Document

Southwest Airlines Co. (the “Company”) hereby grants to you (the “Participant”) a performance-based cash award (the “Award”) pursuant to the Southwest Airlines Co. Senior Executive Short Term Incentive Plan (the “Plan”). Capitalized terms used and not otherwise defined in this Notice of Grant are defined in the Plan or in the accompanying Terms and Conditions. The Award represents the right to receive a cash payment under the Plan, in accordance with, and subject to, the following:

By asserting any rights with respect to this Award, the Participant (and any person who has acquired the Award by will or the laws of descent and distribution or intestacy) will be deemed to have understood and agreed to the terms and conditions of the Plan and the accompanying Terms and Conditions.

By asserting any rights with respect to the performance-based cash award (the “Award”) received pursuant to the Southwest Airlines Co. Senior Executive Short Term Incentive Plan (the “Plan”) and granted pursuant to the Notice of Grant with which these Terms and Conditions are attached (the “Notice of Grant”), the recipient of the Award (the “Participant”) will be deemed to have understood and agreed to the terms and conditions of the Plan and the terms and conditions set forth below. Capitalized terms used and not otherwise defined in these Terms and Conditions or in the Notice of Grant shall have the meanings assigned to them in Appendix A to these Terms and Conditions.

2. Interpretation. The Participant’s Award is subject to the terms and conditions of the Plan, which terms and conditions are incorporated herein by reference. The Participant’s Award is also subject to any rules promulgated pursuant to the Plan by the Company’s Board of Directors (the “Board”), the Compensation Committee of the Board (the “Committee”), or the persons designated by the Committee to administer the day-to-day administration of the Plan. Any decisions or interpretations upon any questions with respect to an Award or the Plan, including the determination of the cash amount to be received, shall (as permissible pursuant to applicable laws, rules, or regulations, including the rules of any stock exchange upon which the Company’s Common Stock is listed or quoted) be determined (i) by the Committee, (ii) by the Board, or (iii) where permitted by the Committee, by any person(s) to whom the Committee has delegated its authority. The Participant (and any person who has acquired the Award by will or the laws of descent and distribution or intestacy) agrees to accept any such decisions or interpretations as binding, conclusive, and final in all respects.

3. Payment of Award. Subject to these Terms and Conditions and the provisions of the Plan, on the Vesting Date, the Participant (or any person who has acquired the Award by will or the laws of descent and distribution or intestacy) will become entitled to a lump sum cash payment of the Award. The final value of the Award will be determined in accordance with the schedule set forth in the Notice of Grant (the “Vested Award”). Payment of the Vested Award will be made as soon as is administratively and reasonably practicable after the Vesting Date, but in any event no later than 30 days thereafter, subject to the Participant’s satisfaction of any Tax Obligations (as defined in Section 5 below); provided, however, in the event any action required to satisfy the Participant’s Tax Obligations has not been completed by the Participant within 85 days following the Vesting Date, the Award will be forfeited at 4:00 p.m., Eastern Time, on such date.

Subject to the provisions of subsections 4(a) and (b) below, in the event of termination of the Participant’s Service prior to the Vesting Date, any Award that has not vested shall automatically and without notice be forfeited at 4:00 p.m., Eastern Time, on the date of termination; provided that, notwithstanding anything in the Plan or the Notice of Grant to the contrary:

(a) in the event of the termination of the Participant’s Service as a result of death or Disability, such Participant’s Award will remain outstanding as if the Participant’s Service has not terminated and will otherwise be payable in accordance with the Notice of Grant, these Terms and Conditions, and the terms of the Plan; and

(b) provided that the Participant’s Service has terminated no earlier than 12 months after the Date of Grant, in the event of a “qualified retirement,” such Participant’s Award will remain outstanding as if the Participant’s Service has not terminated and will otherwise be payable in accordance with the Notice of Grant, these Terms and Conditions, and the terms of the Plan; however, the amount of cash payable will be prorated based on the Participant’s number of days of Service between the Date of Grant and the end of the Performance Period.

For purposes of Section 4(b), a Participant’s termination of Service will be considered a “qualified retirement” if (a) the Participant has completed at least 10 years of continuous Service; (b) the Participant’s age plus completed years of continuous Service equal at least 65 at the time of the Participant’s termination of Service; and (c) the Participant has not been terminated for cause.

a.In order to comply with any federal, state, local, or other laws or regulations of the United States or any other applicable jurisdiction, the Company or any Affiliate is authorized to take such action as it deems appropriate to provide that all applicable federal, state, local, or other income, employment, or other tax withholding or similar obligations (collectively, “Tax Obligations”) to which the Participant is subject in connection with the Award are withheld or collected from the Participant. If and to the extent permitted by the Committee from time to time, the Company is authorized to satisfy the Tax Obligations by any one or more of the following methods: (i) by requiring the Participant to pay such amount in cash or check; (ii) by withholding an amount that would otherwise be payable with respect to the Award that is equal to the amount of the Tax Obligations; (iii) by deducting the amount of the Tax Obligations out of any other remuneration otherwise payable by the Company to the Participant; or (iv) by such other method as may be available to the Company from time to time.

b.The Participant is ultimately liable and responsible for all of the Participant’s Tax Obligations, regardless of any action taken by the Company in accordance with Section 5.a. The Company makes no representation or undertaking regarding the treatment of any Tax Obligation in connection with the grant, vesting, or payment of the Award. The Company does not commit, and is under no obligation, to structure the Plan and its administration to reduce or eliminate a Participant’s tax liability.

6. Restriction on Transfer. The Participant’s Award and any rights with respect to the Participant’s Award may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by the Participant except by will or the laws of descent and distribution or intestacy, and any attempt to sell, assign, transfer, pledge, hypothecate, or otherwise dispose of the Participant’s Award will be void and unenforceable against the Company or any Affiliate.

7. Section 409A Compliance. The Plan and these Terms and Conditions are intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), including its exceptions, and shall be construed and administered in accordance with such intent. Notwithstanding any other provision of the Plan, these Terms and Conditions, or the Notice of Grant, the Company may only make cash payments pursuant to this Award upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments that may be excluded from Section 409A as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Notwithstanding the foregoing, the Company makes no representations that the Award or payments made pursuant to the Award comply with Section 409A, and the Company will not be liable for any portion of any taxes, penalties, interest or other expenses that the Participant may incur because of non-compliance with Section 409A.

Notwithstanding any provision of the Plan, these Terms and Conditions, or the Notice of Grant to the contrary, if the Participant is a “specified employee” within the meaning of Section 409A as of the date of the Participant’s termination of Service, and the Company determines in good faith that immediate payment of any amounts under the Award would cause a violation of Section 409A, then any amount due upon the Participant’s “separation from service” within the meaning of Section 409A that (i) is subject to the provisions of Section 409A; (ii) is not otherwise excluded under Section 409A; and (iii) would otherwise be paid during the first six-month period following the Participant’s separation from service, shall become payable on the earlier of (1) the first business day after the date that is six months following the date of separation from service or (2) the date of the Participant’s death.

8. No Right to Continued Service and other Participant Acknowledgments. Nothing herein shall be construed to confer upon the Participant any right to continue as an Employee, Director or Advisor or to interfere with or restrict in any way the right of the Company or any Affiliate to discharge the Participant at any time (subject to any contractual rights of the Participant) for any reason whatsoever, with or without cause and with or without advance notice. Furthermore, nothing herein shall in any way be construed as imposing on the Company or any Affiliate a contractual obligation between the Company or any Affiliate and the Participant, other than with respect to the specific terms of the Participant’s Award.

10. Legal Construction. In the event that any one or more of these Terms and Conditions shall be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term or condition shall not affect any other term or condition, and these Terms and Conditions shall be construed in all respects as if the invalid, illegal, or unenforceable term or condition had never been contained herein.

“Advisor” means any natural person performing advisory or consulting services for the Company or any Subsidiary, with or without compensation, to whom the Company chooses to grant an Award under the Plan; provided that (i) bona fide services must be rendered by such person; and (ii) such services are not rendered in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

“Affiliate” means any corporation, partnership, limited liability company, or partnership, association, trust, or other organization that directly or indirectly controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50 percent of the securities having ordinary voting power for the election of directors of the controlled entity or organization; or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.

“Disability” means the inability of a Participant to continue to perform services for the Company because of the sickness or injury of the Participant, as determined by the Company’s Chief Executive Officer, Chief People Officer, Chief Financial Officer, and/or General Counsel. Such a determination will be made in good faith and in the sole discretion of one or more of these officers, who shall also have sole discretion to determine the effective date of a Participant’s termination of Service as a result of Disability.

“Service” means a Participant’s employment or service with the Company or any Affiliate of the Company, whether in the capacity of an Employee, a Director, or an Advisor. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Company or any Affiliate or because of a change in entity for which services are performed; provided, however, to the extent necessary to comply with the provisions of Section 409A, a termination of Service shall mean a “separation from service” within the meaning of Section 409A.


Participant:
Date of Grant:
Performance Period:
Vesting Date:
Target Value:


SOUTHWEST AIRLINES CO.
SENIOR EXECUTIVE SHORT TERM INCENTIVE PLAN
TERMS AND CONDITIONS

PERFORMANCE-BASED CASH AWARD


SOUTHWEST AIRLINES CO.
SENIOR EXECUTIVE SHORT TERM INCENTIVE PLAN

NOTICE OF GRANT OF PERFORMANCE-BASED CASH AWARD


Schedule of Performance Targets/Cash Amount Payable Upon Vesting
[Performance Target(s)]			Cash Amount Payable


Appendix A

Definitions