Exhibit 10.2
SEVERANCE CONTRACT
THIS SEVERANCE CONTRACT (hereinafter referred to as this "Agreement"),
dated as of July 15, 2004, by and between XXXXX X. XXXXXX (hereinafter
referred to as the "Executive"), a resident of Dallas, Texas, and SOUTHWEST
AIRLINES CO. (hereinafter referred to as "Southwest", which term shall
include its subsidiary companies where the context so admits), a Texas
corporation,
W I T N E S S E T H:
WHEREAS the Executive has served as an employee and an executive
officer of Southwest since February 1986, and he has also served on the Board
of Directors of Southwest since June 2001; and
WHEREAS the Executive desires to resign his offices but to continue his
employment with Southwest, and Southwest is agreeable, subject to the terms
and conditions of this Agreement, to continuing his employment and to paying
him severance compensation in consideration of the Executive's agreements
contained herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and promises contained herein, Southwest and the Executive agree as
follows:
I. RESIGNATION AND CONTINUED EMPLOYMENT
A. RESIGNATION AND CONTINUED EMPLOYMENT. The Executive hereby
resigns as an officer and director of Southwest effective as of the
commencement of business on the date of this Agreement, and he irrevocably
waives any claim that he may have against Southwest, its directors or
officers based on or related to such resignation. Notwithstanding such
resignation, the Executive shall remain an employee of Southwest through
December 31, 2009, and during the period of such employment the Executive
shall discharge the consulting obligations set forth in Paragraph II-B of
this Agreement. The Executive may elect to terminate his employment at any
time prior to January 1, 2010, upon prior notice to Southwest; provided,
however, that in such event Southwest shall be relieved of any obligation to
make further payments to the Executive under Paragraph III-B hereof and, if
the Executive shall do work prior to the second anniversary of the date
of this Agreement for any airline that then competes with Southwest, then
Southwest shall be entitled to recover all past payments that Southwest shall
have made pursuant to Paragraphs III-B and III-C hereof, all as more
particularly provided in Paragraph III-G hereof.
II. EXECUTIVE'S OBLIGATIONS
A. NON-DEROGATION, ETC. The Executive agrees that he shall not do or
say anything, whether personally or through his attorney, agent or other
representative, to, directly or impliedly, derogate Southwest, its business
operations or prospects, its properties or any of its officers, directors or
employees, whether by way of media interviews, radio or television
appearances, letters to editors or others, articles published in the airline
trade press or in the general press, Internet chat rooms or otherwise. In
addition, the Executive shall provide no assistance or advice to, or discuss
any of Southwest's business matters or affairs with, any current or
prospective employee of Southwest, whether for a fee or otherwise, unless
specifically requested to do so by the Chief Executive Officer or the
Chairman of the Board of Directors of Southwest.
B. CONSULTANCY. The Executive agrees that, from time to time during
the term of his employment under this Agreement, the Executive shall make
himself available at the offices of Southwest, when specifically requested to
do so by Southwest, in order to consult with either the Chief Executive
Officer of Southwest, or the Chairman of its Board of Directors, as to the
business, properties or operations of Southwest, in each case for such
reasonable periods of time as either such officer may request. At all times
during his employment the Executive shall generally conform to all policies
of Southwest as they may apply to an employee of his level of duties and
obligations.
C. UNION WORK. The Executive agrees that, at all times prior to
January 1, 2010, he shall not personally, or through any representative,
intermediary or agent, directly or indirectly provide any advice, assistance
or counsel to any union or collective bargaining unit in connection with its
representation (or efforts to seek representation) of any group of Employees
at Southwest.
III. EXECUTIVE SEVERANCE COMPENSATION
X. XXXXXXXXX COMPENSATION. In consideration of his agreements set
forth in Articles I and II hereof, Southwest shall pay to the Executive the
severance compensation set forth in this Article III. All such severance
compensation shall be subject to such payroll and withholding deductions as
may be required by law.
B. SEMI-MONTHLY INSTALLMENTS. The Executive shall receive severance
compensation consisting of fifty-nine (59) equal semi-monthly installments,
each in an amount equal to the Executive's semi-monthly Base Salary (as such
term is defined in his Employment Contract referred to in Paragraph III-F
below) as in effect on July 15, 2004, commencing with Southwest's next
regular payroll date and continuing through its last regular payroll date for
December 2006. Thereafter, the Executive shall receive severance compensation
consisting of seventy-two (72) equal semi-monthly installments, each in an
amount equal to one-half of the Executive's semi-monthly Base Salary as in
effect on July 15, 2004, commencing with Southwest's first regular payroll
date in January 2007 and continuing through its last regular payroll date for
December 2009. In the event that Southwest shall change its payroll practices
while payments are owing to the Executive pursuant to this Paragraph III-B,
then Southwest shall adjust the timing of its such payments to the Executive
so as to insure that he receives equal installment payments no less
frequently than monthly.
C. LUMP-SUM PAYMENT. The Executive shall receive a lump-sum severance
payment of $131,250.00, payable on such date in January 2005 as Southwest
shall pay its officers their annual performance bonuses (or, in the absence
of any such bonus payments next January, on the last business day of January
2005).
D. AIRLINE PASSES. The Executive and his wife, Xxxxxxxx, shall receive
lifetime, positive-space passes for travel on Southwest's scheduled flights,
and the Executive shall be eligible for all pass privileges that other
airlines make available to Southwest's retirees generally.
E. MEDICAL AND DENTAL EXPENSES. During his term of employment with
Southwest, the Executive shall remain eligible to participate in any medical
benefit plan or program that Southwest makes available to its employees
generally Upon termination of his employment with Southwest, the Executive
shall be eligible to participate in any non-contract retiree medical benefit
plan or program that Southwest may then make available to its retirees
generally. Southwest shall reimburse the Executive for all of his out-of-
pocket expenses (including specifically all premiums and deductibles) that
the Executive may incur for himself and his spouse under any such Southwest
plan or program prior to January 1, 2010.
F. PRIOR BENEFITS. Nothing contained in this Agreement is intended to
diminish or enlarge any compensation or other benefits that may have accrued
to the benefit of the Executive in his capacity as an employee, officer or
director of Southwest at any time prior to the date of this Agreement,
including, without limitation, any deferred compensation payable to him
pursuant to this Employment Contract with Southwest dated as of June 19,
2001, it being understood that the Executive shall have no claim on any
further Base Salary or Performance Bonus (as such terms are defined in such
Employment Contract). The Executive shall be eligible to receive such
benefits as he may be entitled to under all profit-sharing, stock purchase,
stock option, group insurance and other benefit plans or programs in which he
may have participated while employed by Southwest, either prior to or after
the date of this Agreement, in each case to the extent of and in accordance
with the rules and agreements governing such plans or programs.
G. PAYMENTS UNFUNDED; CONDITION PRECEDENT; CLAWBACK, ETC. The
severance compensation provided for in this Article III is provided on an
unsecured, unfunded basis and shall be payable solely from the general assets
of Southwest. All amounts payable by Southwest pursuant to this Article III
shall be paid without notice or demand, and irrespective of the Executive's
death or disability; provided, however, that notwithstanding any other
provision of this Agreement it shall be a condition precedent to the
obligation of Southwest to make any payment under Paragraphs III-B and III-C
hereof that each of the following shall be true and accurate at the time of
such payment: (i) the Executive's agreements contained in Paragraphs II-A and
II-C of this Agreement shall not have been declared to be unenforceable or
non-binding on the Executive, in whole or in part, by any court of competent
jurisdiction; (ii) the Executive shall not have engaged in any conduct in
breach of his agreements contained in Paragraphs II-A and II-C hereof,
irrespective of the enforceability of any such agreements at law or in equity;
and (iii) at no time prior to January 1, 2010, shall the Executive do
work for any airline that then competes with Southwest, whether as an
employee or as a consultant, nor shall he provide advice to, nor
representation of, any person or entity whose interests are adverse to
Southwest in any legal or administrative proceeding. Upon the occurrence at
any time of either event described in the preceding clauses (i) and (ii) or,
if prior to the second anniversary date of this Agreement (but not
thereafter) the Executive shall do work for any airline that then competes
with Southwest, in addition to relieving Southwest of any obligation to make
any further payments owing under Paragraphs III-B and III-C hereof, Southwest
shall be entitled to recover the full amount of all past payments that
Southwest shall have made pursuant to Paragraph III-B hereof (but not
Paragraph III-C hereof), with interest thereon at a rate of six percent (6%)
per annum from the time Southwest shall have made any such payment to the
Executive until its recovery thereof. The Executive shall have no obligation
to seek other employment in mitigation of any amount payable to him under
this Article III, and he shall have the right, without incurring any penalty
hereunder, to accept any other employment that does not (i) violate the
provisions of Paragraph II-C hereof or (ii) involve doing work for any
airline that then competes with Southwest. After the second anniversary of
this Agreement, the Executive may accept employment that involves doing work
for an airline that then competes with Southwest, with only the loss of
future payments of severance compensation under Paragraph III-B hereof.
IV. MISCELLANEOUS
A. ASSIGNABILITY, ETC. The rights and obligations of Southwest
hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of Southwest; provided, however, Southwest's
obligations hereunder may not be assigned without the prior approval of the
Executive. This Agreement is personal to the Executive and may not be
assigned by him; provided, however, the rights of the Executive to receive
payments of severance compensation pursuant to Paragraphs III-B and III-C
hereof shall inure to the benefit of his heirs and legal representatives.
B. NO WAIVERS. Failure to insist upon strict compliance with any
provision hereof shall not be deemed a waiver of such provision or any other
provision hereof.
C. AMENDMENTS. This Agreement may not be modified except by an
agreement in writing executed by the parties hereto.
D. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing in the English language and shall be deemed to
have been given to the person affected by such notice when personally
delivered or when deposited in the United States mail, certified mail,
return receipt requested and postage prepaid, and addressed to the party
affected by such notice at the address indicated on the signature page
hereof.
E. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other provision
hereof.
F. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
taken together shall constitute a single instrument.
G. ENTIRE AGREEMENT. This Agreement contains all of the terms and
conditions agreed upon by the parties hereto respecting the subject matter
hereof, and all other prior agreements, oral or otherwise, regarding the
subject matter of this Agreement shall be deemed to be superseded as of the
date of this Agreement and not to bind either of the parties hereto.
H. GOVERNING LAW; FORUM SELECTION. This Agreement shall be subject to
and governed by the laws of the State of Texas. The parties hereto agree that
any action or proceeding arising out of this Agreement shall be subject to
the exclusive jurisdiction of the competent courts of the State of Texas
sitting in Dallas County, Texas, and of the United States District Court for
the Northern District of Texas, irrespective of whether or not at any time
after the date hereof the Executive shall relocate his residence to a
jurisdiction outside the State of Texas.
IN WITNESS WHEREOF, the Executive has set his hand hereto and Southwest
has caused this Agreement to be signed in its corporate name and behalf by
one of its officers thereunto duly authorized, all as of the day and year
first above written.
SOUTHWEST AIRLINES CO.
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Chairman of the Board of Directors
Address: X.X. Xxx 00000
Xxxxxx, Xxxxx 00000-0000
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Address: 0000 Xxxxxx
Xxxxxx, Xxxxx 00000
