Exhibit 10.7
[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED TO THE OMITTED
PORTION.
STRATEGIC ALLIANCE AGREEMENT FOR AIR SERVICE
     THIS STRATEGIC ALLIANCE AGREEMENT FOR AIR SERVICE (this “Agreement”), dated
as of October 21, 2009, is made by and between THE ST. JOE COMPANY, a Florida
corporation (“JOE”), and SOUTHWEST AIRLINES CO., a Texas corporation
(“Southwest”).
     WHEREAS, the new Northwest Florida international airport located in Bay
County, Florida (the “New Airport”) is currently under construction and is
currently scheduled to be open for operations in May 2010;
     WHEREAS, JOE, the largest private landowner in Northwest Florida,
recognizes that increased air service to the New Airport would have a
substantial and meaningful economic benefit to Northwest Florida and JOE;
     WHEREAS, Southwest is a commercial air carrier that desires to serve the
New Airport; and
     WHEREAS, JOE and Southwest desire, pursuant to the terms of this Agreement,
to work collaboratively to bring air service offered by Southwest to the New
Airport.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, JOE and Southwest agree as
follows:
     1. Definitions. For purposes of this Agreement, the following capitalized
terms shall have the meanings set forth below:
     “Actual Revenues” means the passenger revenues generated by Southwest from
passengers whose final destination or point of departure is the New Airport,
less government imposed taxes and fees directly related to passenger air fares.
     “Agreement” has the meaning set forth in the introductory paragraph hereof.
     “Air Service” has the meaning set forth in Section 2(a) hereof.
     “Air Service Year” means the successive twelve-month periods during the
Term beginning with the commencement of the Air Service.
     “Airport Authority” means the Panama City-Bay County Airport and Industrial
District,

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an independent special district of the State of Florida.
     “Annual Gain” means the positive amount resulting from the sum of all
Quarterly Gains, less all Quarterly Shortfalls, for any Calendar Year.
     “Annual Shortfall” means the negative amount resulting from the sum of all
Quarterly Gains, less all Quarterly Shortfalls, for any Calendar Year.
     “Break Even Payment” means a cash payment by JOE to Southwest equal to each
Quarterly Shortfall, if any, made pursuant to Section 3.
     “Calendar Quarter” means a period of three (3) months that is consistent
with Southwest’s and JOE’s fiscal reporting (with Q1 being January — March, Q2
being April — June, Q3 being July — September, and Q4 being October — December).
     “Calendar Year” means a period of twelve (12) months that is consistent
with Southwest’s and JOE’s fiscal reporting (with the Calendar Year being
January to December). Notwithstanding the foregoing: (a) the 2010 Calendar Year
shall consist of the period of months beginning upon Southwest’s commencement of
Air Service at the New Airport and continuing through December 31, 2010; and
(b) the 2013 Calendar Year shall consist of the period of months beginning in
January 2013 and continuing through the expiration date of the Agreement.
     “Cost Mitigation Measures” means available grants of funds, expense waivers
or reductions, accommodations or other cost mitigation measures, obtained or
received by, or made available to, Southwest for the purpose of reducing the
amount of total expenses incurred in connection with the Air Service, including,
but not limited to airport fee waivers, crew overnights, recruitment grants and
start-up grants.
     “CV3000” shall have the meaning set forth in Section 5(b) hereof.
     “Effective Date” means the date first written above.
     “Flight Destinations” means the destinations for scheduled flights from the
New Airport as set forth on Exhibit C or as otherwise agreed upon in writing by
JOE and Southwest, which revised schedule shall become the new Exhibit C hereto.
     “Force Majeure Event” means any event or circumstance beyond the reasonable
control of a party, including but not limited to, any war or hostilities, public
disorder, terrorism, inclement weather, closing of airports or other assistances
to or adjuncts to airports, fire, flood, earthquake, or other natural disaster,
epidemic, strikes or other labor disturbances, or any other event not within the
reasonable control of the affected party.
     “Fuel Costs” means the fuel costs for the Air Service calculated by
multiplying (i) the number of flights between the New Airport and each Flight
Destination, by (ii) the applicable fixed “Gallons Consumed per Flight” set
forth on Exhibit B, by (iii) Southwest’s monthly audited fuel unit cost. The
form of the Monthly Fuel Report is included on Exhibit B. The parties recognize
and acknowledge that the Fuel Costs shall fluctuate over the Term according to
market prices.

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     “JOE” has the meaning set forth in the introductory paragraph hereof.
     “Minimum Revenues” means the fixed amounts set forth on Exhibit A for each
Calendar Year. For purposes of the Quarterly Shortfall calculation, Minimum
Revenues shall be prorated among the Calendar Quarters, or any portion thereof,
according to a projected quarterly forecast agreed upon by the parties.
     “New Airport” has the meaning set forth in the Recitals to this Agreement.
     “Non-Fuel Expenses” means the fixed amounts set forth on Exhibit A for each
Calendar Year. For purposes of the Quarterly Shortfall calculation, Non-Fuel
Expenses shall be prorated among the Calendar Quarters, or any portion thereof,
according to a projected quarterly forecast agreed upon by the parties.
     “Quarterly Gain” has the meaning set forth in Section 3(b).
     “Quarterly Revenues” means for each Calendar Quarter, the greater of the
Actual Revenues achieved with respect to the Air Service, or the Minimum
Revenues for such Calendar Quarter.
     “Quarterly Statement” has the meaning set forth in Section 3(a).
     “Quarterly Shortfall” means the Quarterly Revenues less Total Break Even
Costs for the Calendar Quarter, subject to any cumulative adjustments as set
forth in Section 3(b).
     “Southwest” has the meaning set forth in the introductory paragraph hereof.
     “Start-up Expenses” means the actual costs incurred by Southwest after the
date hereof directly in connection with the commencement of the Air Service,
which costs shall not exceed the maximum amount set forth on Exhibit A. Start-up
Expenses shall not include estimated costs of Southwest’s employees, overhead
allocations or other Southwest internal costs. Start-up Expenses shall be
prorated evenly among the Calendar Quarters, or portions thereof, occurring
during the first Air Service Year.
     “TDCs” shall have the meaning set forth in Section 5(a) hereof.
     “Term” shall have the meaning set forth in Section 11(a) hereof.
     “Total Break Even Costs” means for the applicable measurement period the
sum of Southwest’s (a) Non-Fuel Expenses, (b) Fuel Costs, and (c) for the first
Air Service Year, pro rated Start-up Expenses for the Air Service, less (z) any
actual Cost Mitigation Measures obtained or received by Southwest in connection
with the Air Service.
     2. Air Service to the New Airport.
     (a) During the Term, Southwest agrees to provide air service to the New
Airport consisting of at least two scheduled flights per day to each of the
Flight Destinations (the “Air Service”). The Air Service shall commence on or
about the day the New Airport opens for

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commercial flight operations (currently scheduled for May 2010), subject to the
conditions described in Section 2(b) below, and shall continue through the Term.
Any changes or modifications in the Air Service shall be mutually agreed upon by
Southwest and JOE. Notwithstanding the two scheduled flights per day to each of
the Flight Destinations, Southwest may, consistent with its flight scheduling
policies and procedures, reduce flight capacity on certain days due to
maintenance reasons or a Force Majeure Event, or any other reason related to the
safety and security of its Employees or Customers.
     (b) Southwest’s obligation to commence the Air Service shall be conditioned
upon the following (unless any such conditions are waived by Southwest, in its
sole discretion, in written notice to JOE):
     (1) the certification of the New Airport to commence commercial flight
operations by the Federal Aviation Administration and the Transportation
Security Administration on or before April 15, 2010;
     (2) receipt by the Airport Authority of a certificate of occupancy
authorizing the use of the airport facilities for the purposes for which they
were constructed on or before April 15, 2010;
     (3) the execution of one or more agreements between Southwest and the
Airport Authority authorizing Southwest to use and lease space at the New
Airport, and to receive the benefit of any Cost Mitigation Measures that may be
available from the Airport Authority, which agreement(s) shall be in a form
satisfactory to Southwest, in its sole discretion;
     (4) the execution of an agreement between Southwest and the TDCs, as
addressed in Section 5(a) hereof, by no later than thirty (30) days from the
Effective Date;
     (5) the execution of an agreement between Southwest and CV3000, as
addressed in Section 5(b) hereof, by no later than sixty (60) days from the
Effective Date; and
     (6) the execution of any other agreement or agreements by Southwest that
Southwest deems necessary or appropriate to be executed prior to the
commencement of the Air Service.
     (c) JOE recognizes and acknowledges that, in addition to the Air Service as
defined in this Agreement, Southwest may, in its sole discretion, add additional
flights to and from the New Airport, either to the same destinations included in
the Flight Destinations or to other destinations. Unless otherwise agreed by JOE
and Southwest in writing, such additional flights shall not be deemed a part of
this Agreement (not defined as “Air Service”) and the revenues and costs of such
additional flights shall not be included in any calculation contemplated under
this Agreement.

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     3. Break Even Payments.
     (a) Within twenty (20) days after the conclusion of each Calendar Quarter,
Southwest shall deliver to JOE a detailed statement (the “Quarterly Statement”),
together with any relevant supporting documentation, showing various
calculations for such Calendar Quarter and for the Calendar Year and
Agreement-to-date through the conclusion of such Calendar Quarter, including any
Quarterly Shortfalls, Quarterly Gains, Annual Shortfalls, Annual Gains and Break
Even Payments made by JOE. The form of the Quarterly Statement is included on
Exhibit D.
     (b) Calculations and payments made with respect to each Calendar Quarter
during the Term shall be accounted for cumulatively within each Calendar Year.
Therefore, in the event a Quarterly Shortfall calculation shows that the
Quarterly Revenues are greater than the Total Break Even Costs for the Calendar
Quarter (the “Quarterly Gain”), Southwest shall remit to JOE a cash payment for
such Calendar Quarter to the extent of the aggregate amount of any prior Break
Even Payments within the same Calendar Year, up to the amount of the Quarterly
Gain. Furthermore, in the event the amount of any Quarterly Gain exceeds all
prior Break Even Payments within the same Calendar Year, such excess Quarterly
Gain shall be applied in any future Quarterly Shortfall calculations within the
same Calendar Year, to reduce the amount of the Break Even Payment. However,
such cumulative calculations and payments shall not carry over beyond a Calendar
Year. To the extent Southwest has an Annual Shortfall or an Annual Gain in a
Calendar Year, that Annual Shortfall or Annual Gain shall not be subject to
future cumulative calculations. Each Calendar Year shall be treated separately
with regard to the calculation of shortfalls or gains and once completed, those
amounts would not be subject to clawback.
     (c) JOE shall have the obligation to make the Break Even Payments to
Southwest during the Term (and thereafter until all such payments have been
made). JOE shall have thirty (30) days from the receipt of each Quarterly
Shortfall calculation provided for in Section 3(a) to make the Break Even
Payment, if any, to Southwest. Any payment by Southwest to JOE in connection
with the Quarterly Shortfall calculation provided for in Section 3(b) shall
accompany the applicable Quarterly Statement delivered to JOE by Southwest.
     (d) In addition to the Quarterly Statements to be provided pursuant to
Section 3(a), Southwest shall provide JOE, within twenty (20) days of the end of
each calendar month, a summary of the Fuel Costs for the prior calendar month,
containing the information set forth in Exhibit B.
     (e) Southwest agrees that it will provide reasonable information to JOE to
assist them in developing hedging strategies related to the Fuel Costs.
     (f) Southwest agrees that it shall use commercially reasonable efforts to
pursue and obtain Cost Mitigation Measures.
     (g) The Minimum Revenues and the Non-Fuel Expenses are based on the Air
Service as described herein. In the event that the parties agree to change or
modify the Air Service pursuant to Section 2(a) such that, if in the
commercially reasonable judgment of the parties the Minimum Revenues and the
Non-Fuel Expenses are likely to be materially different from the estimates

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provided in Exhibit A, the parties shall negotiate in good faith to mutually
agree upon revised amounts that reflect such changes or modifications for the
Minimum Revenues and the Non-Fuel Expenses for purposes of this Agreement.
     (h) It is the intent of the parties that, to the extent any Annual Gains
are available during the Term of this Agreement, that such Annual Gains shall be
shared, in accordance with this subsection: (1) in consideration and up to JOE’s
cumulative Break Even Payments made under this Agreement; and (2) to the extent
that Southwest’s cumulative Actual Revenues are less than cumulative Minimum
Revenues hereunder. Therefore, in addition to the calculations and payments made
with respect to each Calendar Quarter, as set forth in 3(b), in the event there
is an Annual Gain at the conclusion of the 2011 Calendar Year or any subsequent
Calendar Year during the Term, then fifty percent (50%) of such Annual Gain
shall be paid in cash to JOE within thirty (30) days after the conclusion of
such Calendar Year, up to an amount equal to any cumulative, unrecovered Break
Even Payments made by JOE to Southwest (and taking into account any Quarterly
Gain payments made pursuant to Section 3(b)). Fifty percent (50%) of such Annual
Gain shall be applied by Southwest to offset any cumulative revenue shortfall
between Actual Revenues and Minimum Revenues used in the Break Even Payment
calculation. To the extent there is no cumulative revenue shortfall, then 100%
of the Annual Gain shall be paid to JOE up to the cumulative Break Even Payments
noted above. If no cumulative Break Even Payments are recorded, then 100% of the
Annual Gain will be retained by Southwest.
     4. Announcement of Air Service; Confidentiality.
     (a) Southwest and JOE shall issue a joint press release following the
execution of this Agreement. The content and timing of any press release issued
regarding this Agreement and/or the Air Service shall be mutually approved by
both JOE and Southwest.
     (b) Each party agrees that during the Term all confidential information of
a party (a “disclosing party”) delivered or disclosed to the other party (a
“restricted party”) in connection with this Agreement shall be held and treated
by the restricted party and its officers, employees, agents, affiliates,
consultants, advisers and attorneys (collectively, “Representatives”) in strict
confidence and shall not, without the prior written consent of the disclosing
party, be disclosed by the restricted party or its Representatives in any
manner, in whole or in part, and will not be used by restricted party’s
Representatives, except as may be provided in this Agreement or as required by
applicable law, regulation, legal process, or regulatory authority (including,
but not limited to, by interrogatory, request for information or documents,
subpoena, deposition, civil investigative demand or other legal process). Each
party shall not disclose confidential information of the other party to any
person other than its Representatives who (a) need to know the confidential
information solely for purposes of complying with such party’s obligations under
this Agreement or its legitimate business purposes related to this Agreement and
(b) shall be bound by confidentiality obligations at least as restrictive as
those set forth herein.
     (c) Notwithstanding anything in this Section 4 to the contrary, each party
may make such public disclosure of the terms of the Agreement or the Air Service
as it may determine in good faith and upon the advice of counsel to be required
in connection with any applicable law, regulation, legal process, or regulatory
authority (“Required Disclosure”), but only to the extent necessary for purposes
of complying with the Required Disclosure. Prior to making any

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Required Disclosure, the party subject to such Required Disclosure shall, to the
extent permitted by applicable law, give prior notice to the other party and
afford the other party the opportunity to protect against the disclosure of its
confidential information.
     5. Marketing.
     (a) The parties recognize that the Bay County Tourist Development Council,
the Panama City Beach Convention and Visitors Bureau and the Beaches of South
Walton Tourist Development Council (collectively, the “TDCs”) provide marketing
resources that are essential to the success of the Air Service. JOE agrees to
use commercially reasonable efforts to actively support Southwest’s efforts to
reach agreement with the TDCs regarding the coordination of marketing efforts
for the Air Service, and the parties will work together to ensure that such
agreements allow Southwest to direct the annual marketing spend and identify
firms to perform the media and creative portions of the spending during the term
of this Agreement. As part of its support, JOE shall designate a JOE
representative to help inform and align the TDCs and other civic and community
groups in Northwest Florida for the purpose of coordination of marketing efforts
for the Air Service.
     (b) JOE agrees to use commercially reasonable efforts to actively support
Southwest’s efforts to reach agreement with Coastal Vision 3000 (“CV3000”)
regarding the establishment of a program through which CV3000 would provide to
Southwest, at no cost to Southwest or its passengers, one available room night
at various hotels, condominiums or other rental properties in Northwest Florida
for every passenger enplaned by Southwest in connection with the Air Service,
which room nights would be available for use by Southwest in its marketing
efforts in support of the Air Service.
     6. Development of the New Airport.
     (a) Southwest and JOE shall use their respective commercially reasonable
efforts to work with the Airport Authority to help recommend and prioritize the
development of the infrastructure of the New Airport in ways that can stimulate
economic activity and grow airline passengers in Northwest Florida. These
priorities should focus on infrastructure designed to significantly enhance the
passenger experience, including, but not limited to, the following:
          (1) Covered connections to parking and rental car areas;
          (2) State of the art baggage handling;
          (3) Regional signage;
          (4) Ground transportation infrastructure, including rental cars;
          (5) Landscaping;
          (6) Enhanced security;
          (7) Cruise ship outreach; and

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          (8) Coordinated regional airport name and brand.
     (b) Southwest and JOE shall use their respective commercially reasonable
efforts to work with the Airport Authority on any future development of the New
Airport.
     (c) Southwest and JOE shall use their respective commercially reasonable
efforts to work with the Airport Authority to promote new economic activity and
business development in Northwest Florida, including, but not limited to, the
following:
          (1) The promotion of coordinated local, regional and state economic
development initiatives; and
          (2) The establishment of a through-the-fence development program with
JOE for the New Airport and certain adjacent properties.
     (d) The parties recognize and acknowledge that neither Southwest nor JOE
shall be under any obligation to expend any funds for the undertakings
contemplated by this Section 6.
     7. Representations and Warranties.
     (a) Southwest and JOE, each for its own account, hereby represent and
warrant to each other as follows:
          (1) Each party has the power and authority to enter into this
Agreement and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by it.
          (2) This Agreement has been duly authorized, validly executed and
delivered by an authorized officer of each party and constitutes the legal,
valid and binding obligations of each party enforceable against each party in
accordance with its terms, provided that such enforceability is subject to
general principles of equity.
          (3) The execution and delivery of this Agreement and the performance
by each party hereunder do not and will not require the consent or approval of
any regulatory authority or governmental authority or agency having jurisdiction
over such party, nor be in contravention of or in conflict with the articles of
incorporation, bylaws or other organizational documents of each party, or the
provision of any statute, judgment, order, indenture, instrument, agreement or
undertaking, to which each party is subject or is a party or by which the assets
or properties of each party are or may become bound.
          (4) In performance of their respective obligations under this
Agreement, Southwest and JOE shall comply with all applicable laws and
regulations.
     (b) Notwithstanding any provision of this Agreement, JOE represents and
warrants for the benefit of Southwest: (i) that the Break Even Payments provided
for under Section 3, and any other payments made to Southwest hereunder, shall
not be derived from Airport Authority revenues; and (ii) that the Airport
Authority has had no involvement in the negotiation of this Agreement and shall
have no involvement in its administration or any determination for its

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continuation or extension.
     8. Budgets; Meetings; Books and Records; Audit.
     (a) Southwest shall provide JOE with initial estimated budgets for the Fuel
Costs, Start-up Expenses and Cost Mitigation Measures within thirty (30) days
after the date hereof. Thereafter, during the Term, Southwest shall provide JOE,
upon request, an updated estimated budget for the following Calendar Quarter.
JOE recognizes and acknowledges that such budget estimates shall be provided for
informational purposes only, and shall not impact the actual Quarterly Shortfall
calculations contemplated by this Agreement.
     (b) The parties shall meet monthly to review and discuss the Air Service
performance and discuss any proposed changes.
     (c) Southwest shall maintain, in accordance with its document retention
policies and procedures, accurate and current books and records with respect to
the Fuel Costs, Start-up Expenses, Cost Mitigation Measures and Actual Revenues.
     (d) JOE, or a third party engaged by JOE, which third party shall be
reasonably acceptable to Southwest and be bound by obligations of
confidentiality at least as restrictive as set forth in this Agreement, may
examine and/or audit the books and records of Southwest described in Section
8(c) above at Southwest’s offices described in Section 12(a) below (or such
other location where Southwest maintains such records in the ordinary course of
its business), during normal business hours, upon ten (10) days advance written
notice to Southwest, to obtain or verify the information described in this
Agreement. JOE shall exercise such audit rights no more than once during any
twelve-month period. Any such audit shall be at the sole cost and expense of
JOE.
     9. Additional Air Service. The parties acknowledge that a material
consideration for JOE’s willingness to enter into this Agreement is the
importance of having the Air Service from the New Airport be Southwest’s first
and exclusive service in the region until the Air Service is well established.
Accordingly, Southwest agrees that it shall not commence air service to any
airport within 80 statute miles of the New Airport during the Term. In addition,
in the event Southwest develops a business case for initiating new air service
to an airport that is more than 80 statute miles but within 120 statute miles
from the New Airport, Southwest shall discuss such service with JOE, and shall
meet with JOE to mutually negotiate changes to this Agreement. In the absence of
such agreed upon changes to this Agreement within thirty (30) days of such
meeting, Southwest may proceed to commence air service to the proposed new
airport while not diminishing Air Service under this Agreement; provided,
however, the Minimum Revenues shall automatically increase to an amount that is
one hundred and ten percent (110%) of the amounts reflected on Exhibit A from
the point of commencing such new service until the earlier of the discontinuance
of such new service or the end of the Term. Notwithstanding any increase in
Minimum Revenues pursuant to the preceding sentence, the Minimum Revenues shall
not be increased for the purposes of Section 11(d) hereof.
     10. Dispute Resolution Procedures. With respect to any dispute arising
under this Agreement that is not resolved through good faith discussions between
the parties, the parties

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agree that either party shall have the right to submit the dispute to
non-binding mediation; provided, that applicable statute of limitations will be
tolled during the pendency of such mediation. In the event the parties cannot in
good faith agree on a mediator within thirty (30) days after this Section is
triggered, do not conduct and complete mediation within ninety (90) days after
this Section is triggered, or if the parties remain in dispute following such
mediation, then either party may seek appropriate relief in any court of
competent jurisdiction in the State of Florida.
     11. Term and Termination.
     (a) The term of this Agreement shall be from the date hereof through the
date that is three (3) years after the commencement of the Air Service (the
“Term”), unless earlier terminated pursuant to the terms hereof.
     (b) The Agreement may be terminated by JOE upon thirty (30) days advance
written notice to Southwest if the Break Even Payments for the first Air Service
Year exceed $14 million, or for the second Air Service Year exceed $12 million.
     (c) The Agreement may be terminated by JOE immediately upon written notice
to Southwest if Southwest has not commenced Air Service within ninety (90) days
after the New Airport is open for commercial flight operations.
     (d) The Agreement may be terminated by Southwest upon thirty (30) days
advance written notice to JOE if the Actual Revenues achieved with respect to
the Air Service during any Calendar Year are less than the Minimum Revenues for
such Calendar Year.
     (e) A party may terminate this Agreement upon thirty (30) days advance
written notice to the other party in the event a party breaches any material
provision of this Agreement, including any payment obligation hereunder, and
such breach remains uncured for thirty (30) days after written notice from the
non-breaching party to the other party.
     (f) A party may terminate this Agreement immediately upon written notice to
the other party in the event the other party: (i) dissolves, becomes insolvent,
generally fails to pay or admits in writing its inability generally to pay its
debts as they become due; (ii) makes a general assignment, arrangement, or
composition agreement with or for the benefit of its creditors; or (iii) files a
petition in bankruptcy or institutes any claim under federal or state law for
the relief of debtors or seeks or consents to the appointment of an
administrator, receiver, custodian or similar official for the wind up of its
business (or has such a petition or claim filed against it and such petition,
claim or appointment is not dismissed or stayed within thirty (30) days).
     12. Miscellaneous Provisions.
     (a) Notices. Any notice, demand, consent, authorization, request, approval
or other communication that a party is required, or may desire, to give to or
make upon the other party pursuant to this Agreement shall be effective and
valid only if in writing, signed by the party giving notice and delivered
personally to the other party or sent by nationally recognized courier or
delivery service or by certified mail of the United States Postal Service,
postage prepaid and return receipt requested, or by facsimile, addressed to the
other party as follows (or to such other

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person or place as either party may by written notice to the other specify):
The St. Joe Company
245 Riverside Avenue, Suite 500
Jacksonville, Florida 32202
Attn: Chief Executive Officer
Facsimile: 904-301-4243
With a copy to:
The St. Joe Company
245 Riverside Avenue, Suite 500
Jacksonville, Florida 32202
Attn: General Counsel
Facsimile: 904-301-4650
Southwest Airlines Co.
2702 Love Field Drive
Dallas, TX 75235
Attn: Bob Montgomery
VP Properties
Facsimile: 214 792-4086
With a copy to:
Southwest Airlines Co.
2702 Love Field Drive
Dallas, TX 75235
Attn: Michael AuBuchon, Attorney
Facsimile: 214 792-6200
     (b) Assignment. This Agreement may not be transferred or assigned by a
party hereto without the prior written consent of the other party; provided,
however, that such prohibition shall not be deemed to apply to the assignment or
transfer of the Agreement by a party, whether by operation of law or otherwise,
in connection with a corporate reorganization, a merger or consolidation
transaction or a sale transaction involving substantially all of the assets of
such party.
     (c) Governing Law. This Agreement and all matters regarding the
interpretation and/or enforcement hereof, shall be governed exclusively by the
law of the State of Florida, without reference to its conflicts of law rules,
except in so far as the federal law of the United States of America may control
any aspect of this Agreement, in which case federal law shall govern such
aspect.
     (d) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and no statement or representation of the respective parties
hereto, their agents or employees, made outside of this Agreement, and not
contained herein, shall form any part hereof or be binding upon the other party
hereto.

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     (e) Amendment. This Agreement shall not be changed, amended or modified
except in writing signed by the parties hereto.
     (f) Further Assurances. Each party hereto shall, from time to time, execute
and deliver such further instruments as the other party or its counsel may
reasonably request to effectuate the intent of this Agreement.
     (g) Remedies Cumulative. All remedies available to either party for breach
of this Agreement are cumulative and may be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed an election
of such remedy to the exclusion of other remedies.
     (h) Waiver. No term or provision hereof shall be deemed waived and no
breach excused unless such waiver or consent shall be in writing and signed by
the party claimed to have waived or consented.
     (i) Severability. If any term or provision of this Agreement is declared
void or unenforceable in a particular situation, by any judicial or
administrative authority, this declaration shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation.
     (j) No Partnership; Independent Contractors. It is expressly understood and
agreed that this Agreement does not create a partnership between the parties.
Southwest and JOE are contractors independent of one another, and neither has
the authority to bind the other to any third person or to act in any way on
behalf of or as the representative of the other with respect to any matter
described herein or otherwise, except as may be expressly agreed to in writing
by the parties.
     (k) Counterparts. This Agreement may be executed in one or more
counterparts, all of which, when taken together, will be deemed to constitute
one and the same agreement.
     (l) Section Headings. Section headings are for reference purposes only and
shall not affect the interpretation or meaning of this Agreement.
     (m) Time is of the Essence. Time is of the essence of this Agreement. If
any date referenced herein falls on a Saturday, Sunday or legal holiday, then
such date automatically is extended to the next business day.
     (n) No Third Party Beneficiary. This Agreement is solely between JOE and
Southwest and is not intended and shall not provide any benefit to any persons
who are not parties to the agreement.
     (o) Attorneys’ Fees. In the event of litigation arising pursuant to the
provisions of this Agreement (other than the dispute resolution procedures
described in Section 10 hereof), the prevailing party shall be entitled to
collect reasonable attorneys’ fees from the non-prevailing party and costs and
expenses of such litigation whether at the trial level or on appeal.
[Signature Page Follows]

-12-

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     IN WITNESS WHEREOF, JOE and Southwest have executed and delivered this
Agreement effective as of the day and year first written above.

            THE ST. JOE COMPANY
      By:   /s/ Wm Britton Greene       Name:   Wm. Britton Greene      Its:   
President and CEO        SOUTHWEST AIRLINES CO.
      By:   /s/ Gary Kelly       Name:   Gary Kelly      Its:    Chairman of the
Board, President and CEO     

-13-

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[ * ] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED TO THE OMITTED
PORTION.
Exhibit A
Certain Financial Data

                                      Calendar   Calendar   Calendar   Calendar
    Year 2010   Year 2011   Year 2012   Year 2013
Minimum Revenues:
  $ [*1]     $ [*2]     $ [*3]     $ [*4]  
Fixed Non-Fuel Expenses:
    [*5]       [*6]       [*7]       [*8]  
Maximum Start-up Expenses:
    [*9]       [*10]                  

-14-

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Exhibit B
Form of Monthly Fuel Report

                                                              Gallons          
      Number of                   Consumed             Extended      Flights  
Origin     Destination     Per Flight     Fuel Price*     Price  
 
  PFN   BWI     1,600                  
 
  PFN   BNA     800                  
 
  PFN   MCO     600                  
 
  PFN   HOU     1,100                  
 
  BWI   PFN     1,600                  
 
  BNA   PFN     800                  
 
  MCO   PFN     600                  
 
  HOU   PFN     1,100                  
 
                                     
Total
                                       

 

*   Southwest’s unhedged fuel price including taxes.

-15-

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Exhibit C
Flight Destinations
Baltimore Washington (BWI)
Nashville (BNA)
Houston Hobby (HOU)
Orlando (MCO)

-16-

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Exhibit D
Form of Quarterly Statement

                                              Calendar Year _______       Qtr 1
    Qtr 2     Qtr 3     Qtr 4     Total Year  
Revenues:
                                       
Actual Revenues
                                       
Minimum Revenues
                                       
Quarterly Revenues
                                             
 
                                       
Costs:
                                       
Start-up Expenses
                                       
Non-Fuel Expenses
                                       
Fuel Costs
                                             
Total Costs
                                       
 
                                       
Cost Mitigation Measures:
                                       
Start-up Grant
                                       
Recruitment Grant
                                       
Airport Fee Waiver
                                       
Crew Overnight
                                       
[Others TBD]
                                             
Total Cost Mitigation Measures
                                       
 
                                       
Total Break Even Costs
                                             
 
                                         
Calendar Year View
                                       
Quarterly Gain
                                       
Quarterly (Shortfall)
                                       
Annual Gain / (Shortfall) — Cumulative
                                       
Break Even Payment
                                       
Southwest Reimbursement
                                       
Southwest Carryforward
                                       
Annual Revenue (Shortfall)
                                       

-17-

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          Agreement View (for Calendar Years 2011 - 2013   Total Year  
Cumulative Revenue (Shortfall):
       
Annual Revenue (Shortfall) — Prior Year
       
Annual Revenue (Shortfall) — Current Year
       
 
     
Cumulative Revenue (Shortfall) — Prior to Profit Sharing
       
Apply Current Year Profit Sharing up to 50%
       
 
     
Cumulative Revenue (Shortfall)
       
 
     
 
       
Cumulative Break Even Payments, net of reimbursements:
       
Annual Break Even Payments, net of reimbursements — Prior Year
       
Annual Break Even Payments, net of reimbursements — Current Year
       
 
     
Cumulative Break Even Payments — Prior to Profit Sharing
       
Apply Current Year Profit Sharing
       
 
     
Cumulative Break Even Payments, net of reimbursements
       
 
     
 
       
Cumulative Profit Sharing Available for Use:
       
Profit Sharing Carryforward — Prior Year
       
Annual Gain — Current Year
       
 
     
Profit Sharing Available for Use in Current Year
       
Profit Sharing Used
       
 
     
Cumulative Profit Sharing Carryforward
       
 
     

-18-