Document:

ex10_1.htm

    
      

      

    

                                                                                                                                                                                                                                          
 Exhibit
      10.1
                                                                                                                                                                                                            CONFIDENTIAL
      TREATMENT

    
 

    Supplemental
      Agreement No. 53

    

    to

    

    Purchase
      Agreement No. 1810

    

    between

    

    THE
      BOEING COMPANY

    

    and

    

    SOUTHWEST
      AIRLINES CO.

    

    

    Relating
      to Boeing Model 737-7H4 Aircraft (the Aircraft)

    

    

    

    THIS
      SUPPLEMENTAL AGREEMENT, entered
      into as of April 26, 2007, by and between THE BOEING COMPANY, a Delaware
      corporation with principal offices in Seattle, Washington, (Boeing) and
      SOUTHWEST AIRLINES CO., a Texas corporation with principal offices in Dallas,
      Texas (Buyer);

    

    WHEREAS,
      the parties hereto entered
      into Purchase Agreement No. 1810 dated January 19, 1994, relating to Boeing
      Model 737-7H4 aircraft (the Agreement) and;

     

           
      WHEREAS, Buyer has agreed to exercise one (1) August 2008 Option Aircraft as
      Block T-W-2 Aircraft and;

    

    NOW
      THEREFORE, in consideration of the
      mutual covenants herein contained, the parties agree to amend the Agreement
      as
      follows:

    

    1.           The
      Table of Contents of the Agreement is deleted in its entirety and a new Table
      of
      Contents is attached hereto and incorporated into the Agreement by this
      reference.

    

    2.           Table
      1 is deleted in its entirety and replaced by a new
      Table
      1 which is attached hereto and is incorporated into the Agreement by this
      reference.

    

    ***Pursuant
      to 17 CFR 240.24b-2, confidential information has been omitted and has been
      filed separately with the Securities and Exchange Commission pursuant to a
      Confidential Treatment Application filed with the
      Commission.

     

    
      
        
          
            P.A.
              No. 1810                                                                               SA-53-1             

            K/SWA           

          

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Table
      2 is deleted in its entirety and replaced by a new
      Table
      2 which is attached hereto and is incorporated into the Agreement by this
      reference.

    

    4.           All
      references in the Letter Agreements associated with Purchase Agreement No.
      1810
      shall be deemed to refer to the purchase by Buyer of three hundred seventy-five
      (375) Model 737-7H4 Aircraft, one hundred eleven (111) Model 737-7H4 Option
      Aircraft and fifty-four (54) Model 737-7H4 Purchase Right Aircraft, to the
      extent such reference is not specifically addressed herein.

    

    5.           The
      Advance Payment due upon signing assuming execution of this Supplemental
      Agreement on or before April  30, 2007 is:

    

    ***for
      one (1) August 2008 Block T-W-2 Aircraft bearing serial number

    

    Buyer
      will pay the *** directly to Boeing on or before April 30, 2007.

    

    The
      Agreement will be deemed to be supplemented to the extent herein provided and
      as
      so supplemented will continue in full force and effect.

    

    EXECUTED
      IN DUPLICATE as of the day and year first above written.

    

    

    
      	
              THE
                BOEING COMPANY

            	
              SOUTHWEST
                AIRLINES CO.

            	 
	 	 	 
	 	 	 
	 	 	 
	
              By:
                /s/ Nobuko Wiles

            	
              By:
                /s/ Scott Topping

            	 
	 	 	 
	
              Its:    Attorney-In-Fact

            	
              Its:   
                VP Treasurer

            	 

    

    
 

    
      
        
          
            P.A.
              No. 1810                                                                               SA-53-2            

            K/SWA           

          

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    TABLE
      OF
      CONTENTS

    

    

    
      	 	 	
              Page

            	
              SA

            
	 	 	
              Number

            	
              Number

            
	 	 	 	 
	
              ARTICLES

            	 	 	 
	 	 	 	 
	 	 	 	 
	
              1.

            	
              Subject
                Matter of Sale

            	
              1-1

            	
              SA-13

            
	 	 	 	 
	
              2.

            	
              Delivery,
                Title and Risk of Loss

            	2-1	SA-28
	 	 	 	 
	
              3.

            	
              Price
                of Aircraft

            	
              3-1

            	
              SA-47

            
	 	 	 	 
	
              4.

            	
              Taxes

            	
              4-1

            	 
	 	 	 	 
	
              5.

            	
              Payment

            	
              5-1

            	 
	 	 	 	 
	
              6.

            	
              Excusable
                Delay

            	
              6-1

            	 
	 	 	 	 
	
              7.

            	
              Changes
                to the Detail Specification

            	7-1	SA-1
	 	 	 	 
	
              8.

            	
              Federal
                Aviation Requirements and Certificates and Export

            	 	 
	 	
              License

            	
              8-1

            	 
	 	 	 	 
	
              9.

            	
              Representatives,
                Inspection,

            	 	 
	 	
              Flights
                and Test Data

            	
              9-1

            	 
	 	 	 	 
	
              10.

            	
              Assignment,
                Resale or Lease

            	
              10-1

            	 
	 	 	 	 
	
              11.

            	
              Termination
                for Certain Events

            	
              11-1

            	 
	 	 	 	 
	
              12.

            	
              Product
                Assurance; Disclaimer and Release; Exclusion of

            	 	 
	 	
              Liabilities;
                Customer Support; Indemnification and

            	 	 
	 	
              Insurance

            	
              12-1

            	 
	 	 	 	 
	
              13.

            	
              Buyer
                Furnished Equipment and Spare Parts

            	13-1	 
	 	 	 	 
	
              14.

            	
              Contractual
                Notices and Requests

            	
              14-1

            	 
	 	 	 	 
	
              15.

            	
              Miscellaneous

            	
              15-1

            	 

    

    

    

    
      
        
          P.A.
            No. 1810                                                                               
            i                           SA-53             

          K/SWA           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    

    TABLE
      OF
      CONTENTS CON'T

    

    

    
      	 	 	
              SA

            
	 	 	
              Number

            
	 	 	 
	
              TABLE

            	 	 
	 	 	 
	
              1.

            	
              Aircraft
                Information Table

            	
              SA-53

            
	 	 	 
	
              2.

            	
              Option
                Aircraft Information Table

            	
              SA-53

            
	 	 	 
	
              EXHIBITS

            	 	 
	 	 	 
	 	 	 
	
              A

            	
              Aircraft
                Configuration

            	
              SA-47

            
	 	 	 
	
              B

            	
              Product
                Assurance Document

            	
              SA-1

            
	 	 	 
	
              C

            	
              Customer
                Support Document

            	 
	 	 	 
	
              D

            	
              Price
                Adjustments Due to

            	 
	 	
              Economic
                Fluctuations - Aircraft

            	 
	 	 	 
	
              E

            	
              Buyer
                Furnished Equipment

            	 
	 	
              Provisions
                Document

            	 
	 	 	 
	
              F

            	
              Defined
                Terms Document

            	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
              LETTERAGREEMENTS

            	 	 
	 	 	 
	 	 	 
	
              1810-1

            	
              Waiver
                of Aircraft Demonstration Flight

            	 

    

    

    

    

    

    
      
        
          P.A.
            No. 1810                                                                                                                                          
ii                                                                                                                                       SA-53             

          K/SWA           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    TABLE
      OF
      CONTENTS CON'T

    

    
      	 	 	
                  SA

            
	 	 	
              Number

            
	
              RESTRICTEDLETTERAGREEMENTS

            	 	 
	 	 	 
	 	 	 
	
              6-1162-RLL-932R2

            	
              Promotional
                Support

            	
              SA-13

            
	 	 	 
	
              6-1162-RLL-933R20

            	
              ***

            	
              SA-47

            
	 	 	 
	
              6-1162-RLL-934R3

            	
              Disclosure
                of Confidential Information

            	
              SA-14

            
	 	 	 
	
              6-1162-RLL-935R1

            	
              Performance
                Guarantees

            	
              SA-1

            
	 	 	 
	
              6-1162-NIW-890

            	
              ***

            	
              SA-39

            
	 	 	 
	 	 	 
	
              6-1162-RLL-936R4

            	
              Certain
                Contractual Matters

            	
              SA-4

            
	 	 	 
	
              6-1162-RLL-937

            	
              Alternate
                Advance Payment Schedule

            	 
	 	 	 
	
              6-1162-RLL-938

            	
              ***

            	 
	 	 	 
	
              6-1162-RLL-939R1

            	
              Certification
                Flight Test Aircraft

            	
              SA-1

            
	 	 	 
	
              6-1162-RLL-940R1

            	
              Training
                Matters

            	
              SA-1

            
	 	 	 
	
              6-1162-RLL-941R2

            	
              Other
                Matters

            	
              SA-13

            
	 	 	 
	
              6-1162-RLL-942

            	
              Open
                Configuration Matters

            	 
	 	 	 
	
              6-1162-RLL-943R1

            	
              Substitution
                Rights

            	
              SA-6

            
	 	 	 
	
              6-1162-RLL-944

            	
              Airframe
                Maintenance Material Cost Protection
                Program

            	 
	 	 	 
	
              6-1162-RLL-945

            	
              Comparison
                of 737-7H4 and 737-3H4 Block
                Fuel Burn

            	 
	 	 	 
	
              6-1162-RLL-1855R3

            	
              Additional
                Contractual Matters

            	
              SA-4

            
	 	 	 
	
              6-1162-RLL-1856

            	
              ***

            	
              SA-1

            
	 	 	 
	
              6-1162-RLL-1857

            	
              Service
                Ready Validation Program

            	
              SA-1

            
	 	
              Field
                Test

            	 
	 	 	 
	
              6-1162-RLL-1858R1

            	
              Escalation
                Matters

            	
              SA-4

            

    

    

    
      
        
          P.A.
            No. 1810                                                                                                                                         
 iii                                                                                                                                       SA-53            

          K/SWA           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
                  

        

      

    

    TABLE
      OF
      CONTENTS CON'T

    

    
      	 	 	
              SA

            
	 	 	
              Number

            
	
              RESTRICTEDLETTERAGREEMENTS

            	 	 
	 	 	 
	 	 	 
	
              6-1162-RLL-2036

            	
              Amortization
                of Costs for

            	 
	 	
              Customer
                Unique Changes

            	
              SA-1

            
	 	 	 
	
              6-1162-RLL-2037

            	
              Reconciliation
                of the Aircraft Basic Price

            	
              SA-1

            
	 	 	 
	
              6-1162-RLL-2073

            	
              Maintenance
                Training Matters

            	
              SA-1

            
	 	 	 
	
              6-1162-KJJ-054R1

            	
              Business
                Matters

            	 
	 	 	 
	
              6-1162-KJJ-055R1

            	
              Structural
                Matters

            	
              SA-25

            
	 	 	 
	
              6-1162-KJJ-056

            	
              Noise
                and Emission Matters

            	
              SA-13

            
	 	 	 
	
              6-1162-KJJ-057

            	
              Product
                Development Matters

            	
              SA-13

            
	 	 	 
	
              6-1162-KJJ-058

            	
              Additional
                Substitution Rights

            	
              SA-13

            
	 	 	 
	
              6-1162-KJJ-150

            	
              Flight
                Control Computer & Mode Control
                Panel Spares Matter

            	
              SA-14

            
	 	 	 
	
              6-1162-MSA-185R3

            	
              Delivery
                Change Contractual Matters

            	
              SA-21

            
	 	 	 
	
              6-1162-JMG-669R7

            	
              ***

            	
              SA-47

            
	 	 	
              SA-51

            
	 	 	 
	
              6-1162-JMG-747R1

            	
              ***

            	
              SA-36

            
	 	 	 
	
              6-1162-CHL-217

            	
              Rescheduled
                Flight Test Aircraft

            	
              SA-32

            
	 	 	 
	
              6-1162-NIW-606R1

            	
              ***

            	
              SA-36

            
	
              6-1162-NIW-640

            	
              Early
                Delivery of Two April 2004 Aircraft

            	
              SA-35

            
	 	 	 
	
              6-1162-NIW-889

            	
              Warranty
                - Exterior Color Schemes and
                Markings for YA143 and on

            	
              SA-39

            
	 	 	 
	
              6-1162-NIW-1142

            	
              ***

            	
              SA-43

            

    

    

    

     

    
      
        
          P.A.
            No. 1810                                                                                                                                          
iv                                                                                                                                      SA-53             

          K/SWA           

        

      

      
        
        

        
          

        

      

      
        
        

      

       

      TABLE
        OF CONTENTS CON'T

    

    
      
        	
                6-1162-NIW-1369

              	
                ***

              	
                SA-46

              

      

      
        
          
            P.A.
              No. 1810                                                                                                                                           
v                                                                                                                                      SA-53             

            K/SWA 

          

        

        
           

          
            

          

        

        
           

        

      

     

    
 

    Table
      1 to

    Purchase
      Agreement No. 1810

    Aircraft
      Information Table

    

    
      	 	 	
              Base
                Aircraft Price

            	
              Special
                Features

            	
              Aircraft
                Basic Price

            	
              Base
                Year Dollars

            
	
              Block
                A, B, C, D & E Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                F & G Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                H Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                I Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                J Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                K Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                K-W Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                L Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1992

            
	
              Block
                T Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	
              Block
                T-W Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	
              Block
                T-W-1 / T-W-1a Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	
              Block
                T-W-2 / T-W-2a Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	 	 	 	 	 	 
	
              Block
                K-W Aircraft: Block K airplanes with production winglets
                installation

            	 	 
	
              Block
                T-W Aircraft: Block T airplanes with production winglets
                installation

            	 	 
	
              Block
                T-W-1 / T-W-1a  Aircraft: Firm Aircraft contracted to deliver
                from May 1, 2006 through June 2008 at the
                signing

            
	
               of
                SA-47  -- (T-W-1a Aircraft -- Advance Payment Schedule per LA
                6-1162-JGM-669)

            	 	 
	
              Block
                T-W-2 / T-W-2a Aircraft: U-W-1 Option Aircraft which becomes Firm
                Aircraft
                after signing of SA-47 and

            	 
	
              Firm
                Aircaft contracted to deliver in July 2008 and on at the signing
                of SA47
                --

            	 	 
	
              (T-W-2a
                Aircraft -- Advance Payment Schedule per LA
                6-1162-JGM-669)

            	 	 

    

    

    
      
        SWA                                                                                                                                                    
          Page
          1                                                                                                                                   SA-53            

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    

    Table
      1 to

    Purchase
      Agreement No. 1810

    Aircraft
      Information Table

    
 

    
      
        	
                 

              	
                 

              	
                 

              	
                Escalation
                  Estimate

              	 
	
                Delivery

              	
                Number
                  of

              	
                Aircraft

              	
                Adv
                  Payment Base

              	
                 

              
	
                Date

              	
                Aircraft

              	
                Block

              	
                Price
                  Per A/P

              	
                Serial
                  Number

              
	
                Dec-2000

              	
                2

              	
                E

              	
                ***

              	
                 

              
	
                Jan-2001

              	
                1

              	
                E

              	
                ***

              	
                 

              
	
                Feb-2001

              	
                1

              	
                E

              	
                ***

              	
                 

              
	
                Mar-2001

              	
                2

              	
                E

              	
                ***

              	
                 

              
	
                Jun-2001

              	
                3

              	
                E

              	
                ***

              	
                 

              
	
                Sep-2001

              	
                3

              	
                E

              	
                ***

              	
                 

              
	
                Oct-1998

              	
                1

              	
                F

              	
                ***

              	
                 

              
	
                Nov-1998

              	
                2

              	
                F

              	
                ***

              	
                 

              
	
                Dec-1998

              	
                2

              	
                F

              	
                ***

              	
                 

              
	
                Mar-1999

              	
                2

              	
                G

              	
                ***

              	
                 

              
	
                Jun-1999

              	
                2

              	
                H

              	
                ***

              	
                 

              
	
                Jul-1999

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Aug-1999

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Sep-1999

              	
                2

              	
                H

              	
                ***

              	
                 

              
	
                Oct-1999

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Mar-2000

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Apr-2000

              	
                2

              	
                H

              	
                ***

              	
                 

              
	
                Sep-2000

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Oct-2000

              	
                2

              	
                H

              	
                ***

              	
                 

              
	
                Mar-2001

              	
                2

              	
                H

              	
                ***

              	
                 

              
	
                Apr-2001

              	
                1

              	
                H

              	
                ***

              	
                 

              
	
                Oct-2001

              	
                3

              	
                H

              	
                ***

              	
                 

              
	
                Nov-2001

              	
                2

              	
                I

              	
                ***

              	
                 

              
	
                Dec-2001

              	
                1

              	
                I

              	
                ***

              	
                 

              
	
                Jan-2002

              	
                1

              	
                I

              	
                ***

              	
                 

              
	
                Mar-2002

              	
                4

              	
                I

              	
                ***

              	
                 

              
	
                Apr-2002

              	
                2

              	
                I

              	
                ***

              	
                 

              
	
                Dec-2002

              	
                2

              	
                I

              	
                ***

              	
                 

              
	
                May-2003

              	
                1

              	
                I

              	
                ***

              	
                 

              
	
                Jun-2003

              	
                2

              	
                I

              	
                ***

              	
                 

              
	
                Jul-2003

              	
                1

              	
                I

              	
                ***

              	
                 

              
	
                Aug-2003

              	
                1

              	
                I

              	
                ***

              	
                 

              
	
                Sep-2003

              	
                3

              	
                I

              	
                ***

              	
                 

              
	
                Nov-2002

              	
                1

              	
                J

              	
                ***

              	
                 

              
	
                Dec-2002

              	
                1

              	
                J

              	
                ***

              	
                 

              
	
                Nov-2003

              	
                2

              	
                J

              	
                ***

              	
                 

              
	
                Dec-2003

              	
                2

              	
                J

              	
                ***

              	
                 

              
	
                Mar-2004

              	
                1

              	
                J

              	
                ***

              	
                 

              
	
                Mar-2004

              	
                1

              	
                K

              	
                ***

              	
                 

              
	
                Apr-2004

              	
                3

              	
                K

              	
                ***

              	
                 

              
	
                May-2004

              	
                1

              	
                K

              	
                ***

              	
                 

              
	
                Jun-2004

              	
                2

              	
                K

              	
                ***

              	
                 

              
	
                Jul-2004

              	
                2

              	
                K

              	
                ***

              	 

      

      
        
          
            SWA                                                                                                                                                    
              Page 2                                                                                                                                   SA-53      

          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Table
        1 to

      Purchase
        Agreement No. 1810

      Aircraft
        Information Table

       

      

        
          	
                  Sep-2004

                	
                  1

                	
                  K-W

                	
                  ***

                	
                   

                
	
                  Oct-2004

                	
                  4

                	
                  K-W

                	
                  ***

                	
                   

                
	
                  Oct-1999

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Nov-1999

                	
                  2

                	
                  L

                	
                  ***

                	
                   

                
	
                  Dec-1999

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Jun-2000

                	
                  3

                	
                  L

                	
                  ***

                	
                   

                
	
                  Jul-2000

                	
                  3

                	
                  L

                	
                  ***

                	
                   

                
	
                  Sep-2000

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Oct-2000

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Nov-2000

                	
                  4

                	
                  L

                	
                  ***

                	
                   

                
	
                  Dec-2000

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Jan-2001

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Feb-2001

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Jul-2001

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Sep-2001

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Oct-2001

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Mar-2003

                	
                  2

                	
                  L

                	
                  ***

                	
                   

                
	
                  Jul-2003

                	
                  1

                	
                  L

                	
                  ***

                	
                   

                
	
                  Aug-2003

                	
                  2

                	
                  L

                	
                  ***

                	
                   

                
	
                  Nov-2001

                	
                  1

                	
                  T

                	
                  ***

                	
                   

                
	
                  Feb-2002

                	
                  1

                	
                  T

                	
                  ***

                	
                   

                
	
                  Jan-2004

                	
                  2

                	
                  T

                	
                  ***

                	
                   

                
	
                  Feb-2004

                	
                  1

                	
                  T

                	
                  ***

                	
                   

                
	
                  Apr-2004

                	
                  3

                	
                  T

                	
                  ***

                	
                   

                
	
                  May-2004

                	
                  1

                	
                  T

                	
                  ***

                	
                   

                
	
                  Jun-2004

                	
                  6

                	
                  T

                	
                  ***

                	
                   

                
	
                  Jul-2004

                	
                  2

                	
                  T

                	
                  ***

                	
                   

                
	
                  Aug-2004

                	
                  6

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Sep-2004

                	
                  4

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Oct-2004

                	
                  0

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Nov-2004

                	
                  3

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Dec-2004

                	
                  3

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Jan-2005

                	
                  5

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Feb-2005

                	
                  3

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Mar-2005

                	
                  4

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Apr-2005

                	
                  4

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  May-2005

                	
                  2

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Jun-2005

                	
                  4

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Jul-2005

                	
                  2

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Aug-2005

                	
                  2

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Sep-2005

                	
                  3

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Oct-2005

                	
                  2

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Nov-2005

                	
                  2

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Dec-2005

                	
                  1

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Jan-2006

                	
                  1

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Feb-2006

                	
                  4

                	
                  T-W

                	
                  ***

                	
                   

                
	
                  Mar-2006

                	
                  3

                	
                  T-W

                	
                  ***

                	 

        

    

    
      
        
          SWA                                                                                                                                                    
            Page 3                                                                                                                                   SA-53      

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
      1 to

    Purchase
      Agreement No. 1810

    Aircraft
      Information Table

     

    
      
        	
                Apr-2006

              	
                2

              	
                T-W

              	
                ***

              	
                 

              
	
                May-2006

              	
                5

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jun-2006

              	
                5

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jul-2006

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Aug-2006

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Sep-2006

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Oct-2006

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Nov-2006

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Dec-2006

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jan-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Feb-2007

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Mar-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Apr-2007

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                May-2007

              	
                3

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jun-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jun-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36528

              
	
                Jul-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jul-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36610

              
	
                Aug-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Aug-2007

              	
                3

              	
                T-W-1a

              	
                ***

              	
                36611,
                  36632 & 36633

              
	
                Sep-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Sep-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36612

              
	
                Oct-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Oct-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36613

              
	
                Nov-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Nov-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36614

              
	
                Dec-2007

              	
                2

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Dec-2007

              	
                1

              	
                T-W-1a

              	
                ***

              	
                36615

              
	
                Jan-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jan-2008

              	
                2

              	
                T-W-1a

              	
                ***

              	
                36616
                  & 36617

              
	
                Jan-2008

              	
                1

              	
                T-W-2

              	
                ***

              	
                36887

              
	
                Feb-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Feb-2008

              	
                3

              	
                T-W-1a

              	
                ***

              	
                36618,
                  36619 & 36620

              
	
                Mar-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Mar-2008

              	
                2

              	
                T-W-1a

              	
                ***

              	
                36621
                  & 36622

              
	
                Mar-2008

              	
                1

              	
                T-W-2

              	
                ***

              	
                36888

              
	
                Apr-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Apr-2008

              	
                2

              	
                T-W-1a

              	
                ***

              	
                36623
                  & 36624

              
	
                May-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                May-2008

              	
                2

              	
                T-W-1a

              	
                ***

              	
                36625
                  & 36626

              
	
                Jun-2008

              	
                1

              	
                T-W-1

              	
                ***

              	
                 

              
	
                Jun-2008

              	
                2

              	
                T-W-1a

              	
                ***

              	
                36627
                  & 36628

              
	
                Jul-2008

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jul-2008

              	
                2

              	
                T-W-2

              	
                ***

              	
                36889
                  & 36890

              
	
                Aug-2008

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Aug-2008

              	
                1

              	
                T-W-2

              	
                ***

              	
                36891

              
	
                Sep-2008

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              

      

      
        
          
            SWA                                                                                                                                                    
              Page 4                                                                                                                                   SA-53      

          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Table
        1 to

      Purchase
        Agreement No. 1810

      Aircraft
        Information Table

      
 

    

    
      
        	
                Oct-2008

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Nov-2008

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Dec-2008

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jan-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Feb-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Mar-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Apr-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                May-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jun-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jul-2009

              	
                2

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Aug-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Sep-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Oct-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Nov-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Dec-2009

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jan-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Feb-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Mar-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Apr-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                May-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jun-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jul-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Aug-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Sep-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Oct-2010

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jan-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Feb-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Mar-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Apr-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                May-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jun-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jul-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Aug-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Sep-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Oct-2011

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jan-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Feb-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Mar-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Apr-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                May-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jun-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Jul-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Aug-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Sep-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              
	
                Oct-2012

              	
                1

              	
                T-W-2a

              	
                ***

              	
                 

              

      

      
        
          
            SWA                                                                                                                                                    
              Page 5                                                                                                                                  SA-53      

          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Table
      2 to Purchase Agreement No. 1810

    (Letter
      Agreement No. 6-1162-RLL-933R20)

    Option
      Aircraft Information Table

    

    
      	 	 	 	 	 	 
	
              Price
                Description of Option Aircraft:

            	 	 	 
	 	 	
              Base
                Aircraft Price

            	
              Special
                Features

            	
              Aircraft
                Basic Price

            	
              Base
                Year Dollars

            
	
              Block
                U Option Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	
              (without
                Winglets)

            	 	 	 	 
	
              Block
                U-W Option Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	
              (with
                Winglets)

            	 	 	 	 
	
              Block
                U-W-1 Option Aircraft

            	
              ***

            	
              ***

            	
              ***

            	
              July
                1999

            
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              Delivery
                of Purchase Right Aircraft:

            	
              Quantity

            	
              54

            	 
	
              Delivery
                Period of Purchase Right Aircraft:

            	
              Complete
                delivery not later than Dec. 31, 2014

            
	
              Condition
                of Offer for Purchase Right Aircraft:

            	
              Subject
                to Available Position

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              Remaining
                Option Aircraft:

            	 	
              111

            	 	 

    

    

    
      
        
          
            SWA                                                                                                                                                    
              Page 1                                                                                                                                  SA-53      

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

                     

      

    

    Table
      2 to Purchase Agreement No. 1810

    (Letter
      Agreement No. 6-1162-RLL-933R20)

    Option
      Aircraft Information Table

    

    
      	
              Aircraft

            	
              Number
                of

            	
              Option

            	
              Adv
                Payment Base

            	
               

            
	
              Delivery

            	
              Option

            	
              Aircraft

            	
              Price
                Per

            	
               

            
	
              Mo.
                & Yr.

            	
              Aircraft

            	
              Block

            	
              Option
                Aircraft

            	
              Option
                Exercise

            
	
              Dec-2008

            	
              1

            	
              U-W-1

            	
              ***

            	
              August
                1, 2007

            
	
              Jan-2009

            	
              3

            	
              U-W-1

            	
              ***

            	
              September
                3, 2007

            
	
              Mar-2009

            	
              3

            	
              U-W-1

            	
              ***

            	
              November
                1, 2007

            
	
              Apr-2009

            	
              2

            	
              U-W-1

            	
              ***

            	
              December
                3, 2007

            
	
              May-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              January
                1, 2008

            
	
              Jun-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              February
                1, 2008

            
	
              Jul-2009

            	
              2

            	
              U-W-1

            	
              ***

            	
              March
                3, 2008

            
	
              Aug-2009

            	
              2

            	
              U-W-1

            	
              ***

            	
              April
                1, 2008

            
	
              Sep-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              May
                1, 2008

            
	
              Oct-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              June
                2, 2008

            
	
              Nov-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              July
                1, 2008

            
	
              Dec-2009

            	
              1

            	
              U-W-1

            	
              ***

            	
              August
                1, 2008

            
	
              Jan-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              September
                1, 2008

            
	
              Feb-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              October
                1, 2008

            
	
              Mar-2010

            	
              2

            	
              U-W-1

            	
              ***

            	
              November
                3, 2008

            
	
              Apr-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              December
                1, 2008

            
	
              May-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              January
                1, 2009

            
	
              Jun-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              February
                2, 2009

            
	
              Jul-2010

            	
              2

            	
              U-W-1

            	
              ***

            	
              March
                2, 2009

            
	
              Aug-2010

            	
              2

            	
              U-W-1

            	
              ***

            	
              April
                1, 2009

            
	
              Sep-2010

            	
              2

            	
              U-W-1

            	
              ***

            	
              May
                1, 2009

            
	
              Oct-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              June
                1, 2009

            
	
              Nov-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              July
                1, 2009

            
	
              Dec-2010

            	
              3

            	
              U-W-1

            	
              ***

            	
              August
                3, 2009

            
	
              Jan-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              September
                1, 2009

            
	
              Feb-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              October
                1, 2009

            
	
              Mar-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              November
                2, 2009

            
	
              Apr-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              December
                1, 2009

            
	
              May-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              January
                1, 2010

            
	
              Jun-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              February
                1, 2010

            
	
              Jul-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              March
                1, 2010

            
	
              Aug-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              April
                1, 2010

            
	
              Sep-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              May
                3, 2010

            
	
              Oct-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              June
                1, 2010

            
	
              Nov-2011

            	
              3

            	
              U-W-1

            	
              ***

            	
              July
                1, 2010

            
	
              Dec-2011

            	
              2

            	
              U-W-1

            	
              ***

            	
              August
                2, 2010

            
	
              Jan-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              September
                1, 2010

            
	
              Feb-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              October
                1, 2010

            
	
              Mar-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              November
                1, 2010

            
	
              Apr-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              December
                1, 2010

            
	
              May-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              January
                3, 2011

            
	
              Jun-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              February
                1, 2011

            
	
              Jul-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              March
                1, 2011

            
	
              Aug-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              April
                1, 2011

            
	
              Sep-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              May
                2, 2011

            
	
              Oct-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              June
                1, 2011

            
	
              Nov-2012

            	
              3

            	
              U-W-1

            	
              ***

            	
              July
                1, 2011

            
	
              Dec-2012

            	
              2

            	
              U-W-1

            	
              ***

            	
              August
                1, 2011ex10_2.htm

    
      

      

    

    
                                                                                                                                                                                                                                    Exhibit
      10.2

    
 

    SOUTHWEST
      AIRLINES CO.

    OUTSIDE
      DIRECTOR INCENTIVE PLAN

    (as
      amended and restated effective May 16, 2007)

    

    1.           Purpose.  The
      purpose of this Plan is to align more closely the interests of the Outside
      Directors of Southwest Airlines Co. (the “Company”) with those of the Company’s
      Shareholders and to provide the Outside Directors with retirement
      income.  To accomplish this purpose, the Plan compensates each Outside
      Director based on the performance of the Company’s Common Stock and defers the
      receipt of such compensation until after the Outside Director ceases to be
      a
      director of the Company.

     

    2.           Definitions.  As
      used in this Plan, the following words and phrases wherever capitalized shall
      have the following meanings unless the context clearly indicates that a
      different meaning is intended:

     

    (a)           “Board”
      shall mean the Board of Directors of the Company.

     

    (b)           “Committee”
      shall mean the Compensation Committee of the Board.

     

    (c)           “Common
      Stock” shall mean Common Stock, par value one dollar ($1.00) per share, of the
      Company.

     

    (d)           “Company”
      shall mean Southwest Airlines Co.

     

    (e)           
      “Fair Market Value” shall mean, with respect to Common Stock, the average
      closing sale price of Common Stock as reported on the New York Stock
      Exchange

            
      for the trading days that occur during a specified period.

     

    (f)            
      “Outside Director” shall mean a non-employee director of the
      Company.

     

    (g)           
      “Performance Bonus” shall, with respect to an Outside Director, have the meaning
      assigned to such term in Section 4.

     

    (h)           
      “Performance Share” shall mean a unit of value equal to the Fair Market Value of
      a share of Common Stock.

     

    (i)            
      “Plan” shall mean the Southwest Airlines Co. Outside Director Incentive Plan, as
      amended.

     

    (j)            
      “Service Ending Date” shall, with respect to any Outside Director, have the
      meaning assigned to such term in Section 4.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Performance
      Shares.

     

    (a)           On
      the date of the 2002 Annual Meeting of Shareholders of the Company, the Company
      shall grant 750 Performance Shares to each Outside Director who has served
      as a
      director of the Company since at least May 2001.  Thereafter, (i) on
      the date of each Annual Meeting of Shareholders beginning in 2003, the Company
      shall grant 750 Performance Shares to each Outside Director who has served
      since
      the previous Annual Meeting; and (ii) on the date of each Annual Meeting of
      Shareholders beginning in 2007, the Company shall grant 1,000 Performance Shares
      to each Outside Director who has served since the previous Annual
      Meeting.  No pro-rated grants shall be made.  If a Director
      retires as of an Annual Meeting date, such Director shall be awarded Performance
      Shares for the preceding year if he or she has so served.

     

    (b)           The
      Company shall appropriately record each grant of Performance Shares on its
      books
      and shall notify each Outside Director of the number of Performance Shares
      granted and such other terms and conditions consistent with the Plan as the
      Committee shall determine.

     

    4.           Distribution.  On
      the 30th
      calendar day following such date (the “Service Ending Date”) as an Outside
      Director shall cease serving as a director of the Company, the Company shall
      pay
      to such Outside Director an amount (the “Performance Bonus”) equal to the Fair
      Market Value of Common Stock during the 30 days preceding such Outside
      Director’s Service Ending Date multiplied by the number of Performance Shares
      then held by such Outside Director.  An Outside Director’s Performance
      Bonus shall be paid to him or her in a lump sum. Distribution with respect
      to an
      Outside Director shall not be made or commence before the Outside Director
      ceases serving as a director of the Company. Upon the death of an Outside
      Director while serving on the Board, such Outside Director’s Performance Bonus
      at the time of his or her death shall be paid to the person who acquires such
      right by will or the laws of descent and distribution or otherwise by reason
      of
      the death of the Outside Director.

     

    5.           Administration.  The
      Plan shall be administered by the Committee. The Committee may, by a writing
      signed by a majority of its members, delegate to any member or members of the
      Committee or to any Employee or Employees of the Company the authority to
      perform any ministerial act in connection with the administration of the
      Plan.

     

    The
      Committee shall have the authority
      to control and manage the operation and administration of the Plan and the
      discretion to construe Plan provisions.  Subject to the provisions of
      the Plan, the Committee may from time to time establish rules for the
      administration and interpretation of the Plan.  The final
      determination of the Committee as to any disputed questions shall be
      conclusive.

     

    6.           Adjustment
      on Changes in Capitalization.  In the event of any merger,
      reorganization, consolidation, recapitalization, separation, spin-off,
      liquidation, stock dividend, split-up, share combination, or other change in
      the
      corporate or capital structure of the Company affecting the Common Stock and
      occurring during the term of an Outside Director’s service as a director of the
      Company, the number of Performance Shares previously granted to such Outside
      Director pursuant to this Plan shall be equitably adjusted to prevent dilution
      or enlargement of such Outside Director’s rights hereunder and, if necessary,
      provision shall be made for the substitution for the Performance Shares of
      new
      performance shares related to the securities of a successor corporation or
      an
      affiliate thereof, with appropriate adjustments as to the number and kind of
      securities; provided that the total number of Performance Shares granted
      hereunder shall always be a whole number.

     

    The
      existence of the Plan and the
      Performance Shares granted hereunder shall not affect in any way the right
      or
      power of the Board 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.           Miscellaneous.

     

    (a)           Unsecured
      Creditor Status.  This Plan, the Performance Shares to be granted
      pursuant hereto, and the payment of Performance Bonuses as contemplated herein
      are intended to constitute an “unfunded” compensation arrangement for tax
      purposes and for purposes of Title I of ERISA.  The Plan shall not be
      construed to create or require the Company to create a trust of any kind to
      fund
      the amounts payable hereunder.  To the extent an Outside Director or
      other person acquires a right to receive payments from the Company in accordance
      with the Plan, such right shall be no greater than the right of any general
      unsecured creditor of the Company.

     

    (b)           No
      Shareholder or Director Rights.  The Performance Shares are not
      shares of Common Stock of the Company.  Neither this Plan nor the
      grant of any Performance Shares shall confer on any Outside Director any right
      to continue serving as a director of the Company.  Neither any Outside
      Director nor any beneficiary of an Outside Director shall have any of the rights
      of a Shareholder of the Company with respect to the Performance Shares
      including, without limitation, any right to receive dividends or dividend
      equivalents declared or paid on the Common Stock.

     

    (c)           Nontransferability.  Performance
      Shares may not be sold, transferred, or otherwise disposed of and may not be
      pledged, hypothecated, or otherwise encumbered, except by will or the laws
      of
      descent and distribution.  The right of any Outside Director or any
      beneficiary to payments under the Plan shall not be subject to alienation,
      assignment, garnishment, attachment, execution, or levy of any kind, and any
      attempt to cause such amounts to be so subjected shall not be recognized by
      the
      Company.

     

    (d)           Amendment
      and Termination.  The Board reserves the right to amend the Plan
      from time to time or terminate the Plan; provided, however, that no such
      amendment or termination shall adversely affect the rights of any Outside
      Director or beneficiary, without such person’s prior written consent, with
      respect to Performance Shares granted prior to such amendment or
      termination.  Performance Shares granted prior to an amendment or
      termination of the Plan shall remain in full force and effect as if the Plan
      had
      not been amended or terminated.

     

    IN
      WITNESS WHEREOF, the undersigned certifies that the Board adopted the foregoing
      Plan on the 16th day of May 2007.

     

    
      	
              /s/
                Herbert D. Kelleher

            
	
              Herbert
                D. Kelleher, Chairman of the Board of Directors of

            
	
              Southwest
                Airlines Co.

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