Document:

exv4w11w1

 

Exhibit 4.11.1

EXECUTION COPY

 

 

INTERCREDITOR AGREEMENT

(2007-1)

Dated as of

October 3, 2007

AMONG

WILMINGTON TRUST COMPANY,

not in its individual capacity

but solely as Trustee under the

Southwest Airlines Pass Through Trust 2007-1A

and

Southwest Airlines Pass Through Trust 2007-1B

BNP Paribas,

as Liquidity Provider

AND

WILMINGTON TRUST COMPANY,

not in its individual capacity except

as expressly set forth herein but

solely as Subordination Agent and Trustee

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	ARTICLE I DEFINITIONS	 	 	2	 
	 
	 	SECTION 1.1.	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY	 	 	17	 
	 
	 	SECTION 2.1.	 	Agreement to Terms of Subordination; Payments from Monies Received Only	 	 	17	 
	 
	 	SECTION 2.2.	 	Trust Accounts	 	 	18	 
	 
	 	SECTION 2.3.	 	Deposits to the Collection Account and Special Payments Account	 	 	19	 
	 
	 	SECTION 2.4.	 	Distributions of Special Payments	 	 	19	 
	 
	 	SECTION 2.5.	 	Designated Representatives	 	 	21	 
	 
	 	SECTION 2.6.	 	Controlling Party	 	 	22	 
	 
	 	SECTION 2.7.	 	Equipment Note Buy-Out Rights	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED	 	 	26	 
	 
	 	SECTION 3.1.	 	Written Notice of Distribution	 	 	26	 
	 
	 	SECTION 3.2.	 	Distribution of Amounts on Deposit in the Collection Account	 	 	28	 
	 
	 	SECTION 3.3.	 	Other Payments	 	 	30	 
	 
	 	SECTION 3.4.	 	Payments to the Trustees and the Liquidity Provider	 	 	30	 
	 
	 	SECTION 3.5.	 	Liquidity Facility	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV EXERCISE OF REMEDIES	 	 	36	 
	 
	 	SECTION 4.1.	 	Directions from the Controlling Party	 	 	36	 
	 
	 	SECTION 4.2.	 	Remedies Cumulative	 	 	38	 
	 
	 	SECTION 4.3.	 	Discontinuance of Proceedings	 	 	39	 
	 
	 	SECTION 4.4.	 	Right of Certificateholders and the Liquidity Provider to Receive Payments Not to Be Impaired	 	 	39	 
	 
	 	SECTION 4.5.	 	Undertaking for Costs	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC.	 	 	39	 
	 
	 	SECTION 5.1.	 	Notice of Indenture Default or Triggering Event	 	 	39	 
	 
	 	SECTION 5.2.	 	Indemnification	 	 	41	 
	 
	 	SECTION 5.3.	 	No Duties Except as Specified in Intercreditor Agreement	 	 	41	 
	 
	 	SECTION 5.4.	 	Notice from the Liquidity Provider and Trustees	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI THE SUBORDINATION AGENT	 	 	41	 
	 
	 	SECTION 6.1.	 	Authorization; Acceptance of Trusts and Duties	 	 	41	 
	 
	 	SECTION 6.2.	 	Absence of Duties	 	 	42	 
	 
	 	SECTION 6.3.	 	No Representations or Warranties as to Documents	 	 	42	 

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	 	 	 	 	 	 	Page	 
	 
	 
	 	SECTION 6.4.	 	No Segregation of Monies; No Interest	 	 	42	 
	 
	 	SECTION 6.5.	 	Reliance; Agents; Advice of Counsel	 	 	42	 
	 
	 	SECTION 6.6.	 	Capacity in Which Acting	 	 	43	 
	 
	 	SECTION 6.7.	 	Compensation	 	 	43	 
	 
	 	SECTION 6.8.	 	May Become Certificateholder	 	 	43	 
	 
	 	SECTION 6.9.	 	Subordination Agent Required; Eligibility	 	 	43	 
	 
	 	SECTION 6.10.	 	Money to Be Held in Trust	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII INDEMNIFICATION OF SUBORDINATION AGENT	 	 	44	 
	 
	 	SECTION 7.1.	 	Scope of Indemnification	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII SUCCESSOR SUBORDINATION AGENT	 	 	44	 
	 
	 	SECTION 8.1.	 	Replacement of Subordination Agent; Appointment of Successor	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX SUPPLEMENTS AND AMENDMENTS	 	 	45	 
	 
	 	SECTION 9.1.	 	Amendments, Waivers, etc.	 	 	45	 
	 
	 	SECTION 9.2.	 	Subordination Agent Protected	 	 	49	 
	 
	 	SECTION 9.3.	 	Effect of Supplemental Agreements	 	 	49	 
	 
	 	SECTION 9.4.	 	Notice to Rating Agencies	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	49	 
	 
	 	SECTION 10.1.	 	Termination of Intercreditor Agreement	 	 	49	 
	 
	 	SECTION 10.2.	 	Intercreditor Agreement for Benefit of Trustees, Liquidity Provider and Subordination Agent	 	 	49	 
	 
	 	SECTION 10.3.	 	Notices	 	 	50	 
	 
	 	SECTION 10.4.	 	Severability	 	 	50	 
	 
	 	SECTION 10.5.	 	No Oral Modifications or Continuing Waivers	 	 	51	 
	 
	 	SECTION 10.6.	 	Successors and Assigns	 	 	51	 
	 
	 	SECTION 10.7.	 	Headings	 	 	51	 
	 
	 	SECTION 10.8.	 	Counterpart Form	 	 	51	 
	 
	 	SECTION 10.9.	 	Subordination	 	 	51	 
	 
	 	SECTION 10.10.	 	Governing Law	 	 	52	 
	 
	 	SECTION 10.11.	 	Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity	 	 	52	 

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INTERCREDITOR AGREEMENT

          INTERCREDITOR AGREEMENT dated as of October 3, 2007, among WILMINGTON TRUST COMPANY, a
Delaware corporation (“WTC”), not in its individual capacity but solely as Trustee of each
Trust (each as defined below); BNP PARIBAS, a societe anonym organized under the laws of France
acting through its New York branch, as Liquidity Provider (the “Liquidity Provider”); and
WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly set forth herein, but
solely as Subordination Agent and trustee hereunder (in such capacity, together with any successor
appointed pursuant to Article VIII hereof, the “Subordination Agent”).

          WHEREAS, all capitalized terms used herein shall have the respective meanings referred to in
Article I hereof;

          WHEREAS, pursuant to the Indentures covering 16 Boeing 737-700 aircraft, owned by Southwest,
Southwest will issue on a recourse basis up to (and including) two series of Equipment Notes, the
proceeds of which are intended to be used for general corporate purposes;

          WHEREAS, pursuant to the Participation Agreements, each Trust will acquire Equipment Notes
having an interest rate equal to the interest rate applicable to the Certificates to be issued by
such Trust;

          WHEREAS, pursuant to each Trust Agreement, the Trust created thereby proposes to issue a
single class of Certificates (a “Class”) bearing the interest rate and having the final
distribution date described in such Trust Agreement on the terms and subject to the conditions set
forth therein;

          WHEREAS, pursuant to the Underwriting Agreement, the Underwriters propose to purchase the
Class A Certificates issued by the Class A Trust and the Class B Certificates issued by the Class B
Trust in the aggregate face amount set forth opposite the name of such Trust on Schedule I thereto
on the terms and subject to the conditions set forth therein;

          WHEREAS, the Liquidity Provider proposes to enter into a revolving credit agreement relating
to the Class A Certificates with the Subordination Agent, as agent for the Trustee of the Class A
Trust for the benefit of the Certificateholders of such Trust; and

          WHEREAS, it is a condition precedent to the obligations of the Underwriters under the
Underwriting Agreement that the Subordination Agent, the Trustees and the Liquidity Provider agree
to the terms of subordination set forth in this Agreement in respect of each Class of Certificates,
and the Subordination Agent, the Trustees and the Liquidity Provider, by entering into this
Agreement, hereby acknowledge and agree to such terms of subordination and the other provisions of
this Agreement.

          NOW, THEREFORE, in consideration of the mutual agreements herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:

 

 

ARTICLE I

DEFINITIONS

          SECTION 1.1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

     (1) the terms used herein that are defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;

     (2) all references in this Agreement to designated “Articles”, “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of this
Agreement;

     (3) the words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or other
subdivision; and

     (4) the term “including” means “including without limitation”.

          “Acceleration” means, with respect to the amounts payable in respect of the Equipment
Notes issued under any Indenture, such amounts becoming immediately due and payable by declaration
or otherwise. “Accelerate”, “Accelerated” and “Accelerating” have meanings
correlative to the foregoing.

          “Actual Disposition Event” means, in respect of any Equipment Note: (i) the
disposition of the Collateral (as defined in the Indenture pursuant to which such Equipment Note
was issued) securing such Equipment Note, (ii) the occurrence of the mandatory redemption date for
such Equipment Note following an Event of Loss (as defined in such Indenture) with respect to the
Aircraft which secured such Equipment Note or (iii) the sale of such Equipment Note.

          “Additional Certificateholders” has the meaning specified in Section 9.1(d).

          “Additional Certificates” has the meaning specified in Section 9.1(d).

          “Additional Equipment Notes” has the meaning specified in Section 9.1(d).

          “Additional Trust” has the meaning specified in Section 9.1(d).

          “Additional Trust Agreement” has the meaning specified in Section 9.1(d).

          “Additional Trustee” has the meaning specified in Section 9.1(d).

          “Administration Expenses” has the meaning specified in clause “first” of Section 3.2.

          “Advance”, with respect to the Liquidity Facility, means any Advance as defined
thereunder.

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          “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For the purposes of this
definition, “control” means the power, directly or indirectly, to direct or cause the direction of
the management and policies of such Person whether through the ownership of voting securities or by
contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to
the foregoing.

          “Aircraft” means, with respect to each Indenture, the “Aircraft” referred to therein.

          “Appraisal” has the meaning specified in Section 4.1(a)(iv).

          “Appraised Current Market Value” of any Aircraft means the lower of the average and
the median of the three most recent Post-Default Appraisals of such Aircraft.

          “Appraisers” means Aircraft Information Services, Inc., BK Associates, Inc. and BACK
Aviation Solutions or, so long as the Person entitled or required hereunder to select such
Appraiser acts reasonably, any other nationally recognized appraiser reasonably satisfactory to the
Subordination Agent and the Controlling Party.

          “Available Amount” means, with respect to the Liquidity Facility on any date, the
Maximum Available Commitment (as defined therein) on such date.

          “Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Sections 101 et
seq.

          “Basic Agreement” means the Pass Through Trust Agreement dated as of July 1, 2005
between Southwest and WTC, not in its individual capacity, except as otherwise expressly provided
therein, but solely as trustee.

          “Business Day” means any day other than a Saturday or Sunday or a day on which
commercial banks are required or authorized to close in Dallas, Texas, New York, New York, or, so
long as any Certificate is outstanding, the city and state in which any Trustee, the Subordination
Agent or any Loan Trustee maintains its Corporate Trust Office and that, solely with respect to the
making and repayment of Advances under the Liquidity Facility, also is a “Business Day” as defined
therein.

          “Cash Collateral Account” means an Eligible Deposit Account in the name of the
Subordination Agent maintained at an Eligible Institution, which shall be the Subordination Agent
if it shall so qualify, into which all amounts drawn under the Liquidity Facility pursuant to
Section 3.5(c), 3.5(d), 3.5(i) or 3.5(k) shall be deposited.

          “Certificate” means a Class A Certificate or a Class B Certificate, as applicable.

          “Certificate Buy-Out Event” means that a Southwest Bankruptcy Event has occurred and
is continuing and the following events have occurred: (A) (i) the 60-Day Period has expired, and
(ii) Southwest has not entered into one or more agreements under Section 1110(a)(2)(A) of the
Bankruptcy Code to perform all of its obligations under all of the

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Indentures or, if it has entered
into such agreements, has at any time failed to cure any default under any of the Indentures in
accordance with Section 1110(a)(2)(B) of the Bankruptcy Code; or (B) if prior to the expiry of the
60-Day Period, Southwest shall have abandoned any Aircraft.

          “Certificateholder” means any holder of one or more Certificates.

          “Class” has the meaning assigned to such term in the preliminary statements to this
Agreement.

          “Class A Certificateholder” means, at any time, any holder of one or more Class A
Certificates.

          “Class A Certificates” means the certificates issued by the Class A Trust,
substantially in the form of Exhibit A to the Class A Trust Agreement, and authenticated by the
Class A Trustee, representing fractional undivided interests in the Class A Trust, and any
certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class
A Trust Agreement.

          “Class A Trust” means the Southwest Airlines Pass Through Trust 2007-1A created and
administered pursuant to the Class A Trust Agreement.

          “Class A Trust Agreement” means the Basic Agreement, as supplemented by the Supplement
No. 2007-1A thereto dated as of the date hereof, governing the creation and administration of the
Southwest Airlines Pass Through Trust 2007-1A and the issuance of the Class A Certificates, as the
same may be amended, supplemented or otherwise modified from time to time in accordance with its
terms.

          “Class A Trustee” means WTC, not in its individual capacity except as expressly set
forth in the Class A Trust Agreement, but solely as trustee under the Class A Trust Agreement,
together with any successor trustee appointed pursuant thereto.

          “Class B Adjusted Interest” means, as of any Current Distribution Date: (I) any
interest of the type described in clause (II) of this definition accruing prior to the immediately
preceding Distribution Date which remains unpaid and (II) interest at the Stated Interest Rate for
the Class B Certificates (A) for the number of days during the period commencing on, and including,
the immediately preceding Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, the Closing Date) and ending on, but excluding the Current Distribution Date, on
the Preferred B Pool Balance on such Current Distribution Date and (B) on the principal amount
calculated pursuant to clauses (B)(i), (ii), (iii) and (iv) of the definition of Preferred B Pool
Balance for each Series B Equipment Note with respect to which a disposition, distribution, sale or
Deemed Disposition Event has occurred since the immediately preceding Distribution Date (but only
if no such event has previously occurred with respect to such Series B Equipment Note), for each
day during the period, for each such Series B Equipment Note, commencing on, and including, the
immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the Closing Date) and ending on, but
excluding the date of disposition, distribution, sale or Deemed Disposition Event with respect to
such Series B Equipment Note, Aircraft or Collateral, as the case may be.

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          ““Class B Certificateholder” means, at any time, any holder of one or more Class B
Certificates.

          “Class B Certificates” means the certificates issued by the Class B Trust,
substantially in the form of Exhibit A to the Class B Trust Agreement, and authenticated by the
Class B Trustee, representing fractional undivided interests in the Class B Trust, and any
certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class
B Trust Agreement.

          “Class B Trust” means the Southwest Airlines Pass Through Trust 2007-1B created and
administered pursuant to the Class B Trust Agreement.

          “Class B Trust Agreement” means the Basic Agreement, as supplemented by the Supplement
No. 2007-1B thereto dated as of the date hereof, governing the creation and administration of the
Southwest Airlines Pass Through Trust 2007-1B and the issuance of the Class B Certificates, as the
same may be amended, supplemented or otherwise modified from time to time in accordance with its
terms.

          “Class B Trustee” means WTC, not in its individual capacity except as expressly set
forth in the Class B Trust Agreement, but solely as trustee under the Class B Trust Agreement,
together with any successor trustee appointed pursuant thereto.

          “Closing Date” means October 3, 2007.

          “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
Treasury Regulations promulgated thereunder.

          “Collateral” has the meaning specified in the Indentures.

          “Collection Account” means the Eligible Deposit Account established by the
Subordination Agent pursuant to Section 2.2(a)(i) which the Subordination Agent shall make deposits
in and withdrawals from in accordance with this Agreement.

          “Consent Period” has the meaning specified in Section 3.5(d).

          “Controlling Party” means the Person entitled to act as such pursuant to the terms of
Section 2.6.

          “Corporate Trust Office” means, with respect to any Trustee, the Subordination Agent
or any Loan Trustee, the office of such Person in the city at which, at any particular time, its
corporate trust business shall be principally administered.

          “Cross-Collateralization Period” has the meaning specified in Section 2.7(e).

          “Current Distribution Date” means a Distribution Date specified as a reference date
for calculating the Expected Distributions with respect to the Certificates of any Trust as of such
Distribution Date.

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          “Deemed Disposition Event” means, in respect of any Equipment Note, the continuation
of an Indenture Default in respect of such Equipment Note without an Actual Disposition Event
occurring in respect of such Equipment Note for a period of five years from the date of the
occurrence of such Indenture Default.

          “Designated Representatives” means the Subordination Agent Representatives, the
Trustee Representatives and the Provider Representatives identified under Section 2.5.

          “Distribution Date” means a Regular Distribution Date or a Special Distribution Date.

          “Dollars” or “$” means United States dollars.

          “Downgrade Drawing” has the meaning specified in Section 3.5(c).

          “Downgrade Event” with respect to the Liquidity Facility, has the meaning assigned to
such term therein.

          “Downgraded Facility” has the meaning specified in Section 3.5(c).

          “Drawing” means an Interest Drawing, a Final Drawing, a Non-Extension Drawing, a
Special Termination Drawing, or a Downgrade Drawing, as the case may be.

          “Eligible Deposit Account” means either (a) a segregated account with an Eligible
Institution or (b) a segregated trust account with the corporate trust department of a depository
institution organized under the laws of the United States of America or any one of the states
thereof or the District of Columbia (or any U.S. branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any of the securities
of such depository institution has a long-term unsecured debt rating of at least A3 from Moody’s
and a long-term issuer credit rating of at least A- from Standard & Poor’s. An Eligible Deposit
Account may be maintained with the Liquidity Provider so long as the Liquidity Provider is an
Eligible Institution; provided that such Liquidity Provider shall have waived all rights of
set-off and counterclaim with respect to such account.

          “Eligible Institution” means (a) the corporate trust department of the Subordination
Agent or any Trustee, as applicable, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of Columbia (or any
U.S. branch of a foreign bank), which has a long-term unsecured debt rating or issuer credit
rating, as the case may be, from each Rating Agency of at least A-/A-3 or its equivalent.

          “Eligible Investments” means (a) investments in obligations of, or guaranteed by, the
United States government having maturities no later than 90 days following the date of such
investment, (b) investments in open market commercial paper of any corporation incorporated
under the laws of the United States of America or any state thereof with a short-term
unsecured debt rating issued by Moody’s of at least P-1 and a short-term issuer credit rating
issued by Standard & Poor’s of at least A-1 having maturities no later than 90 days following the
date of such investment or (c) investments in negotiable certificates of deposit, time deposits,
banker’s

6

 

acceptances, commercial paper or other direct obligations of, or obligations guaranteed
by, commercial banks organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with a short-term unsecured debt rating by Moody’s
of at least P-1 and a short-term issuer credit rating by Standard
& Poor’s of at least A-1,
having maturities no later than 90 days following the date of such investment; provided,
however, that (x) all Eligible Investments that are bank obligations shall be denominated
in U.S. dollars; and (y) the aggregate amount of Eligible Investments at any one time that are bank
obligations issued by any one bank shall not be in excess of 5% of such bank’s capital surplus;
provided further that any investment of the types described in clauses (a), (b) and
(c) above may be made through a repurchase agreement in commercially reasonable form with a bank or
other financial institution qualifying as an Eligible Institution so long as such investment is
held by a third party custodian also qualifying as an Eligible Institution; provided
further, however, that in the case of any Eligible Investment issued by a domestic
branch of a foreign bank, the income from such investment shall be from sources within the United
States for purposes of the Code. Notwithstanding the foregoing, no investment of the types
described in clause (b) above which is issued or guaranteed by Southwest or any of its Affiliates,
and no investment in the obligations of any one bank in excess of $10,000,000, shall be an Eligible
Investment unless a Ratings Confirmation shall have been received with respect to the making of
such investment.

          “Equipment Note Buy-Out Event” means the occurrence and continuation of (i) a
Certificate Buy-Out Event or (ii) an Indenture Default under any Indenture that has continued for a
period of five years without an Actual Disposition Event occurring with respect to the Equipment
Notes issued under such Indenture.

          “Equipment Note Special Payment” means a Special Payment on account of the redemption,
purchase or prepayment of all of the Equipment Notes.

          “Equipment Notes” means, at any time, the Series A Equipment Notes and the Series B
Equipment Notes, collectively, and in each case, any Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of the Indentures.

          “Excess Liquidity Obligations” means, with respect to an Indenture, the amounts
payable under clauses (i) through (vi) of the third paragraph of Section 2.02 of such Indenture.

          “Expected Distributions” means, with respect to the Certificates of any Trust on any
Current Distribution Date, the difference between (A) the Pool Balance of such Certificates as of
the immediately preceding Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, the original aggregate face amount of Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date calculated on the basis that
(i) the principal of the Non-Performing Equipment Notes held in such Trust has been paid in full
and such payments have been distributed to the holders of such Certificates, (ii) the principal of
the Performing Equipment Notes held in such Trust has been paid when due (without giving effect to
any Acceleration of Performing Equipment Notes) and such payments have been
distributed to the holders of such Certificates and (iii) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to the terms hereof has been paid in full
and such payments have been distributed to the holders of such Certificates. For purposes of
calculating Expected Distributions with respect to the Certificates of any Trust, any Premium

7

 

paid
on the Equipment Notes held in such Trust which has not been distributed to the Certificateholders
of such Trust (other than such Premium or a portion thereof applied to the payment of interest on
the Certificates of such Trust or the reduction of the Pool Balance of such Trust) shall be added
to the amount of such Expected Distributions.

          “Expiry Date” has the meaning set forth in the Liquidity Facility.

          “Facility Office” means the office of the Liquidity Provider, presently located at 787
Seventh Avenue, New York, NY 10019, or such other office as the Liquidity Provider from time to
time shall notify the Class A Trustee as its “Facility Office” under the Liquidity Facility;
provided that the Liquidity Provider shall not change its Facility Office to another
Facility Office outside the United States of America except in accordance with Section 3.01, 3.02
or 3.03 of the Liquidity Facility.

          “Fee Letters” means, collectively, (i) the Fee Letter dated as of the date hereof
between the Liquidity Provider, the Subordination Agent and Southwest with respect to the initial
Liquidity Facility and (ii) any fee letter entered into between the Subordination Agent and any
Replacement Liquidity Provider in respect of such Liquidity Facility.

          “Final Distributions” means, with respect to the Certificates of any Trust on any
Distribution Date, the sum of (x) the aggregate amount of all accrued and unpaid interest on such
Certificates and (y) the Pool Balance of such Certificates as of the immediately preceding
Distribution Date. For purposes of calculating Final Distributions with respect to the
Certificates of any Trust, any Premium paid on the Equipment Notes held in such Trust which has not
been distributed to the Certificateholders of such Trust (other than such Premium or a portion
thereof applied to the payment of interest on the Certificates of such Trust or the reduction of
the Pool Balance of such Trust) shall be added to the amount of such Final Distributions.

          “Final Drawing” has the meaning assigned to such term in Section 3.5(i).

          “Final Legal Distribution Date” means (i) with respect to the Class A Certificates
February 1, 2024, and (ii) with respect to the Class B Certificates, August 1, 2022.

          “Indenture” means, with respect to the Equipment Notes, each of the separate trust
indenture and mortgages described on Schedule I to this Agreement, in each case as the same may be
amended, supplemented or otherwise modified from time to time in accordance with its terms.

          “Indenture Default” means, with respect to any Indenture, any Event of Default (as
such term is defined in such Indenture) thereunder.

          “Interest Drawing” has the meaning specified in Section 3.5(a).

          “Interest Payment Date” means, with respect to the Liquidity Facility, each date on
which interest is due and payable thereunder on a Downgrade Drawing, Non-Extension Drawing, a
Special Termination Drawing or Final Drawing thereunder, other than any such date on which interest
is due and payable under such Liquidity Facility only on an Applied Provider

8

 

Advance or Applied
Special Termination Advance (as such terms are defined in such Liquidity Facility).

          “Investment Earnings” means investment earnings on funds on deposit in the Trust
Accounts net of losses and investment expenses of the Subordination Agent in making such
investments.

          “Junior Additional Certificateholder” has the meaning specified in Section 2.7(b).

          “Lien” means any mortgage, pledge, lien, charge, claim, disposition of title,
encumbrance, lease, sublease, sub-sublease or security interest of any kind, including, without
limitation, any thereof arising under any conditional sales or other title retention agreement.

          “Liquidity Event of Default” has the meaning assigned to such term in the Liquidity
Facility.

          “Liquidity Expenses” means all Liquidity Obligations other than (i) the principal
amount of any Drawings under the Liquidity Facility and (ii) any interest accrued on any Liquidity
Obligations.

          “Liquidity Facility” means, initially, the Revolving Credit Agreement dated as of the
date hereof, between the Subordination Agent, as agent and trustee for the Class A Trust, and the
initial Liquidity Provider, and from and after the replacement of such Revolving Credit Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its terms.

          “Liquidity Obligations” means all principal, interest, fees and other amounts owing to
the Liquidity Provider under the Liquidity Facility, Section 8.1 of the Participation Agreements or
the Fee Letters.

          “Liquidity Provider” means BNP Paribas or, if applicable, any Replacement Liquidity
Provider which has issued a Replacement Liquidity Facility to replace the Liquidity Facility
pursuant to Section 3.5(e).

          “Loan Trustee” means, with respect to any Indenture, the mortgagee thereunder.

          “Minimum Sale Price” means, with respect to any Aircraft or the Equipment Notes issued
in respect of such Aircraft, at any time, the lesser of (1) in the case of the sale of an Aircraft,
75%, or in the case of the sale of related Equipment Notes, 85%, of the Appraised Current Market
Value of such Aircraft and (2) the sum of the aggregate Note Target Price of such Equipment Notes
and an amount equal to the Excess Liquidity Obligations in respect of the Indenture under which
such Equipment Notes were issued.

          “Moody’s” means Moody’s Investors Service, Inc.

          “Non-Controlling Party” means, at any time, any Trustee or Liquidity Provider which is
not the Controlling Party at such time.

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          “Non-Extended Facility” has the meaning specified in Section 3.5(d).

          “Non-Extension Drawing” has the meaning specified in Section 3.5(d).

          “Non-Performing Equipment Note” means an Equipment Note that is not a Performing
Equipment Note.

          “Note Target Price” means, for any Equipment Note issued under any Indenture, (i) the
aggregate outstanding principal amount of such Equipment Note, plus (ii) the accrued and unpaid
interest thereon, together with all other sums owing on or in respect of such Equipment Note under
such Indenture (including, without limitation, enforcement costs incurred by the Subordination
Agent in respect of such Equipment Note).

          “Officer’s Certificate” of any Person means a certification signed by a Responsible
Officer of such Person.

          “Operative Agreements” means this Agreement, the Liquidity Facility, the Indentures,
the Trust Agreements, the Underwriting Agreement, the Participation Agreements, the Fee Letters,
the Equipment Notes and the Certificates, together with all exhibits and schedules included with
any of the foregoing.

          “Outstanding” means, when used with respect to each Class of Certificates, as of the
date of determination, all Certificates of such Class theretofore authenticated and delivered under
the related Trust Agreement, except:

     (i) Certificates of such Class theretofore canceled by the Registrar (as defined in
such Trust Agreement) or delivered to the Trustee thereunder or such Registrar for
cancellation;

     (ii) Certificates of such Class for which money in the full amount required to make the
final distribution with respect to such Certificates pursuant to Section 11.01 of such Trust
Agreement has been theretofore deposited with the related Trustee in trust for the holders
of such Certificates as provided in Section 4.01 of such Trust Agreement pending
distribution of such money to such Certificateholders pursuant to such final distribution
payment; and

     (iii) Certificates of such Class in exchange for or in lieu of which other Certificates
have been authenticated and delivered pursuant to such Trust Agreement;

provided, however, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, any Certificates owned by Southwest or any of its Affiliates
shall be disregarded and deemed not to be Outstanding, except that, in determining whether such
Trustee shall be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that such Trustee knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the applicable Trustee the pledgee’s

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right so to act with respect to such Certificates and that the pledgee is not Southwest or any of
its Affiliates.

          “Overdue Scheduled Payment” means any Scheduled Payment which is not in fact received
by the Subordination Agent within ten Business Days after the Scheduled Payment Date relating
thereto.

          “Participation Agreement” means, with respect to each Indenture, the “Participation
Agreement” referred to therein.

          “Payees” has the meaning specified in Section 2.4(c).

          “Performing Equipment Note” means an Equipment Note with respect to which no payment
default has occurred and is continuing (without giving effect to any Acceleration);
provided that in the event of a bankruptcy proceeding under the Bankruptcy Code in which
Southwest is a debtor any payment default existing during the 60-Day Period (or such longer period
as may apply under Section 1110(b) of the Bankruptcy Code or as may apply for the cure of such
payment default under Section 1110(a)(2)(B) of the Bankruptcy Code) shall not be taken into
consideration until the expiration of the applicable period.

          “Performing Note Deficiency” means any time that less than 65% of the then aggregate
outstanding principal amount of all Equipment Notes (other than any Additional Equipment Notes
issued under any Indenture) are Performing Equipment Notes.

          “Person” means any individual, corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, trustee, unincorporated organization or
government or any agency or political subdivision thereof.

          “Pool Balance” means, with respect to each Trust or the Certificates issued by any
Trust, as of any date, (i) the original aggregate face amount of the Certificates of such Trust
less (ii) the aggregate amount of all payments made as of such date in respect of the
Certificates of such Trust other than payments made in respect of interest or Premium thereon or
reimbursement of any costs and expenses in connection therewith. The Pool Balance for each Trust
or for the Certificates issued by any Trust as of any Distribution Date shall be computed after
giving effect to any payment of principal of the Equipment Notes or payment with respect to other
Trust Property held in such Trust and the distribution thereof to be made on that date.

          “Post-Default Appraisal” has the meaning specified in Section 4.1(a)(iv).

          “Preferred B Pool Balance” means, as of any date, the excess of (A) the Pool Balance
of the Class B Certificates as of the immediately preceding Distribution Date (or, if such date is
on or before the first Distribution Date, the original aggregate face amount of the Class B
Certificates) (after giving effect to distributions made on such date) over (B) the sum of (i) the
outstanding principal amount of each Series B Equipment Note that remains unpaid as of such date
subsequent to the disposition of the Collateral under the Indenture pursuant to which such Series B
Equipment Note was issued and after giving effect to any distributions of the proceeds
of such disposition applied under such Indenture to the payment of each such Series B
Equipment Note, (ii) the outstanding principal amount of each Series B Equipment Note that

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remains
unpaid as of such date subsequent to the scheduled date of mandatory redemption of such Series B
Equipment Note following an Event of Loss (as defined in such Indenture) with respect to the
Aircraft which secured such Series B Equipment Note and after giving effect to the distributions of
any proceeds in respect of such Event of Loss applied under such Indenture to the payment of each
such Series B Equipment Note, (iii) the excess, if any, of (x) the outstanding amount of principal
and interest as of the date of sale of each Series B Equipment Note previously sold over (y) the
purchase price received with respect to the sale of such Series B Equipment Note (net of any
applicable costs and expenses of sale) and (iv) the outstanding principal amount of any Series B
Equipment Note with respect to which a Deemed Disposition Event has occurred; provided,
however, that if more than one of the clauses (i), (ii), (iii) and (iv) is applicable to
any one Series B Equipment Note, only the amount determined pursuant to the clause that first
became applicable shall be counted with respect to such Series B Equipment Note.

          “Premium” means any “Make-Whole Amount” as such term is defined in any Indenture.

          “Proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

          “Provider Incumbency Certificate” has the meaning specified in Section 2.5(c).

          “Provider Representatives” has the meaning specified in Section 2.5(c).

          “PTC Event of Default” means, with respect to each Trust Agreement, the failure to pay
within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the applicable
Class of Certificates on the Final Legal Distribution Date for such Class or (ii) interest due on
such Certificates on any Distribution Date (unless, in the case of the Class A Trust Agreement, the
Subordination Agent shall have made an Interest Drawing or a withdrawal from the Cash Collateral
Account with respect thereto in an aggregate amount sufficient to pay such interest and shall have
distributed such amount to the Trustee entitled thereto).

          “Rating Agencies” means, collectively, at any time, each nationally recognized rating
agency which shall have been requested to rate the Certificates and which shall then be rating the
Certificates. The initial Rating Agencies will be Moody’s and Standard & Poor’s.

          “Ratings Confirmation” means, with respect to any action proposed to be taken, a
written confirmation from each of the Rating Agencies that such action would not result in (i) a
reduction of the rating for any Class of Certificates below the then current rating for such Class
of Certificates or (ii) a withdrawal or suspension of the rating of any Class of Certificates.

          “Refinancing Certificateholders” has the meaning specified in Section 9.1(c).

          “Refinancing Certificates” has the meaning specified in Section 9.1(c).

          “Refinancing Equipment Notes” has the meaning specified in Section 9.1(c).

          “Refinancing Trust Agreement” has the meaning specified in Section 9.1(c).

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          “Refinancing Trust” has the meaning specified in Section 9.1(c).

          “Refinancing Trustee” has the meaning specified in Section 9.1(c).

          “Regular Distribution Dates” means each February 1 and August 1, commencing on
February 1, 2008; provided, however, that, if any such day shall not be a Business
Day, the related distribution shall be made on the next succeeding Business Day without additional
interest.

          “Replacement Liquidity Facility” means, for the Liquidity Facility, an irrevocable
revolving credit agreement (or agreements) in substantially the form of the replaced Liquidity
Facility, including reinstatement provisions, or in such other form (which may include a letter of
credit) as shall permit the Rating Agencies to confirm in writing their respective ratings then in
effect for the Class A Certificates (before downgrading of such ratings, if any, as a result of the
downgrading of the Liquidity Provider), in a face amount (or in an aggregate face amount) equal to
the then Required Amount and issued by a Person (or Persons) having a short-term rating or
short-term issuer credit rating, as the case may be, issued by both Rating Agencies which is equal
to or higher than the Threshold Rating. Without limitation of the form that a Replacement
Liquidity Facility otherwise may have pursuant to the preceding sentence, a Replacement Liquidity
Facility may have a stated expiration date earlier than 15 days after the Final Legal Distribution
Date of the Class A Certificates so long as such Replacement Liquidity Facility provides for a
Non-Extension Drawing as contemplated by Section 3.5(d) hereof.

          “Replacement Liquidity Provider” means a Person (or Persons) who issues a Replacement
Liquidity Facility.

          “Required Amount” means with respect to the Liquidity Facility or Cash Collateral
Account, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum
equal to the Stated Interest Rate for the Class A Certificates, that would be payable on the Class
A Certificates on each of the three successive Regular Distribution Dates immediately following
such day or, if such day is a Regular Distribution Date, on such day and the succeeding two Regular
Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class A
Certificates on such date and without regard to expected future payments of principal on such Class
of Certificates.

          “Responsible Officer” means (i) with respect to the Subordination Agent and each of
the Trustees, any officer in the corporate trust administration department of the Subordination
Agent or such Trustee or any other officer customarily performing functions similar to those
performed by the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity with a particular
subject and (ii) with respect to the Liquidity Provider, any authorized officer of the Liquidity
Provider.

          “Scheduled Payment” means, with respect to any Equipment Note, (i) any payment of
principal or interest on such Equipment Note (other than an Overdue Scheduled Payment) due from the
obligor thereon, which payment represents the installment of principal at
the stated maturity of such installment of principal on such Equipment Note, the payment of

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regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both
or (ii) any payment of interest on the corresponding Class of Certificates with funds drawn under
the Liquidity Facility or withdrawn from any Cash Collateral Account, which payment represents the
payment of regularly scheduled interest accrued on the unpaid principal amount of the related
Equipment Note; provided that any payment of principal of, Premium, if any, or interest
resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled
Payment.

          “Scheduled Payment Date” means, with respect to any Scheduled Payment, the date on
which such Scheduled Payment is scheduled to be made.

          “Section 2.4 Fraction” means, with respect to any Special Distribution Date, a
fraction, the numerator of which shall be the amount of principal of the applicable Series A
Equipment Notes being redeemed, purchased or prepaid on such Special Distribution Date, and the
denominator of which shall be the aggregate unpaid principal amount of all Series A Equipment Notes
outstanding as of such Special Distribution Date.

          “Senior Additional Certificateholder” has the meaning specified in Section 2.7(b).

          “Senior Additional Equipment Notes” has the meaning specified in Section 2.7(b).

          “Series A Equipment Notes” means the Series A Equipment Notes issued pursuant to any
Indenture by Southwest and authenticated by the Loan Trustee thereunder, and any such Equipment
Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture.

          “Series B Equipment Notes” means the Series B Equipment Notes issued pursuant to any
Indenture by Southwest and authenticated by the Loan Trustee thereunder, and any such Equipment
Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture.

          “60-Day Period” means 60-day period specified in Section 1110(a)(2)(A) of the
Bankruptcy Code.

          “Southwest” means Southwest Airlines Co., a Texas corporation, and its successors and
assigns.

          “Southwest Bankruptcy Event” means the occurrence and continuation of any of the
following:

     (a) Southwest shall consent to the appointment of or the taking of possession by a
receiver, trustee or liquidator of itself or of a substantial part of its property, or
Southwest shall admit in writing its inability to pay its debts generally as they come due,
or shall make a general assignment for the benefit of its creditors, or Southwest shall file
a voluntary petition in bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a case under any bankruptcy laws or other
insolvency laws (as in effect at such time) or an answer admitting the material allegations
of a petition filed against Southwest in any such case, or Southwest shall seek relief by

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voluntary petition, answer or consent, under the provisions of any other bankruptcy or
similar law providing for the reorganization or winding-up of corporations (as in effect at
such time) or Southwest shall seek an agreement, composition, extension or adjustment with
its creditors under such laws, or Southwest’s board of directors shall adopt a resolution
authorizing corporate action in furtherance of any of the foregoing; or

     (b) an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of Southwest, a receiver, trustee or liquidator
of Southwest or of any substantial part of its property, or any substantial part of the
property of Southwest shall be sequestered, or granting any other relief in respect of
Southwest as a debtor under any bankruptcy laws or other insolvency laws (as in effect at
such time), and any such order, judgment or decree of appointment or sequestration shall
remain in force undismissed, unstayed and unvacated for a period of 90 days after the date
of entry thereof; or

     (c) a petition against Southwest in a case under any bankruptcy laws or other
insolvency laws (as in effect at such time) is filed and not withdrawn or dismissed within
90 days thereafter, or if, under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to Southwest, any court of competent jurisdiction
assumes jurisdiction, custody or control of Southwest or of any substantial part of its
property and such jurisdiction, custody or control remains in force unrelinquished, unstayed
and unterminated for a period of 90 days.

          “Southwest Provisions” has the meaning specified in Section 9.1(a).

          “Special Distribution Date” means, with respect to any Special Payment, the date
chosen by the Subordination Agent pursuant to Section 2.4(a) for the distribution of such Special
Payment in accordance with this Agreement, whether distributed pursuant to Section 2.4 or Section
3.2 hereof.

          “Special Payment” means any payment (other than a Scheduled Payment) in respect of, or
any proceeds of, any Equipment Note or Collateral.

          “Special Payments Account” means the Eligible Deposit Account created pursuant to
Section 2.2(a)(ii) as a sub-account to the Collection Account.

          “Special Termination Drawing” has the meaning assigned to such term in Section 3.5(k).

          “Special Termination Notice” has the meaning assigned to such term in the Liquidity
Facility.

          “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.

          “Stated Amount” means the Maximum Commitment (as defined in the Liquidity Facility) of
the Liquidity Provider thereunder.

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          “Stated Expiration Date” has the meaning specified in Section 3.5(d).

          “Stated Interest Rate” means (i) with respect to the Class A Certificates, 6.15% per
annum and (ii) with respect to the Class B Certificates, 6.65% per annum.

          “Subordination Agent” has the meaning assigned to it in the preliminary statements to
this Agreement.

          “Subordination Agent Incumbency Certificate” has the meaning specified in Section
2.5(a).

          “Subordination Agent Representatives” has the meaning specified in Section 2.5(a).

          “Tax” and “Taxes” mean any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any similar kind (together with any and all interest, penalties,
loss, damage, liability, expense, additions to tax and additional amounts or costs incurred or
imposed with respect thereto) imposed or otherwise assessed by the United States of America or by
any state, local or foreign government (or any subdivision or agency thereof) or other taxing
authority, including, without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers’ compensation, unemployment compensation, or net
worth and similar charges; taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value added, taxes on goods and services, gains taxes, license, registration and
documentation fees, customs duties, tariffs, and similar charges.

          “Termination Notice” has the meaning assigned to such term in the Liquidity Facility.

          “Threshold Rating” means the short-term rating of P-1 by Moody’s and the short-term
issuer credit rating of A-1+ by Standard & Poor’s.

          “Treasury Regulations” means regulations, including proposed or temporary regulations,
promulgated under the Code. References herein to specific provisions of proposed or temporary
regulations shall include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.

          “Triggering Event” means (x) the occurrence of an Indenture Default under all of the
Indentures resulting in a PTC Event of Default with respect to the most senior Class of
Certificates then Outstanding, (y) the Acceleration of all of the outstanding Equipment Notes or
(z) the occurrence of a Southwest Bankruptcy Event.

          “Trust” means either the Class A Trust or the Class B Trust.

          “Trust Accounts” has the meaning specified in Section 2.2(a).

          “Trust Agreement” means either the Class A Trust Agreement or the Class B Trust
Agreement.

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          “Trust Property” with respect to any Trust, has the meaning set forth in the Trust
Agreement for such Trust.

          “Trustee” means either the Class A Trustee or the Class B Trustee.

          “Trustee Incumbency Certificate” has the meaning specified in Section 2.5(b).

          “Trustee Representatives” has the meaning specified in Section 2.5(b).

          “Unapplied Provider Advance” has the meaning assigned to such term in the Liquidity
Facility.

          “Underwriters” means Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc.,
Comerica Securities, Inc., SG Americas Securities, LLC and UBS Securities LLC.

          “Underwriting Agreement” means the Underwriting Agreement dated September 19, 2007
among the Underwriters and Southwest, relating to the purchase of the Certificates by the
Underwriters, as the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.

          “Unindemnified Tax” means (i) any Tax imposed on the net income, net worth or capital,
any franchise Tax or similar doing business Tax of the Subordination Agent or the Trustee and (ii)
any withholding Tax imposed by the United States (including, without limitation, any withholding
Tax imposed by the United States which is imposed or increased as a result of the Subordination
Agent’s or the Trustee’s failing to deliver to the Company any certificate or document necessary to
establish that payments under this Agreement are exempt from withholding Tax).

          “Written Notice” means, from the Subordination Agent, any Trustee or the Liquidity
Provider, a written instrument executed by the Designated Representative of such Person. An
invoice delivered by the Liquidity Provider pursuant to Section 3.1 in accordance with its normal
invoicing procedures shall constitute Written Notice under such Section.

          “WTC” has the meaning assigned to such term in the recital of parties to this
Agreement.

ARTICLE II

TRUST ACCOUNTS; CONTROLLING PARTY

          SECTION 2.1. Agreement to Terms of Subordination; Payments from Monies Received Only.
(a) Each Trustee hereby acknowledges and agrees to the terms of subordination and distribution
set forth in this Agreement in respect of each Class of Certificates and agrees to enforce such
provisions and cause all payments in respect of the Equipment Notes held by the Subordination Agent
and the Liquidity Provider to be applied in accordance with the terms of this Agreement. In
addition, each Trustee hereby agrees to cause the Equipment Notes
purchased by the related Trust to be registered in the name of the Subordination Agent or its

17

 

nominee, as agent and trustee for such Trustee, to be held in trust by the Subordination Agent
solely for the purpose of facilitating the enforcement of the subordination and other provisions of
this Agreement.

          (b) Except as otherwise expressly provided in the next succeeding sentence of this Section
2.1, all payments to be made by the Subordination Agent hereunder shall be made only from amounts
received by it that constitute Scheduled Payments, Special Payments or payments under Section 8.1
of the Participation Agreements, and only to the extent that the Subordination Agent shall have
received sufficient income or proceeds therefrom to enable it to make such payments in accordance
with the terms hereof. Each of the Trustees and the Subordination Agent hereby agrees and, as
provided in each Trust Agreement, each Certificateholder, by its acceptance of a Certificate and
the Liquidity Provider, by entering into the Liquidity Facility, has agreed to look solely to such
amounts to the extent available for distribution to it as provided in this Agreement and that none
of the Trustees, Loan Trustees nor the Subordination Agent is personally liable to any of them for
any amounts payable or any liability under this Agreement, any Trust Agreement, the Liquidity
Facility or such Certificate, except (in the case of the Subordination Agent) as expressly provided
herein or (in the case of the Trustees) as expressly provided in each Trust Agreement or (in the
case of the Loan Trustees) as expressly provided in any Operative Agreement.

          SECTION 2.2. Trust Accounts. (a) Upon the execution of this Agreement, the
Subordination Agent shall establish and maintain in its name (i) the Collection Account as an
Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein
are held in trust for the benefit of the Trustees, the Certificateholders and the Liquidity
Provider and (ii) as a sub-account in the Collection Account, the Special Payments Account as an
Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein
are held in trust for the benefit of the Trustees, the Certificateholders and the Liquidity
Provider. The Subordination Agent shall establish and maintain the Cash Collateral Accounts
pursuant to and under the circumstances set forth in Section 3.5(f) hereof. Upon such
establishment and maintenance under Section 3.5(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the “Trust Accounts” hereunder. Without
limiting the foregoing, all monies credited to the Trust Accounts shall be, and shall remain, the
property of the relevant Trust(s).

          (b) Funds on deposit in the Trust Accounts shall be invested and reinvested by the
Subordination Agent in Eligible Investments selected by the Subordination Agent if such investments
are reasonably available and have maturities no later than the earlier of (i) 90 days following the
date of such investment and (ii) the Business Day immediately preceding the Regular Distribution
Date or the date of the related distribution pursuant to Section 2.4 hereof, as the case may be,
next following the date of such investment; provided, however, that following the
making of a Downgrade Drawing, a Non-Extension Drawing or a Special Termination Drawing under the
Liquidity Facility, the Subordination Agent shall invest and reinvest such amounts in Eligible
Investments at the direction of Southwest (or, if and to the extent so specified to the
Subordination Agent by Southwest, the Liquidity Provider); provided further,
however, that, notwithstanding the foregoing proviso, following the making of a Downgrade
Drawing, a Non-Extension Drawing or a Special Termination Drawing under the initial Liquidity
Facility, the Subordination Agent shall invest and reinvest the amounts in the Cash Collateral

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Account in Eligible Investments pursuant to the written instructions of the Liquidity Provider
funding such Drawing; provided further, however, that upon the occurrence
and during the continuation of a Triggering Event, the Subordination Agent shall invest and
reinvest such amounts in accordance with the written instructions of the Controlling Party. Unless
otherwise expressly provided in this Agreement (including, without limitation, with respect to
Investment Earnings on amounts on deposit in the Cash Collateral Account pursuant to Section 3.5(f)
hereof), any Investment Earnings shall be deposited in the Collection Account when received by the
Subordination Agent and shall be applied by the Subordination Agent in the same manner as the other
amounts on deposit in the Collection Account are to be applied and any losses shall be charged
against the principal amount invested, in each case net of the Subordination Agent’s reasonable
fees and expenses in making such investments. The Subordination Agent shall not be liable for any
loss resulting from any investment, reinvestment or liquidation required to be made under this
Agreement other than by reason of its willful misconduct or gross negligence (or, with respect to
the handling or transfer of funds, its own negligence). Eligible Investments and any other
investment required to be made hereunder shall be held to their maturities except that any such
investment may be sold (without regard to its maturity) by the Subordination Agent without
instructions whenever such sale is necessary to make a distribution required under this Agreement.
Uninvested funds held hereunder shall not earn or accrue interest.

          (c) The Subordination Agent shall possess all right, title and interest in all funds on
deposit from time to time in the Trust Accounts and in all proceeds thereof (including all income
thereon, except as otherwise expressly provided in Section 3.3(b) with respect to Investment
Earnings). The Trust Accounts shall be held in trust by the Subordination Agent under the sole
dominion and control of the Subordination Agent for the benefit of the Trustees, the
Certificateholders and the Liquidity Provider, as the case may be. If, at any time, any of the
Trust Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, for which a Ratings
Confirmation for each Class of Certificates shall have been obtained) establish a new Collection
Account, Special Payments Account or Cash Collateral Account, as the case may be, as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such new Collection Account,
Special Payments Account or Cash Collateral Account, as the case may be. So long as WTC is an
Eligible Institution, the Trust Accounts shall be maintained with it as Eligible Deposit Accounts.

          SECTION 2.3. Deposits to the Collection Account and Special Payments Account. (a)
The Subordination Agent shall, upon receipt thereof, deposit in the Collection Account all
Scheduled Payments received by it (other than any Scheduled Payment which by the express terms
hereof is to be deposited to a Cash Collateral Account).

          (b) The Subordination Agent shall, on each date when one or more Special Payments are made to
the Subordination Agent as holder of the Equipment Notes, deposit in the Special Payments Account
the aggregate amount of such Special Payments.

          SECTION 2.4. Distributions of Special Payments. (a) Notice of Special Payment. Except as provided in Section 2.4(c) below, upon
receipt by the Subordination Agent, as registered holder of the Equipment Notes, of any notice of a
Special Payment (or, in the absence of any such notice, upon receipt by the Subordination Agent of
a Special Payment), the

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Subordination Agent shall promptly give notice thereof to each Trustee and
the Liquidity Provider. The Subordination Agent shall promptly calculate the amount of the
redemption or purchase of Equipment Notes, the amount of any Overdue Scheduled Payment or the
proceeds of Equipment Notes or Collateral, as the case may be, comprising such Special Payment
under the applicable Indenture or Indentures and shall promptly send to each Trustee and the
Liqudiity Provider a Written Notice of such amount and the amount allocable to each Trust. Such
Written Notice shall also set the distribution date for such Special Payment (a “Special
Distribution Date”), which shall be the Business Day which immediately follows the later to
occur of (x) the 15th day after the date of such Written Notice and (y) the date the Subordination
Agent has received or expects to receive such Special Payment. Amounts on deposit in the Special
Payments Account shall be distributed in accordance with Sections 2.4(b) and 2.4(c) and Article III
hereof, as applicable.

          For the purposes of the application of any Equipment Note Special Payment distributed on a
Special Distribution Date in accordance with Section 3.2 hereof, so long as no Indenture Default
shall have occurred and be continuing under any Indenture:

          (i) the amount of accrued and unpaid Liquidity Expenses that are not yet due that are payable
pursuant to clause “second” thereof shall be multiplied by the Section 2.4 Fraction;

          (ii) clause “third” thereof shall be deemed to read as follows: “third, (i) the sum
of such amount as shall be required to pay accrued and unpaid interest then in arrears on all
Liquidity Obligations (at the rate, or in the amount, provided in the Liquidity Facility) plus an
amount equal to the amount of accrued and unpaid interest on the Liquidity Obligations not in
arrears multiplied by the Section 2.4 Fraction, and (ii) if a Special Termination Drawing has been
made under any Liquidity Facility and has not been converted into a Final Drawing, the outstanding
amount of such Special Termination Drawing, shall be distributed to the Liquidity Provider”;

          (iii) clause “seventh” thereof shall be deemed to read as follows: “seventh, such
amount as shall be required to pay accrued, due and unpaid interest at the Stated Interest Rate on
the outstanding Pool Balance of the Class A Certificates together with (without duplication)
accrued and unpaid interest at the Stated Interest Rate on the outstanding principal amount of the
Series A Equipment Notes held in the Class A Trust being redeemed, purchased or prepaid”;

          (iv) clause “eighth” thereof shall be deemed to read as follows: “eighth, such amount
as shall be required to pay any accrued, due and unpaid Class B Adjusted Interest to the holders of
the Class B Certificates”; and

          (v) clause “eleventh” thereof shall be deemed to read as follows: “eleventh, such
amount as shall be required to pay in full accrued, due and unpaid interest at the Stated Interest
Rate on the outstanding Pool Balance of the Class B Certificates which was not
previously paid pursuant to clause “eighth” above to the holders of the Class B Certificates
together with (without duplication) accrued and unpaid interest at the Stated Interest Rate on the

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outstanding principal amount of the Series B Equipment Notes held in the Class B Trust and being
redeemed, purchased or prepaid”.

          (b) Investment of Amounts in Special Payments Account. Any amounts on deposit in the
Special Payments Account prior to the distribution thereof pursuant to Section 2.4 or 3.2 shall be
invested in accordance with Section 2.2(b). Investment Earnings on such investments shall be
distributed in accordance with Article III hereof.

          (c) Certain Payments. Except for amounts constituting Liquidity Obligations which
shall be distributed as provided in Section 3.2, the Subordination Agent will distribute promptly
upon receipt thereof (i) any indemnity payment or expense reimbursement received by it from
Southwest in respect of any Trustee or the Liquidity Provider (collectively, the “Payees”),
and (ii) any compensation received by it from Southwest under any Operative Agreement in respect of
any Payee, directly to the Payee entitled thereto.

          SECTION 2.5. Designated Representatives. (a) With the delivery of this Agreement,
the Subordination Agent shall furnish to the Liquidity Provider and each Trustee, and from time to
time thereafter may furnish to each Liquidity Provider and each Trustee, at the Subordination
Agent’s discretion, or upon the Liquidity Provider’s or any Trustee’s request (which request shall
not be made more than one time in any 12-month period), a certificate (a “Subordination Agent
Incumbency Certificate”) of a Responsible Officer of the Subordination Agent certifying as to
the incumbency and specimen signatures of the officers of the Subordination Agent and the
attorney-in-fact and agents of the Subordination Agent (the “Subordination Agent
Representatives”) authorized to give Written Notices on behalf of the Subordination Agent
hereunder. Until the Liquidity Provider and each Trustee receives a subsequent Subordination Agent
Incumbency Certificate, it shall be entitled to rely on the last Subordination Agent Incumbency
Certificate delivered to it hereunder.

          (b) With the delivery of this Agreement, each Trustee shall furnish to the Subordination
Agent, and from time to time thereafter may furnish to the Subordination Agent, at such Trustee’s
discretion, or upon the Subordination Agent’s request (which request shall not be made more than
one time in any 12-month period), a certificate (a “Trustee Incumbency Certificate”) of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen signatures of the
officers of such Trustee and the attorney-in-fact and agents of such Trustee (the “Trustee
Representatives”) authorized to give Written Notices on behalf of such Trustee hereunder.
Until the Subordination Agent receives a subsequent Trustee Incumbency Certificate, it shall be
entitled to rely on the last Trustee Incumbency Certificate delivered to it hereunder.

          (c) With the delivery of this Agreement, the Liquidity Provider shall furnish to the
Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, at
the Liquidity Provider’s discretion, or upon the Subordination Agent’s request (which request shall
not be made more than one time in any 12-month period), a certificate (each, a “Provider
Incumbency Certificate”) of any Responsible Officer of the Liquidity Provider certifying as to
the incumbency and specimen signatures of any officer, attorney-in-fact, agent or
other designated representative of the Liquidity Provider (in each case, the “Provider
Representatives” and, together with the Subordination Agent Representatives and the Trustee

21

 

Representatives, the “Designated Representatives”) authorized to give Written Notices on
behalf of the Liquidity Provider hereunder. Until the Subordination Agent receives a subsequent
Provider Incumbency Certificate, it shall be entitled to rely on the last Provider Incumbency
Certificate delivered to it hereunder.

          SECTION 2.6. Controlling Party. (a) The Trustees and the Liquidity Provider hereby
agree that, with respect to any Indenture at any given time, the Loan Trustee thereunder will be
directed in taking, or refraining from taking, any action under such Indenture or with respect to
the Equipment Notes issued thereunder (i) so long as no Indenture Default has occurred and is
continuing thereunder, by the holders of at least a majority of the outstanding principal amount of
such Equipment Notes (provided that, for so long as the Subordination Agent is the registered
holder of the Equipment Notes, the Subordination Agent shall act with respect to this clause (i) in
accordance with the directions of the Trustees (in the case of each such Trustee, with respect to
the Equipment Notes issued under such Indenture and held as Trust Property of such Trust)
constituting, in the aggregate, directions with respect to at least a majority of outstanding
principal amount of Equipment Notes except as provided in Section 9.1(b)), and (ii) after the
occurrence and during the continuance of an Indenture Default thereunder, in taking, or refraining
from taking, any action under such Indenture or with respect to such Equipment Notes, including
exercising remedies thereunder (including Accelerating the Equipment Notes issued thereunder or
foreclosing the Lien on the Aircraft securing such Equipment Notes), by the Controlling Party
(except as otherwise provided in Section 2.6(d)).

          (b) The “Controlling Party” shall be (x) the Class A Trustee and (y) upon payment of Final
Distributions to the holders of Class A Certificates, the Class B Trustee. For purposes of giving
effect to the provisions of Section 2.6(a) and this Section 2.6(b), the Trustees (other than the
Controlling Party) irrevocably agree (and the Certificateholders (other than the Certificateholders
represented by the Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) that the Subordination Agent, as record holder of the Equipment Notes, shall exercise
its voting rights in respect of the Equipment Notes so held by the Subordination Agent as directed
by the Controlling Party and any vote so exercised shall be binding upon the Trustees and all
Certificateholders.

          The Subordination Agent shall give Written Notice to all of the other parties to this
Agreement promptly upon a change in the identity of the Controlling Party. Each of the parties
hereto agrees that it shall not exercise any of the rights of the Controlling Party at such time as
it is not the Controlling Party hereunder; provided, however, that nothing herein
contained shall prevent or prohibit any Non-Controlling Party from exercising such rights as shall
be specifically granted to such Non-Controlling Party hereunder and under the other Operative
Agreements.

          (c) Notwithstanding the foregoing provisions of clauses (a) and (b) above, at any time after
18 months from the earliest to occur of (i) the date on which the entire Available Amount as of
such date under the Liquidity Facility shall have been drawn (excluding a Downgrade Drawing, a
Non-Extension Drawing or a Special Termination Drawing but including
a Final Drawing or a Downgrade Drawing, a Non-Extension Drawing or a Special Termination
Drawing that has been converted to a Final Drawing under the Liquidity Facility) and remain
unreimbursed, (ii) the date on which the portion of any Downgrade Drawing, Non-Extension

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Drawing or
a Special Termination Drawing equal to the amount on deposit in the Cash Collateral Account up to
the Required Amount as of such date under the Liquidity Facility shall have become and remain
“Applied Downgrade Advances” or “Applied Non-Extension Advances” or “Applied Special Termination
Advances”, as the case may be, under and as defined in the Liquidity Facility and (iii) the date on
which all Equipment Notes under all Indentures shall have been Accelerated (provided that
in the event of a bankruptcy proceeding under the Bankruptcy Code in which Southwest is a debtor,
any amounts payable in respect of Equipment Notes which have become immediately due and payable by
declaration or otherwise shall not be considered Accelerated for purposes of this sub-clause (iii)
until the expiration of the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code or
such longer period as may apply under Section 1110(a)(2)(B) or Section 1110(b) of the Bankruptcy
Code), the Liquidity Provider (so long as the Liquidity Provider has not defaulted in its
obligation to make any Drawing under the Liquidity Facility) shall have the right to elect, by
Written Notice to the Subordination Agent and each of the Trustees, to become the Controlling Party
hereunder at any time from and including the last day of such 18-month period.

          (d) Notwithstanding the foregoing provisions of clauses (a) through (c) above, if any holders
of the Class B Certificates or Additional Certificates exercise their right under Section 2.7
hereof to purchase Equipment Notes issued under any Indenture, the holders of the majority in
aggregate unpaid principal amount of all the Equipment Notes issued under such Indenture, instead
of the Controlling Party, shall be entitled to direct the relevant Loan Trustee in taking, or
refraining from taking, any action under such Indenture or with respect to such Equipment Notes,
including exercising remedies thereunder (including Accelerating the Equipment Notes issued
thereunder or foreclosing the Lien on the Aircraft securing such Equipment Notes) (it being
understood and agreed that any Equipment Notes that continue to be held by the Subordination Agent
shall be voted in accordance with clause (a) above).

          (e) The exercise of remedies by the Controlling Party under this Agreement shall be expressly
limited by Sections 4.1(a)(ii) and 4.1(a)(iii) hereof.

          (f) The Controlling Party shall not be entitled to require or obligate any Non-Controlling
Party to provide funds necessary to exercise any right or remedy hereunder.

          SECTION 2.7. Equipment Note Buy-Out Rights. (a) If an Equipment Note Buy-Out Event
has occurred and is continuing, then, with respect to the Indentures referred to below in this
clause (a), any Class B Certificateholder may, upon 15 days’ prior written notice to the
Subordination Agent, each Trustee (and each such Trustee shall promptly provide such notice to all
Certificateholders of its Trust) and each applicable Loan Trustee given on or before the date which
is six months after the occurrence of the applicable Equipment Note Buy-Out Event, purchase on the
third Business Day next following the expiry of such 15-day notice period all, but not less than
all, of the Series A Equipment Notes issued under any one or more of the Indentures for a purchase
price equal to the sum of the aggregate Note Target Price for such Series A Equipment Notes plus an
amount equal to the Excess Liquidity Obligations in respect of such Indentures. If prior to the
end of such 15-day period, any other holder of the Class B Certificates notifies the Subordination
Agent, each Trustee (and each such Trustee shall promptly notify all Certificateholders of its
Trust, including the purchasing Class B Certificateholder) and each applicable Loan Trustee that it
wishes to participate in such purchase,

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then such other Certificateholder may join with the
purchasing Certificateholder to purchase such Series A Equipment Notes pro rata based on the
interest in the Class B Trust held by each such Certificateholder compared to such interests held
by all such participating Certificateholders.

               (b) If an Equipment Note Buy-Out Event has occurred and is continuing, then regardless of
whether any Class B Certificateholder (or, if applicable, any Senior Additional Certificateholder
(as defined below)) has elected to exercise its right to purchase Equipment Notes under this
Section 2.7 (and so long as, with respect to the Indentures referred to in this clause (b), no
Junior Additional Certificateholder (as defined below) has elected to exercise its right to
purchase Equipment Notes issued under such Indentures pursuant to this Section 2.7), any Additional
Certificateholder may, upon 15 days’ prior written notice to the Subordination Agent, each Trustee
(and each such Trustee shall promptly provide such notice to all Certificateholders of the
applicable Trust) and each applicable Loan Trustee given on or before the date which is six months
after the occurrence of the applicable Equipment Note Buy-Out Event, purchase on the third Business
Day next following the expiry of such 15-day notice period all, but not less than all, of the
Series A Equipment Notes and the Series B Equipment Notes (and, if applicable, any Senior
Additional Equipment Notes (as defined below)) issued under any one or more Indentures for a
purchase price equal to the sum of the aggregate Note Target Price for such Series A Equipment
Notes, and Series B Equipment Notes (and, if applicable, any Senior Additional Equipment Notes)
plus an amount equal to the Excess Liquidity Obligations in respect of such Indentures. If prior
to the end of such 15-day period, any other holder of such class of Additional Certificates
notifies the Subordination Agent, each Trustee (and each such Trustee shall promptly notify all
Certificateholders of the applicable Trust, including the purchasing Additional Certificateholder)
and each applicable Loan Trustee that it wishes to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase such Series A
Equipment Notes and Series B Equipment Notes (and, if applicable, any Senior Additional Equipment
Notes) pro rata based on the interest in the applicable Trust held by each such Certificateholder
compared to such interests held by all such participating Certificateholders.

          “Junior Additional Certificateholder” means, with respect to any Additional
Certificateholder exercising its right to purchase Equipment Notes under this Section 2.7(b), any
holder of any class (or classes) of Additional Certificates that rank junior, in priority of
payment under this Agreement, to the class of Additional Certificates held by such Additional
Certificateholder.

          “Senior Additional Certificateholder” means, with respect to any Additional
Certificateholder exercising its right to purchase Equipment Notes under this Section 2.7(b), any
holder of any class (or classes) of Additional Certificates that rank senior, in priority of
payment under this Agreement, to the class of Additional Certificates held by such Additional
Certificateholder.

          “Senior Additional Equipment Notes” means, with respect to any Additional
Certificateholder exercising its right, under this Section 2.7(b), to purchase Equipment Notes
issued under any Indenture, any series of Additional Equipment Notes that rank senior, in priority
of payment under such Indenture, to the series of Additional Equipment Notes corresponding to the
class of Additional Certificates held by such Additional Certificateholder.

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          (c) On the date of any purchase by the Class B Certificateholders or any Additional
Certificateholders, as applicable, of Equipment Notes issued under any Indenture, the purchasing
Certificateholders shall pay to the Subordination Agent in immediately available funds the
aggregate purchase price of all of the Equipment Notes being purchased as specified in this Section
2.7. The proceeds received by the Subordination Agent pursuant to this clause (d) shall be
promptly applied by the Subordination Agent in accordance with the first paragraph of Section
2.4(a) and Section 3.2 hereof.

          (d) From and after the purchase of any Equipment Notes pursuant to this Section 2.7, any
proceeds received or payments made with respect to such purchased Equipment Notes shall be paid
directly to the holders of such Equipment Notes in accordance with the related Indentures pro rata
and shall not be subject to application under Article III hereof. Any proceeds received or
payments made with respect to any Equipment Notes under the related Indenture not purchased
pursuant to this Section 2.7 shall continue to be paid to the Subordination Agent and shall be
applied in accordance with Article III hereof.

          (e) Notwithstanding the purchase of any Equipment Notes under any Indenture pursuant to this
Section 2.7, the provisions of the Granting Clause, Section 2.06, Article III and Section 11.01 and
the definitions of “Related Additional Series Equipment Note”, “Related Equipment Note”, “Related
Event of Default”, “Related Indenture Indemnitee”, “Related Indentures”, “Related Mortgagee”,
“Related Note Holder”, “Related Operative Agreements”, “Related Participation Agreement”, “Related
Payment Default”, “Related Secured Obligations”, “Related Secured Parties”, “Related Series A
Equipment Note”, “Related Series B Equipment Note”, and “Related Special Default” (the
“Cross-Collateralization Provisions”) of such Indenture shall remain unchanged and in full
force and effect, and may not be amended, modified or otherwise waived in any manner without the
prior written consent of the Subordination Agent acting on the instructions of each Trustee. As a
condition precedent to any purchase of Equipment Notes under this Section 2.7, each purchasing
Certificateholder shall confirm in writing to the Subordination Agent that such purchasing
Certificateholder acknowledges, consents and agrees to the provisions of this Section 2.7(e) and
shall not take any action in contravention thereof or otherwise amend, modify or waive the
Cross-Collateralization Provisions of such Indenture, and further acknowledges, consents and agrees
to the restrictions set forth in Sections 4.1(a)(ii) and 4.1(a)(iii) hereof.

          (f) In the event that Southwest or any of its Affiliates is an owner of a Class B Certificate
(or an Additional Certificate), it shall not have any right, as a Class B Certificateholder (or an
Additional Certificateholder), as applicable, to purchase any Equipment Notes under this Section
2.7.

          (g) In connection with the purchase of Equipment Notes pursuant to this Section 2.7, upon the
payment by any Certificateholder of the applicable Excess Liquidity
Obligations and that portion of Note Target Price constituting enforcement costs incurred by
the Subordination Agent, such Certificateholder, as the holder of such Equipment Notes, shall be
subrogated to the right of the Subordination Agent to receive payment of such amounts in respect of
such Equipment Notes under the applicable Indenture.

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          (h) The right of any Certificateholder to purchase Equipment Notes pursuant to this Section
2.7 shall be subject to such purchase being exempt from, or not subject to, the registration
requirements of the Securities Act of 1933, as amended, and in compliance with other applicable
state or foreign securities laws. Each purchaser shall be required to provide to the Subordination
Agent reasonably satisfactory evidence of compliance with such laws.

          (i) Any Taxes incurred by the applicable Loan Trustee, the Subordination Agent or the
applicable Trustee in connection with the sale of any Equipment Note pursuant to the exercise by
one or more Certificateholders of the right to purchase Equipment Notes pursuant to this Section
2.7 shall be paid by such purchasing Certificateholders, on a pro rata basis.

ARTICLE III

RECEIPT, DISTRIBUTION AND APPLICATION

OF AMOUNTS RECEIVED

          SECTION 3.1. Written Notice of Distribution. (a) No later than 3:00 P.M. (New York
City time) on the Business Day immediately preceding each Distribution Date, each of the following
Persons shall deliver to the Subordination Agent a Written Notice setting forth the following
information as at the close of business on such Business Day:

     (i) With respect to the Class A Certificates, the Class A Trustee shall separately set
forth the amounts to be paid in accordance with clause “first” (to reimburse payments made
by such Trustee or the Class A Certificateholders, as the case may be, pursuant to subclause
(ii) or (iv) of clause “first”), subclauses (ii) and (iii) of clause “sixth” of Section 3.2
hereof and clauses “seventh” and “tenth” of Section 3.2 hereof;

     (ii) With respect to the Class B Certificates, the Class B Trustee shall separately set
forth the amounts to be paid in accordance with clause “first” (to reimburse payments made
by such Trustee or the Class B Certificateholders, as the case may be, pursuant to subclause
(ii) or (iv) of clause “first”), subclauses (ii) and (iii) of clause “sixth” of Section 3.2
hereof and clauses “eighth”, “eleventh” and “twelfth” of Section 3.2 hereof;

     (iii) With respect to the Liquidity Facility, the Liquidity Provider shall separately
set forth the amounts to be paid to it in accordance with subclauses (iii) and (iv) of
clause “first” of Section 3.2 hereof, clause “second” of Section 3.2 hereof, clause “third”
of Section 3.2 hereof, clause “fourth” of Section 3.2 hereof and clause “fifth” of Section
3.2 hereof; and

     (iv) Each Trustee shall set forth the amounts to be paid in accordance with clause
“sixth” of Section 3.2 hereof.

          (b) At such time as a Trustee or the Liquidity Provider shall have received all amounts owing
to it (and, in the case of a Trustee, the Certificateholders for which it is acting) pursuant to
Section 3.2 hereof and, in the case of the Liquidity Provider, its commitment or

26

 

obligations under
the Liquidity Facility shall have terminated or expired, such Person shall, by a Written Notice, so
inform the Subordination Agent and each other party to this Agreement.

          (c) As provided in Section 6.5 hereof, the Subordination Agent shall be fully protected in
relying on any of the information set forth in a Written Notice provided by any Trustee, the
Liquidity Provider pursuant to paragraphs (a) and (b) above and shall have no independent
obligation to verify, calculate or recalculate any amount set forth in any Written Notice delivered
in accordance with such paragraphs.

          (d) Any Written Notice delivered by the Trustee, the Liquidity Provider or the Subordination
Agent, as applicable, pursuant to Section 3.1(b) hereof, if made prior to 10:00 A.M. (New York City
time) on any Business Day, shall be effective on the date delivered (or if delivered later on a
Business Day or if delivered on a day which is not a Business Day shall be effective as of the next
Business Day). Subject to the terms of this Agreement, the Subordination Agent shall as promptly
as practicable comply with any such instructions; provided, however, that any
transfer of funds pursuant to any instruction received after 10:00 A.M. (New York City time) on any
Business Day may be made on the next succeeding Business Day.

          (e) In the event the Subordination Agent shall not receive from any Person any information set
forth in paragraph (a) above which is required to enable the Subordination Agent to make a
distribution to such Person pursuant to Section 3.2 hereof, the Subordination Agent shall request
such information and, failing to receive any such information, the Subordination Agent shall not
make such distribution(s) to such Person. In such event, the Subordination Agent shall make
distributions pursuant to clauses “first” through “fourteenth” of Section 3.2 to the extent it
shall have sufficient information to enable it to make such distributions, and shall continue to
hold any funds remaining, after making such distributions, until the Subordination Agent shall
receive all necessary information to enable it to distribute any funds so withheld.

          (f) On such dates (but not more frequently than monthly) as the Liquidity Provider or any
Trustee shall request, but in any event automatically at the end of each calendar quarter, the
Subordination Agent shall send to such party a written statement reflecting all amounts on deposit
with the Subordination Agent pursuant to Section 3.1(e) hereof.

          The notices required under this Section 3.1 may be in the form of a schedule or similar
document provided to the Subordination Agent by the parties referenced therein or by any one of
them, which schedule or similar document may state that, unless there has been a prepayment of the
Certificates, such schedule or similar document is to remain in effect until any substitute notice
or amendment shall be given to the Subordination Agent by the party providing such notice.

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          SECTION 3.2. Distribution of Amounts on Deposit in the Collection Account. Except as
otherwise provided in Sections 2.4, 3.1(e), 3.3, 3.5(b) and 3.5(k), amounts on deposit in the
Collection Account (including amounts on deposit in the Special Payments Account) shall be promptly
distributed on each Regular Distribution Date (or, in the case of any amount described in Section
2.4(a), on the Special Distribution Date thereof) in the following order of priority and in
accordance with the information provided to the Subordination Agent pursuant to Section 3.1(a)
hereof:

     first, such amount as shall be required to reimburse (i) the Subordination
Agent for any reasonable out-of-pocket costs and expenses actually incurred by it (to the
extent not previously reimbursed) or reasonably expected to be incurred by it for the period
ending on the next succeeding Regular Distribution Date (which shall not exceed $150,000
unless approved in writing by the Controlling Party) in the protection of, or the
realization of the value of, the Equipment Notes or any Collateral, shall be applied by the
Subordination Agent in reimbursement of such costs and expenses, (ii) any Trustee for any
amounts of the nature described in clause (i) above actually incurred by it under the
applicable Trust Agreement (to the extent not previously reimbursed), shall be distributed
to such Trustee, (iii) the Liquidity Provider for any amounts of the nature described in
clause (i) above actually incurred by it (to the extent not previously reimbursed), shall be
distributed to the Liquidity Provider, and (iv) the Liquidity Provider or any
Certificateholder for payments, if any, made by it to the Subordination Agent or any Trustee
in respect of amounts described in clause (i) above actually incurred by it (to the extent
not previously reimbursed) (collectively, the “Administration Expenses”), shall be
distributed to the Liquidity Provider, Certificateholder or the applicable Trustee for the
account of such Certificateholder, in each such case, pro rata on the basis of all amounts
described in clauses (i) through (iv) above;

     second, such amount as shall be required to pay all accrued and unpaid
Liquidity Expenses owed to the Liquidity Provider shall be distributed to the Liquidity
Provider;

     third, (i) such amount as shall be required to pay the aggregate amount of
accrued and unpaid interest on all Liquidity Obligations (at the rate, or in the amount,
provided in the Liquidity Facility) and (ii) if a Special Termination Drawing has been made
under the Liquidity Facility and has not been converted into a Final Drawing, the
outstanding amount of such Special Termination Drawing shall be distributed to the Liquidity
Provider;

     fourth, such amount as shall be required (A) if any Cash Collateral Account had
been previously funded as provided in Section 3.5(f), unless (i) a Performing Note
Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing
with respect to the Liquidity Facility or (ii) a Final Drawing shall have occurred with
respect to the Liquidity Facility, to fund such Cash Collateral Account up to its Required
Amount shall be deposited in such Cash Collateral Account, (B) if the Liquidity Facility
shall become a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed
Interest Drawings under the Liquidity Facility have reduced the Available Amount thereunder
to zero, unless (i) a Performing Note Deficiency exists and a Liquidity Event of Default
shall have occurred and be continuing with respect to the

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Liquidity Facility or (ii) a Final Drawing shall have occurred with respect to the
Liquidity Facility, to deposit into the related Cash Collateral Account an amount equal to
such Cash Collateral Account’s Required Amount shall be deposited in such Cash Collateral
Account, and (C) if, with respect to the Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause “fourth” is applicable, to pay or reimburse the Liquidity
Provider in an amount equal to the amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause “second” or “third” of
this Section 3.2), pro rata on the basis of the amounts of all such deficiencies and/or
unreimbursed Liquidity Obligations of the Liquidity Provider;

     fifth, if, with respect to the Liquidity Facility, any amounts are to be
distributed pursuant to either subclause (A) or (B) of clause “fourth” above, then the
Liquidity Provider shall be paid the excess of (x) the aggregate outstanding amount of
unreimbursed Advances (whether or not then due) under the Liquidity Facility over (y) the
Required Amount;

     sixth, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Unindemnified Taxes), expense, fee, charge or
other loss incurred by or any other amount payable to the Subordination Agent in connection
with the transactions contemplated hereby (to the extent not previously reimbursed), shall
be applied by the Subordination Agent in reimbursement of such amount, (ii) each Trustee for
any Tax (other than Unindemnified Taxes), expense, fee, charge, loss or any other amount
payable to such Trustee under the applicable Trust Agreements (to the extent not previously
reimbursed), shall be distributed to such Trustee, and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of amounts described
in clause (i) above, shall be distributed to the applicable Trustee for the account of such
Certificateholder, in each such case, pro rata on the basis of all amounts described in
clauses (i) through (iii) above;

     seventh, such amount as shall be required to pay in full accrued and unpaid
interest at the Stated Interest Rate on the Pool Balance of the Class A Certificates shall
be distributed to the Class A Trustee;

     eighth, such amount as shall be required to pay unpaid Class B Adjusted
Interest to the holders of the Class B Certificates;

     ninth, [Reserved];

     tenth, such amount as shall be required to pay in full Expected Distributions
to the holders of the Class A Certificates on such Distribution Date shall be distributed to
the Class A Trustee;

     eleventh, such amount as shall be required to pay in full accrued and unpaid
interest at the Stated Interest Rate on the Pool Balance of the Class B Certificates which
was not previously paid pursuant to clause “eighth” above to the holders of the Class B
Certificates;

29

 

     twelfth, such amount as shall be required to pay in full Expected Distributions
to the holders of the Class B Certificates on such Distribution Date shall be distributed to
the Class B Trustee; and

     thirteenth, the balance, if any, of any such amount remaining thereafter shall
be held in the Collection Account for later distribution in accordance with this Article
III.

          With respect to clauses “first” and “sixth” above, no amounts shall be reimbursable to the
Subordination Agent, any Trustee, the Liquidity Provider or any Certificateholder for any payments
made by any such Person in connection with any Equipment Note that is no longer held by the
Subordination Agent (to the extent that such payments relate to periods after such Equipment Note
ceases to be held by the Subordination Agent).

          SECTION 3.3. Other Payments. (a) Any payments received by the Subordination Agent
for which no provision as to the application thereof is made in this Agreement shall be distributed
by the Subordination Agent (i) in the order of priority specified in Section 3.2 hereof and (ii) to
the extent received or realized at any time after the Final Distributions for each Class of
Certificates have been made, in the manner provided in clause “first” of Section 3.2 hereof.

          (b) Notwithstanding the priority of payments specified in Section 3.2, in the event any
Investment Earnings on amounts on deposit in any Cash Collateral Account resulting from an
Unapplied Provider Advance are deposited in the Collection Account or the Special Payments Account,
such Investment Earnings shall be used to pay interest payable in respect of such Unapplied
Provider Advance to the extent of such Investment Earnings.

          (c) If the Subordination Agent receives any Scheduled Payment after the Scheduled Payment Date
relating thereto, but prior to such payment becoming an Overdue Scheduled Payment, then the
Subordination Agent shall deposit such Scheduled Payment in the Collection Account and promptly
distribute such Scheduled Payment in accordance with the priority of distributions set forth in
Section 3.2 hereof; provided that, for the purposes of this Section 3.3(c) only, each
reference in clause “tenth” or “twelfth” of Section 3.2 to “Distribution Date” shall be deemed to
refer to such Scheduled Payment Date.

          (d) Payments in respect of Liquidity Obligations under Section 3.2 shall be without
duplication of any indemnity payment, expense reimbursement or compensation previously paid to the
applicable Liquidity Provider under Section 2.4(c).

          SECTION 3.4. Payments to the Trustees and the Liquidity Provider. Any amounts
distributed hereunder to the Liquidity Provider shall be paid to the Liquidity Provider by wire
transfer of funds to the address the Liquidity Provider shall provide to the Subordination Agent.
The Subordination Agent shall provide a Written Notice of any such transfer to the Liquidity
Provider at the time of such transfer. Any amounts distributed hereunder by the Subordination
Agent to any Trustee which shall not be the same institution as the Subordination Agent shall be
paid to such Trustee by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.

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          SECTION 3.5. Liquidity Facility. (a) Interest Drawings. If on any Distribution Date, after giving effect to the
subordination provisions of this Agreement, the Subordination Agent shall not have sufficient funds
for the payment of any amounts due and owing in respect of accrued interest on the Class A
Certificates (at the Stated Interest Rate for such Class of Certificates) then, prior to 12:30 p.m.
(New York City time) on such Distribution Date, (i) the Subordination Agent shall request a drawing
(each such drawing, an “Interest Drawing”) under the Liquidity Facility in an amount equal
to the lesser of (x) an amount sufficient to pay the amount of such accrued interest (at the
applicable Stated Interest Rate for such Class of Certificates) and (y) the Available Amount, and
shall pay such amount to the Trustee with respect to such Class of Certificates in payment of such
accrued interest.

          (b) Application of Interest Drawings. Notwithstanding anything to the contrary
contained in this Agreement, all payments received by the Subordination Agent in respect of an
Interest Drawing under the Liquidity Facility and all amounts withdrawn by the Subordination Agent
from the Cash Collateral Account, and payable in each case to the Class A Certificateholders or the
Class A Trustee, shall be promptly distributed to the Class A Trustee.

          (c) Downgrade Drawings. (i) With respect to the Liquidity Facility, a Downgrade
Drawing shall be requested by the Subordination Agent thereunder as provided in Section
3.5(c)(iii), if at any time a Downgrade Event shall have occurred (a “Downgraded
Facility”), unless the Liquidity Provider or Southwest arranges for a Replacement Liquidity
Provider as provided in Section 3.5(c)(ii) with respect to the Liquidity Facility.

               (ii) If at any time the Liquidity Facility becomes a Downgraded Facility, the Subordination
Agent shall request a Downgrade Drawing thereunder in accordance with Section 3.5(c)(iii), unless
the Liquidity Provider or Southwest arranges for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility to the Subordination Agent within 10 days (or 45 days if
Standard & Poor’s downgrades the Liquidity Provider’s ratings from A-1+ to A-1) after receiving
notice of a Downgrade Event (but not later than the expiration date of such Downgraded Facility).

               (iii) Upon the occurrence of any Downgrade Event, unless a Replacement Liquidity Facility is
arranged as provided in Section 3.5(c)(ii), the Subordination Agent shall, on the 10th (or the
45th, as the case may be) day referred to in Section 3.5(c)(ii) (or if such 10th day or
45th day, as the case may be, is not a Business Day, on the next succeeding Business
Day) (or, if earlier, the expiration date of such Downgraded Facility), request a drawing in
accordance with and to the extent permitted by such Downgraded Facility (such drawing, a
“Downgrade Drawing”) of the Available Amount thereunder. Amounts drawn pursuant to a
Downgrade Drawing shall be maintained and invested as provided in Section 3.5(f) hereof. The
Liquidity Provider may also arrange for a Replacement Liquidity Provider to issue and deliver a
Replacement Liquidity Facility at any time after such Downgrade Drawing so long as such Downgrade
Drawing has not been reimbursed in full to the Liquidity Provider.

          (d) Non-Extension Drawings. If the Liquidity Facility is scheduled to expire on a
date (the “Stated Expiration Date”) prior to the date that is 15 days after the Final Legal
Distribution Date for the Class A Certificates, then, no earlier than the 60th day and no later
than the 40th day prior to the then Stated Expiration Date, the Subordination Agent shall request
that

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the Liquidity Provider extend the Stated Expiration Date until the earlier of (i) the date
which is 15 days after such Final Legal Distribution Date and (ii) the date that is the day
immediately preceding the 364th day occurring after the last day of the applicable
Consent Period (as hereinafter defined) (unless the obligations of the Liquidity Provider are
earlier terminated in accordance with the Liquidity Facility). Whether or not the Liquidity
Provider has received a request from the Subordination Agent, the Liquidity Provider shall advise
the Subordination Agent, no earlier than the 40th day (or, if earlier, the date of the
Liquidity Provider’s receipt of such request, if any, from the Subordination Agent) and no later
than the 25th day prior to the Stated Expiration Date then in effect for the Liquidity
Facility (such period, the “Consent Period”), whether, in its sole discretion, it agrees to
extend such Stated Expiration Date. If (A) on or before the date on which such Consent Period
ends, the Liquidity Facility shall not have been replaced in accordance with Section 3.5(e) and (B)
the Liquidity Provider fails irrevocably and unconditionally to advise the Subordination Agent on
or before the date on which such Consent Period ends that such Stated Expiration Date then in
effect shall be so extended for the Liquidity Facility, the Subordination Agent shall, on the date
on which such Consent Period ends (or as soon as possible thereafter), in accordance with the terms
of the Liquidity Facility (a “Non-Extended Facility”), request a drawing under the
Liquidity Facility (such drawing, a “Non-Extension Drawing”) of all available and undrawn
amounts thereunder. Amounts drawn pursuant to a Non-Extension Drawing shall be maintained and
invested in accordance with Section 3.5(f) hereof.

          (e) Issuance of Replacement Liquidity Facility. (i) At any time, Southwest may, at
its option, with cause or without cause, arrange for a Replacement Liquidity Facility to replace
the Liquidity Facility (including any Replacement Liquidity Facility provided pursuant to Section
3.5(e)(ii) hereof); provided, however, that the initial Liquidity Provider for the
Liquidity Facility shall not be replaced by Southwest as a Liquidity Provider with respect to such
Liquidity Facility prior to the third anniversary of the Closing Date unless (A) there shall have
become due to such initial Liquidity Provider, or such initial Liquidity Provider shall have
demanded, amounts pursuant to Section 3.01, 3.02 or 3.03 of the Liquidity Facility and the
replacement of such initial Liquidity Provider would reduce or eliminate the obligation to pay such
amounts or Southwest determines in good faith that there is a substantial likelihood that such
initial Liquidity Provider will have the right to claim any such amounts (unless such initial
Liquidity Provider waives, in writing, any right it may have to claim such amounts), which
determination shall be set forth in a certificate delivered by Southwest to such initial Liquidity
Provider setting forth the basis for such determination and accompanied by an opinion of outside
counsel selected by Southwest and reasonably acceptable to such initial Liquidity Provider
verifying the legal conclusions, if any, of such certificate relating to such basis,
provided that, in the case of any likely claim for such amounts based upon any proposed, or
proposed change in, law, rule, regulation, interpretation, directive, requirement, request or
administrative practice, such opinion may assume the adoption or promulgation of such proposed
matter, (B) it shall become unlawful or impossible for such initial Liquidity Provider (or its
Facility Office) to maintain or fund its LIBOR Advances as described in Section 3.10 of the
Liquidity Facility, (C) the Liquidity Facility of such initial Liquidity Provider shall become a
Downgraded Facility or a Non-Extended Facility or a Downgrade Drawing or a Non-Extension Drawing
shall have occurred under the Liquidity Facility of such initial Liquidity Provider or (D) such
initial Liquidity Provider shall have breached any of its payment (including, without limitation,
funding) obligations under the Liquidity Facility in respect of which it is the Liquidity Provider.
If such

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Replacement Liquidity Facility is provided at any time after a Downgrade Drawing, a
Non-Extension Drawing or a Special Termination Drawing has been made, all funds on deposit in the
relevant Cash Collateral Account will be returned to the Liquidity Provider being replaced.

               (ii) If the Liquidity Provider shall determine not to extend the Liquidity Facility in
accordance with Section 3.5(d), then the Liquidity Provider may, at its option, arrange for a
Replacement Liquidity Facility to replace the Liquidity Facility during the period no earlier than
40 days and no later than 25 days prior to the then effective Stated Expiration Date of such
Liquidity Facility. At any time after a Non-Extension Drawing has been made under the Liquidity
Facility, the Liquidity Provider may, at its option, arrange for a Replacement Liquidity Facility
to replace the Liquidity Facility under which such Non-Extension Drawing has been made.

               (iii) No Replacement Liquidity Facility arranged by Southwest or a Liquidity Provider in
accordance with clause (i) or (ii) above or pursuant to Section 3.5(c), respectively, shall become
effective and no such Replacement Liquidity Facility shall be deemed a “Liquidity Facility” under
the Operative Agreements, unless and until (A) each of the conditions referred to in sub-clauses
(iv)(x) and (z) below shall have been satisfied, (B) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations of the Class A
Certificateholders under any of the Operative Agreements, the applicable Trustee shall have
consented, in writing, to the execution and issuance of such Replacement Liquidity Facility and (C)
in the case of a Replacement Liquidity Facility arranged by the Liquidity Provider under Section
3.5(e)(ii) or pursuant to Section 3.5(c), such Replacement Liquidity Facility is acceptable to
Southwest.

               (iv) In connection with the issuance of any Replacement Liquidity Facility, the Subordination
Agent shall (x) prior to the issuance of such Replacement Liquidity Facility, obtain written
confirmation from each Rating Agency that such Replacement Liquidity Facility will not cause a
reduction of any rating then in effect for the Class A Certificates by such Rating Agency (without
regard to any downgrading of any rating of any Liquidity Provider being replaced pursuant to
Section 3.5(c) hereof), (y) pay all Liquidity Obligations then owing to the replaced Liquidity
Provider (which payment shall be made first from available funds in the applicable Cash Collateral
Account as described in clause (v) of Section 3.5(f) hereof, and thereafter from any other
available source, including, without limitation, a drawing under the Replacement Liquidity
Facility) and (z) cause the issuer of the Replacement Liquidity Facility to deliver the Replacement
Liquidity Facility to the Subordination Agent, together with a legal opinion opining that such
Replacement Liquidity Facility is an enforceable obligation of such Replacement Liquidity Provider.

               (v) Upon satisfaction of the conditions set forth in clauses (iii) and (iv) of this Section
3.5(e) with respect to a Replacement Liquidity Facility, (w) the replaced Liquidity Facility shall
terminate, (x) the Subordination Agent shall, if and to the extent so requested by Southwest or the
Liquidity Provider being replaced, execute and deliver any certificate or other instrument required
in order to terminate the replaced Liquidity Facility, shall surrender the replaced Liquidity
Facility to the Liquidity Provider being replaced and shall execute and deliver the Replacement
Liquidity Facility and any associated Fee Letters, (y) each of the parties hereto shall enter into
any amendments to this Agreement necessary to give effect to (1) the

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replacement of the applicable Liquidity Provider with the applicable Replacement Liquidity
Provider and (2) the replacement of the applicable Liquidity Facility with the applicable
Replacement Liquidity Facility and (z) the applicable Replacement Liquidity Provider shall be
deemed to be a Liquidity Provider with the rights and obligations of a Liquidity Provider hereunder
and under the other Operative Agreements and such Replacement Liquidity Facility shall be deemed to
be a Liquidity Facility hereunder and under the other Operative Agreements.

          (f) Cash Collateral Account; Withdrawals; Investments. In the event the Subordination
Agent shall draw all available amounts under the Liquidity Facility, pursuant to Section 3.5(c),
3.5(d), 3.5(i) or 3.5(k) hereof, or in the event amounts are to be deposited in the Cash Collateral
Account pursuant to subclause (A) or (B) of clause “fourth” of Section 3.2, amounts so drawn or to
be deposited, as the case may be, shall be deposited by the Subordination Agent in the Cash
Collateral Account. All amounts on deposit in the Cash Collateral Account shall be invested and
reinvested in Eligible Investments in accordance with Section 2.2(b) hereof.

          On each Interest Payment Date (or, in the case of any Special Distribution Date with respect
to the distribution of a Special Payment, on such Special Distribution Date), Investment Earnings
on amounts on deposit in the Cash Collateral Account (or, in the case of any Special Distribution
Date with respect to the distribution of a Special Payment, so long as no Indenture Default shall
have occurred and be continuing under any Indenture, such Investment Earnings multiplied by the
Section 2.4 Fraction) shall be deposited in the Collection Account (or, in the case of any Special
Distribution Date with respect to the distribution of a Special Payment, the Special Payments
Account) and applied on such Interest Payment Date (or Special Distribution Date, as the case may
be) in accordance with Section 3.2 or 3.3 (as applicable). The Subordination Agent shall deliver a
written statement to Southwest and the Liquidity Provider one day prior to each Interest Payment
Date and Special Distribution Date setting forth the aggregate amount of Investment Earnings held
in the Cash Collateral Account as of such date. In addition, from and after the date funds are so
deposited, the Subordination Agent shall make withdrawals from such account as follows:

     (i) on each Distribution Date, the Subordination Agent shall, to the extent it shall
not have received funds to pay accrued and unpaid interest due and owing on the Class A
Certificates (at the applicable Stated Interest Rate for the Class A Certificates) after
giving effect to the subordination provisions of this Agreement, withdraw from the Cash
Collateral Account, and pay to the Class A Trustee, an amount equal to the lesser of (x) an
amount necessary to pay accrued and unpaid interest (at the applicable Stated Interest Rate
for the Class A Certificates) on such Class A Certificates and (y) the amount on deposit in
the Cash Collateral Account;

     (ii) [Reserved];

     (iii) on each date on which the Pool Balance of the Class A Trust shall have been
reduced by payments made to the Class A Certificateholders pursuant to Section 3.2 hereof,
the Subordination Agent shall withdraw from the Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool Balance on such date
(and any reduction in the amounts on deposit in the Cash Collateral Account

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resulting from a prior withdrawal of amounts on deposit in the Cash Collateral Account
on such date) and any transfer of Investment Earnings from the Cash Collateral Account to
the Collection Account or the Special Payments Account on such date, an amount equal to the
sum of the Required Amount plus (if on a Distribution Date not coinciding with an Interest
Payment Date) Investment Earnings on deposit in the Cash Collateral Account (after giving
effect to any such transfer of Investment Earnings) will be on deposit in the Cash
Collateral Account and shall first, pay such withdrawn amount to the Liquidity Provider
until the Liquidity Obligations owing to the Liquidity Provider shall have been paid in
full, and second, deposit any remaining withdrawn amount in the Collection Account;

     (iv) [Reserved];

     (v) if a Replacement Liquidity Facility shall be delivered to the Subordination Agent
following the date on which funds have been deposited into the Cash Collateral Account, the
Subordination Agent shall withdraw all amounts on deposit in such Cash Collateral Account
and shall pay such amounts to the replaced Liquidity Provider until all Liquidity
Obligations owed to such Person shall have been paid in full, and shall deposit any
remaining amount in the Collection Account; and

     (vi) following the payment of Final Distributions with respect to the Class A
Certificates, on the date on which the Subordination Agent shall have been notified by the
Liquidity Provider that the Liquidity Obligations owed to the Liquidity Provider have been
paid in full, the Subordination Agent shall withdraw all amounts on deposit in the Cash
Collateral Account and shall deposit such amount in the Collection Account.

          (g) Reinstatement. With respect to any Interest Drawing under the Liquidity Facility,
upon the reimbursement of the Liquidity Provider for all or any part of the amount of such Interest
Drawing, together with any accrued interest thereon, the Available Amount of the Liquidity Facility
shall be reinstated by an amount equal to the amount of such Interest Drawing so reimbursed but not
to exceed the Stated Amount for the Liquidity Facility; provided, however, that the
Liquidity Facility shall not be so reinstated in part or in full at any time if (x) both a
Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be
continuing with respect to the Liquidity Facility or (y) a Final Drawing, a Non-Extension Drawing,
a Downgrade Drawing or a Special Termination Drawing shall have occurred with respect to the
Liquidity Facility or an Interest Drawing shall have been converted into a Final Drawing. In the
event that, with respect to the Liquidity Facility, (i) funds are withdrawn from the Cash
Collateral Account pursuant to clause (i) or (ii) of Section 3.5(f) hereof or (ii) the Liquidity
Facility shall become a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed
Interest Drawings under the Liquidity Facility have reduced the Available Amount thereunder to
zero, then funds received by the Subordination Agent at any time other than (x) any time when a
Liquidity Event of Default shall have occurred and be continuing and a Performing Note Deficiency
exists or (y) any time after a Final Drawing shall have occurred with respect to the Liquidity
Facility or an Interest Drawing shall have been converted into a Final Drawing, shall be deposited
in the Cash Collateral Account as and to the extent provided in clause “fourth” of Section 3.2 and
applied in accordance with Section 3.5(f) hereof.

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          (h) Reimbursement. The amount of each drawing under the Liquidity Facility shall be
due and payable, together with interest thereon, on the dates and at the rates, respectively,
provided in the Liquidity Facility.

          (i) Final Drawing. Upon receipt from the Liquidity Provider of the Termination Notice
with respect to the Liquidity Facility, the Subordination Agent shall, not later than the date
specified in such Termination Notice, in accordance with the terms of the Liquidity Facility,
request a drawing under the Liquidity Facility of all available and undrawn amounts thereunder (a
“Final Drawing”). Amounts drawn pursuant to a Final Drawing shall be maintained and
invested in accordance with Section 3.5(f) hereof.

          (j) Adjustments of Stated Amount. Promptly following each date on which the Required
Amount of the Liquidity Facility is reduced as a result of a reduction in the Pool Balance with
respect to the Class A Certificates or otherwise, the Stated Amount of the Liquidity Facility shall
automatically be adjusted to an amount equal to the Required Amount with respect to the Liquidity
Facility (as calculated by the Subordination Agent after giving effect to such payment).

          (k) Special Termination Drawing. Upon receipt from any Liquidity Provider of the
Special Termination Notice with respect to the Liquidity Facility, the Subordination Agent shall,
not later than the date specified in the Special Termination Notice, in accordance with the terms
of the Liquidity Facility, request a drawing under such Liquidity Facility of all available and
undrawn amounts thereunder (a “Special Termination Drawing”). Amounts drawn pursuant to a
Special Termination Drawing shall be maintained and invested in accordance with Section 3.5(f)
hereof.

          (l) Relation to Subordination Provisions. Interest Drawings under the Liquidity
Facility and withdrawals from the Cash Collateral Account will be distributed to the Trustee for
the Class A Certificates, notwithstanding Section 3.2 hereof.

          (m) Assignment of Liquidity Facility. The Subordination Agent agrees not to consent
to the assignment by the Liquidity Provider of any of its rights or obligations under the Liquidity
Facility or any interest therein, unless (i) Southwest shall have consented to such assignment and
(ii) each Rating Agency shall have provided a Ratings Confirmation in respect of such assignment;
provided, that the Subordination Agent shall consent to such assignment if the conditions
in the foregoing clauses (i) and (ii) are satisfied, and the foregoing is not intended to and shall
not be construed to limit the rights of the initial Liquidity Provider under Section 3.5(c) or
3.5(e)(ii).

ARTICLE IV

EXERCISE OF REMEDIES

          SECTION 4.1. Directions from the Controlling Party. (a) (i) Following the
occurrence and during the continuation of an Indenture Default under any Indenture, the Controlling
Party (except as otherwise provided in Section 2.6(d)) shall direct the Subordination Agent, as the
holder of Equipment Notes issued under such Indenture, which in turn shall direct

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the Loan Trustee under such Indenture, in the exercise
of remedies available to the holder of such Equipment Notes, including, without limitation, the
ability to vote all such Equipment Notes held by the Subordination Agent in favor of Accelerating
such Equipment Notes in accordance with the provisions of such Indenture. If the Equipment Notes
issued pursuant to any Indenture and held by the Subordination Agent have been Accelerated
following an Indenture Default with respect thereto, the Controlling Party may direct the
Subordination Agent to sell, assign, contract to sell or otherwise dispose of and deliver all (but
not less than all) of such Equipment Notes to any Person at public or private sale, at any location
at the option of the Controlling Party, all upon such terms and conditions as it may reasonably
deem advisable in accordance with applicable law.

          (ii) Following the occurrence and during the continuation of an Indenture Default under any
Indenture, in the exercise of remedies pursuant to such Indenture, the Loan Trustee under such
Indenture may be directed to lease the related Aircraft to any Person (including Southwest) so long
as the Loan Trustee in doing so acts in a “commercially reasonable” manner within the meaning of
Article 9 of the Uniform Commercial Code as in effect in any applicable jurisdiction (including
Sections 9-610 and 9-627 thereof).

          (iii) Notwithstanding the foregoing, so long as any Certificates remain Outstanding, during
the period ending on the date which is nine months after the earlier of (x) the Acceleration of the
Equipment Notes issued pursuant to any Indenture and (y) the occurrence of a Southwest Bankruptcy
Event, without the consent of each Trustee, no Aircraft subject to the Lien of such Indenture or
such Equipment Notes may be sold if the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes.

          (iv) Upon the occurrence and continuation of an Indenture Default under any Indenture, the
Subordination Agent will obtain three desktop appraisals from the Appraisers selected by the
Controlling Party setting forth the current market value, current lease rate and distressed value
(in each case, as defined by the International Society of Transport Aircraft Trading or any
successor organization) of the Aircraft subject to such Indenture (each such appraisal, an
“Appraisal” and the current market value appraisals being referred to herein as the
“Post-Default Appraisals”). For so long as any Indenture Default shall be continuing under
any Indenture, and without limiting the right of the Controlling Party to request more frequent
Appraisals, the Subordination Agent will obtain updated Appraisals on the date that is 364 days
from the date of the most recent Appraisal (or if a Southwest Bankruptcy Event shall have occurred
and is continuing, on the date that is 180 days from the date of the most recent Appraisal).

          (b) Following the occurrence and during the continuance of an Indenture Default under any
Indenture, the Controlling Party shall take such actions as it may reasonably deem most effectual
to complete the sale or other disposition of the relevant Aircraft or Equipment Notes. In
addition, in lieu of any sale, assignment, contract to sell or other disposition, the Controlling
Party may maintain or cause the Subordination Agent to maintain possession of such Equipment Notes
and continue to apply monies received in respect of such Equipment Notes in accordance with Article
III hereof. In addition, in lieu of such sale, assignment, contract to sell or other disposition,
or in lieu of such maintenance of possession, the Controlling Party may, subject to the terms and
conditions of the related Indenture, instruct the

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Loan Trustee under such Indenture to foreclose on the Lien on the related Aircraft or to take
any other remedial action permitted under such Indenture or under any applicable law.

          (c) If following a Southwest Bankruptcy Event and during the pendency thereof, the Controlling
Party receives a proposal from or on behalf of Southwest to restructure the financing of any one or
more of the Aircraft, the Controlling Party shall promptly thereafter give the Subordination Agent
and each Trustee notice of the material economic terms and conditions of such restructuring
proposal whereupon the Subordination Agent acting on behalf of each Trustee shall endeavor using
reasonable commercial efforts to make such terms and conditions of such restructuring proposal
available to all Certificateholders (whether by posting on DTC’s Internet board or otherwise) and
the Liquidity Provider. Thereafter, neither the Subordination Agent nor any Trustee, whether
acting on instructions of the Controlling Party or otherwise, may, without the consent of each
other Trustee and the Liquidity Provider, enter into any term sheet, stipulation or other agreement
(whether in the form of an adequate protection stipulation, an extension under Section 1110(b) of
the Bankruptcy Code or otherwise) to effect any such restructuring proposal with or on behalf of
Southwest unless and until the material economic terms and conditions of such restructuring shall
have been made available to all Certificateholders and the Liquidity Provider for a period of not
less than 15 calendar days (except that such requirement shall not apply to any such term sheet,
stipulation or other agreement that is entered into on or prior to the expiry of the 60-Day Period
and that is effective for a period not longer than three months from the expiry of the 60-Day
Period). In the event that any Certificateholder gives irrevocable notice of the exercise of (i)
its right to purchase any Equipment Notes pursuant to Section 2.7 hereof or (ii) its right to
purchase all (but not less than all) of the Class of Certificates represented by the then
Controlling Party pursuant to the applicable Trust Agreement, in either case, prior to the expiry
of the 15-day notice period specified above, such Controlling Party may not direct the
Subordination Agent or any Trustee to enter into (i) in the case of such purchase of Equipment
Notes, any such restructuring proposal with respect to the Aircraft related to such Equipment
Notes, or (ii) in the case of such purchase of Certificates, any such restructuring proposal with
respect to any of the Aircraft, in either case, unless and until such Certificateholder shall fail
to purchase such Equipment Notes or Class of Certificates, as applicable, on the date that it is
required to make such purchase.

          SECTION 4.2. Remedies Cumulative. Each and every right, power and remedy given to
the Trustees, the Liquidity Provider, the Controlling Party or the Subordination Agent specifically
or otherwise in this Agreement shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein given or otherwise
existing may, subject always to the terms and conditions hereof, be exercised from time to time and
as often and in such order as may be deemed expedient by any Trustee, any Liquidity Provider, the
Controlling Party or the Subordination Agent, as appropriate, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or omission by any
Trustee, any Liquidity Provider, the Controlling Party or the Subordination Agent in the exercise
of any right, remedy or power or in the pursuit of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default or to be an acquiescence therein.

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          SECTION 4.3. Discontinuance of Proceedings. In case any party to this Agreement
(including the Controlling Party in such capacity) shall have instituted any Proceeding to enforce
any right, power or remedy under this Agreement by foreclosure, entry or otherwise, and such
Proceeding shall have been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such case each such party
shall, subject to any determination in such Proceeding, be restored to its former position and
rights hereunder, and all rights, remedies and powers of such party shall continue as if no such
Proceeding had been instituted.

          SECTION 4.4. Right of Certificateholders and the Liquidity Provider to Receive Payments
Not to Be Impaired. Anything in this Agreement to the contrary notwithstanding, the right of
any Certificateholder (subject to the applicable Trust Agreement) or the Liquidity Provider,
respectively, to receive payments hereunder (including without limitation pursuant to Section 3.2
hereof) when due, or to institute suit for the enforcement of any such payment on or after the
applicable Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder or the Liquidity Provider, respectively.

          SECTION 4.5. Undertaking for Costs. In any Proceeding for the enforcement of any
right or remedy under this Agreement or in any Proceeding against any Controlling Party or the
Subordination Agent for any action taken or omitted by it as Controlling Party or Subordination
Agent, as the case may be, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the claims or defenses made
by the party litigant. The provisions of this Section do not apply to a suit instituted by the
Subordination Agent, the Liquidity Provider or a Trustee or a suit by Certificateholders holding
more than 10% of the original principal amount of any Class of Certificates.

ARTICLE V

DUTIES OF THE SUBORDINATION AGENT;

AGREEMENTS OF TRUSTEES, ETC.

          SECTION 5.1. Notice of Indenture Default or Triggering Event. (a) In the event the
Subordination Agent shall have actual knowledge of the occurrence of an Indenture Default or a
Triggering Event, as promptly as practicable, and in any event within 10 days after obtaining
knowledge thereof, the Subordination Agent shall transmit by mail or courier to the Rating
Agencies, the Liquidity Provider and the Trustees notice of such Indenture Default or Triggering
Event, unless such Indenture Default or Triggering Event shall have been cured or waived. For all
purposes of this Agreement, in the absence of actual knowledge on the part of a Responsible
Officer, the Subordination Agent shall not be deemed to have knowledge of any Indenture Default or
Triggering Event unless notified in writing by one or more Trustees, one or more of the Liquidity
Provider or one or more Certificateholders.

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          (b) Other Notices. The Subordination Agent will furnish to the Liquidity Provider and
each Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments furnished to the
Subordination Agent as registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise directly distributed to
such Liquidity Provider or Trustee, as applicable, pursuant to the express provision of any other
Operative Agreement.

          (c) Securities Position. Upon the occurrence of an Indenture Default, the
Subordination Agent shall instruct the Trustees to, and the Trustees shall, request that DTC post
on its Internet bulletin board a securities position listing setting forth the names of all the
parties reflected on DTC’s books as holding interests in the Certificates.

          (d) Reports. Promptly after the occurrence of a Triggering Event or an Indenture
Default resulting from the failure of Southwest to make payments on any Equipment Note and on every
Regular Distribution Date while the Triggering Event or such Indenture Default shall be continuing,
the Subordination Agent will provide to the Trustee, the Liquidity Provider, the Rating Agencies
and Southwest a statement setting forth the following information:

               (i) after a Southwest Bankruptcy Event, with respect to each Aircraft, whether such Aircraft
is (A) subject to the 60-Day Period, (B) subject to an election by Southwest under Section 1110(a)
of the Bankruptcy Code, (C) covered by an agreement contemplated by Section 1110(b) of the
Bankruptcy Code or (D) not subject to any of (A), (B) or (C);

               (ii) to the best of the Subordination Agent’s knowledge, after requesting such information
from Southwest, (A) whether the Aircraft are currently in service or parked in storage, (B) the
maintenance status of the Aircraft and (C) the location of the Engines (as defined in the
Indentures);

               (iii) the current Pool Balances of the Certificates, the Preferred B Pool Balance and
outstanding principal amount of all Equipment Notes;

               (iv) the expected amount of interest which will have accrued on the Equipment Notes and on the
Certificates as of the next Regular Distribution Date;

               (v) the amounts paid to each Person on such Distribution Date pursuant to this Agreement;

               (vi) details of the amounts paid on such Distribution Date identified by reference to the
relevant provision of this Agreement and the source of payment (by Aircraft and party);

               (vii) if the Subordination Agent has made a Final Drawing under the Liquidity Facility;

               (viii) the amounts currently owed to the Liquidity Provider;

40

 

               (ix) the amounts drawn under the Liquidity Facility; and

               (x) after a Southwest Bankruptcy Event, any operational reports filed by Southwest with the
bankruptcy court which are available to the Subordination Agent on a non-confidential basis.

          SECTION 5.2. Indemnification. The Subordination Agent shall not be required to take
any action or refrain from taking any action under Section 5.1 (other than the first sentence
thereof) or Article IV hereof unless the Subordination Agent shall have been indemnified (to the
extent and in the manner reasonably satisfactory to the Subordination Agent) against any liability,
cost or expense (including counsel fees and expenses) which may be incurred in connection
therewith. The Subordination Agent shall not be under any obligation to take any action under this
Agreement and nothing contained in this Agreement shall require the Subordination Agent to expend
or risk its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Subordination Agent shall not be required to take
any action under Section 5.1 (other than the first sentence thereof) or Article IV hereof, nor
shall any other provision of this Agreement be deemed to impose a duty on the Subordination Agent
to take any action, if the Subordination Agent shall have been advised by counsel that such action
is contrary to the terms hereof or is otherwise contrary to law.

          SECTION 5.3. No Duties Except as Specified in Intercreditor Agreement. The
Subordination Agent shall not have any duty or obligation to take or refrain from taking any action
under, or in connection with, this Agreement, except as expressly provided by the terms of this
Agreement; and no implied duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its individual capacity and
at its own cost and expense (but without any right of indemnity in respect of any such cost or
expense under Section 5.2 or 7.1 hereof) promptly take such action as may be necessary to duly
discharge all Liens on any of the Trust Accounts or any monies deposited therein which result from
claims against it in its individual capacity not related to its activities hereunder or any other
Operative Agreement.

          SECTION 5.4. Notice from the Liquidity Provider and Trustees. If the Liquidity
Provider or Trustee has notice of an Indenture Default or a Triggering Event, such Person shall
promptly give notice thereof to all other Trustees, to the Liquidity Provider (if a Trustee has
notice) and to the Subordination Agent, provided, however, that no such Person
shall have any liability hereunder as a result of its failure to deliver any such notice.

ARTICLE VI

THE SUBORDINATION AGENT

          SECTION 6.1. Authorization; Acceptance of Trusts and Duties . The Class A Trustee hereby designates and
appoints the Subordination Agent as the agent and
trustee under

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the Liquidity Facility and authorizes the Subordination Agent to enter into the
Liquidity Facility as its agent and trustee. The Liquidity Provider and all the Trustees hereby
designates and appoints the Subordination Agent as the Subordination Agent under this Agreement.
WTC hereby accepts the duties hereby created and applicable to it as the Subordination Agent and
agrees to perform the same but only upon the terms of this Agreement and agrees to receive and
disburse all monies received by it in accordance with the terms hereof. The Subordination Agent
shall not be answerable or accountable under any circumstances, except (a) for its own willful
misconduct or gross negligence (or ordinary negligence in the handling of funds), (b) as provided
in Sections 2.2 or 5.3 hereof and (c) for liabilities that may result from the material inaccuracy
of any representation or warranty of the Subordination Agent made in its individual capacity in any
Operative Agreement. The Subordination Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Subordination Agent, unless it is proved that the
Subordination Agent was negligent in ascertaining the pertinent facts.

          SECTION 6.2. Absence of Duties. The Subordination Agent shall have no duty to see to
any recording or filing of this Agreement or any other document, or to see to the maintenance of
any such recording or filing.

          SECTION 6.3. No Representations or Warranties as to Documents. The Subordination
Agent in its individual capacity does not make nor shall be deemed to have made any representation
or warranty as to the validity, legality or enforceability of this Agreement or any other Operative
Agreement or as to the correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its individual capacity, under
any Operative Agreement to which it is a party. The Certificateholders, the Trustees and the
Liquidity Provider make no representation or warranty hereunder whatsoever.

          SECTION 6.4. No Segregation of Monies; No Interest. Any monies paid to or retained
by the Subordination Agent pursuant to any provision hereof and not then required to be distributed
to any Trustee or the Liquidity Provider as provided in Articles II and III hereof or deposited
into one or more Trust Accounts need not be segregated in any manner except to the extent required
by such Articles II and III and by law, and the Subordination Agent shall not (except as otherwise
provided in Section 2.2 hereof) be liable for any interest thereon; provided,
however, that any payments received or applied hereunder by the Subordination Agent shall
be accounted for by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.

          SECTION 6.5. Reliance; Agents; Advice of Counsel. The Subordination Agent shall not
incur liability to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or parties. As to the Pool Balance of
any Trust as of any date, the Subordination Agent may for all purposes hereof rely on a certificate
signed by any Responsible Officer of the applicable Trustee, and such certificate shall constitute
full protection to the Subordination Agent
for any action taken or omitted to be taken by it in good faith in reliance thereon. As to
any fact or matter relating to the Liquidity Provider or the Trustees the manner of ascertainment
of which is not specifically described herein, the Subordination Agent may for all purposes hereof
rely on a certificate, signed by any

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Responsible Officer of the Liquidity Provider or Trustee, as
the case may be, as to such fact or matter, and such certificate shall constitute full protection
to the Subordination Agent for any action taken or omitted to be taken by it in good faith in
reliance thereon. The Subordination Agent shall assume, and shall be fully protected in assuming,
that the Liquidity Provider and each of the Trustees are authorized to enter into this Agreement
and to take all action to be taken by them pursuant to the provisions hereof, and shall not inquire
into the authorization of the Liquidity Provider and the Trustees with respect thereto. In the
administration of the trusts hereunder, the Subordination Agent may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled persons to be selected and retained by
it, and the Subordination Agent shall not be liable for the acts or omissions of any agent
appointed with due care or for anything done, suffered or omitted in good faith by it in accordance
with the advice or written opinion of any such counsel, accountants or other skilled persons.

          SECTION 6.6. Capacity in Which Acting. The Subordination Agent acts hereunder solely
as agent and trustee herein and not in its individual capacity, except as otherwise expressly
provided in the Operative Agreements.

          SECTION 6.7. Compensation. The Subordination Agent shall be entitled to reasonable
compensation, including expenses and disbursements, except with respect to any Unindemnified Taxes,
for all services rendered hereunder and shall have a priority claim to the extent set forth in
Article III hereof on all monies collected hereunder for the payment of such compensation (other
than Unindemnified Taxes), to the extent that such compensation shall not be paid by others. The
Subordination Agent agrees that it shall have no right against any Trustee or the Liquidity
Provider for any fee as compensation for its services as agent under this Agreement. The
provisions of this Section 6.7 shall survive the termination of this Agreement.

          SECTION 6.8. May Become Certificateholder. The institution acting as Subordination
Agent hereunder may become a Certificateholder and have all rights and benefits of a
Certificateholder to the same extent as if it were not the institution acting as the Subordination
Agent.

          SECTION 6.9. Subordination Agent Required; Eligibility. There shall at all times be
a Subordination Agent hereunder which shall be a bank, trust company, corporation or other
financial institution organized and doing business under the laws of the United States of America
or of any State or the District of Columbia having a combined capital and surplus of at least
$100,000,000 (or the obligations of which, whether now in existence or hereafter incurred, are
fully and unconditionally guaranteed by a corporation organized and doing business under the laws
of the United States of America, any State thereof or of the District of Columbia and having a
combined capital and surplus of at least $100,000,000), if there is such an institution willing and
able to perform the duties of the
Subordination Agent hereunder upon reasonable or customary terms. Such financial institution
shall be a citizen of the United States and shall be authorized under the laws of the United States
or any State thereof or of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia authorities. If
such financial institution publishes reports of condition at least annually, pursuant to law or to
the requirements of any of the aforesaid supervising or examining authorities, then, for the
purposes of this Section 6.9, the combined

43

 

capital and surplus of such financial institution shall
be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published.

          In case at any time the Subordination Agent shall cease to be eligible in accordance with the
provisions of this Section, the Subordination Agent shall resign immediately in the manner and with
the effect specified in Section 8.1.

          SECTION 6.10. Money to Be Held in Trust. All Equipment Notes, monies and other
property deposited with or held by the Subordination Agent pursuant to this Agreement shall be held
in trust for the benefit of the parties entitled to such Equipment Notes, monies and other
property. All such Equipment Notes, monies or other property shall be held in the Trust Department
of the institution acting as Subordination Agent hereunder.

ARTICLE VII

INDEMNIFICATION OF SUBORDINATION AGENT

          SECTION 7.1. Scope of Indemnification. The Subordination Agent shall be indemnified
hereunder to the extent and in the manner described in Section 8.1 of the Participation Agreements.
The indemnities contained in such Section shall survive the termination of this Agreement.

ARTICLE VIII

SUCCESSOR SUBORDINATION AGENT

          SECTION 8.1. Replacement of Subordination Agent; Appointment of Successor. The
Subordination Agent may resign at any time by so notifying the Trustees and the Liquidity Provider.
The Controlling Party may remove the Subordination Agent for cause by so notifying the
Subordination Agent and may appoint a successor Subordination Agent. The Controlling Party shall
remove the Subordination Agent if:

     (1) the Subordination Agent fails to comply with Section 6.9 hereof;

     (2) the Subordination Agent is adjudged bankrupt or insolvent;

     (3) a receiver or other public officer takes charge of the Subordination Agent or its
property; or

     (4) the Subordination Agent otherwise becomes incapable of acting.

          If the Subordination Agent resigns or is removed or if a vacancy exists in the office of
Subordination Agent for any reason (the Subordination Agent in such event being referred to herein
as the retiring Subordination Agent), the Controlling Party shall promptly appoint a successor
Subordination Agent.

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          A successor Subordination Agent shall deliver (x) a written acceptance of its appointment as
Subordination Agent hereunder to the retiring Subordination Agent and (y) a written assumption of
its obligations hereunder and under the Liquidity Facility to each party hereto, upon which the
resignation or removal of the retiring Subordination Agent shall become effective, and the
successor Subordination Agent shall have all the rights, powers and duties of the Subordination
Agent under this Agreement. The successor Subordination Agent shall mail a notice of its
succession to the Liquidity Provider and the Trustees. The retiring Subordination Agent shall
promptly transfer its rights under the Liquidity Facility and all of the property held by it as
Subordination Agent to the successor Subordination Agent.

          If a successor Subordination Agent does not take office within 60 days after the retiring
Subordination Agent resigns or is removed, the retiring Subordination Agent or one or more of the
Trustees may petition any court of competent jurisdiction for the appointment of a successor
Subordination Agent.

          If the Subordination Agent fails to comply with Section 6.9 hereof (to the extent applicable),
one or more of the Trustees or the Liquidity Provider may petition any court of competent
jurisdiction for the removal of the Subordination Agent and the appointment of a successor
Subordination Agent.

          Notwithstanding the foregoing, no resignation or removal of the Subordination Agent shall be
effective unless and until a successor has been appointed. No appointment of a successor
Subordination Agent shall be effective unless and until the Rating Agencies shall have delivered a
Ratings Confirmation.

ARTICLE IX

SUPPLEMENTS AND AMENDMENTS

          SECTION 9.1. Amendments, Waivers, etc. (a) This Agreement may not be supplemented,
amended or modified without the consent of each Trustee (acting, except in the case of any
amendment pursuant to Section 3.5(e)(v)(y) hereof with respect to any Replacement Liquidity
Facility or any amendment contemplated by the last sentence of this Section 9.1(a), with the
consent of holders of the Class A Certificates evidencing interests in the Class A Trust
aggregating not less than a majority in interest in such Trust or as otherwise authorized pursuant
to the relevant Trust Agreement), the Subordination Agent and the Liquidity Provider;
provided, however, that this Agreement may be supplemented, amended or modified
without the consent of any Trustee, the Subordination Agent and the Liquidity Provider if such
supplement, amendment or modification (i) is in accordance with Section 9.1(c) or Section 9.1(d)
hereof or (ii) cures an ambiguity or
inconsistency or does not materially adversely affect such Trustee or the holders of the
related Class of Certificates or the Liquidity Provider; provided further,
however, that, if such supplement, amendment or modification (A) would (x) directly or
indirectly modify or supersede, or otherwise conflict with, Section 2.2(b), Section 2.4, Section
3.2, Section 3.5(e), Section 3.5(f)(other than the last sentence thereof), Section 3.5(l), the last
sentence of this Section 9.1(a), Section 9.1(c), Section 9.1(d), the second sentence of Section
10.6 or this proviso (collectively, the “Southwest Provisions”) or (y) otherwise adversely
affect

45

 

the interests of a potential Replacement Liquidity Provider or of Southwest with respect to
its ability to replace the Liquidity Facility or with respect to its payment obligations under any
Operative Agreement or (B) is made pursuant to the last sentence of this Section 9.1(a) or pursuant
to Section 9.1(c) or Section 9.1(d), then such supplement, amendment or modification shall not be
effective without the additional written consent of Southwest. Notwithstanding the foregoing,
without the consent of each Certificateholder and the Liquidity Provider, no supplement, amendment
or modification of this Agreement may (i) reduce the percentage of the interest in any Trust
evidenced by the Certificates issued by such Trust necessary to consent to modify or amend any
provision of this Agreement or to waive compliance therewith or (ii) except as provided in this
Section 9.1(a), Section 9.1(c) or Section 9.1(d), modify Section 2.4 or 3.2 hereof, relating to the
distribution of monies received by the Subordination Agent hereunder from the Equipment Notes or
pursuant to the Liquidity Facility. Nothing contained in this Section shall require the consent of
a Trustee at any time following the payment of Final Distributions with respect to the related
Class of Certificates. If the Replacement Liquidity Facility for the Liquidity Facility in
accordance with Section 3.5(c) or (e) hereof is to be comprised of more than one instrument as
contemplated by the definition of the term “Replacement Liquidity Facility”, then each of the
parties hereto agrees to amend this Agreement to incorporate appropriate mechanics for multiple
Liquidity Facilities for an individual Trust.

          (b) In the event that the Subordination Agent, as the registered holder of any Equipment
Notes, receives a request for the giving of any notice or for its consent to any amendment,
supplement, modification, consent or waiver under such Equipment Notes, the Indenture pursuant to
which such Equipment Notes were issued, or the related Participation Agreement or other related
document, (i) if no Indenture Default shall have occurred and be continuing with respect to such
Indenture, the Subordination Agent shall request directions with respect to each Series of such
Equipment Notes from the Trustee of the Trust which holds such Equipment Notes and shall vote or
consent in accordance with the directions of such Trustee, and (ii) if any Indenture Default shall
have occurred and be continuing with respect to such Indenture, the Subordination Agent will
exercise its voting rights with respect to such Equipment Notes as directed by the Controlling
Party (subject to Sections 4.1 and 4.4 hereof); provided that no such amendment, modification or
waiver shall, without the consent of each affected Certificateholder and the Liquidity Provider,
reduce the amount of principal or interest payable by Southwest under any Equipment Note or change
the time of payments or method of calculation of any amount under any Equipment Note.

          (c) If Series B Equipment Notes (or any series of Additional Equipment Notes) issued with
respect to all of the Aircraft are redeemed and re-issued in accordance with the terms of Section
2.11(b) of each Indenture, such series of re-issued Equipment Notes (the “Refinancing Equipment
Notes”) shall be issued to a new pass through trust (a “Refinancing Trust”) that issues
a class of pass through certificates (the “Refinancing Certificates”) to
certificateholders (the “Refinancing Certificateholders”) pursuant to a pass through
trust agreement (a “Refinancing Trust Agreement”) with a trustee (a “Refinancing
Trustee”). A Refinancing Trust, a Refinancing Trustee and the Refinancing Certificates shall
be subject to all of the provisions of this Agreement in the same manner as the Trust, the Trustee
and the Certificates of the Class corresponding to the series of the refinanced Equipment Notes,
including, the subordination of the Refinancing Certificates to the Administration Expenses, the
Liquidity Obligations, the Class A Certificates and, if applicable, the Class B Certificates. Such

46

 

issuance of Refinancing Equipment Notes and Refinancing Certificates and the amendment of this
Agreement as provided below shall require Ratings Confirmation and shall not materially adversely
affect any of the Trustees. This Agreement shall be amended by written agreement of Southwest and
the Subordination Agent to give effect to the issuance of the Refinancing Certificates subject to
the following terms and conditions:

     (i) the Refinancing Trustee shall be added as a party to this Agreement;

     (ii) the definitions of “Certificate”, “Class”, “Class B Certificates” (if applicable),
“Final Legal Distribution Date”, “Trust”, “Trust Agreement” and “Controlling Party” (and
such other applicable definitions) shall be revised, as appropriate, to reflect such
issuance (and the subordination of the Refinancing Certificates and the Refinancing
Equipment Notes);

     (iii) the Refinancing Certificates may have the benefit of credit support similar to
the Liquidity Facility and claims for fees, interest, expenses, reimbursement of advances
and other obligations arising from such credit support may rank pari passu with similar
claims in respect of the Liquidity Facility so long as Ratings Confirmation and the prior
written consent of the Liquidity Provider shall have been obtained;

     (iv) the Refinancing Certificates cannot be issued to Southwest but may be issued to
any of Southwest’s Affiliates so long as such Affiliate shall have bankruptcy remote and
special purpose provisions in its certificate of incorporation or other organizational
documents and any subsequent transfer of the Refinancing Certificates to any Affiliate of
Southwest shall be similarly restricted; and

     (v) the scheduled payment dates on the Refinancing Equipment Notes shall be on the
Regular Distribution Dates.

          The issuance of the Refinancing Certificates in compliance with all of the foregoing terms of
this Section 9.1(c) shall not require the consent of any of the Trustees or the holders of any
Class of Certificates. The Liquidity Provider hereby agrees and confirms that it shall be deemed
to consent to any issuance and amendment in accordance with this Section 9.1(c) (subject to the
Liquidity Provider’s consent right in Section 9.1(c)(iii)) and any such issuance and amendment
shall not affect any of its respective obligations under the Liquidity Facility.

          (d) Pursuant to the terms of Section 2.02 of each Indenture, one or more additional series of
Equipment Notes (the “Additional Equipment Notes”), which shall be subordinated in right of
payment to the Series A Equipment Notes and the Series B Equipment
Notes under such Indenture, may be issued at any time and from time to time. If any series of
Additional Equipment Notes is issued under any Indenture, such series of Additional Equipment Notes
shall be issued to a new pass through trust (an “Additional Trust”) that issues a class of
pass through certificates (the “Additional Certificates”) to certificateholders (the
“Additional Certificateholders”) pursuant to a pass through trust agreement (an
“Additional Trust Agreement”) with a trustee (an “Additional Trustee”). In such
case, this Agreement shall be amended by written agreement of Southwest and the Subordination Agent
to provide for the

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subordination of the Additional Certificates to the Administration Expenses, the
Liquidity Obligations, the Class A Certificates and the Class B Certificates and, if applicable,
any previously issued class (or classes) of Additional Certificates (in order of their issuance)
(subject to clause (iii) below). Such issuance and the amendment of this Agreement as provided
below shall require Ratings Confirmation and shall not materially adversely affect any of the
Trustees. This Agreement shall be amended by written agreement of Southwest and the Subordination
Agent to give effect to the issuance of any Additional Certificates subject to the following terms
and conditions:

          (i) the Additional Trustee shall be added as a party to this Agreement;

          (ii) the definitions of “Certificate”, “Class”, “Equipment Notes”, “Final Legal Distribution
Date”, “Trust”, “Trust Agreement” and “Controlling Party” (and such other applicable definitions)
shall be revised, as appropriate, to reflect the issuance of the Additional Certificates (and the
subordination thereof);

          (iii) Section 3.2 may be revised, with respect to each Class of Additional Certificates, to
provide for the distribution of “Adjusted Interest” for such Class of Additional Certificates
(calculated in a manner substantially similar to the calculation of Class B Adjusted Interest)
after the Class B Adjusted Interest but before Expected Distributions on the Class A Certificates
(it being understood that the Rating Agencies, in connection with providing a Ratings Confirmation,
may require that such class of Additional Certificates be rated);

          (iv) the Additional Certificates may have the benefit of credit support similar to the
Liquidity Facility and claims for fees, interest, expenses, reimbursement of advances and other
obligations arising from such credit support may rank pari passu with similar claims in respect of
the Liquidity Facility so long as Ratings Confirmation and the prior written consent of the
Liquidity Provider shall have been obtained;

          (v) the Additional Certificates cannot be issued to Southwest but may be issued to any of
Southwest’s Affiliates so long as such Affiliate shall have bankruptcy remote and special purpose
provisions in its certificate of incorporation or other organizational documents and any subsequent
transfer of the Additional Certificates to any Affiliate of Southwest shall be similarly
restricted;

          (vi) the provisions of this Agreement governing payments with respect to Certificates and
related notices, including Sections 2.4, 3.1 and 3.2, shall be revised to provide for distributions
on such class of the Additional Certificates after payment of Administration Expenses, the
Liquidity Obligations, the Class A Certificates and the Class B Certificates (and, if
applicable, any previously issued class (or classes) of Additional Certificates (in order of
their issuance)), subject to clause (iii) above; and

          (vii) the scheduled payment dates on such series of Additional Equipment Notes shall be on the
Regular Distribution Dates.

          The issuance of the Additional Certificates in compliance with all of the foregoing terms of
this Section 9.1(d) shall not require the consent of any of the Trustees or the holders of any
Class of Certificates. The Liquidity Provider hereby agrees and confirms that it shall be

48

 

deemed
to consent to any issuance and amendment in accordance with this Section 9.1(d) (subject to the
Liquidity Provider’s consent right in Section 9.1(d)(iv)) and any such issuance and amendment shall
not affect any of its respective obligations under the Liquidity Facility.

          SECTION 9.2. Subordination Agent Protected. If, in the reasonable opinion of the
institution acting as the Subordination Agent hereunder, any document required to be executed
pursuant to the terms of Section 9.1 affects any right, duty, immunity or indemnity with respect to
it under this Agreement or the Liquidity Facility, the Subordination Agent may in its discretion
decline to execute such document.

          SECTION 9.3. Effect of Supplemental Agreements. Upon the execution of any amendment,
consent or supplement hereto pursuant to the provisions hereof, this Agreement shall be and be
deemed to be and shall be modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Agreement of the parties
hereto and beneficiaries hereof shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms and conditions of
any such supplemental agreement shall be and be deemed to be and shall be part of the terms and
conditions of this Agreement for any and all purposes. In executing or accepting any supplemental
agreement permitted by this Article IX, the Subordination Agent shall be entitled to receive, and
shall be fully protected in relying upon, an opinion of counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Agreement.

          SECTION 9.4. Notice to Rating Agencies. Promptly upon receipt of any amendment, consent,
modification, supplement or waiver contemplated by this Article IX and prior to taking any action
required to be taken thereunder, the Subordination Agent shall send a copy thereof to each Rating
Agency.

ARTICLE X

MISCELLANEOUS

          SECTION 10.1. Termination of Intercreditor Agreement. Following payment of Final
Distributions with respect to each Class of Certificates and the payment in full of all Liquidity
Obligations to the Liquidity Provider and provided that there shall then be no other
amounts due to the Certificateholders, the Trustees, the Liquidity Provider and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the Liquidity Provider
under the Liquidity Facility shall have expired or
been terminated, this Agreement and the trusts created hereby shall terminate and this
Agreement shall be of no further force or effect. Except as aforesaid or otherwise provided, this
Agreement and the trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.

          SECTION 10.2. Intercreditor Agreement for Benefit of Trustees, Liquidity Provider and
Subordination Agent. Subject to the second sentence of Section 10.6 and the provisions of
Sections 4.4 and 9.1, nothing in this Agreement, whether express or implied, shall be construed to
give to any Person other than the Trustees, the Liquidity Provider and the

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Subordination Agent any
legal or equitable right, remedy or claim under or in respect of this Agreement.

          SECTION 10.3. Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Agreement to be made, given, furnished or filed shall be in
writing, mailed by certified mail, postage prepaid, or by confirmed telecopy and

	 	(i)	 	if to the Subordination Agent, addressed to at its office at:
	 
	 	 	 	WILMINGTON TRUST COMPANY

One Rodney Square

1100 N. Market Street

Wilmington, DE 19890-1605

Attention: Corporate Capital Market Services

Telecopy: (302) 636-4140
	 
	 	(ii)	 	if to any Trustee, addressed to it at its office at:
	 
	 	 	 	WILMINGTON TRUST COMPANY

One Rodney Square

1100 N. Market Street

Wilmington, DE 19890-1605

Attention: Corporate Capital Market Services

Telecopy: (302) 636-4140
	 
	 	(iii)	 	if to the Liquidity Provider, addressed to it at its office at:
	 
	 	 	 	BNP Paribas

787 Seventh Avenue

New York, NY 10019

Attention: Aviation Finance Group

Telephone: (212) 841-2000

Telecopy: (212) 841-2146

Whenever any notice in writing is required to be given by any Trustee, Liquidity Provider or the
Subordination Agent to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received. Any party hereto may change the address to
which notices to such party will be sent by giving notice of such change to the other parties to
this Agreement.

          SECTION 10.4. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

50

 

          SECTION 10.5. No Oral Modifications or Continuing Waivers. No terms or provisions of
this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party or other Person against whom enforcement of the change, waiver,
discharge or termination is sought and any other party or other Person whose consent is required
pursuant to this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.

          SECTION 10.6. Successors and Assigns. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors
and assigns of each, all as herein provided. In addition, the Southwest Provisions shall inure to
the benefit of Southwest and its successors and assigns, and (without limitation of the foregoing)
Southwest is hereby constituted, and agreed to be, an express third party beneficiary of the
Southwest Provisions.

          SECTION 10.7. Headings. The headings of the various Articles and Sections herein and
in the table of contents hereto are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.

          SECTION 10.8. Counterpart Form. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the same agreement.

          SECTION 10.9. Subordination. (a) As between the Liquidity Provider (and any
additional liquidity providers in respect of any class of Refinancing Certificates or Additional
Certificates), on the one hand, and the Trustees (and any Refinancing Trustees or Additional
Trustees) and the Certificateholders (and any Refinancing Certificateholders or Additional
Certificateholders), on the other hand, and as among the Trustees (and any Refinancing Trustees or
Additional Trustees) and the related Certificateholders (and any Refinancing Certificateholders or
Additional Certificateholders), this Agreement shall be a subordination agreement for purposes of
Section 510 of the United States Bankruptcy Code, as amended from time to time.

          (b) Notwithstanding the provisions of this Agreement, if prior to the payment in full to the
Liquidity Provider of all Liquidity Obligations then due and payable, any party hereto shall have
received any payment or distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the subordination provisions of this Agreement
been properly applied to such payment, distribution or other amount, would not have been
distributed to such Person, then such payment, distribution or other amount shall be received and
held in trust by such Person and paid over or delivered to the Subordination Agent for application
as provided herein.

          (c) If any Trustee, the Liquidity Provider or the Subordination Agent receives any payment in
respect of any obligations owing hereunder (or, in the case of the Liquidity Provider, in respect
of the Liquidity Obligations), which is subsequently invalidated, declared preferential, set aside
and/or required to be repaid to a trustee, receiver or other party, then, to the extent of such
payment, such obligations (or, in the case of the Liquidity Provider, such Liquidity

51

 

Obligations)
intended to be satisfied shall be revived and continue in full force and effect as if such payment
had not been received.

          (d) The Trustees (on behalf of themselves and the holders of Certificates), the Liquidity
Provider and the Subordination Agent confirm that the payment priorities specified in Section 3.2
shall apply in all circumstances, notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain assets and the Liquidity
Obligations may not be so secured. The Trustees expressly agree (on behalf of themselves and the
holders of Certificates) not to assert priority over the holders of Liquidity Obligations (except
as specifically set forth in Section 3.2) due to their status as secured creditors in any
bankruptcy, insolvency or other legal proceeding.

          (e) Each of the Trustees (on behalf of themselves and the holders of Certificates), the
Liquidity Provider and the Subordination Agent may take any of the following actions without
impairing its rights under this Agreement:

     (i) obtain a Lien on any property to secure any amounts owing to it hereunder,
including, in the case of the Liquidity Provider, the Liquidity Obligations,

     (ii) obtain the primary or secondary obligation of any other obligor with respect to
any amounts owing to it hereunder, including, in the case of the Liquidity Provider, any of
the Liquidity Obligations,

     (iii) renew, extend, increase, alter or exchange any amounts owing to it hereunder,
including, in the case of the Liquidity Provider, any of the Liquidity Obligations, or
release or compromise any obligation of any obligor with respect thereto,

     (iv) refrain from exercising any right or remedy, or delay in exercising such right or
remedy, which it may have, or

     (v) take any other action which might discharge a subordinated party or a surety under
applicable law;

provided, however, that the taking of any such actions by any of the Trustees, the
Liquidity Provider or the Subordination Agent shall not prejudice the rights or adversely affect
the obligations of any other party under this Agreement.

          SECTION 10.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity.

          (a) Each of the parties hereto hereby irrevocably and unconditionally:

     (i) submits for itself and its property in any legal action or proceeding relating to
this Agreement or any other Operative Agreement, or for recognition and enforcement

52

 

of any
judgment in respect hereof or thereof, to the nonexclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of America for the Southern
District of New York, and the appellate courts from any thereof;

     (ii) consents that any such action or proceeding may be brought in such courts, and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     (iii) agrees that service of process in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, to each party hereto at its address set forth in Section 10.3
hereof, or at such other address of which the other parties shall have been notified
pursuant thereto; and

     (iv) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction.

          (b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RIGHT TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN IT AND ANY
OTHER PARTY HERETO RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each of the parties warrants and represents
that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily
waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

          (c) The Liquidity Provider hereby waives any immunity it may have from the jurisdiction of the
courts of the United States of America or of any State and waives any immunity any of its
properties located in the United States of America may have from attachment or execution upon a
judgment entered by any such court under the United States Foreign Sovereign Immunities Act of 1976
or any similar successor legislation.

53

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, as of the day and year first above written, and
acknowledge that this Agreement has been made and delivered in the City of New York, and this
Agreement has become effective only upon such execution and delivery.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY,

not in its individual capacity but solely as

Trustee for each of the Trusts

 	 
	 	By  	/s/ James P. Lawler
 	 
	 	 	Name:  	James P. Lawler 	 
	 	 	Title:  	Vice President 	 
	 
	 	BNP PARIBAS, as Liquidity Provider

 	 
	 	By  	/s/ Sean Reddington
 	 
	 	 	Name:  	Sean Reddington 	 
	 	 	Title:  	Managing Director and
Authorized Signatory 	 
	 
	 	 	 
	 	By 	/s/  Mary Dierdorff
 	 
	 	 	Name:  	Mary Dierdorff 	 
	 	 	Title:  	Director and Authorized Singnatory 	 
	 
	 	WILMINGTON TRUST COMPANY,

not in its individual capacity except as

expressly set forth herein but solely as

Subordination Agent and trustee

 	 
	 	By  	/s/ James P. Lawler
 	 
	 	 	Name:  	James P. Lawler 	 
	 	 	Title:  	Vice Presidentexv4w12

 

Exhibit 4.12

EXECUTION COPY

 

 

REVOLVING CREDIT AGREEMENT

dated as of October 3, 2007

between

WILMINGTON TRUST COMPANY,

as Subordination Agent,

as Agent and Trustee for the

Southwest Airlines Pass Through Trust 2007-1A,

as Borrower

and

BNP PARIBAS,

as Liquidity Provider

 

Relating to Southwest Airlines

Pass Through Trust 2007-1A

Southwest Airlines Pass Through Certificates, Series 2007-1A

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	1	 
	     Section 1.01
	 	Certain Defined Terms	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT	 	 	7	 
	     Section 2.01
	 	The Advances	 	 	7	 
	     Section 2.02
	 	Making the Advances	 	 	7	 
	     Section 2.03
	 	Fees	 	 	9	 
	     Section 2.04
	 	Automatic Reductions and Termination of the Maximum Commitment	 	 	9	 
	     Section 2.05
	 	Repayments of Interest Advances , the Special Termination Advance or	 	 	 	 
	 
	 	the Final Advance	 	 	10	 
	     Section 2.06
	 	Repayments of Provider Advances	 	 	10	 
	     Section 2.07
	 	Payments to the Liquidity Provider Under the Intercreditor Agreement	 	 	11	 
	     Section 2.08
	 	Book Entries	 	 	12	 
	     Section 2.09
	 	Payments from Available Funds Only	 	 	12	 
	     Section 2.10
	 	Extension of the Expiry Date; Non-Extension Advance	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE III OBLIGATIONS OF THE BORROWER	 	 	12	 
	     Section 3.01
	 	Increased Costs	 	 	12	 
	     Section 3.02
	 	Capital Adequacy	 	 	13	 
	     Section 3.03
	 	Payments Free of Deductions	 	 	14	 
	     Section 3.04
	 	Payments	 	 	15	 
	     Section 3.05
	 	Computations	 	 	15	 
	     Section 3.06
	 	Payment on Non-Business Days	 	 	15	 
	     Section 3.07
	 	Interest	 	 	16	 
	     Section 3.08
	 	Replacement of Borrower	 	 	17	 
	     Section 3.09
	 	Funding Loss Indemnification	 	 	17	 
	     Section 3.10
	 	Illegality	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT	 	 	18	 
	     Section 4.01
	 	Conditions Precedent to Effectiveness of Section 2.01	 	 	18	 
	     Section 4.02
	 	Conditions Precedent to Borrowing	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE V COVENANTS	 	 	19	 

i

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	     Section 5.01
	 	Affirmative Covenants of the Borrower	 	 	19	 
	     Section 5.02
	 	Negative Covenants of the Borrower	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE VI LIQUIDITY EVENTS OF DEFAULT AND SPECIAL TERMINATION	 	 	20	 
	     Section 6.01
	 	Liquidity Events of Default and Special Termination	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE VII MISCELLANEOUS	 	 	21	 
	     Section 7.01
	 	Amendments, Etc	 	 	21	 
	     Section 7.02
	 	Notices, Etc	 	 	21	 
	     Section 7.03
	 	No Waiver; Remedies	 	 	22	 
	     Section 7.04
	 	Further Assurances	 	 	22	 
	     Section 7.05
	 	Indemnification; Survival of Certain Provisions	 	 	23	 
	     Section 7.06
	 	Liability of the Liquidity Provider	 	 	23	 
	     Section 7.07
	 	Costs, Expenses and Taxes	 	 	24	 
	     Section 7.08
	 	Binding Effect; Participations	 	 	24	 
	     Section 7.09
	 	Severability	 	 	25	 
	     Section 7.10
	 	GOVERNING LAW	 	 	25	 
	     Section 7.11
	 	Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity	 	 	25	 
	     Section 7.12
	 	Execution in Counterparts	 	 	26	 
	     Section 7.13
	 	Entirety	 	 	26	 
	     Section 7.14
	 	Headings	 	 	26	 
	     Section 7.15
	 	Liquidity Provider’s Obligation to Make Advances	 	 	26	 

	 	 	 	 	 
	Annex I

	 	—
	 	Interest Advance Notice of Borrowing
	Annex II

	 	—
	 	Non-Extension Advance Notice of Borrowing
	Annex III

	 	—
	 	Downgrade Advance Notice of Borrowing
	Annex IV

	 	—
	 	Final Advance Notice of Borrowing
	Annex V

	 	—
	 	Notice of Termination
	Annex VI

	 	—
	 	Notice of Replacement Subordination Agent
	Annex VII

	 	—
	 	Special Termination Advance Notice of Borrowing
	Annex VIII

	 	—
	 	Notice of Special Termination
	Annex IX

	 	—
	 	Subordination Agent Incumbency Certificate

ii

 

REVOLVING CREDIT AGREEMENT

     THIS REVOLVING CREDIT AGREEMENT dated as of October 3, 2007 (this “Agreement”),
between WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity
but solely as Subordination Agent under the Intercreditor Agreement (each as defined below), as
agent and trustee for the Class A Trust (as defined in the Intercreditor Agreement) (the
“Borrower”), and BNP PARIBAS, a société anonyme organized under the laws of France acting
through its New York Branch (the “Liquidity Provider”).

WITNESSETH:

     WHEREAS, pursuant to the Class A Trust Agreement (such term and all other capitalized terms
used in these recitals having the meanings set forth or referred to in Section 1.01), the Class A
Trust is issuing the Class A Certificates; and

     WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on
the Class A Certificates in accordance with their terms, has requested the Liquidity Provider to
enter into this Agreement, providing in part for the Borrower to request in specified circumstances
that Advances be made hereunder.

     NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context clearly requires
otherwise, the following capitalized terms shall have the following respective meanings for all
purposes of this Agreement:

     “Additional Costs” has the meaning assigned to such term in Section 3.01.

     “Advance” means an Interest Advance, a Final Advance, a Provider Advance, a Special
Termination Advance, an Applied Special Termination Advance or an Applied Provider Advance, as the
case may be.

     “Applicable Liquidity Rate” has the meaning assigned to such term in Section 3.07(g).

     “Applicable Margin” means (x) with respect to any Unpaid Advance (other than an
Unapplied Special Termination Advance) or Applied Provider Advance, 1.20% per annum, or (y) with
respect to any Unapplied Provider Advance, the margin per annum specified in the Fee Letter, or (z)
with respect to any Unapplied Special Termination Advance, the margin per annum specified in the
Fee Letter.

 

 

[Revolving Credit Agreement]

     “Applied Downgrade Advance” has the meaning assigned to such term in Section 2.06(a).

     “Applied Non-Extension Advance” has the meaning assigned to such term in Section
2.06(a).

     “Applied Provider Advance” has the meaning assigned to such term in Section 2.06(a).

     “Applied Special Termination Advance” has the meaning assigned to such term in Section
2.05.

     “Base Rate” means, for a day, a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to (a) the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day that is a Business Day, the average of the quotations for such day for such
transactions received by the Liquidity Provider from three Federal funds brokers of recognized
standing selected by it, plus (b) one-quarter of one percent (1/4 of 1%).

     “Base Rate Advance” means an Advance that bears interest at a rate based upon the Base
Rate.

     “Borrower” has the meaning assigned to such term in the recital of parties to this
Agreement.

     “Borrowing” means the making of Advances requested by delivery of a Notice of
Borrowing.

     “Business Day” means any day other than a Saturday or Sunday or a day on which
commercial banks are required or authorized to close in Dallas, Texas, New York, New York or, so
long as any Class A Certificate is outstanding, the city and state in which the Class A Trustee,
the Borrower or any Loan Trustee maintains its corporate trust office or receives or disburses
funds, and, if the applicable Business Day relates to any Advance or other amount bearing interest
based on the LIBOR Rate, on which dealings in dollars are carried on in the London interbank
market.

     “Consent Period” has the meaning assigned to such term in Section 2.10.

     “Downgrade Advance” means an Advance made pursuant to Section 2.02(c).

     “Downgrade Event” means a downgrading of the Liquidity Provider’s short-term unsecured
debt rating or short-term issuer credit rating (as applicable) issued by either Rating Agency below
the applicable Threshold Rating.

     “Effective Date” has the meaning assigned to such term in Section 4.01. The delivery
of the certificate of the Liquidity Provider contemplated by Section 4.01(e) shall be conclusive
evidence that the Effective Date has occurred.

2

 

[Revolving Credit Agreement]

     “Excluded Taxes” means (i) Taxes imposed on, based on, or measured by the overall net
income, capital, franchises or receipts (other than Taxes which are or are in the nature of sales
or use Taxes or value added Taxes) of the Liquidity Provider or of its Lending Office by the
jurisdiction where such Liquidity Provider’s principal office or such Lending Office is located or
any other taxing jurisdiction in which such Tax is imposed solely as a result of the Liquidity
Provider being, or having been, organized in, or conducting, or having conducted, any activities
unrelated to the transactions contemplated by the Operative Agreements in such jurisdiction, and
(ii) Excluded Withholding Taxes.

     “Excluded Withholding Taxes” means (i) withholding Taxes imposed by the United States
except (but only in the case of a successor Liquidity Provider organized under the laws of a
jurisdiction outside the United States) to the extent that such United States withholding Taxes are
imposed or increased as a result of any change in applicable law or treaty after the date hereof,
(ii) any withholding Taxes imposed by the United States which are imposed or increased as a result
of the Liquidity Provider failing to deliver to the Borrower any certificate or document (which
certificate or document in the good faith judgment of the Liquidity Provider it is legally entitled
to provide) which is reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding Tax, and (iii) withholding
Taxes imposed by the United States on payments to a recipient in any other jurisdiction to which
such Lending Office is moved if, under the laws in effect at the time of such move, such laws would
require greater withholding of Taxes on payments to such Liquidity Provider acting from an office
in such jurisdiction than would be required on payments to such Liquidity Provider acting from an
office in the jurisdiction from which such Lending Office was moved.

     “Expenses” means liabilities, obligations, damages, settlements, penalties, claims,
actions, suits, costs, expenses, and disbursements (including, without limitation, reasonable fees
and disbursements of legal counsel and costs of investigation), provided that Expenses shall not
include any Taxes.

     “Expiry Date” means October 1, 2008, initially, or any date to which the Expiry Date
is extended pursuant to Section 2.10.

     “Final Advance” means an Advance made pursuant to Section 2.02(d).

     “GAAP” means generally accepted accounting principles as set forth in the statements
of financial accounting standards issued by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants, as such principles may at any time or from time
to time be varied by any applicable financial accounting rules or regulations issued by the
Securities and Exchange Commission and, with respect to any person, shall mean such principles
applied on a basis consistent with prior periods except as may be disclosed in such person’s
financial statements.

     “Indemnified Tax” has the meaning assigned to such term in Section 3.03(a).

3

 

[Revolving Credit Agreement]

     “Intercreditor Agreement” means the Intercreditor Agreement dated as of the date
hereof among the Trustee, the Liquidity Provider, and the Subordination Agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with its terms.

     “Interest Advance” means an Advance made pursuant to Section 2.02(a).

     “Interest Period” means, with respect to any LIBOR Advance, each of the following
periods:

     (i) the period beginning on the third Business Day following either (x) the date of the
Liquidity Provider’s receipt of the Notice of Borrowing for such LIBOR Advance or (y) the
date of the withdrawal of funds from the Cash Collateral Account for the purpose of paying
interest on the Class A Certificates as contemplated by Section 2.06(a) hereof and, in
either case, ending on the next Regular Distribution Date (or, if such day is not a Business
Day, the next succeeding Business Day); and

     (ii) each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the next Regular Distribution Date (or, if such day is not a
Business Day, the next succeeding Business Day);

provided, however, that if (x) the Final Advance shall have been made, or (y) other outstanding
Advances shall have been converted into the Final Advance, then the Interest Periods shall be
successive periods of one month beginning on the third Business Day following the Liquidity
Provider’s receipt of the Notice of Borrowing for such Final Advance (in the case of clause (x)
above) or the Regular Distribution Date (or, if such day is not a Business Day, the next succeeding
Business Day) following such conversion (in the case of clause (y) above).

     “Lending Office” means the office of the Liquidity Provider presently located in New
York, New York, or such other office as the Liquidity Provider from time to time shall notify the
Borrower as its Lending Office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to another Lending Office outside the United States of America except in accordance
with Section 3.01, 3.02, 3.03 or 3.10 hereof.

     “LIBOR Advance” means an Advance bearing interest at a rate based upon the LIBOR Rate.

     “LIBOR Rate” means, with respect to any Interest Period,

     (i) the rate per annum appearing on Bloomberg L.P. page “BBAM” (or any successor or
substitute therefor) at approximately 11:00 a.m. (London time) two Business Days before the
first day of such Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period, or

     (ii) if the rate calculated pursuant to clause (i) above is not available, the average
(rounded upwards, if necessary, to the next 1/16 of 1%) of the rates per annum at which
deposits in dollars are offered for the relevant Interest Period by three banks of
recognized standing selected by the Liquidity Provider in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days before the first day of such

4

 

 [Revolving Credit Agreement]

Interest Period in an amount approximately equal to the principal amount of the LIBOR
Advance to which such Interest Period is to apply and for a period comparable to such
Interest Period.

     “Liquidity Event of Default” means the occurrence of either (a) the Acceleration of
all of the Equipment Notes or (b) a Southwest Bankruptcy Event.

     “Liquidity Indemnitee” means (i) the Liquidity Provider, (ii) the directors, officers,
employees and agents of the Liquidity Provider, and (iii) the successors and permitted assigns of
the persons described in clauses (i) and (ii) inclusive.

     “Liquidity Provider” has the meaning assigned to such term in the recital of parties
to this Agreement.

     “Maximum Available Commitment” means, subject to the proviso contained in the third
sentence of Section 2.02(a), at any time of determination, (a) the Maximum Commitment at such time
less (b) the aggregate amount of each Interest Advance outstanding at such time; provided that
following a Provider Advance, a Special Termination Advance, or a Final Advance, the Maximum
Available Commitment shall be zero.

     “Maximum Commitment” means initially $38,016,225.00 as such amount may be reduced from
time to time in accordance with Section 2.04(a).

     “Non-Extension Advance” means an Advance made pursuant to Section 2.02(b).

     “Notice of Borrowing” has the meaning assigned to such term in Section 2.02(e).

     “Notice of Replacement Subordination Agent” has the meaning assigned to such term in
Section 3.08.

     “Performing Note Deficiency” means any time that less than 65% of the then aggregate
outstanding principal amount of all Equipment Notes (other than any Additional Equipment Notes
issued under any Indenture) are Performing Equipment Notes.

     “Prospectus Supplement” means the final Prospectus Supplement dated September 19, 2007
relating to the Certificates, as such Prospectus Supplement may be amended or supplemented.

     “Provider Advance” means a Downgrade Advance or a Non-Extension Advance.

     “Regulatory Change” has the meaning assigned to such term in Section 3.01.

     “Replenishment Amount” has the meaning assigned to such term in Section 2.06(b).

     “Required Amount” means, for any day, the sum of the aggregate amount of interest,
calculated at the rate per annum equal to the Stated Interest Rate for the Class A Certificates,
that would be payable on the Class A Certificates on each of the three successive semi-annual
Regular Distribution Dates immediately following such day or, if such day is a Regular

5

 

[Revolving Credit Agreement]

Distribution Date, on such day and the succeeding two semi-annual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class A Certificates on such day
and without regard to expected future distributions of principal on the Class A Certificates.

     “Special Termination Advance” means an Advance made pursuant to Section 2.02(g).

     “Special Termination Notice” means the Notice of Termination substantially in the form
of Annex VIII to this Agreement.

     “Termination Date” means the earliest to occur of the following: (i) the Expiry Date;
(ii) the date on which the Borrower delivers to the Liquidity Provider a certificate, signed by the
Borrower, certifying that all of the Class A Certificates have been paid in full (or provision has
been made for such payment in accordance with the Intercreditor Agreement and the Class A Trust
Agreement) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on
which the Borrower delivers to the Liquidity Provider a certificate, signed by the Borrower,
certifying that a Replacement Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.5(e) of the Intercreditor Agreement; (iv) the fifth Business Day following
the receipt by the Borrower of a Termination Notice or Special Termination Notice from the
Liquidity Provider pursuant to Section 6.01 hereof; and (v) the date on which no Advance is or may
(including by reason of reinstatement as herein provided) become available for a Borrowing
hereunder.

     “Termination Notice” means the Notice of Termination substantially in the form of
Annex V to this Agreement.

     “Transferee” has the meaning assigned to such term in Section 7.08(b).

     “Unapplied Downgrade Advance” means any Downgrade Advance other than an Applied
Downgrade Advance.

     “Unapplied Non-Extension Advance” means any Non-Extension Advance other than an
Applied Non-Extension Advance.

     “Unapplied Provider Advance” means any Provider Advance other than an Applied Provider
Advance.

     “Unapplied Special Termination Advance” means any Special Termination Advance other
than an Applied Special Termination Advance.

     “Unpaid Advance” has the meaning assigned to such term in Section 2.05.

     (b) Terms Defined in the Intercreditor Agreement. Capitalized terms not otherwise
defined in this Agreement shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.

6

 

[Revolving Credit Agreement]

ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENT

     Section 2.01 The Advances. The Liquidity Provider hereby irrevocably agrees, on the
terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on
any Business Day during the period from the Effective Date until 1:00 p.m. (New York City time) on
the Expiry Date (unless the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time outstanding not to
exceed the Maximum Commitment.

     Section 2.02 Making the Advances. (a) Interest Advances shall be made in one or more
Borrowings by delivery to the Liquidity Provider of one or more written and completed Notices of
Borrowing in substantially the form of Annex I attached hereto, signed by the Borrower, in an
amount not exceeding the Maximum Available Commitment at such time and shall be used solely for the
payment when due of interest on the Class A Certificates at the Stated Interest Rate therefor in
accordance with Section 3.5(a) of the Intercreditor Agreement. Each Interest Advance made
hereunder shall automatically reduce the Maximum Available Commitment and the amount available to
be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to
reinstatement as provided in the next sentence). Upon repayment to the Liquidity Provider in full
or in part of the amount of any Interest Advance made pursuant to this Section 2.02(a), together
with accrued interest thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by an amount equal to the amount of the Interest Advance so repaid but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment shall not be so
reinstated (x) at any time if (i) a Liquidity Event of Default shall have occurred and be
continuing and (ii) there is a Performing Note Deficiency or (y) at any time after the making of a
Provider Advance, a Final Advance or a Special Termination Advance or after any Interest Advance
shall have been converted into a Final Advance.

     (b) A Non-Extension Advance shall be made in a single Borrowing if this Agreement is not
extended in accordance with Section 3.5(d) of the Intercreditor Agreement (unless a Replacement
Liquidity Facility to replace this Agreement shall have been delivered to the Borrower as
contemplated by said Section 3.5(d) within the time period specified in such Section) by delivery
to the Liquidity Provider of a written and completed Notice of Borrowing in substantially the form
of Annex II attached hereto, signed by the Borrower, in an amount equal to the Maximum Available
Commitment at such time, and shall be used to fund the Cash Collateral Account in accordance with
said Section 3.5(d) and Section 3.5(f) of the Intercreditor Agreement.

     (c) A Downgrade Advance shall be made in a single Borrowing upon the occurrence of a Downgrade
Event (as provided for in Section 3.5(c) of the Intercreditor Agreement) unless a Replacement
Liquidity Facility to replace this Agreement shall have been previously delivered to the Borrower
in accordance with Section 3.5(c), by delivery to the Liquidity Provider of a written and completed
Notice of Borrowing in substantially the form of Annex III attached hereto, signed by the Borrower,
in an amount equal to the Maximum Available Commitment at

7

 

[Revolving Credit Agreement]

such time, and shall be used solely to fund the Cash Collateral Account in accordance with
said Section 3.5(c) and Section 3.5(f) of the Intercreditor Agreement.

     (d) A Final Advance shall be made in a single Borrowing upon the receipt by the Borrower of a
Termination Notice from the Liquidity Provider pursuant to Section 6.01 hereof by delivery to the
Liquidity Provider of a written and completed Notice of Borrowing in substantially the form of
Annex IV attached hereto, signed by the Borrower, in an amount equal to the Maximum Available
Commitment at such time, and shall be used solely to fund the Cash Collateral Account (in
accordance with Sections 3.5(f) and 3.5(i) of the Intercreditor Agreement).

     (e) Each Borrowing shall be made on notice in writing (a “Notice of Borrowing”) in
substantially the form required by Section 2.02(a), 2.02(b), 2.02(c), 2.02(d) or 2.02 (g), as the
case may be, given by the Borrower to the Liquidity Provider. Each Notice of Borrowing shall be
effective upon delivery of a copy thereof to the Liquidity Provider’s office at the address
specified in Section 7.02. If a Notice of Borrowing is delivered by the Borrower in respect of any
Borrowing no later than 1:00 p.m. (New York City time) on a Business Day, upon satisfaction of the
conditions precedent set forth in Section 4.02 with respect to a requested Borrowing, the Liquidity
Provider shall make available to the Borrower, in accordance with its payment instructions, the
amount of such Borrowing in U.S. dollars and immediately available funds, before 5:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in such Notice of
Borrowing. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing on a
day that is not a Business Day or after 1:00 p.m. (New York City time) on a Business Day, upon
satisfaction of the conditions precedent set forth in Section 4.02 with respect to a requested
Borrowing, the Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and in immediately available
funds, before 12:00 Noon (New York City time) on the first Business Day next following the day of
receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such
Notice of Borrowing. Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire transfer instructions as
the Borrower shall furnish from time to time to the Liquidity Provider for such purpose. Each
Notice of Borrowing shall be irrevocable and binding on the Borrower.

     (f) Upon the making of any Advance requested pursuant to a Notice of Borrowing, in accordance
with the Borrower’s payment instructions, the Liquidity Provider shall be fully discharged of its
obligation hereunder with respect to such Notice of Borrowing, and the Liquidity Provider shall not
thereafter be obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other Person. If the Liquidity Provider makes an Advance
requested pursuant to a Notice of Borrowing before 12:00 Noon (New York City time) on the second
Business Day after the date of payment specified in Section 2.02(e), the Liquidity Provider shall
have fully discharged its obligations hereunder with respect to such Advance and an event of
default shall not have occurred hereunder. Following the making of any Advance pursuant to Section
2.02(b), (c), (d) or (g) hereof to fund the Cash Collateral Account, the Liquidity Provider shall
have no interest in or rights to the Cash Collateral Account, the funds constituting such Advance
or any other amounts from time to time on deposit in the Cash Collateral Account; provided
that the foregoing shall not affect or impair

8

 

[Revolving Credit Agreement]

the obligations of the Subordination Agent to make the distributions contemplated by Section
3.5(e) or (f) of the Intercreditor Agreement, and provided further, that the foregoing
shall not affect or impair the rights of the Liquidity Provider to provide written instructions
with respect to the investment and reinvestment of amounts in the Cash Collateral Accounts to the
extent provided in Section 2.2(b) of the Intercreditor Agreement. By paying to the Borrower
proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no responsibility for, the
correctness or sufficiency for any purpose of the amount of the Advances so made and requested.

     (g) A “Special Termination Advance” shall be made in a single Borrowing upon the receipt by
the Borrower of a Special Termination Notice from the Liquidity Provider pursuant to Section
6.01(b), by delivery to the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex VII, signed by the Borrower, in an amount equal to the Maximum
Available Commitment at such time, and shall be used solely to fund the Cash Collateral Account (in
accordance with Section 3.5(f) and Section 3.5(k) of the Intercreditor Agreement).

     Section 2.03 Fees. The Borrower agrees to pay to the Liquidity Provider the fees set
forth in the Fee Letter.

     Section 2.04 Automatic Reductions and Termination of the Maximum Commitment.

     (a) Automatic Reduction. Promptly following each date on which the Required Amount is
reduced as a result of a reduction in the Pool Balance of the Class A Certificates or otherwise,
the Maximum Commitment shall automatically be reduced to an amount equal to such reduced Required
Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic
reduction of the Maximum Commitment to the Liquidity Provider within two Business Days thereof.
The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of
the Maximum Commitment.

     (b) Termination. Upon the making of any Provider Advance, or the Special Termination
Advance, or the making of or conversion to a Final Advance hereunder or the occurrence of the
Termination Date, the obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.

     Section 2.05 Repayments of Interest Advances , the Special Termination Advance or the
Final Advance. Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider (which notice and
demand are hereby waived by the Borrower), to pay, or to cause to be paid, to the Liquidity
Provider on each date on which the Liquidity Provider shall make an Interest Advance, the Special
Termination Advance or the Final Advance, an amount equal to (a) the amount of such Advance (any
such Advance, until repaid, is referred to herein as an “Unpaid Advance”) (if multiple
Interest Advances are outstanding any such repayment to be applied in the order in which such
Interest Advances have been made, starting with the earliest), plus (b) interest on the amount of
each such Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the

9

 

[Revolving Credit Agreement]

Liquidity
Provider shall make a Provider Advance at any time after making one or more Interest
Advances which shall not have been repaid in accordance with this Section 2.05 or (ii) this
Liquidity Facility shall become a Downgraded Facility or Non-Extended Facility at any time when
unreimbursed Interest Advances have reduced the Maximum Available Commitment to zero, then such
Interest Advances shall cease to constitute Unpaid Advances and shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied Non-Extension Advance, as the case may be,
for all purposes of this Agreement (including, without limitation, for the purpose of determining
when such Interest Advance is required to be repaid to the Liquidity Provider in accordance with
Section 2.06 and for the purposes of Section 2.06(b)); provided, further, that
amounts in respect of a Special Termination Advance withdrawn from the Cash Collateral Account for
the purpose of paying interest on the Class A Certificates in accordance with Section 3.5(f) of the
Intercreditor Agreement (the amount of any such withdrawal being an “Applied Special Termination
Advance”) shall thereafter (subject to Section 2.06(b)) be treated as an Interest Advance under
this Agreement for purposes of determining the Applicable Liquidity Rate for interest payable
thereon; and provided, further, that if, following the making of a Special
Termination Advance, the Liquidity Provider delivers a Termination Notice to the Borrower pursuant
to Section 6.01(a), such Special Termination Advance shall thereafter be converted to and treated
as a Final Advance under this Agreement for purposes of determining the Applicable Liquidity Rate
for interest payable thereon and the obligation for repayment thereof and as an Applied Special
Termination Advance for purposes of Section 2.6(c) of the Intercreditor Agreement. The Borrower
and the Liquidity Provider agree that the repayment in full of each Interest Advance, Special
Termination Advance and Final Advance on the date such Advance is made is intended to be a
contemporaneous exchange for new value given to the Borrower by the Liquidity Provider.

     Section 2.06 Repayments of Provider Advances. (a) Amounts advanced hereunder in
respect of a Provider Advance shall be deposited in the Cash Collateral Account, invested and
withdrawn from the Cash Collateral Account as set forth in Sections 3.5(c), (d), (e) and (f) of the
Intercreditor Agreement. Subject to Sections 2.07 and 2.09, the Borrower agrees to pay to the
Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution
Date after the making of a Provider Advance, interest on the principal amount of any such Provider
Advance as provided in Section 3.07; provided, however, that amounts in respect of a
Provider Advance withdrawn from the Cash Collateral Account for the purpose of paying interest on
the Class A Certificates in accordance with Section 3.5(f) of the Intercreditor Agreement (the
amount of any such withdrawal being (y) in the case of a Downgrade Advance, an “Applied
Downgrade Advance” and (z) in the case of a Non-Extension Advance, an “Applied
Non-Extension Advance” and, together with an Applied Downgrade Advance, an “Applied
Provider Advance”) shall thereafter (subject to Section 2.06(b)) be treated as an Interest
Advance under this Agreement for purposes of determining the Applicable Liquidity Rate for interest
payable thereon and the dates on which such interest is payable; provided further,
however, that if, following the making of a Provider Advance, the Liquidity Provider
delivers a Termination Notice to the Borrower pursuant to Section 6.01 hereof, such Provider
Advance shall thereafter be converted to and treated as a Final Advance under this Agreement for
purposes of determining the Applicable Liquidity Rate for interest payable thereon and the
obligation for repayment thereof and as an Applied Downgrade Advance or Applied Non-Extension
Advance, as the case may be, for the purposes of Section 2.6(c) of the Intercreditor Agreement.
Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any

10

 

[Revolving Credit Agreement]

amounts from the
Cash Collateral Account on account of a reduction in the Required Amount,
the Borrower shall repay to the Liquidity Provider a portion of the Provider Advances in a
principal amount equal to the amount of such reduction, plus interest on the principal amount
prepaid as provided in Section 3.07 hereof.

     (b) At any time when an Applied Provider Advance (or any portion thereof) is outstanding, upon
the deposit in the Cash Collateral Account of any amount pursuant to clause “fourth” of
Section 3.2 of the Intercreditor Agreement (any such amount being a “Replenishment Amount”)
for the purpose of replenishing or increasing the balance thereof up to the amount of the Required
Amount at such time, (i) the aggregate outstanding principal amount of all Applied Provider
Advances (and of Provider Advances treated as an Interest Advance for purposes of determining the
Applicable Liquidity Rate for interest payable thereon) shall be automatically reduced by the
amount of such Replenishment Amount (if multiple Applied Provider Advances are outstanding, such
Replenishment Amount to be applied in the order in which such Applied Provider Advances have been
made, starting with the earliest) and (ii) the aggregate outstanding principal amount of all
Unapplied Provider Advances shall be automatically increased by the amount of such Replenishment
Amount.

     (c) Upon the provision of a Replacement Liquidity Facility in replacement of this Agreement in
accordance with Section 3.5(e) of the Intercreditor Agreement, amounts remaining on deposit in the
Cash Collateral Account after giving effect to any Applied Provider Advance or Applied Special
Termination Advance on the date of such replacement shall be reimbursed to the replaced Liquidity
Provider, but only to the extent such amounts are necessary to repay in full to the replaced
Liquidity Provider all amounts owing to it hereunder.

     Section 2.07 Payments to the Liquidity Provider Under the Intercreditor Agreement. In
order to provide for payment or repayment to the Liquidity Provider of any amounts hereunder, the
Intercreditor Agreement provides that amounts available and referred to in Articles II and III of
the Intercreditor Agreement, to the extent payable to the Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.5(f) of the Intercreditor
Agreement), shall be paid to the Liquidity Provider in accordance with the terms thereof. Amounts
so paid to, and not required to be returned by, the Liquidity Provider shall be applied by the
Liquidity Provider to Liquidity Obligations then due and payable in accordance with the
Intercreditor Agreement and shall discharge in full the corresponding obligations of the Borrower
hereunder (or, if not provided for in the Intercreditor Agreement, then in such manner as the
Liquidity Provider shall deem appropriate).

     Section 2.08 Book Entries. The Liquidity Provider shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting
from Advances made from time to time and the amounts of principal and interest payable hereunder
and paid from time to time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations of the Borrower in
respect of Advances.

     Section 2.09 Payments from Available Funds Only. All payments to be made by the
Borrower under this Agreement, including, without limitation, Sections 7.05 and 7.07, shall be made
only from the amounts that constitute Scheduled Payments, Special Payments or payments

11

 

[Revolving Credit Agreement]

under the
Fee Letter and Section 8.1 of the Participation Agreements and only to the extent that
the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the priority of payments
provisions set forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will
look solely to such amounts in respect of payments to be made by the Borrower hereunder to the
extent available for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided in this Agreement,
the Intercreditor Agreement or any Participation Agreement. Amounts on deposit in the Cash
Collateral Account shall be available to the Borrower to make payments under this Agreement only to
the extent and for the purposes expressly contemplated in Section 3.5(f) of the Intercreditor
Agreement.

     Section 2.10 Non-Extension Advance. No earlier than the 60th day and no later than
the 40th day prior to the then effective Expiry Date (unless such Expiry Date is on or after the
date that is 15 days after the Final Legal Distribution Date for the Class A Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date to the earlier of (i) the
date that is 15 days after the Final Legal Distribution Date for the Class A Certificates and (ii)
the date that is the day immediately preceding the 364th day occurring after the last day of the
Consent Period (as hereinafter defined). Whether or not the Borrower has made such request, the
Liquidity Provider shall advise the Borrower no earlier than the 40th day (or, if earlier, the date
of the Liquidity Provider’s receipt of such request, if any, from the Borrower) and no later than
the 25th day prior to the then effective Expiry Date (such period, the “Consent Period”),
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the Liquidity Provider
advises the Borrower on or before the date on which the Consent Period ends that such Expiry Date
shall not be so extended, or fails to irrevocably and unconditionally advise the Borrower on or
before the date on which the Consent Period ends that such Expiry Date shall be so extended (and,
in each case, if the Liquidity Provider shall not have been replaced in accordance with Section
3.5(e) of the Intercreditor Agreement), the Borrower shall be entitled on and after the date on
which the Consent Period ends (but prior to the then effective Expiry Date) to request a
Non-Extension Advance in accordance with Section 2.02(b) hereof and Section 3.5(d) of the
Intercreditor Agreement.

ARTICLE III

OBLIGATIONS OF THE BORROWER

     Section 3.01 Increased Costs. The Borrower shall pay to the Liquidity Provider from
time to time such amounts as may be necessary to compensate the Liquidity Provider for any
increased costs incurred by the Liquidity Provider which are attributable to its making or
maintaining any Advances hereunder or its obligation to make any such Advances hereunder, or any
reduction in any amount receivable by the Liquidity Provider under this Agreement or the
Intercreditor Agreement in respect of any such Advances or such obligation (such increases in costs
and reductions in amounts receivable being herein called “Additional Costs”), resulting
from any change after the date of this Agreement in U.S. federal, state, municipal, or foreign laws
or regulations (including Regulation D of the Board of Governors of the Federal Reserve System), or
the adoption or making after the date of this Agreement of any interpretations,

12

 

[Revolving Credit Agreement]

directives, or
requirements applying to a class of banks including the Liquidity Provider under
any U.S. federal, state, municipal, or any foreign laws or regulations (whether or not having
the force of law) by any court, central bank or monetary authority charged with the interpretation
or administration thereof (a “Regulatory Change”), which: (1) changes the basis of
taxation of any amounts payable to the Liquidity Provider under this Agreement in respect of any
such Advances or such obligation (other than with respect to Excluded Taxes or Indemnified Taxes);
or (2) imposes or modifies any reserve, special deposit, compulsory loan or similar requirements
relating to any extensions of credit or other assets of, or any deposits with other liabilities of,
the Liquidity Provider (including any such Advances or such obligation or any deposits referred to
in the definition of LIBOR Rate or related definitions). The Liquidity Provider agrees to use
reasonable efforts (consistent with its internal policies and applicable legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section 3.01 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity Provider, be otherwise
disadvantageous to the Liquidity Provider.

     The Liquidity Provider will notify the Borrower of any event occurring after the date of this
Agreement that will entitle the Liquidity Provider to compensation pursuant to this Section 3.01 as
promptly as practicable after it obtains knowledge thereof and determines to request such
compensation, which notice shall describe in reasonable detail the calculation of the amounts owed
under this Section; provided, that if the Liquidity Provider fails to give such notice within 180
days after it obtains such knowledge, the Liquidity Provider shall, with respect to any Additional
Costs resulting from such event, only be entitled to payment under this Section 3.01 for Additional
Costs incurred from and after the date 180 days prior to the date the Liquidity Provider does give
such notice. Determinations by the Liquidity Provider for purposes of this Section 3.01 of the
effect of any Regulatory Change on its costs of making or maintaining Advances or on amounts
receivable by it in respect of Advances, and of the additional amounts required to compensate the
Liquidity Provider in respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section 3.01.

     Section 3.02 Capital Adequacy. If (1) the adoption, after the date hereof, of any
applicable governmental law, rule or regulation regarding capital adequacy, (2) any change, after
the date hereof, in the interpretation or administration of any such law, rule or regulation by any
central bank or other governmental authority charged with the interpretation or administration
thereof or (3) compliance by the Liquidity Provider or any corporation or bank controlling the
Liquidity Provider with any applicable guideline or request of general applicability, issued after
the date hereof, by any central bank or other governmental authority (whether or not having the
force of law) that constitutes a change of the nature described in clause (2), has the effect of
requiring an increase in the amount of capital required to be maintained by the Liquidity Provider
or any corporation or bank controlling the Liquidity Provider and such increase is based upon the
Liquidity Provider’s obligations hereunder (including funded obligations) and other similar
obligations, the Borrower shall, subject to the provisions of the next paragraph, pay to the
Liquidity Provider from time to time such additional amount or amounts as are necessary to
compensate the Liquidity Provider for such portion of such increase as shall be reasonably
allocable to the Liquidity Provider’s obligations to the Borrower hereunder. The Liquidity
Provider agrees to use reasonable efforts (consistent with its internal policies and applicable
legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such

13

 

[Revolving Credit Agreement]

change would avoid the need for, or reduce the amount of, any amount payable under this
Section 3.02 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous to the Liquidity Provider.

     The Liquidity Provider will notify the Borrower of any event occurring after the date of this
Agreement that will entitle the Liquidity Provider to compensation pursuant to this Section 3.02 as
promptly as practicable after it obtains knowledge thereof and determines to request such
compensation, which notice shall describe in reasonable detail the calculation of the amounts owed
under this Section; provided, that if the Liquidity Provider fails to give such notice within 180
days after it obtains such knowledge, the Liquidity Provider shall, with respect to any costs
resulting from such event, only be entitled to payment under this Section 3.02 for costs incurred
from and after the date 180 days prior to the date the Liquidity Provider does give such notice.
Determinations by the Liquidity Provider for purposes of this Section 3.02 of the effect of any
increase in the amount of capital required to be maintained by the Liquidity Provider and of the
amount allocable to the Liquidity Provider’s obligations to the Borrower hereunder shall be prima
facie evidence of the amounts owed under this Section, absent manifest error.

     Section 3.03 Payments Free of Deductions. (a) Unless required by applicable law, all
payments made by the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future Taxes of any nature whatsoever now or
hereafter imposed, levied, collected, withheld or assessed. If any Taxes are required to be
withheld from any amount payable to the Liquidity Provider under this Agreement, (i) the Borrower
shall within the time prescribed therefor by applicable law pay to the appropriate governmental or
taxing authority the full amount of any such Taxes (and any additional Taxes in respect of the
additional amounts payable under clause (ii) hereof) and make such reports or returns in connection
therewith at the time or times and in the manner prescribed by applicable law, and (ii) if such
Taxes are, other than Excluded Taxes (such non-Excluded Taxes being referred to herein,
collectively, as “Indemnified Taxes” and each, individually, as a “Indemnified
Tax”), the amount so payable to the Liquidity Provider shall be increased to the extent
necessary to yield to the Liquidity Provider (after reduction by all Taxes required to be withheld
from the amount payable to the Liquidity Provider) the amount that would have been payable under
this Agreement if no such withholding had been required. The Liquidity Provider agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous to the Liquidity
Provider. From time to time upon the reasonable request of the Borrower, the Liquidity Provider
agrees to provide to the Borrower such original Internal Revenue Service Forms (including W-8BEN,
W-8ECI or W-9), as appropriate with respect to Liquidity Provider, or any successor or other form
prescribed by the Internal Revenue Service, certifying as to any available exemption from or
reduction in the rate of United States withholding tax on payments pursuant to this Agreement.
Within 30 days after the date of each payment hereunder, the Borrower shall furnish to the
Liquidity Provider the original or a certified copy of (or other documentary evidence of) the
payment of the Indemnified Taxes applicable to such payment.

14

 

[Revolving Credit Agreement]

     (b) Unless required by applicable law, all payments (including, without limitation, Advances)
made by the Liquidity Provider under this Agreement shall be made free and clear of,
and without reduction for or on account of, any Taxes. If any Taxes are required to be
withheld or deducted from any amounts payable to the Borrower under this Agreement, the Liquidity
Provider shall (i) within the time prescribed therefor by applicable law pay to the appropriate
governmental or taxing authority the full amount of any such Taxes (and any additional Taxes in
respect of the additional amounts payable under clause (ii) hereof) and make such reports or
returns in connection therewith at the time or times and in the manner prescribed by applicable
law, and (ii) pay to the Borrower an additional amount which (after deduction of all such Taxes)
will be sufficient to yield to the Borrower the full amount which would have been received by it
had no such withholding or deduction been made. Within 30 days after the date of each payment
hereunder, the Liquidity Provider shall furnish to the Borrower the original or a certified copy of
(or other documentary evidence of) the payment of the Taxes applicable to such payment.

     (c) If any exemption from, or reduction in the rate of, any Taxes is reasonably available to
the Borrower to establish that payments under this Agreement are exempt from (or entitled to a
reduced rate of) tax, the Borrower shall deliver to the Liquidity Provider such form or forms and
such other evidence of the eligibility of the Borrower for such exemption or reduction as the
Liquidity Provider may reasonably identify to the Borrower as being required as a condition to
exemption from, or reduction in the rate of, any Taxes.

     Section 3.04 Payments. The Borrower shall make or cause to be made each payment to
the Liquidity Provider under this Agreement so as to cause the same to be received by the Liquidity
Provider not later than 1:00 P.M. (New York City time) on the day when due. The Borrower shall
make all such payments in lawful money of the United States of America, to the Liquidity Provider
in immediately available funds, by wire transfer to the account at BNP Paribas, New York, ABA No.
026-007-689, Account No. 10313000103, Account Name: Loan Servicing Clearing Account, Reference:
Securitization — F185 — Southwest 2007-1 EETC, or to such other account as the Liquidity Provider
may from time to time direct the Borrower.

     Section 3.05 Computations. All computations of interest based on the Base Rate shall
be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of
interest based on the LIBOR Rate shall be made on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day) occurring in the
period for which such interest is payable.

     Section 3.06 Payment on Non-Business Days. Whenever any payment to be made hereunder
to the Liquidity Provider shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and if so made, shall be deemed to have
been made when due).

     Section 3.07 Interest. (a) Subject to Section 2.09, the Borrower shall pay, or shall
cause to be paid, without duplication, interest on (i) the unpaid principal amount of each Advance
from and including the date of such Advance (or, in the case of an Applied Provider Advance or
Applied Special Termination Advance, from and including the date on which the amount thereof was
withdrawn from the Cash Collateral Account to pay interest on the Class A Certificates) to but
excluding the date such principal amount shall be paid in full (or, in the case

15

 

[Revolving Credit Agreement]

of an Applied
Provider Advance or Applied Special Termination Advance, the date on which the Cash Collateral
Account is fully replenished in respect of such Advance) and (ii) any other
amount due hereunder (whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount) that is not paid
when due (whether at stated maturity, by acceleration or otherwise) from and including the due date
thereof to but excluding the date such amount is paid in full, in each such case, at a fluctuating
interest rate per annum for each day equal to the Applicable Liquidity Rate (as defined below) for
such Advance or such other amount, as the case may be, as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law; provided,
however, that, if at any time the otherwise applicable interest rate as set forth in this
Section 3.07 shall exceed the maximum rate permitted by applicable law, then any subsequent
reduction in such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.07 below the maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise applicable interest
rate as set forth in this Section 3.07 had at all times been in effect.

     (b) Except as provided in clause (e) below, each Advance will be either a Base Rate Advance or
a LIBOR Advance as provided in this Section. Each such Advance will be a Base Rate Advance for the
period from the date of its borrowing to (but excluding) the third Business Day following the
Liquidity Provider’s receipt of the Notice of Borrowing for such Advance. Thereafter, such Advance
shall be a LIBOR Advance.

     (c) Each LIBOR Advance shall bear interest during each Interest Period at a rate per annum
equal to the LIBOR Rate for such Interest Period plus the Applicable Margin for such LIBOR Advance,
payable in arrears on the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).

     (d) Each Base Rate Advance shall bear interest at a rate per annum equal to the Base Rate plus
the Applicable Margin for such Base Rate Advance, payable in arrears on each Regular Distribution
Date and, in the event of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of interest accrued on the
amount of principal repaid).

     (e) Each outstanding Unapplied Non-Extension Advance, Unapplied Downgrade Advance and
Unapplied Special Termination Advance shall bear interest in an amount equal to the Investment
Earnings on amounts on deposit in the Cash Collateral Account plus the Applicable Margin for such
Unapplied Non-Extension Advance, Unapplied Downgrade Advance or Unapplied Special Termination
Advance, as applicable, on the amount of such Unapplied Non-Extension Advance, Unapplied Downgrade
Advance or Unapplied Special Termination Advance from time to time, payable in arrears on each
Regular Distribution Date.

     (f) Each amount not paid when due hereunder (whether fees, commissions, expenses or other
amounts or, to the extent permitted by applicable law, installments of interest on Advances but
excluding Advances) shall bear interest at a rate per annum equal to the Base Rate plus 2.00% per
annum until paid.

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[Revolving Credit Agreement]

     (g) Each change in the Base Rate shall become effective immediately. The rates of interest
specified in this Section 3.07 with respect to any Advance or other amount shall be referred to as
the “Applicable Liquidity Rate”.

     Section 3.08 Replacement of Borrower. From time to time and subject to the successor
Borrower’s meeting the eligibility requirements set forth in Section 6.9 of the Intercreditor
Agreement applicable to the Subordination Agent, upon the effective date and time specified in a
written and completed Notice of Replacement Subordination Agent in substantially the form of Annex
VI attached hereto (a “Notice of Replacement Subordination Agent”) delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated therein shall be
substituted for the Borrower for all purposes hereunder.

     Section 3.09 Funding Loss Indemnification. The Borrower shall pay to the Liquidity
Provider, upon the request of the Liquidity Provider, such amount or amounts as shall be sufficient
(in the reasonable opinion of the Liquidity Provider) to compensate it for any loss, cost, or
expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired
by the Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss of anticipated
profits) incurred as a result of:

     (1) Any repayment of a LIBOR Advance on a date other than the last day of the Interest
Period for such Advance; or

     (2) Any failure by the Borrower to borrow a LIBOR Advance on the date for borrowing
specified in the relevant notice under Section 2.02.

     Section 3.10 Illegality. Notwithstanding any other provision in this Agreement, if
any change in any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Liquidity Provider (or its
Lending Office) with any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or impossible for the Liquidity
Provider (or its Lending Office) to maintain or fund its LIBOR Advances, then upon notice to the
Borrower by the Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if such
change or compliance with such request, in the judgment of the Liquidity Provider, requires
immediate repayment; or (b) at the expiration of the last Interest Period to expire before the
effective date of any such change or request. The Liquidity Provider agrees to use reasonable
efforts (consistent with its internal policies and applicable legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid or cure the
aforesaid illegality and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider.

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[Revolving Credit Agreement]

ARTICLE IV

CONDITIONS PRECEDENT

     Section 4.01 Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of
this Agreement shall become effective on and as of the first date (the “Effective Date”) on
which the following conditions precedent have been satisfied or waived:

     (a) The Liquidity Provider shall have received each of the following, and in the case of each
document delivered pursuant to paragraphs (i), (ii) and (iii), each in form and substance
satisfactory to the Liquidity Provider:

          (i) This Agreement duly executed on behalf of the Borrower and the Fee Letter duly executed on
behalf of the Borrower;

          (ii) The Intercreditor Agreement duly executed on behalf of each of the parties thereto (other
than the Liquidity Provider);

          (iii) Fully executed copies of each of the Operative Agreements executed and delivered on or
before the Closing Date (other than this Agreement, the Fee Letter and the Intercreditor
Agreement);

          (iv) A copy of the Prospectus Supplement and specimen copies of the Class A Certificates;

          (v) An executed copy of each document, instrument, certificate and opinion delivered on or
before the Closing Date pursuant to the Class A Trust Agreement, the Intercreditor Agreement and
the other Operative Agreements (in the case of each such opinion, other than the opinion of counsel
for the Underwriters, either addressed to the Liquidity Provider or accompanied by a letter from
the counsel rendering such opinion to the effect that the Liquidity Provider is entitled to rely on
such opinion as of its date as if it were addressed to the Liquidity Provider);

          (vi) Evidence that there shall have been made and shall be in full force and effect, all
filings, recordings and/or registrations, and there shall have been given or taken any notice or
other similar action as may be reasonably necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to establish, perfect, protect and preserve the
right, title and interest, remedies, powers, privileges, liens and security interests of, or for
the benefit of, the Trustees, the Borrower and the Liquidity Provider created by the Operative
Agreements executed and delivered on or before the Closing Date;

          (vii) An agreement from Southwest, pursuant to which Southwest agrees to provide copies of
quarterly financial statements and audited annual financial statements to the Liquidity Provider
provided that so long as Southwest is subject to the reporting requirements of the Securities
Exchange Act of 1934, such information will be considered provided if it is made available on the
EDGAR database of the Securities and Exchange Commission;

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[Revolving Credit Agreement]

          (viii) Legal opinions from (a) Morris James LLP, special counsel to the Borrower and (b)
Vinson & Elkins L.L.P., special counsel to Southwest, each in form and substance reasonably
satisfactory to the Liquidity Provider; and

          (ix) Such other documents, instruments, opinions and approvals pertaining to the transactions
contemplated hereby or by the other Operative Agreements as the Liquidity Provider shall have
reasonably requested, including, without limitation, such documentation as the Liquidity Provider
may require to satisfy its “know your customer” policies.

     (b) The following statement shall be true on and as of the Effective Date: no event has
occurred and is continuing, or would result from the entering into of this Agreement or the making
of any Advance, which constitutes a Liquidity Event of Default.

     (c) The Liquidity Provider shall have received payment in full of all fees and other sums
required to be paid to or for the account of the Liquidity Provider on or prior to the Effective
Date.

     (d) All conditions precedent to the issuance of the Certificates under the Trust Agreements
shall have been satisfied or waived and all conditions precedent to the purchase of the Class A
Certificates and the Class B Certificates by the Underwriters under the Underwriting Agreement
shall have been satisfied or waived.

     (e) The Borrower shall have received a certificate, dated the date hereof, signed by a duly
authorized representative of the Liquidity Provider, certifying that all conditions precedent to
the effectiveness of Section 2.01 have been satisfied or waived.

     Section 4.02 Conditions Precedent to Borrowing. The obligation of the Liquidity
Provider to make an Advance on the occasion of each Borrowing shall be subject to the conditions
precedent that the Effective Date shall have occurred and, on or prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which conforms to the terms and
conditions of this Agreement and has been completed as may be required by the relevant form of the
Notice of Borrowing for the type of Advance requested. The Liquidity Provider will be permitted to
rely on the Subordination Agent incumbency certificate substantially in the form of Annex IX
relating to officers of the Subordination Agent that are authorized to deliver a Notice of
Borrowing to the Liquidity Provider.

ARTICLE V

COVENANTS

     Section 5.01 Affirmative Covenants of the Borrower. So long as any Advance shall
remain unpaid or the Liquidity Provider shall have any Maximum Commitment hereunder or the Borrower
shall have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will,
unless the Liquidity Provider shall otherwise consent in writing:

     (a) Performance of this and Other Agreements. Punctually pay or cause to be paid all
amounts payable by it under this Agreement and the other Operative Agreements and observe

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[Revolving Credit Agreement]

and perform in all material respects the conditions, covenants and requirements applicable to
it contained in this Agreement and the other Operative Agreements.

     (b) Reporting Requirements. Furnish to the Liquidity Provider with reasonable
promptness, such information and data with respect to the transactions contemplated by the
Operative Agreements as from time to time may be reasonably requested by the Liquidity Provider;
and permit the Liquidity Provider, upon reasonable notice, to inspect the Borrower’s books and
records with respect to such transactions and to meet with officers and employees of the Borrower
to discuss such transactions.

     (c) Certain Operative Agreements. Furnish to the Liquidity Provider with reasonable
promptness, such Operative Agreements entered into after the date hereof as from time to time may
be reasonably requested by the Liquidity Provider.

     Section 5.02 Negative Covenants of the Borrower. So long as any Advance shall remain
unpaid or the Liquidity Provider shall have any Maximum Commitment hereunder or the Borrower shall
have any obligation to pay any amount to the Liquidity Provider hereunder, the Borrower will not
appoint or permit or suffer to be appointed any successor Borrower without the prior written
consent of the Liquidity Provider, which consent shall not be unreasonably withheld or delayed.

ARTICLE VI

LIQUIDITY EVENTS OF DEFAULT AND SPECIAL TERMINATION

     Section 6.01 Liquidity Events of Default and Special Termination. (a) If (i) any
Liquidity Event of Default has occurred and is continuing and (ii) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the Borrower a Termination
Notice, the effect of which shall be to cause (A) the obligation of the Liquidity Provider to make
Advances hereunder to expire on the fifth Business Day after the date on which such Termination
Notice is received by the Borrower, (B) the Borrower to promptly request, and the Liquidity
Provider to promptly make, a Final Advance in accordance with Section 2.02(d) hereof and Section
3.5(i) of the Intercreditor Agreement, (C) all other outstanding Advances to be automatically
converted into Final Advances for purposes of determining the Applicable Liquidity Rate for
interest payable thereon, and (D) subject to Sections 2.07 and 2.09 hereof, all Advances
(including, without limitation, any Provider Advance and Applied Provider Advance), any accrued
interest thereon and any other amounts outstanding hereunder to become immediately due and payable
to the Liquidity Provider.

     (b) If the Pool Balance of the Class A Certificates is greater than the aggregate outstanding
principal amount of the Series A Equipment Notes (other than any Series A Equipment Notes
previously sold or with respect to which the collateral securing such Series A Equipment Notes has
been disposed of) at any time during the 18-month period prior to August 1, 2022, the Liquidity
Provider may, in its discretion, deliver to the Borrower a Special Termination Notice, the effect
of which shall be to cause (i) the obligation of the Liquidity Provider to make Advances hereunder
to expire on the fifth Business Day after the date on which such Special Termination Notice is
received by the Borrower, (ii) the Borrower to promptly

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[Revolving Credit Agreement]

request, and the Liquidity Provider to promptly make, a Special Termination Advance in
accordance with Section 2.02(g) and Section 3.5(k) of the Intercreditor Agreement, and (iii)
subject to Sections 2.07 and 2.09, all Advances (including, without limitation, any Provider
Advance and Applied Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity Provider.

ARTICLE VII

MISCELLANEOUS

     Section 7.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Liquidity Provider, and, in the case of an
amendment or of a waiver by the Borrower, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

     Section 7.02 Notices, Etc. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including telecopier and
mailed or delivered or sent by telecopier) addressed to the applicable party at its address set
forth below:

Borrower:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-0001

Attention: Corporate Trust Administration

Telephone: (800) 733-8485

Fax: (302) 636-4141

with a copy to:

Southwest Airlines Co.

2702 Love Field Drive

P.O. Box 36611

Dallas, TX 75235-1611

Attention: Treasurer

Telephone: (214) 792-2392

Facsimile: (214) 792-4022

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[Revolving Credit Agreement]

Liquidity Provider:

BNP Paribas

787 Seventh Avenue

New York, NY 10019

Attention: Fixed Income — ASG, NY, Thomas Kunz

cc: Helene Mizrahi-Walden, London

cc: Aviation Finance Group, NY — Robert Papas

Telephone: (917) 472-4841

Fax: (212) 841-2689

or to such other address as shall be designated by such Person in a written notice to the others.
All such notices and communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above with receipt confirmed electronically, and received in
legible form, (ii) if given by mail, five Business Days after being deposited in the mails
addressed as specified above, and (iii) if given by other means, when delivered at the address
specified above, except that written notices to the Liquidity Provider pursuant to the provisions
of Article II and Article III hereof shall not be effective until received by the Liquidity
Provider.

     Section 7.03 No Waiver; Remedies. No failure on the part of the Liquidity Provider to
exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under this Agreement preclude any
other or further exercise thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.

     Section 7.04 Further Assurances. The Borrower agrees to do such further acts and
things and to execute and deliver to the Liquidity Provider such additional assignments,
agreements, powers and instruments as the Liquidity Provider may reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other Operative Agreements or
to better assure and confirm unto the Liquidity Provider its rights, powers and remedies hereunder
and under the other Operative Agreements.

     Section 7.05 Indemnification; Survival of Certain Provisions. The Liquidity Provider
shall be indemnified hereunder to the extent and in the manner described in Section 8.1 of the
Participation Agreements. In addition, the Borrower agrees to indemnify, protect, defend and hold
harmless the Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature described in
Section 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless of whether indemnified against
pursuant to said Sections or in the Fee Letter)), that may be imposed on, incurred by or asserted
against any Liquidity Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such Liquidity Indemnitee
and relating to this Agreement, the Fee Letter, the Intercreditor Agreement or any Participation
Agreement; provided, however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in respect of any Expense of such
Liquidity Indemnitee to the extent such Expense is (i) attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any other Liquidity

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[Revolving Credit Agreement]

Indemnitee, (ii) ordinary and usual operating overhead expense, (iii) attributable to the
failure by such Liquidity Indemnitee or any other Liquidity Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in this Agreement, the
Intercreditor Agreement, the Fee Letter or any other Operative Agreement to which it is a party; or
(iv) a Tax. The indemnities contained in Section 8.1 of the Participation Agreements, and the
provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07 hereof, shall survive the termination
of this Agreement.

     Section 7.06 Liability of the Liquidity Provider. (a) Neither the Liquidity Provider
nor any of its officers, employees, directors or Affiliates shall be liable or responsible for:
(i) the use which may be made of the Advances or any acts or omissions of the Borrower or any
beneficiary or transferee in connection therewith; (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of Advances by the
Liquidity Provider against delivery of a Notice of Borrowing and other documents which do not
comply with the terms hereof; provided, however, that the Borrower shall have a
claim against the Liquidity Provider, and the Liquidity Provider shall be liable to the Borrower,
to the extent of any damages suffered by the Borrower which were the result of (A) the Liquidity
Provider’s willful misconduct or gross negligence in determining whether documents presented
hereunder comply with the terms hereof, or (B) any breach by the Liquidity Provider of any of the
terms of this Agreement or the Intercreditor Agreement, including, but not limited to, the
Liquidity Provider’s failure to make lawful payment hereunder after the delivery to it by the
Borrower of a Notice of Borrowing strictly complying with the terms and conditions hereof. In no
event, however, shall the Liquidity Provider be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any loss of profits,
business or anticipated savings).

     (b) Neither the Liquidity Provider nor any of its officers, employees, directors or Affiliates
shall be liable or responsible in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however transmitted, in connection
with this Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action, inaction or
omission which may be taken by it in good faith, absent willful misconduct or gross negligence (in
which event the extent of the Liquidity Provider’s potential liability to the Borrower shall be
limited as set forth in the immediately preceding paragraph), in connection with this Agreement or
any Notice of Borrowing.

     Section 7.07 Costs, Expenses and Taxes. The Borrower agrees to pay, or cause to be
paid (A) on the Effective Date and on such later date or dates on which the Liquidity Provider
shall make demand, all reasonable out-of-pocket costs and expenses (including, without limitation,
the reasonable fees and expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery, filing and recording
of this Agreement, any other Operative Agreement and any other documents which may be delivered in
connection with this Agreement and (B) on demand, all reasonable costs and expenses (including
reasonable counsel fees and expenses) of the Liquidity Provider in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the modification or amendment
of, or supplement to, this Agreement or any other Operative Agreement or such other documents which
may be delivered in connection herewith or therewith

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[Revolving Credit Agreement]

(whether or not the same shall become effective) or any waiver or consent thereunder (whether
or not the same shall become effective) or (iii) any action or proceeding relating to any order,
injunction, or other process or decree restraining or seeking to restrain the Liquidity Provider
from paying any amount under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Cash Collateral Account. In
addition, the Borrower shall pay any and all recording, stamp and other similar taxes and fees
payable or determined to be payable by the Liquidity Provider in connection with its execution,
delivery, filing and recording of this Agreement, any other Operative Agreement and such other
documents, and agrees to hold the Liquidity Provider harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or
fees.

     Section 7.08 Binding Effect; Participations. (a) This Agreement shall be binding
upon and inure to the benefit of the Borrower and the Liquidity Provider and their respective
successors and assigns, except that neither the Liquidity Provider (except as otherwise provided in
this Section 7.08 and in Section 3.5(m) of the Intercreditor Agreement) nor (except as contemplated
by Section 3.08) the Borrower shall have the right to assign its rights or obligations hereunder or
any interest herein without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations herein or in any
of its rights hereunder (including, without limitation, funded participations and participations in
rights to receive interest payments hereunder) and under the other Operative Agreements to such
Persons (other than Southwest and its Affiliates) as the Liquidity Provider may in its sole
discretion select, subject to the requirements of Section 7.08(b). No such granting of
participations by the Liquidity Provider, however, will relieve the Liquidity Provider of its
obligations hereunder. In connection with any participation or any proposed participation, the
Liquidity Provider may disclose to the participant or the proposed participant any information that
the Borrower is required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider’s source of funds may
derive in part from its participants. Accordingly, references in this Agreement and the other
Operative Agreements to determinations, reserve and capital adequacy requirements, increased costs,
reduced receipts, additional amounts due pursuant to Section 3.03 and the like as they pertain to
the Liquidity Provider shall be deemed also to include those of each of its participants that are
banks (subject, in each case, to the maximum amount that would have been incurred by or
attributable to the Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).

     (b) If, pursuant to subsection (a) above, the Liquidity Provider sells any participation in
this Agreement to any bank or other entity (each, a “Transferee”), the Transferee shall not
be entitled to receive any greater payment under Section 3.03 than the Liquidity Provider would
have been entitled to receive with respect to the participation sold to such Transferee. A
Transferee shall not be entitled to the benefits of Section 3.03 unless the Borrower is notified of
the participation sold to such Transferee and such Transferee agrees, for the benefit of the
Borrower, to comply with the certification requirements of Section 3.03 as though it were the
Liquidity Provider. Unless the Borrower has received forms or other documents reasonably
satisfactory to it (and required by applicable law) indicating that payments hereunder are not
subject to United States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.

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[Revolving Credit Agreement]

     (c) Notwithstanding the other provisions of this Section 7.08, the Liquidity Provider may
assign and pledge all or any portion of the Advances owing to it to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided
that any payment in respect of such assigned Advances made by the Borrower to the Liquidity
Provider in accordance with the terms of this Agreement shall satisfy the Borrower’s obligations
hereunder in respect of such assigned Advance to the extent of such payment. No such assignment
shall release the Liquidity Provider from its obligations hereunder.

     Section 7.09 Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or non-authorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.

     Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)).

     Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity. 

(a) Each of the parties hereto hereby irrevocably and unconditionally:

          (i) submits for itself and its property in any legal action or proceeding relating to this
Agreement or any other Operative Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District of New York, and the
appellate courts from any thereof;

          (ii) consents that any such action or proceeding may be brought in such courts, and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

          (iii) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to each party hereto at its address set forth in Section 7.02 hereof, or at such
other address of which the Liquidity Provider shall have been notified pursuant thereto; and

          (iv) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction.

     (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR

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[Revolving Credit Agreement]

ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The Borrower and the
Liquidity Provider each warrant and represent that it has reviewed this waiver with its legal
counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.

     Section 7.12 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.

     Section 7.13 Entirety. This Agreement, the Intercreditor Agreement and the other
Operative Agreements to which the Liquidity Provider is a party constitute the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all prior
understandings and agreements of such parties.

     Section 7.14 Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.

     Section 7.15 LIQUIDITY PROVIDER’S OBLIGATION TO MAKE ADVANCES. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER,
AND THE BORROWER’S RIGHTS TO DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES
HEREUNDER, SHALL BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

     Section 7.16 Patriot Act. The Liquidity Provider hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), the Liquidity Provider is required to obtain, verify and
record, and the Borrower shall provide to the Liquidity Provider upon request, information that
identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow the Liquidity Provider to identify the Borrower in accordance with the
Act.

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[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
by their respective officers thereunto duly authorized as of the date first set forth above.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Subordination Agent, as agent and trustee for the Class A Trust,
as Borrower

 	 
	 	By:  	/s/ James P. Lawler
 	 
	 	 	Name:  	James P. Lawler 	 
	 	 	Title:  	Vice President Treasurer 	 
	 
	 	BNP PARIBAS,

as Liquidity Provider

 	 
	 	By:  	/s/ Sean Reddington
 	 
	 	 	Name:  	Sean Reddington 	 
	 	 	Title:  	Managing Director and

Authorized Signatory 	 
	 
	 	 	 
	 	By:  	/s/ Mary Dierdorff
 	 
	 	 	Name:  	Mary Dierdorff 	 
	 	 	Title:  	Director and

Authorized Signatory 	 

27

 

[Revolving Credit Agreement]

	 	 	 	 	 

ANNEX I

TO

REVOLVING CREDIT AGREEMENT

INTEREST ADVANCE NOTICE OF BORROWING

     The undersigned, a duly authorized signatory of the undersigned borrower (the “Borrower”),
hereby certifies to BNP Paribas (the “Liquidity Provider”), with reference to the Revolving
Credit Agreement dated as of October 3, 2007, between the Borrower and the Liquidity Provider (the
“Liquidity Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:

     (1) The Borrower is the Subordination Agent under the Intercreditor Agreement.

     (2) The Borrower is delivering this Notice of Borrowing for the making of an Interest
Advance by the Liquidity Provider to be used, subject to clause (3)(v) below, for the
payment of interest on the Class A Certificates which was payable on _______, _____
(the “Distribution Date”) in accordance with the terms and provisions of the Class A
Trust Agreement and the Class A Certificates, which Advance is requested to be made on
_______, _____. The Interest Advance should be transferred to [name of bank/wire
instructions/ABA number] in favor of account number [             ], reference [             ].

     (3) The amount of the Interest Advance requested hereby (i) is $[____________], to be
applied in respect of the payment of the interest which was due and payable on the Class A
Certificates on the Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, or principal of, or
interest or premium on, the Class B Certificates, (iii) was computed in accordance with the
provisions of the Class A Certificates, the Liquidity Agreement, the Class A Trust Agreement
and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule
I), (iv) does not exceed the Maximum Available Commitment on the date hereof, and (v) has
not been and is not the subject of a prior or contemporaneous Notice of Borrowing.

     (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a)
the Borrower will apply the same in accordance with the terms of Section 3.5(b) of the
Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for
any other purpose and (c) no portion of such amount until so applied shall be commingled
with other funds held by the Borrower.

     The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, the making of the
Interest Advance as requested by this Notice of Borrowing shall automatically reduce, subject to
reinstatement in accordance with the terms of the Liquidity Agreement, the Maximum Available
Commitment by an amount equal to the amount of the Interest Advance requested to be made hereby as
set forth in clause (i) of paragraph (3) of this Notice of

ANNEX I

Page 1

 

[Revolving Credit Agreement]

Borrowing and such reduction shall automatically result in corresponding reductions in the
amounts available to be borrowed pursuant to a subsequent Advance.

ANNEX I

Page 2

 

[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the
______ day of ______, _____.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Subordination Agent, as Agent and Trustee for the Southwest Airlines Pass
Through Trust 2007-1A, as Borrower

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

ANNEX I

Page 3

 

[Revolving Credit Agreement]

SCHEDULE I

TO

INTEREST ADVANCE NOTICE OF BORROWING

     [Insert copy of computations in accordance with Interest Advance Notice of Borrowing]

ANNEX I

Page 4

 

[Revolving Credit Agreement]

ANNEX II

TO

REVOLVING CREDIT AGREEMENT

NON-EXTENSION ADVANCE NOTICE OF BORROWING

     The undersigned, a duly authorized signatory of the undersigned borrower (the “Borrower”),
hereby certifies to BNP Paribas (the “Liquidity Provider”), with reference to the Revolving
Credit Agreement dated as of October 3, 2007, between the Borrower and the Liquidity Provider (the
“Liquidity Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:

     (1) The Borrower is the Subordination Agent under the Intercreditor Agreement.

     (2) The Borrower is delivering this Notice of Borrowing for the making of the
Non-Extension Advance by the Liquidity Provider to be used for the funding of the Cash
Collateral Account in accordance with Section 3.5(d) of the Intercreditor Agreement, which
Advance is requested to be made on ________, _______. The Non-Extension Advance should be
transferred to [name of bank/wire instructions/ABA number] in favor of account number
[           ], reference [               ].

     (3) The amount of the Non-Extension Advance requested hereby (i) is $___________.___,
which equals the Maximum Available Commitment on the date hereof and is to be applied in
respect of the funding of the Cash Collateral Account in accordance with Section 3.5(d) of
the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of
the principal of, or premium on, the Class A Certificates, or principal of, or interest or
premium on, the Class B Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Liquidity Agreement, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and
(iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing
under the Liquidity Agreement.

     (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a)
the Borrower will deposit such amount in the Cash Collateral Account and apply the same in
accordance with the terms of Section 3.5(d) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held by the Borrower.

     The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of
the Non-Extension Advance as requested by this Notice of Borrowing shall automatically and
irrevocably terminate the obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Non-Extension
Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any
further Advances under the Liquidity Agreement.

 ANNEX II

Page 1

 

[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the
_______ day of _______, ___.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Subordination Agent, as Agent and Trustee for the Southwest Airlines Pass
Through Trust 2007-1A, as Borrower

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 ANNEX II

Page 2

 

[Revolving Credit Agreement]

SCHEDULE I

TO

NON-EXTENSION ADVANCE NOTICE OF BORROWING

     [Insert copy of computations in accordance with Non-Extension Advance Notice of Borrowing]

 ANNEX II

Page 3

 

[Revolving Credit Agreement]

ANNEX III

TO

REVOLVING CREDIT AGREEMENT

DOWNGRADE ADVANCE NOTICE OF BORROWING

     The undersigned, a duly authorized signatory of the undersigned borrower (the
“Borrower”), hereby certifies to BNP Paribas (the “Liquidity Provider”), with
reference to the Revolving Credit Agreement dated as of October 3, 2007, between the Borrower and
the Liquidity Provider (the “Liquidity Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined or referenced), that:

     (1) The Borrower is the Subordination Agent under the Intercreditor Agreement.

     (2) The Borrower is delivering this Notice of Borrowing for the making of the Downgrade
Advance by the Liquidity Provider to be used for the funding of the Cash Collateral Account
in accordance with Section 3.5(c) of the Intercreditor Agreement by reason of the occurrence
of a Downgrade Event, which Advance is requested to be made on _______, ______. The
Downgrade Advance should be transferred to [name of bank/wire instructions/ABA number] in
favor of account number [        ], reference [          ].

     (3)
 The amount of the Downgrade Advance requested hereby (i) is $__________.___,
which equals the Maximum Available Commitment on the date hereof and is to be applied in
respect of the funding of the Cash Collateral Account in accordance with Section 3.5(c) of
the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of
the principal of, or premium on, the Class A Certificates, or principal of, or interest or
premium on, the Class B Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Liquidity Agreement, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and
(iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing
under the Liquidity Agreement.

     (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a)
the Borrower will deposit such amount in the Cash Collateral Account and apply the same in
accordance with the terms of Section 3.5(c) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held by the Borrower.

     The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of
the Downgrade Advance as requested by this Notice of Borrowing shall automatically and irrevocably
terminate the obligation of the Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider of the Downgrade Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.

 ANNEX III

Page 1

 

[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the
_______ day of _______, ___.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Subordination Agent, as Agent and Trustee for the Southwest Airlines Pass
Through Trust 2007-1A, as Borrower

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 ANNEX III

Page 2

 

[Revolving Credit Agreement]

SCHEDULE I

TO

DOWNGRADE ADVANCE NOTICE OF BORROWING

     [Insert copy of computations in accordance with Downgrade Advance Notice of Borrowing]

 ANNEX III

Page 3

 

[Revolving Credit Agreement]

ANNEX IV

TO

REVOLVING CREDIT AGREEMENT

FINAL ADVANCE NOTICE OF BORROWING

     The undersigned, a duly authorized signatory of the undersigned borrower (the
“Borrower”), hereby certifies to BNP Paribas (the “Liquidity Provider”), with
reference to the Revolving Credit Agreement dated as of October 3, 2007, between the Borrower and
the Liquidity Provider (the “Liquidity Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined or referenced), that:

     (1) The Borrower is the Subordination Agent under the Intercreditor Agreement.

     (2) The Borrower is delivering this Notice of Borrowing for the making of the Final
Advance by the Liquidity Provider to be used for the funding of the Cash Collateral Account
in accordance with Section 3.5(i) of the Intercreditor Agreement by reason of the receipt by
the Borrower of a Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on _________, ______. The Final
Advance should be transferred to [name of bank/wire instructions/ABA number] in favor of
account number [           ]  , reference [         ].

     (3)
The amount of the Final Advance requested hereby (i) is $__________.___, which
equals the Maximum Available Commitment on the date hereof and is to be applied in respect
of the funding of the Cash Collateral Account in accordance with Section 3.5(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Class A Certificates, or principal of, or interest or
premium on, the Class B Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Liquidity Agreement, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and
(iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing.

     (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a)
the Borrower will deposit such amount in the Cash Collateral Account and apply the same in
accordance with the terms of Section 3.5(i) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held by the Borrower.

     (5) The Borrower hereby requests that the Advance requested hereby be a Base Rate
Advance and that such Base Rate Advance be converted into a LIBOR Advance on the third
Business Day following your receipt of this notice.

     The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of
the Final Advance as requested by this Notice of Borrowing shall automatically and irrevocably
terminate the obligation of the Liquidity Provider to make further Advances under

 ANNEX IV

Page 1

 

[Revolving Credit Agreement]

the Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Final
Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any
further Advances under the Liquidity Agreement.

 ANNEX IV

Page 2

 

[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the
______ day of _______, ___.

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Subordination Agent, as Agent and Trustee for the Southwest Airlines Pass
Through Trust 2007-1A, as Borrower

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

ANNEX IV

Page 3

 

[Revolving Credit Agreement]

SCHEDULE I

TO

FINAL ADVANCE NOTICE OF BORROWING

[Insert copy of computations in accordance with Final Advance Notice of Borrowing]

ANNEX IV

Page 4

 

[Revolving Credit Agreement]

ANNEX V

TO

REVOLVING CREDIT AGREEMENT

NOTICE OF TERMINATION

[Date]

Wilmington Trust Company,

     as Subordination Agent, as Borrower

Rodney Square North

1100 North Market Square

Wilmington, DE 19890-0001

Attention: Corporate Trust Administration

Revolving Credit Agreement dated as of October 3, 2007 between Wilmington Trust Company,
as Subordination Agent, as agent and trustee for the Southwest Airlines Pass Through Trust
2007-1A, as Borrower, and BNP Paribas (the “Liquidity Agreement”)

Ladies and Gentlemen:

     You are hereby notified that pursuant to Section 6.01(a) of the Liquidity Agreement, by reason
of the occurrence of a Liquidity Event of Default and the existence of a Performing Note Deficiency
(each as defined therein), we are giving this notice to you in order to cause (i) our obligations
to make Advances (as defined therein) under such Liquidity Agreement to terminate on the fifth
Business Day after the date on which you receive this notice and (ii) you to request a Final
Advance under the Liquidity Agreement pursuant to Section 3.5(i) of the Intercreditor Agreement (as
defined in the Liquidity Agreement) as a consequence of your receipt of this notice.

ANNEX V

Page 1

 

[Revolving Credit Agreement]

     THIS NOTICE IS THE “NOTICE OF TERMINATION” PROVIDED FOR UNDER THE LIQUIDITY AGREEMENT. OUR
OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY
AFTER THE DATE ON WHICH YOU RECEIVE THIS NOTICE.

	 	 	 	 	 
	 	Very truly yours,

BNP PARIBAS, as Liquidity Provider

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

			
	cc:	 	Wilmington Trust Company,

as Class A Trustee

ANNEX V

Page 2

 

[Revolving Credit Agreement]

ANNEX VI

TO

REVOLVING CREDIT AGREEMENT

NOTICE OF REPLACEMENT SUBORDINATION AGENT

[Date]

Attention:

Revolving Credit Agreement dated as of October 3, 2007, between Wilmington Trust
Company, as Subordination Agent, as agent and trustee for the Southwest Airlines
Pass Through Trust 2007-1A, as Borrower, and BNP Paribas (the “Liquidity
Agreement”)

Ladies and Gentlemen:

     For value received, the undersigned beneficiary hereby irrevocably transfers to:

 

[Name of Transferee]

 

[Address of Transferee]

all rights and obligations of the undersigned as Borrower under the Liquidity Agreement referred to
above. The transferee has succeeded the undersigned as Subordination Agent under the Intercreditor
Agreement referred to in the first paragraph of the Liquidity Agreement, pursuant to the terms of
Section 8.1 of the Intercreditor Agreement.

     By this transfer, all rights of the undersigned as Borrower under the Liquidity Agreement are
transferred to the transferee and the transferee shall hereafter have the sole rights and
obligations as Borrower thereunder. The undersigned shall pay any costs and expenses of such
transfer, including, but not limited to, transfer taxes or governmental charges.

     We ask that this transfer be effective as of                                         ,           .

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not

in its individual capacity but solely as

Subordination Agent, as Agent and Trustee 
for the Southwest Airlines Pass
Through 
Trust 2007-1A, as Borrower 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

ANNEX VI

Page1

 

[Revolving Credit Agreement]

ANNEX VII TO

REVOLVING CREDIT AGREEMENT

SPECIAL TERMINATION ADVANCE NOTICE OF BORROWING

     The undersigned, a duly authorized signatory of the undersigned borrower (the “Borrower”),
hereby certifies to BNP PARIBAS (NEW YORK BRANCH) (the “Liquidity Provider”), with reference to the
Revolving Credit Agreement, dated as of October 3, 2007, between the Borrower and the Liquidity
Provider (the “Liquidity Agreement”); the terms defined therein and not otherwise defined herein
being used herein as therein defined or referenced), that:

     (1) The Borrower is the Subordination Agent under the Intercreditor Agreement.

     (2) The Borrower is delivering this Notice of Borrowing for the making of the Special
Termination Advance by the Liquidity Provider to be used for the funding of the Cash
Collateral Account in accordance with Section 3.5(k) of the Intercreditor Agreement by
reason of the receipt by the Borrower of a Special Termination Notice from the Liquidity
Provider with respect to the Liquidity Agreement, which Advance is requested to be made on
                    .

     (3) The amount of the Special Termination Advance requested hereby (i) is
$                    , which equals the Maximum Available Commitment on the date hereof and is to
be applied in respect of the funding of the Cash Collateral Account in accordance with
Section 3.5(k) of the Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of principal of, or premium on, the Class A Certificates, the Class B
Certificates, or interest on the Class B Certificates, (iii) was computed in accordance with
the provisions of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), and
(iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing.

     (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a)
the Borrower shall deposit such amount in the Cash Collateral Account and apply the same in
accordance with the terms of Section 3.5(k) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and (c) no portion of
such amount until so applied shall be commingled with other funds held by the Borrower.

     The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of
the Special Termination Advance as requested by this Notice of Borrowing shall automatically and
irrevocably terminate the obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity Provider of the Special Termination Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the Liquidity Agreement.

ANNEX VII

Page1

 

[Revolving Credit Agreement]

     IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the
                     day of                                         ,                .

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY,

not in its individual capacity but solely as 
Subordination Agent, as Agent and
Trustee
 for the Southwest Airlines Pass Through 
Trust 2007-1A, as Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

ANNEX VII

Page2

 

[Revolving Credit Agreement]

SCHEDULE I TO SPECIAL TERMINATION ADVANCE NOTICE OF BORROWING

[Insert Copy of Computations in accordance with

Special Termination Advance Notice of Borrowing]

ANNEX VII

Page1

 

[Revolving Credit Agreement]

ANNEX VIII TO

REVOLVING CREDIT AGREEMENT

NOTICE OF SPECIAL TERMINATION

[Date]

Wilmington Trust Company

Rodney Square North

1100 North Market Square

Wilmington, DE 19890-0001

Attention: Corporate Trust Administration

			
	     Re:	 	Revolving Credit Agreement, dated as of October 3, 2007, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Southwest
Airlines Pass Through Trust 2007-1A, as Borrower, and BNP Paribas (the “Liquidity
Agreement”)

Ladies and Gentlemen:

     You are hereby notified that pursuant to Section 6.01(b) of the Liquidity Agreement, by reason
of the Pool Balance of the Class A Certificates exceeding the aggregate outstanding principal
amount of the Series A Equipment Notes (other than any Series A Equipment Notes previously sold or
with respect to which the collateral securing such Series A Equipment Notes has been disposed of)
during the 18-month period prior to August 1, 2022, we are giving this notice to you in order to
cause (i) our obligations to make Advances (as defined therein) under such Liquidity Agreement to
terminate on the fifth Business Day after the date on which you receive this notice and (ii) you to
request a Special Termination Advance under the Liquidity Agreement pursuant to Section 3.5(k) of
the Intercreditor Agreement (as defined in the Liquidity Agreement) as a consequence of your
receipt of this notice.

ANNEX VIII

Page1

 

[Revolving Credit Agreement]

     THIS NOTICE IS THE “NOTICE OF SPECIAL TERMINATION” PROVIDED FOR UNDER THE LIQUIDITY AGREEMENT.
OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT SHALL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON
WHICH YOU RECEIVE THIS NOTICE.

	 	 	 	 	 
	 	Very truly yours,

BNP PARIBAS,

as Liquidity Provider

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

			
	cc:	 	Wilmington Trust Company, as Class A Trustee

ANNEX VIII

Page2

 

[Revolving Credit Agreement]

ANNEX IX TO

REVOLVING CREDIT AGREEMENT

SUBORDINATION AGENT INCUMBENCY CERTIFICATE

ANNEX VIII

Page3

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