income tax purposes in accordance
         with Section 219 of the Internal Revenue Code, as then in effect.

                  (l) Deductible Contribution Account: A separate subaccount to
         which is credited a Member's Deductible Contributions, if any, and any
         earnings attributable thereto, adjusted to reflect any withdrawals,
         distributions or investment losses attributable thereto.


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                  (m) Disability: A physical or mental condition which, in the
         judgment of the Committee, totally and presumably permanently prevents

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