Document:

exv4w1

Exhibit 4.1

 

SHAREHOLDER PROTECTION RIGHTS AGREEMENT

dated as of

February 15, 2011,

between

THE ST. JOE COMPANY

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

as Rights Agent

 

 

 

SHAREHOLDER PROTECTION RIGHTS AGREEMENT

Table of Contents

	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	ARTICLE I

DEFINITIONS
	 
	 	 	 	 
	1.1 Definitions
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II

THE RIGHTS
	 
	 	 	 	 
	2.1 Summary of Rights
	 	 	19	 
	2.2 Legend on Common Stock Certificates
	 	 	20	 
	2.3 Exercise of Rights; Separation of Rights
	 	 	21	 
	2.4 Adjustments to Exercise Price; Number of Rights
	 	 	24	 
	2.5 Date on Which Exercise is Effective
	 	 	26	 
	2.6 Execution, Authentication, Delivery and Dating of Rights Certificates
	 	 	26	 
	2.7 Registration, Registration of Transfer and Exchange
	 	 	27	 
	2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates
	 	 	28	 
	2.9 Persons Deemed Owners
	 	 	29	 
	2.10 Delivery and Cancellation of Certificates
	 	 	30	 
	2.11 Agreement of Rights Holders
	 	 	30	 
	 
	 	 	 	 
	ARTICLE III

ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
	 
	 	 	 	 
	3.1 Flip-in
	 	 	31	 
	3.2 Flip-over
	 	 	35	 
	 
	 	 	 	 
	ARTICLE IV

THE RIGHTS AGENT
	 
	 	 	 	 
	4.1 General
	 	 	37	 
	4.2 Merger or Consolidation or Change of Name of Rights Agent
	 	 	38	 
	4.3 Duties of Rights Agent
	 	 	39	 
	4.4 Change of Rights Agent
	 	 	41	 
	 
	 	 	 	 
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	 	 	Page
	 
	 	 	 	 
	ARTICLE V

MISCELLANEOUS
	 
	 	 	 	 
	5.1 Redemption
	 	 	43	 
	5.2 Shareholder Referendum for Qualifying Offers
	 	 	43	 
	5.3 Expiration
	 	 	47	 
	5.4 Issuance of New Rights Certificates
	 	 	48	 
	5.5 Supplements and Amendments
	 	 	48	 
	5.6 Fractional Shares
	 	 	49	 
	5.7 Rights of Action
	 	 	49	 
	5.8 Holder of Rights Not Deemed a Shareholder
	 	 	50	 
	5.9 Notice of Proposed Actions
	 	 	50	 
	5.10 Notices
	 	 	51	 
	5.11 Suspension of Exercisability
	 	 	52	 
	5.12 Costs of Enforcement
	 	 	52	 
	5.13 Successors
	 	 	52	 
	5.14 Benefits of this Agreement
	 	 	52	 
	5.15 Determination and Actions by the Board of Directors, etc
	 	 	53	 
	5.16 Descriptive Headings; Section References
	 	 	53	 
	5.17 GOVERNING LAW
	 	 	54	 
	5.18 Counterparts
	 	 	54	 
	5.19 Severability
	 	 	54	 

EXHIBITS

			
	Exhibit A	 	Form of Rights Certificate

(Together with Form of

Election to Exercise)

 -ii- 

 

 

SHAREHOLDER PROTECTION RIGHTS AGREEMENT

     SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time, this
“Agreement”), dated as of February 15, 2011, between The St. Joe Company, a Florida
corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, a New York
limited liability trust company, as Rights Agent (the “Rights Agent”, which term shall
include any successor Rights Agent hereunder).

WITNESSETH:

     WHEREAS, the Board of Directors of the Company has (a) authorized and declared a dividend of
one right (“Right”) in respect of each share of Common Stock (as hereinafter defined) held
of record as of the close of business on February 28, 2011 (the “Record Time”) payable in
respect of each such share upon certification by the New York Stock Exchange, Inc. (“NYSE”)
to the Securities and Exchange Commission that the Rights have been approved for listing and
registration (the “Payment Time”) and (b) as provided in Section 2.4, authorized the
issuance of one Right in respect of each share of Common Stock issued after the Record Time and
prior to the Separation Time (as hereinafter defined) and, to the extent provided in Section 5.4,
each share of Common Stock issued after the Separation Time;

     WHEREAS, subject to the terms and conditions hereof, each Right entitles the holder thereof,
after the Separation Time, to purchase securities or assets of the Company (or, in certain cases,
securities of certain other entities) pursuant to the terms and subject to the conditions set forth
herein; and

     WHEREAS, the Company desires to appoint the Rights Agent to act on behalf of the Company, and
the Rights Agent is willing so to act, in connection with the issuance, transfer,

 

 

exchange and replacement of Rights Certificates (as hereinafter defined), the exercise of
Rights and other matters referred to herein;

     NOW THEREFORE, in consideration of the premises and the respective agreements set forth
herein, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

     “Acquiring Person” shall mean any Person who or which, together with all Related
Persons of such Person, is or becomes the Beneficial Owner of 10% or more of the outstanding shares
of Common Stock; provided, however, that the term “Acquiring Person” shall not
include any Person who or which, together with all Related Persons of such Person, (i) (A) is the
Beneficial Owner, on the date of this Agreement, of 10% or more of the then outstanding shares of
Common Stock, or (B) who shall become the Beneficial Owner of 10% or more of the
outstanding shares of Common Stock solely as a result of an acquisition by the Company of shares of
Common Stock, in the case of either clause (A) or (B) until such time hereafter or thereafter as
such Person shall become the Beneficial Owner (other than by means of a stock dividend, stock split
or reclassification) of one or more additional shares of Common Stock while such Person is or as a
result of which such Person becomes the Beneficial Owner of 10% or more of the outstanding shares
of Common Stock, (ii) becomes the Beneficial Owner of 10% or more of the outstanding shares of
Common Stock but who (in the good faith determination of the Company’s Board of Directors) acquired
Beneficial Ownership of shares of Common Stock
inadvertently and without a plan or intention to seek or affect control of the Company, if
such

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Person promptly divests, or promptly enters into an agreement with, and satisfactory to, the
Company, in its sole discretion, to divest and thereafter does divest in accordance with the terms
of such agreement (without exercising or retaining any power, including voting power, with respect
to such shares) sufficient shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock) so that such Person ceases to be the Beneficial Owner of 10%
or more of the outstanding shares of Common Stock or (iii) Beneficially Owns shares of Common Stock
consisting solely of one or more of (A) shares of Common Stock Beneficially Owned pursuant to the
grant or exercise of an option granted to such Person (an “Option Holder”) by the Company
in connection with an agreement to merge with, or acquire, the Company entered into prior to a
Flip-in Date, (B) shares of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock) Beneficially Owned by such Option Holder or its Affiliates or
Associates at the time of grant of such option, and (C) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) acquired by Affiliates or
Associates of such Option Holder after the time of such grant that, in the aggregate, amount to
less than 1% of the outstanding shares of Common Stock.. In addition, the Company, any Subsidiary
of the Company and any employee stock ownership or other employee benefit plan of the Company or a
Subsidiary of the Company (or any entity or trustee holding shares of Common Stock for or pursuant
to the terms of any such plan or for the purpose of funding any such plan or funding other employee
benefits for employees of the Company or of any Subsidiary of the Company) shall not be an
Acquiring Person.

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     “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act, as such Rule is in effect on the date of this
Agreement.

     “Agreement” shall have the meaning set forth in the Preamble.

     A Person shall be deemed the “Beneficial Owner”, and to have “Beneficial
Ownership” of, and to “Beneficially Own”, any securities: (i) as to which such Person
or any of such Person’s Related Persons is or may be deemed to be the beneficial owner pursuant to
Rule 13d-3 and 13d-5 under the Exchange Act, as such Rules are in effect on the date of this
Agreement; (ii) as to which such Person or any of such Person’s Related Persons, directly or
indirectly, has the Right to Acquire; provided, however, that a Person shall not be
deemed the “Beneficial Owner”, or to have “Beneficial Ownership” of, or to “Beneficially Own”, any:
(x) securities solely because such security has been tendered pursuant to a tender or exchange
offer made by such Person or any of such Person’s Related Persons until such tendered security is
accepted for payment or exchange, (y) securities which such Person or any of such Person’s Related
Persons, has a Right to Acquire upon the exercise of Rights at any time prior to the time that any
Person becomes an Acquiring Person, or (z) securities issuable upon the exercise of Rights from and
after the time that any Person becomes an Acquiring Person if such Rights were acquired by such
Person or any of such Person’s Related Persons prior to the Separation Time or pursuant to Section
2.3(b), 2.3(c) or 5.3 (“Original Rights”) or pursuant to Section 2.4 with respect to an
adjustment to Original Rights; (iii) which such Person or any of such Person’s Related Persons,
directly or indirectly, through any contract, arrangement, understanding, relationship, or
otherwise has or shares: (A) voting power, which includes the power to vote, or to direct the
voting of, such security (except that a Person shall not be deemed to be the

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Beneficial Owner of any security under this clause (A) if such voting power arises solely
because such Person or any of such Person’s Related Persons has or shares the power to vote or
direct the voting of such security pursuant to a revocable proxy or consent given in response to a
public proxy or consent solicitation made to more than ten holders of shares of a class of stock of
the Company registered under Section 12 of the Exchange Act and pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act, except if such power (or the
arrangements relating thereto) is then reportable under Item 6 of Schedule 13D under the Exchange
Act (or any similar provision of a comparable or successor report)), and/or (B) investment power,
which includes the power to dispose, or to direct the disposition of, such security; or (iv) which
are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate
thereof) with whom such Person or any of such Person’s Related Persons, has an agreement,
arrangement or understanding to act together for the purpose of acquiring, holding, voting or
disposing of any securities of the Company; provided, however, that a Person shall
not be deemed to be the Beneficial Owner of any security solely because such Person or any of such
Person’s Related Persons has or shares the power to vote or direct the voting of such security
pursuant to a revocable proxy or consent given in response to a public proxy or consent
solicitation made to more than ten holders of shares of a class of stock of the Company registered
under Section 12 of the Exchange Act and pursuant to, and in accordance with, the applicable rules
and regulations under the Exchange Act, except if such power (or the arrangements relating thereto)
is then reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar provision of
a comparable or successor report).

     A Person who or which, together with all of such Person’s Related Persons, shall be the
“Beneficial Owner” (within the meaning of clauses (i) through (iv) above) of 5% or more

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of the Common Stock then outstanding, shall also be deemed to be the “Beneficial Owner” of, to
have “Beneficial Ownership” of and to “Beneficially Own,” the full notional amount of any
securities that, directly or indirectly, underlie any “derivative security” (as such term is
defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as
such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”)
and that is, directly or indirectly, held or maintained by such Person, or any of such Person’s
Related Persons, and that is not otherwise included in the definition of Beneficial Ownership
(within the meaning of clauses (i) through (iv) above); provided that, for the purposes of
the definition of “Synthetic Equity Position,” the term “derivative security” shall also include
any security or instrument that would not otherwise constitute a “derivative security” as a result
of any feature that would make any conversion, exercise or similar right or privilege of such
security or instrument become determinable only at some future date or upon the happening of a
future occurrence, in which case the determination of the amount of securities into which such
security or instrument would be convertible or exercisable shall be made assuming that such
security or instrument is immediately convertible or exercisable at the time of such determination;
and, provided, further, that any Person satisfying the requirements of Rule
13d-1(b)(1) (other than a Person that so satisfies Rule 13d-1(b)(1) solely by reason of Rule
13d-1(b)(1)(ii)(E)) shall not be deemed to Beneficially Own the notional amount of any securities
that underlie a Synthetic Equity Position held by such Person as a hedge with respect to a bona
fide derivatives trade or position of such Person arising in the ordinary course of such Person’s
business as a derivatives dealer; and provided, further, that the number of shares of Common Stock
to which the Synthetic Equity Position relates shall be determined by the Board of Directors in
good faith.

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     No Person shall be deemed to be the “Beneficial Owner” of, to have “Beneficial Ownership” of
or to “Beneficially Own” any securities which such Person or any of such Person’s Related Persons
would otherwise be deemed to “Beneficially Own” pursuant to this definition solely as a result of
any merger or other acquisition agreement between the Company and such Person (or one or more of
such Person’s Related Persons), or any tender, voting or support agreement entered into by such
Person (or one or more of such Person’s Related Persons) in connection therewith, if, prior to such
Person becoming an Acquiring Person, the Board of Directors has approved such merger or other
acquisition agreement, or such tender, voting or support agreement.

     Notwithstanding the foregoing, no officer or director of the Company shall be deemed to
Beneficially Own any securities of any other Person by virtue of any actions that such officer or
director takes in such capacity. For purposes of this Agreement, in determining the percentage of
the outstanding shares of Common Stock with respect to which a Person is the Beneficial Owner, all
shares as to which such Person is deemed the Beneficial Owner shall be deemed outstanding.

     “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the State of New York are generally authorized or obligated by law or
executive order to close.

     “Close of Business” on any given date shall mean 5:00 p.m. New York City time on such
date or, if such date is not a Business Day, 5:00 p.m. New York City time on the next succeeding
Business Day.

     “Common Stock” shall mean the shares of Common Stock, no par value, of the Company.

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     “Company” shall have the meaning set forth in the preamble.

     “Definitive Acquisition Agreement” shall mean any agreement entered into by the
Company that is conditioned on the approval by the holders of not less than a majority of the
outstanding shares of Common Stock at a meeting of shareholder with respect to (i) a merger,
consolidation, recapitalization, reorganization, share exchange, business combination or similar
transaction involving the Company or (ii) the acquisition in any manner, directly or indirectly, of
more than 50% of the consolidated total assets (including, without limitation, equity securities of
its subsidiaries) of the Company.

     “Election to Exercise” shall have the meaning set forth in Section 2.3(d).

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Exchange Ratio” shall have the meaning set forth in Section 3.1(c).

     “Exchange Time” shall mean the time at which the right to exercise the Rights shall
terminate pursuant to Section 3.1(c).

     “Exemption Date” shall have the meaning set forth in Section 5.2(g).

     “Exercise Price” shall mean, as of any date, the price at which a holder may purchase
the securities issuable upon exercise of one whole Right. Until adjustment thereof in accordance
with the terms hereof, the Exercise Price shall equal $50.00.

     “Expansion Factor” shall have the meaning set forth in Section 2.4(a).

     “Expiration Time” shall mean the earliest of (i) the Exchange Time, (ii) the
Redemption Time, (iii) the Close of Business on the third anniversary of the date of this
Agreement, unless, for purposes of this clause (iii), extended by action of the Board of Directors
of the Company (in which case the applicable time shall be the time at which it has been so
extended), (iv) immediately prior to the effective time of a consolidation, merger or statutory

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share exchange that does not constitute a Flip-over Transaction or Event and (v) the close of
business on December 31, 2011, if Shareholder Approval has not been obtained on or before that
date.

     “Flip-in Date” shall mean the date any Person becomes an Acquiring Person.

     “Flip-over Entity”, for purposes of Section 3.2, shall mean (i) in the case of a
Flip-over Transaction or Event described in clause (i) of the definition thereof, the Person
issuing any securities into which shares of Common Stock are being converted or exchanged and, if
no such securities are being issued, the other Person that is a party to such Flip-over Transaction
or Event and (ii) in the case of a Flip-over Transaction or Event referred to in clause (ii) of the
definition thereof, the Person receiving the greatest portion of the (A) assets or (B) operating
income or cash flow being transferred in such Flip-over Transaction or Event, provided in
all cases that if such Person is a Subsidiary of another Person, the ultimate parent entity of such
Person shall be the Flip-over Entity.

     “Flip-over Stock” shall mean the capital stock (or similar equity interest) with the
greatest voting power in respect of the election of directors (or other persons similarly
responsible for the direction of the business and affairs) of the Flip-over Entity.

     “Flip-over Transaction or Event” shall mean a transaction or series of transactions,
on or after a Flip-in Date, in which, directly or indirectly, (i) the Company shall consolidate or
merge or participate in a statutory share exchange with any other Person if, at the time of
consummation of the consolidation, merger or statutory share exchange or at the time the Company
enters into any agreement with respect to any such consolidation, merger or statutory share
exchange, the Acquiring Person is the Beneficial Owner of 90% or more of the outstanding shares of
Common Stock or controls the Board of Directors of the Company and either (A) any

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term of or arrangement concerning the treatment of shares of capital stock in such
consolidation, merger or statutory share exchange relating to the Acquiring Person is not identical
to the terms and arrangements relating to other holders of the Common Stock or (B) the Person with
whom the transaction or series of transactions occurs is the Acquiring Person or a Related Person
of the Acquiring Person or (ii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than 50% of the
operating income or cash flow, of the Company and its Subsidiaries (taken as a whole) to any Person
(other than the Company or one or more of its wholly owned Subsidiaries) or to two or more such
Persons that are Related Persons or otherwise acting in concert, if, at the time of the entry by
the Company (or any such Subsidiary) into an agreement with respect to such sale or transfer of
assets, the Acquiring Person or any of its Related Persons controls the Board of Directors of the
Company. For purposes of the foregoing description, the term “Acquiring Person” shall include any
Acquiring Person and its Related Persons, counted together as a single Person.

     “Market Price” per share of any securities on any date shall mean the average of the
daily closing prices per share of such securities (determined as described below) on each of the 20
consecutive Trading Days through and including the Trading Day immediately preceding such date;
provided, however, that if any event described in Section 2.4, or any analogous
event, shall have caused the closing prices used to determine the Market Price on any Trading Days
during such period of 20 Trading Days not to be fully comparable with the closing price on such
date, each such closing price so used shall be appropriately adjusted in order to make it fully
comparable with the closing price on such date. The closing price per share of any securities on

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any date shall be the last reported sale price, regular way, or, in case no such sale takes
place or is quoted on such date, the average of the closing bid and asked prices, regular way, for
each share of such securities, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the NYSE or, if the
securities are not listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the securities are listed or admitted to trading or, if the
securities are not listed or admitted to trading on any national securities exchange, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the securities are not listed or admitted to trading on
any national securities exchange or quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in the securities
selected by the Board of Directors of the Company; provided, however, that if on
any such date the securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share of such securities
on such date shall mean the fair value per share of such securities on such date as determined in
good faith by the Board of Directors of the Company, after consultation with a nationally
recognized investment banking firm, and set forth in a certificate delivered to the Rights Agent.

     “NYSE” shall have the meaning set forth in the Recitals.

     “Option Holder” shall have the meaning set forth in the definition of Acquiring
Person.

     “Original Rights” shall have the meaning set forth in the definition of “Beneficial
Owner” in Section 1.1.

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     “Outside Meeting Date” shall have the meaning set forth in Section 5.2(g).

     “Payment Time” shall have the meaning set forth in the Recitals.

     “Person” shall mean any individual, firm, partnership, limited liability company,
association, group (as such term is used in Rule 13d-5 under the Exchange Act, as such Rule is in
effect on the date of this Agreement), corporation or other entity.

     “Qualifying Offer” shall mean an offer determined by a majority of directors of the
Company that are determined to be independent under the listing standards of the NYSE to have, to
the extent required for the type of offer specified, each of the following characteristics:

     (a) a fully financed all-cash tender offer or an exchange offer offering shares of common
stock of the offeror, or a combination thereof, in each such case for any and all of the
outstanding shares of Common Stock at the same per-share consideration;

     (b) an offer that has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;

     (c) an offer that, within twenty (20) Business Days after the commencement date of the offer
(or within ten Business Days after any increase in the offer consideration), does not result in a
nationally recognized investment banking firm retained by the Board of Directors of the Company
rendering an opinion to the Board of Directors that the consideration being offered to the
shareholders of the Company is either unfair or inadequate;

     (d) if the offer includes shares of common stock of the offeror, an offer pursuant to which
(i) the offeror shall permit representatives of the Company (including a nationally-recognized
investment banking firm retained by the Board of Directors and legal counsel and an accounting firm
designated by the Company) to have access to such offeror’s books, records, management, accountants
and other appropriate outside advisors for the purposes of permitting

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such representatives to conduct a due diligence review of the offeror in order to permit the
Board of Directors to evaluate the offer and make an informed decision and, if requested by the
Board of Directors, to permit such investment banking firm (relying as appropriate on the advice of
such legal counsel) to be able to render an opinion to the Board of Directors with respect to
whether the consideration being offered to the shareholders of the Company is fair from a financial
point of view, and (ii) within ten Business Days after such investment banking firm shall have
notified the Company and the offeror that it had completed the due diligence review to its
satisfaction (or following completion of such due diligence review within ten Business Days after
any increase in the consideration being offered), such investment banking firm does not render an
opinion to the Board of Directors that the consideration being offered to the shareholders of the
Company is either unfair or inadequate and such investment banking firm does not, after the
expiration of such ten Business Day period, render an opinion to the Board of Directors that the
consideration being offered to the shareholders of the Company has become either unfair or
inadequate based on a subsequent disclosure or discovery of a development or developments that have
had or are reasonably likely to have a material adverse affect on the value of the common stock of
the offeror;

     (e) an offer that is subject only to the minimum tender condition described below in item (h)
of this definition and other customary terms and conditions, which conditions shall not include any
financing, funding or similar conditions or any requirements with respect to the offeror or its
agents being permitted any due diligence with respect to the books, records, management,
accountants or any other outside advisers of the Company;

     (f) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror that the offer will remain open for at least 120 Business Days and, if a

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Special Meeting is duly requested in accordance with Section 5.2, for at least ten Business
Days after the date of the Special Meeting or, if no Special Meeting is held within the Special
Meeting Period (as defined in Section 5.2), for at least ten Business Days following the last day
of such Special Meeting Period;

     (g) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror that, in addition to the minimum time periods specified in clause (f) of this
definition, the offer, if it is otherwise to expire prior thereto, will be extended for at least
twenty Business Days after (i) any increase in the consideration being offered or (ii) any bona
fide alternative offer is commenced within the meaning of Rule 14d-2(a) under the Exchange Act;
provided, however, that such offer need not remain open, as a result of clause (f) above and this
clause (g), beyond (1) the time that any other offer satisfying the criteria for a Qualifying Offer
is then required to be kept open under such clause (f) above and this clause (g), (2) the
expiration date, as such date may be extended by public announcement (with prompt written notice to
the Rights Agent) in compliance with Rule 14e-1 under the Exchange Act, of any other tender offer
for the Common Stock with respect to which the Board of Directors of the Company has agreed to
redeem the Rights immediately prior to acceptance for payment of Common Stock thereunder (unless
such other offer is terminated prior to its expiration without any Common Stock having been
purchased thereunder) or (3) one Business Day after the shareholder vote with respect to approval
of any Definitive Acquisition Agreement has been officially determined and certified by the
inspectors of elections;

     (h) an offer that is conditioned on a minimum of at least two-thirds of the outstanding shares
of the Common Stock not held by the Person making such offer (or such

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Person’s Related Persons) being tendered and not withdrawn as of the offer’s expiration date,
which condition shall not be waivable;

     (i) an offer pursuant to which the Company has received an irrevocable written commitment of
the offeror to consummate, as promptly as practicable upon successful completion of the offer, a
second step transaction whereby all shares of the Common Stock not tendered into the offer will be
acquired at the same consideration per share actually paid pursuant to the offer, subject to
shareholders’ statutory appraisal rights, if any;

     (j) an offer pursuant to which the Company and its shareholders have received an irrevocable
written commitment of the offeror that no amendments will be made to the offer to reduce the
consideration being offered or to otherwise change the terms of the offer in a way that is adverse
to a tendering shareholder;

     (k) an offer (other than an offer consisting solely of cash consideration) pursuant to which
the Company has received the written representation and certification of the offeror and, in their
individual capacities, the written representations and certifications of the offeror’s Chief
Executive Officer and Chief Financial Officer, that (i) all facts about the offeror that would be
material to making an investor’s decision to accept the offer have been fully and accurately
disclosed as of the date of the commencement of the offer within the meaning of Rule 14d-2(a) of
the Exchange Act, (ii) all such new facts will be fully and accurately disclosed on a prompt basis
during the entire period during which the offer remains open, and (iii) all required Exchange Act
reports will be filed by the offeror in a timely manner during such period; and

     (l) if the offer includes shares of stock of common stock of the offeror, (i) the offeror is a
publicly owned United States corporation and its common stock is freely tradable and is listed on
either The NASDAQ Stock Market or the NYSE, (ii) no shareholder approval of the

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offeror is required to issue such common stock, or, if required, such approval has already
been obtained, (iii) no Person (including such Person’s Related Persons) beneficially owns more
than 15% of the voting stock of the offeror at the time of commencement of the offer or at any time
during the term of the offer, (iv) no other class of voting stock of the offeror is outstanding and
(v) the offeror meets the registrant eligibility requirements for use of Form S-3 for registering
securities under the Securities Act, including, without limitation, the filing of all required
Exchange Act reports in a timely manner during the twelve calendar months prior to the date of
commencement of such offer.

     For the purposes of the definition of Qualifying Offer, “fully financed” shall mean that the
offeror has sufficient funds for the offer and related expenses which shall be evidenced by (i)
firm, unqualified, written commitments from responsible financial institutions having the necessary
financial capacity, accepted by the offeror, to provide funds for such offer subject only to
customary terms and conditions, (ii) cash or cash equivalents then available to the offeror, set
apart and maintained solely for the purpose of funding the offer with an irrevocable written
commitment being provided by the offeror to the Board of Directors of the Company to maintain such
availability until the offer is consummated or withdrawn or (iii) a combination of the foregoing;
which evidence has been provided to the Company prior to, or upon, commencement of the offer. If an
offer becomes a Qualifying Offer in accordance with this definition, but subsequently ceases to be
a Qualifying Offer as a result of the failure at a later date to continue to satisfy any of the
requirements of this definition, such offer shall cease to be a Qualifying Offer and the provisions
of Section 5.2 shall no longer be applicable to such offer.

     “Qualifying Offer Resolution” shall have the meaning set forth in Section 5.2(a).

     “Record Time” shall have the meaning set forth in the Recitals.

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     “Redemption Price” shall mean an amount equal to one cent, $0.01.

     “Redemption Time” shall mean the time at which the right to exercise the Rights shall
terminate pursuant to Section 5.1.

     “Requisite Percentage” shall have the meaning set forth in Section 5.2(a).

     “Related Person” shall mean, as to any Person, any Affiliate or Associate of such
Person.

     “Right” shall have the meaning set forth in the Recitals.

     “Right to Acquire” shall mean a legal, equitable or contractual right to acquire
(whether directly or indirectly and whether exercisable immediately, or only after the passage of
time, compliance with regulatory requirements, fulfillment of a condition or otherwise), pursuant
to any agreement, arrangement or understanding, whether or not in writing (excluding customary
agreements entered into in good faith with and between an underwriter and selling group members in
connection with a firm commitment underwriting registered under the Securities Act), or upon the
exercise of any option, warrant or right, through conversion of a security, pursuant to the power
to revoke a trust, discretionary account or similar arrangement, pursuant to the power to terminate
a repurchase or similar so-called “stock borrowing” agreement or arrangement, or pursuant to the
automatic termination of a trust, discretionary account or similar arrangement.

     “Rights Agent” shall have the meaning set forth in the Preamble.

     “Rights Certificate” shall have the meaning set forth in Section 2.3(c).

     “Rights Register” shall have the meaning set forth in Section 2.7(a).

     “Securities Act” shall mean the Securities Act of 1933, as amended.

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     “Separation Time” shall mean the earlier of (i) the Close of Business on the tenth
Business Day (or such later date as the Board of Directors of the Company may from time to time fix
by resolution adopted prior to the Separation Time that otherwise would have occurred) after the
date on which any Person commences a tender or exchange offer that, if consummated, would result in
such Person becoming an Acquiring Person and (ii) the Close of Business on the tenth Business Day
after the Stock Acquisition Date; provided that if the foregoing results in the Separation
Time being prior to the Record Time, the Separation Time shall be the Record Time and
provided further that if any tender or exchange offer referred to in clause (i) of
this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without
the purchase of any shares of Common Stock pursuant thereto, such offer shall be deemed, for
purposes of this paragraph, never to have been made.

     “Shareholder Approval” shall mean the approval of this Agreement by the affirmative
vote of the holders of a majority of the voting power of the outstanding shares of Common Stock (or
other shares that vote together with the Common Stock as one class for purposes of such an
approval) entitled to vote and that are present, or represented by proxy, and are voted on the
proposal to approve this Agreement, at the meeting of shareholders of the Company duly held in
accordance with the Company’s Amended and Restated Articles of Incorporation, as amended, and
applicable law.

     “Solicited Shareholder” shall have the meaning set forth in Section 5.2(e).

     “Special Meeting” shall have the meaning set forth in Section 5.2(a).

     “Special Meeting Demand” shall have the meaning set forth in Section 5.2(a).

     “Special Meeting Period” shall have the meaning set forth in Section 5.2(f).

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          “Stock Acquisition Date” shall mean (i) the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, the filing of a report pursuant
to Section 13(d) of the Exchange Act or pursuant to a comparable successor statute) by the Company
or an Acquiring Person that an Acquiring Person has become such or that discloses information which
reveals the existence of an Acquiring Person or (ii) such earlier date as a majority of the Board
of Directors of the Company shall become aware of the existence of an Acquiring Person.

          “Subsidiary” of any specified Person shall mean any corporation or other entity of
which a majority of the voting power of the equity securities or a majority of the equity or
membership interest is Beneficially Owned, directly or indirectly, by such Person.

          “Trading Day”, when used with respect to any securities, shall mean a day on which the
New York Stock Exchange, Inc. is open for the transaction of business or, if such securities are
not listed or admitted to trading on the New York Stock Exchange, Inc., a day on which the
principal national securities exchange on which such securities are listed or admitted to trading
is open for the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.

          “Trust” shall have the meaning set forth in Section 3.1(c).

          “Trust Agreement” shall have the meaning set forth in Section 3.1(c).

ARTICLE II

THE RIGHTS

          2.1 Summary of Rights. As soon as practicable after the Record Time, the Company will mail a letter summarizing
the terms of the Rights to each holder of record of

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Common Stock as of the Record Time, at such
holder’s address as shown by the records of the Company.

          2.2 Legend on Common Stock Certificates. Certificates for the Common Stock issued on or after the Record Time but prior to the
Separation Time shall evidence one Right for each share of Common Stock represented thereby and
shall have impressed on, printed on, written on or otherwise affixed to them the following legend:

Until the Separation Time (as defined in the Rights Agreement referenced below), this
certificate also evidences and entitles the holder hereof to certain Rights as set forth in
a Rights Agreement, dated as of February 15, 2011 (as such may be amended from time to time,
the “Rights Agreement”), between The St. Joe Company (the “Company”) and
American Stock Transfer & Trust Company, LLC, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may become exercisable for securities or assets of the Company
or securities of another entity, may be exchanged for shares of Common Stock or other
securities or assets of the Company, may expire, may become void (if they are Beneficially
Owned by an Acquiring Person or any Related Person thereof, as such terms are defined in the
Rights Agreement, or by any transferee of any of the foregoing) or may be evidenced by
separate certificates and may no longer be evidenced by this certificate. The Company will
mail or arrange for the mailing of a copy of the Rights Agreement to the holder of this
certificate without charge after the receipt of a written request therefor.

Certificates representing shares of Common Stock that are issued and outstanding at the Record Time
shall, together with the letter mailed pursuant to Section 2.1, evidence one Right for each share
of Common Stock evidenced thereby notwithstanding the absence of the foregoing legend.

          If the Common Stock issued after the Record Time but prior to the Separation Time shall be
uncertificated, the registration of such Common Stock on the stock transfer books of the Company
shall evidence one Right for each share of Common Stock represented thereby
and the Company shall mail to every Person that holds such Common Stock a confirmation of the
registration of such Common Stock on the stock transfer books of the Company, which

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confirmation
will have impressed, printed, written or stamped thereon or otherwise affixed thereto the above
legend. The Company shall mail or arrange for the mailing of a copy of this Agreement to any
Person that holds Common Stock, as evidenced by the registration of the Common Stock in the name of
such Person on the stock transfer books of the Company, without charge after the receipt of a
written request therefor.

          2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections 3.1, 5.1 and 5.11 and subject to adjustment as herein set forth,
each Right will entitle the holder thereof, at or after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one-half of one share of Common Stock.

          (b) Until the Separation Time, (i) no Right may be exercised and (ii) each Right will be
evidenced by the certificate for the associated share of Common Stock (or, if the Common Stock
shall be uncertificated, by the registration of the associated share of Common Stock on the stock
transfer books of the Company and the confirmation thereof provided for in Section 2.2), together,
in the case of certificates issued prior to the Payment Time, with the letter mailed to the record
holder thereof pursuant to Section 2.1, and will be transferable only together with, and will be
transferred by a transfer (whether with or without such letter or confirmation) of, such associated
share.

          (c) Subject to the terms and conditions hereof, at or after the Separation Time and prior to
the Expiration Time, the Rights (i) may be exercised and (ii) may be transferred independent of
shares of Common Stock. Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than
any Person whose Rights have become void pursuant to Section 3.1(b)), at such holder’s address
as shown by the records of the Company (the Company hereby agreeing to furnish copies of such

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records to the Rights Agent for this purpose), (x) a certificate (a “Rights Certificate”)
in substantially the form of Exhibit A hereto appropriately completed, representing the number of
Rights held by such holder at the Separation Time and having such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any national securities exchange or quotation system on which the Rights may
from time to time be listed or traded, or to conform to usage, and (y) a disclosure statement
describing the Rights.

          (d) Subject to the terms and conditions hereof, Rights may be exercised on any Business Day on
or after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent the
Rights Certificate evidencing such Rights with an Election to Exercise (an “Election to
Exercise”) substantially in the form attached to the Rights Certificate duly completed,
accompanied by payment in cash, or by certified or official bank check or money order payable to
the order of the Company, of a sum equal to the Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax or charge that may be payable in
respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance
or delivery of certificates (or, if uncertificated, the registration on the stock transfer books of
the Company) for shares or depositary receipts (or both) in a name other than that of the holder of
the Rights being exercised.

          (e) Upon receipt of a Rights Certificate, with an Election to Exercise accompanied by payment
as set forth in Section 2.3(d), and subject to the terms and conditions hereof, the Rights Agent
will thereupon promptly (i) (A) requisition from a transfer agent stock

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certificates evidencing
such number of shares or other securities to be purchased or, in the case of uncertificated shares
or other securities, requisition from a transfer agent a notice setting forth such number of shares
or other securities to be purchased for which registration will be made on the stock transfer books
of the Company (the Company hereby irrevocably authorizing its transfer agents to comply with all
such requisitions), and (B) if the Company elects pursuant to Section 5.6 not to issue certificates
(or effect registrations on the stock transfer books of the Company) representing fractional
shares, requisition from the depositary selected by the Company depositary receipts representing
the fractional shares to be purchased or requisition from the Company the amount of cash to be paid
in lieu of fractional shares in accordance with Section 5.6 and (ii) after receipt of such
certificates, depositary receipts, notices and/or cash, deliver the same to or upon the order of
the registered holder of such Rights Certificate, registered (in the case of certificates,
depositary receipts or notices) in such name or names as may be designated by such holder.

          (f) In case the holder of any Rights shall exercise less than all of the Rights evidenced by
such holder’s Rights Certificate, a new Rights Certificate evidencing the Rights remaining
unexercised will be issued by the Rights Agent to such holder or to such holder’s duly authorized
assigns.

          (g) The Company covenants and agrees that it will (i) take all such action as may be necessary
to ensure that all shares delivered (or evidenced by registration on the stock transfer books of
the Company) upon exercise of Rights shall, at the time of delivery of the certificates
(or registration) for such shares (subject to payment of the Exercise Price), be duly and
validly authorized, executed, issued and delivered (or registered) and fully paid and
nonassessable; (ii) take all such action as may be necessary to comply with any applicable
requirements of the

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Securities Act of 1933, as amended, or the Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in connection with the
issuance of any shares upon exercise of Rights; and (iii) pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any shares issued upon the exercise of
Rights, provided that the Company shall not be required to pay any transfer tax or charge
that may be payable in respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates (or the registration) for shares in a name
other than that of the holder of the Rights being transferred or exercised.

          2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the Company shall at any time after the Record Time and prior to the
Separation Time (i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares of Common Stock, (x) the Exercise Price in effect after such adjustment will be
equal to the Exercise Price in effect immediately prior to such adjustment divided by the number of
shares of Common Stock including any fractional shares in lieu of which such holder received cash
(the “Expansion Factor”) that a holder of one share of Common Stock immediately prior to
such dividend, subdivision or combination would hold thereafter as a result thereof and (y) each
Right held prior to such adjustment will become that number of Rights equal to the Expansion
Factor, and the adjusted number of Rights will be
deemed to be distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in respect of such
dividend, subdivision or combination, so that each such share of Common Stock will have exactly one
Right associated with it. Each

-24-

 

adjustment made pursuant to this paragraph shall be made as of the
payment or effective date for the applicable dividend, subdivision or combination.

          In the event that the Company shall at any time after the Record Time and prior to the
Separation Time issue any shares of Common Stock otherwise than in a transaction referenced in the
preceding paragraph, each such share of Common Stock so issued shall automatically have one new
Right associated with it, which Right shall be evidenced by the certificate representing such share
(or, if the Common Stock shall be uncertificated, such Right shall be evidenced by the registration
of such Common Stock on the stock transfer books of the Company and the confirmation thereof
provided for in Section 2.2). Rights shall be issued by the Company in respect of shares of Common
Stock that are issued or sold by the Company after the Separation Time only to the extent provided
in Section 5.4.

          (b) In the event that the Company shall at any time after the Record Time and prior to the
Separation Time issue or distribute any securities or assets in respect of, in lieu of or in
exchange for Common Stock (other than pursuant to any non-extraordinary periodic cash dividend or a
dividend paid solely in Common Stock) whether by dividend, in a reclassification or
recapitalization (including any such transaction involving a merger, consolidation or statutory
share exchange), or otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon exercise of Rights as
the Board of Directors of the Company, in its sole discretion, may deem to be appropriate under the
circumstances in order to adequately protect the interests of the holders of Rights
generally, and the Company and the Rights Agent shall amend this Agreement as necessary to
provide for such adjustments.

-25-

 

          (c) Each adjustment to the Exercise Price made pursuant to this Section 2.4 shall be
calculated to the nearest cent. Whenever an adjustment to the Exercise Price is made pursuant to
this Section 2.4, the Company shall (i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy of such certificate.

          (d) Rights Certificates shall represent the right to purchase the securities purchasable under
the terms of this Agreement, including any adjustment or change in the securities purchasable upon
exercise of the Rights, even though such certificates may continue to express the securities
purchasable at the time of issuance of the initial Rights Certificates.

          2.5 Date on Which Exercise is Effective. Each Person in whose name any certificate for shares is issued (or registration on the
stock transfer books is effected) upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares represented thereby on the date upon which the
Rights Certificate evidencing such Rights was duly surrendered and payment of the Exercise Price
for such Rights (and any applicable taxes and other governmental charges payable by the exercising
holder hereunder) was made; provided, however, that if the date of such surrender
and payment is a date upon which the stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such certificate (or
registration) shall be dated, the next succeeding Business Day on which the stock transfer books of
the Company are open.

          2.6 Execution, Authentication, Delivery and Dating of Rights Certificates.
(a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of
the Board or the President and the Secretary of the Company, under its corporate seal reproduced
thereon

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attested by its Secretary. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.

          Rights Certificates bearing the manual or facsimile signatures of individuals who were at any
time the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.

          Promptly after the Separation Time, the Company will notify the Rights Agent of such
Separation Time and will deliver Rights Certificates executed by the Company to the Rights Agent
for countersignature, and, subject to Section 3.1(b), the Rights Agent shall manually countersign
and deliver such Rights Certificates to the holders of the Rights pursuant to Section 2.3(c). No
Rights Certificate shall be valid for any purpose unless manually countersigned by the Rights
Agent.

          (b) Each Rights Certificate shall be dated the date of countersignature thereof.

          2.7 Registration, Registration of Transfer and Exchange. (a) After the Separation Time, the Company will cause to be kept a register (the
“Rights Register”) in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights Agent is hereby
appointed “Rights Registrar” for the purpose of maintaining the Rights Register for the Company and
registering Rights and transfers of Rights after the Separation Time as herein provided. In
the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will
have the right to examine the Rights Register at all reasonable times after the Separation Time.

          After the Separation Time and prior to the Expiration Time, upon surrender for registration of
transfer or exchange of any Rights Certificate, and subject to the provisions of

-27-

 

Sections 2.7(c)
and (d), the Company will execute, and the Rights Agent will countersign and deliver, in the name
of the holder or the designated transferee or transferees, as required pursuant to the holder’s
instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as
did the Rights Certificate so surrendered.

          (b) Except as otherwise provided in Section 3.1(b), all Rights issued upon any registration of
transfer or exchange of Rights Certificates shall be the valid obligations of the Company, and such
Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon
such registration of transfer or exchange.

          (c) Every Rights Certificate surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the
Company or the Rights Agent, as the case may be, duly executed by the holder thereof or such
holder’s attorney duly authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation thereto.

          (d) The Company shall not register the transfer or exchange of any Rights that have become
void under Section 3.1(b), been exchanged under Section 3.1(c) or been redeemed under Section 5.1.

          2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the Company shall execute and
the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so surrendered.

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          (b) If there shall be delivered to the Company and the Rights Agent prior to the Expiration
Time (i) evidence to their satisfaction of the destruction, loss or theft of any Rights Certificate
and (ii) such security or indemnity as may be required by them to save each of them and any of
their agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the absence of
notice to the Company or the Rights Agent that such Rights Certificate has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Rights
Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so destroyed, lost or stolen.

          (c) As a condition to the issuance of any new Rights Certificate under this Section 2.8, the
Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Rights Agent) connected therewith.

          (d) Every new Rights Certificate issued pursuant to this Section 2.8 in lieu of any destroyed,
lost or stolen Rights Certificate shall evidence an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b), shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly issued hereunder.

          2.9 Persons Deemed Owners. Prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the
associated Common Stock certificate or notice of transfer, if uncertificated) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem
and treat the Person in whose name such Rights

-29-

 

Certificate (or, prior to the Separation Time, such
Common Stock certificate or Common Stock registration, if uncertificated) is registered as the
absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever, including
the payment of the Redemption Price and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary. As used in this Agreement, unless the context otherwise requires,
the term “holder” of any Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).

          2.10 Delivery and Cancellation of Certificates. All Rights Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any Person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent. The Company may at
any time deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder that the Company may have acquired in any manner whatsoever;
and all Rights Certificates so delivered shall be promptly cancelled by the Rights Agent. No
Rights Certificates shall be countersigned in lieu of or in exchange for any Rights Certificates
cancelled as provided in this Section 2.10, except as expressly permitted by this Agreement. The
Rights Agent shall destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Company.

          2.11 Agreement of Rights Holders. Every holder of Rights by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of Rights that:

          (a) prior to the Separation Time, each Right will be transferable only together with, and will
be transferred by a transfer of, the associated share of Common Stock;

-30-

 

          (b) after the Separation Time, the Rights Certificates will be transferable only on the Rights
Register as provided herein;

          (c) prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the
associated Common Stock certificate or Common Stock registration, if uncertificated) for
registration of transfer, the Company, the Rights Agent and any agent of the Company or the Rights
Agent may deem and treat the Person in whose name the Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate or Common Stock registration, if
uncertificated) is registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary;

          (d) Rights Beneficially Owned by certain Persons will, under the circumstances set forth in
Section 3.1(b), become void; and

          (e) this Agreement may be supplemented or amended from time to time pursuant to Section 2.4(b)
or 5.4.

ARTICLE III

ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

          3.1 Flip-in. (a) In the event that prior to the Expiration Time a Flip-in Date shall occur, except as
provided in this Section 3.1, each Right shall constitute the right to purchase from the Company,
upon exercise thereof in accordance with the terms hereof (but subject to Section 5.11), that
number of shares of Common Stock having an aggregate Market Price on the Stock Acquisition Date
that gave rise to the Flip-in Date equal to twice the Exercise Price for an amount in cash equal to
the Exercise Price (such right to be appropriately adjusted in order to protect the interests of
the holders of Rights generally in the event that on or after such

-31-

 

Stock Acquisition Date any of
the events described in Section 2.4(a) or (b), or any analogous event, shall have occurred with
respect to the Common Stock).

          (b) Notwithstanding the foregoing, any Rights that are or were Beneficially Owned on or after
the Stock Acquisition Date by an Acquiring Person or a Related Person thereof or by any transferee,
direct or indirect, of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer such Rights under
any provision of this Agreement. If any Rights Certificate is presented for assignment or exercise
and the Person presenting the same will not complete the certification set forth at the end of the
form of assignment or notice of election to exercise and provide such additional evidence of the
identity of the Beneficial Owner and its Affiliates and Associates (or former Beneficial Owners and
their Affiliates and Associates) as the Company shall reasonably request, then the Company shall be
entitled conclusively to deem the Beneficial Owner thereof to be an Acquiring Person or a Related
Person thereof or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced thereby to be void and not transferable or exercisable.

          (c) The Board of Directors of the Company may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of more than 50% of the
outstanding shares of Common Stock elect to exchange all (but not less than all) of the then
outstanding Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted in order to protect the interests of holders of Rights generally in
the event that after the Separation Time any of the events described in Section 2.4(a) or (b), or
any analogous event, shall have occurred with respect to the

-32-

 

Common Stock (such exchange ratio, as
adjusted from time to time, being hereinafter referred to as the “Exchange Ratio”).

          Immediately upon the action of the Board of Directors of the Company electing to exchange the
Rights, without any further action and without any notice, the right to exercise the Rights will
terminate and each Right (other than Rights that have become void pursuant to Section 3.1(b)),
whether or not previously exercised, will thereafter represent only the right to receive a number
of shares of Common Stock equal to the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. Promptly after the action
of the Board of Directors electing to exchange the Rights, the Company shall give notice thereof
(specifying the steps to be taken to receive shares of Common Stock in exchange for Rights) to the
Rights Agent and the holders of the Rights (other than Rights that have become void pursuant to
Section 3.1(b)) outstanding immediately prior thereto by mailing such notice in accordance with
Section 5.10.

          Each Person in whose name any certificate for shares is issued (or for whom any registration
on the stock transfer books of the Company is made) upon the exchange of Rights pursuant to this
Section 3.1(c) shall for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate (or registration on the stock transfer books of the
Company) shall be dated (or registered as of), the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of any applicable taxes and other
governmental charges payable by the holder was made; provided, however, that if the
date of such surrender and payment is a date upon which the stock transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such

-33-

 

shares on, and such
certificate (or registration on the stock transfer books of the Company) shall be dated (or
registered as of), the next succeeding Business Day on which the stock transfer books of the
Company are open.

          Prior to effecting an exchange pursuant to this Section 3.1(c), the Board of Directors of the
Company may direct the Company to enter into a Trust Agreement in such form and with such terms as
the Board shall then approve (the “Trust Agreement”). If the Board of Directors of the
Company so directs, the Company shall enter into the Trust Agreement and shall issue to the trust
created by such agreement (the “Trust”) all of the Common Stock issuable pursuant to the
exchange (or any portion thereof that has not theretofore been issued in connection with the
exchange). From and after the time at which such shares are issued to the Trust, all shareholders
then entitled to receive shares pursuant to the exchange shall be entitled to receive such shares
(and any dividends or distributions made thereon after the date on which such shares are deposited
in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions
of the Trust Agreement. Any Common Stock issued at the
direction of the Board of Directors of the Company in connection herewith shall be validly
issued, fully paid and nonassessable Common Stock, and the Company shall be deemed to have received
as consideration for such issuance a benefit having a value that is at least equal to the aggregate
par value of the shares so issued.

          (d) In the event that there shall not be sufficient treasury shares or authorized but
unissued shares of Common Stock of the Company to permit the exercise or exchange in full of the
Rights in accordance with Section 3.1(a) or if the Company so elects to make the exchange referred
to in Section 3.1(c), the Company shall either (i) call a meeting of shareholders seeking approval
to cause sufficient additional shares to be authorized (provided that if such approval is

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not obtained the Company will take the action specified in clause (ii) of this sentence) or (ii)
take such action as shall be necessary to ensure and provide, as and when and to the maximum extent
permitted by applicable law and any agreements or instruments in effect on the Stock Acquisition
Date (and remaining in effect) to which it is a party, that each Right shall thereafter constitute
the right to receive, (x) at the Company’s option, either (A) in return for the Exercise Price,
debt or equity securities or other assets (or a combination thereof) having a fair value equal to
twice the Exercise Price, or (B) without payment of consideration (except as otherwise required by
applicable law), debt or equity securities or other assets (or a combination thereof) having a fair
value equal to the Exercise Price, or (y) if the Board of Directors of the Company elects to
exchange the Rights in accordance with Section 3.1(c), debt or equity securities or other assets
(or a combination thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the Flip-in Date, where
in any case set forth in (x) or (y) above the fair value of such debt or equity
securities or other assets shall be as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking firm.

          3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not enter into any agreement with
respect to, consummate or permit to occur any Flip-over Transaction or Event unless and until it
shall have entered into a supplemental agreement with the Flip-over Entity, for the benefit of the
holders of the Rights (the terms of which shall be reflected in an amendment to this Agreement
entered into with the Rights Agent), providing that, upon consummation or occurrence of the
Flip-over Transaction or Event (i) each Right shall thereafter constitute the right to purchase
from the Flip-over Entity, upon exercise thereof in accordance with the terms hereof, that number
of shares of Flip-over Stock of the Flip-over Entity having an

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aggregate Market Price on the date
of consummation or occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be appropriately adjusted in
order to protect the interests of the holders of Rights generally in the event that after such date
of consummation or occurrence any of the events described in Section 2.4(a) or (b), or any
analogous event, shall have occurred with respect to the Flip-over Stock) and (ii) the Flip-over
Entity shall thereafter be liable for, and shall assume, by virtue of such Flip-over Transaction or
Event and such supplemental agreement, all the obligations and duties of the Company pursuant to
this Agreement. The provisions of this Section 3.2 shall apply to successive Flip-over
Transactions or Events.

          (b) Prior to the Expiration Time, unless the Rights will be redeemed pursuant to Section 5.1
pursuant to an agreement entered into by the Company prior to a Flip-in Date, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if (i) at the time thereof there are any rights, warrants or
securities outstanding or any other arrangements, agreements or instruments that would eliminate or
otherwise diminish in any material respect the benefits intended to be afforded by this Rights
Agreement to the holders of Rights upon consummation of such transaction, (ii) prior to,
simultaneously with or immediately after such Flip-over Transaction or Event, the shareholders of
the Person who constitutes, or would constitute, the Flip-over Entity shall have received a
distribution of Rights previously owned by such Person or any of its Related Persons, or (iii) the
form or nature of organization of the Flip-over Entity would preclude or limit the exercisability
of the Rights.

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ARTICLE IV

THE RIGHTS AGENT

          4.1 General. (a) The Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted to be done by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs and expenses of
defending against any claim of liability.

          (b) The Rights Agent shall be protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration of this Agreement in
reliance upon any certificate for securities (or registration on the stock transfer books of the
Company) purchasable upon exercise of Rights, Rights Certificate, certificate for other securities
of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.

          (c) The Rights Agent’s liability arising out of or in connection with this Agreement shall not
exceed the aggregate amount of all fees (excluding expenses) paid or

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payable to the Rights Agent
under this Agreement in the twelve month period immediately preceding the date of the first event
giving rise to liability.

          4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any Person resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the
business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 4.4. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may countersign such Rights Certificates either
in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.

          (b) In case at any time the name of the Rights Agent is changed and at such time any of the
Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name

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or in its changed name; and in all
such cases such Rights Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.

          4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:

          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel will be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such
opinion.

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it
necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a person believed by the Rights
Agent to be an officer of the Company; and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

          (c) The Rights Agent will be liable hereunder only for its own gross negligence, bad faith or
willful misconduct.

          (d) The Rights Agent will not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the certificates, if any, for securities purchasable
upon exercise of Rights or the Rights Certificates (except its countersignature

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thereof) or be
required to verify the same, but all such statements and recitals are and will be deemed to have
been made by the Company only.

          (e) The Rights Agent will not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the validity or execution of any certificate,
if any, for securities purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the Company of any covenant
or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible
for any change in the exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b)) or any adjustment required under the provisions of Section 2.4, 3.1 or 3.2 or
responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights after receipt of the certificate contemplated by Section 2.4 describing
any such adjustment); nor will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any securities purchasable upon exercise of
Rights or any Rights Certificate or as to whether any securities purchasable upon exercise of
Rights will, when issued, be duly and validly authorized, executed, issued and delivered and fully
paid and nonassessable.

          (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.

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     (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any person believed by the Rights Agent to an officer
of the Company, and to apply to such persons for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such person.

     (h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent
may buy, sell or deal in Common Stock, Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

     (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent will not be answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.

     4.4 Change of Rights Agent. The Rights Agent may resign and be discharged from its duties under this Agreement upon 90
days’ notice (or such lesser notice as is acceptable to the Company) in writing mailed to the
Company and to each transfer agent of Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.10. The Company may remove the Rights Agent
upon 30 days’ notice in writing, mailed to the Rights Agent and to each transfer agent of the
Common Stock by registered or certified mail, and

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to the holders of the Rights in accordance with
Section 5.10. If the Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make
such appointment within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of any Rights (which holder shall, with such notice, submit such holder’s Rights Certificate
for inspection by the Company), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a Person organized and doing business under
the laws of the United States or any state of the United States, in good standing, that is
authorized under such laws to exercise the powers of the Rights Agent contemplated by this
Agreement and is subject to supervision or examination by federal or state authority and that has
at the time of its appointment as Rights Agent a combined capital and surplus of at least
$100,000,000. After appointment, the successor
Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the holders of the Rights. Failure to give any notice
provided for in this Section 4.4, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.

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ARTICLE V

MISCELLANEOUS

     5.1 Redemption. (a) The Board of Directors of the Company may, at its option, at any time prior to the
Flip-in Date, elect to redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price and the Company, at its option, may pay the Redemption Price either in cash or
shares of Common Stock or other securities of the Company deemed by the Company’s Board of
Directors, in the exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price.

     (b) Immediately upon the action of the Board of Directors of the Company electing to redeem
the Rights (or, if the resolution of the Board of Directors electing to redeem the Rights states
that the redemption will not be effective until the occurrence of a specified future time or event,
upon the occurrence of such future time or event), without any further
action and without any notice, the right to exercise the Rights will terminate and each Right,
whether or not previously exercised, will thereafter represent only the right to receive the
Redemption Price in cash or securities, as determined by the Company’s Board of Directors.
Promptly after the Rights are redeemed, the Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding Rights by mailing such notice in accordance
with Section 5.10.

     5.2 Shareholder Referendum for Qualifying Offers. (a) In the event the Company receives a Qualifying Offer and the Board of Directors has not
redeemed the outstanding Rights or exempted such offer from the terms of this Agreement or called a
special meeting of shareholders for the purpose of voting on whether or not to exempt such
Qualifying Offer from the terms of this Agreement, in each case by the end of the ninety (90)
Business Days

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following the commencement of such Qualifying Offer within the meaning of Rule
14d-2(a) under the Exchange Act, the holders of record (or their duly authorized proxy) of at least
ten percent (10%) or more of the shares of Common Stock then outstanding (excluding shares of
Common Stock that are Beneficially Owned by the Person making the Qualifying Offer) (the
“Requisite Percentage”) may submit to the Board of Directors of the Company, not earlier
than ninety (90) Business Days nor later than 120 Business Days following the commencement of such
Qualifying Offer within the meaning of Rule 14d-2(a) under the Exchange Act, a written demand
complying with the terms of this Section 5.2 (the “Special Meeting Demand”) directing the
Board of Directors of the Company to submit to a vote of shareholders at a special meeting of the
shareholders of the Company (a “Special Meeting”) a resolution exempting such Qualifying
Offer from the provisions of this Agreement (the “Qualifying Offer Resolution”).

     (b) No shareholder may demand that the Board of Directors of the Company call a Special
Meeting of the shareholders pursuant to Section 5.2(a) unless a shareholder of record (other than
the Person making the Qualifying Offer) has first submitted a request in writing that the Board of
Directors of the Company fix a record date for the purpose of determining the shareholders entitled
to demand that the Board of Directors call a Special Meeting, which request shall be in proper form
and delivered to, or mailed and received by, the Secretary of the Company at the principal
executive offices of the Company.

     (c) To be in proper form for purposes of this Section 5.2, a request by a shareholder for the
Board of Directors of the Company to fix a record date shall set forth the information required by
Section 3(c) of the Amended and Restated Bylaws of the Company.

     (d) Within ten (10) days after receipt of a request to fix a record date in proper form and
otherwise in compliance with this Section 5.2 from any shareholder of record (other

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than the Person
making the Qualifying Offer), the Board of Directors of the Company may adopt a resolution fixing a
record date for the purpose of determining the shareholders entitled to demand that the Board of
Directors call a Special Meeting, which date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors and shall not be later than the
twentieth (20th) day after the date on which such a request is received. If no resolution fixing a
record date has been adopted by the Board of Directors within the ten (10) day period after the
date on which such a request to fix a record date was received, the record date in respect thereof
shall be deemed to be the twentieth (20th) day after the date on which such a request is received.

     (e) Without qualification, a Special Meeting of the shareholders shall not be called pursuant
to 5.2(a) unless shareholders of record as of the record date fixed in accordance
with Section 5.2(d) who hold, in the aggregate, more than the Requisite Percentage timely
provide one or more Special Meeting Demands in writing and in proper form to the Secretary of the
Company at the principal executive offices of the Company. Only shareholders of record on the
record date shall be entitled to demand that the Board of Directors of the Company call a Special
Meeting of the shareholders pursuant to Section 5.2(a). To be timely, a Special Meeting Demand
must be delivered to, or mailed and received at, the principal executive offices of the Company not
earlier than ninety (90) Business Days nor later than 120 Business Days following the commencement
of a Qualifying Offer within the meaning of Rule 14d-2(a) under the Exchange Act. To be in proper
form for purposes of this Section 5.2, a Special Meeting Demand shall set forth (i) the text of the
Qualifying Offer Resolution and (ii) with respect to any shareholder or shareholders submitting a
Special Meeting Demand (except for any shareholder that has provided such demand in response to a
solicitation made pursuant to, and in accordance

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with, Section 14(a) of the Exchange Act by way of
a solicitation statement filed on Schedule 14A) (a “Solicited Shareholder”) the information
required to be provided pursuant to Section 5.2(c) of a Requesting Person. A shareholder may
revoke a Special Meeting Demand by written revocation delivered to the Secretary at any time prior
to the Special Meeting. If any such revocation(s) are received by the Secretary after the
Secretary’s receipt of Special Meeting Demands from the holders of the Requisite Percentage of
shareholders, and as a result of such revocation(s), there no longer are unrevoked Special Meeting
Demands from the Requisite Percentage of shareholders to call a Special Meeting, the Board of
Directors shall have the discretion to determine whether or not to proceed with the Special
Meeting.

     (f) After receipt of Special Meeting Demands in proper form and in accordance with this
Section 5.2 from a shareholder or shareholders holding the Requisite Percentage, the
Board of Directors of the Company shall take such actions as are necessary or desirable to
cause the Qualifying Offer Resolution to be so submitted to a vote of shareholders at a Special
Meeting to be convened within ninety (90) Business Days following the Special Meeting Demand;
provided, however, that if the Company at any time during the Special Meeting Period and prior to a
vote on the Qualifying Offer Resolution enters into a Definitive Acquisition Agreement, the Special
Meeting Period may be extended (and any Special Meeting called in connection therewith may be
cancelled) if the Qualifying Offer Resolution will be separately submitted to a vote at the same
meeting as the Definitive Acquisition Agreement (the “Special Meeting Period”). Subject to
the requirements of applicable law, the Board of Directors of the Company may take a position in
favor of or opposed to the adoption of the Qualifying Offer Resolution, or no position with respect
to the Qualifying Offer Resolution, as it determines to be appropriate in the exercise of its
fiduciary duties.

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     (g) In the event that no Person has become an Acquiring Person prior to the Exemption Date (as
defined below) and the Qualifying Offer continues to be a Qualifying Offer and either (i) the
Special Meeting is not convened on or prior to the last day of the Special Meeting Period (the
“Outside Meeting Date”), or (ii) if, at the Special Meeting at which a quorum is present, a
majority of the shares of Common Stock present or represented by proxy at the Special Meeting and
entitled to vote thereon as of the record date for the Special Meeting selected by the Board of
Directors shall vote in favor of the Qualifying Offer Resolution, then the Qualifying Offer shall
be deemed exempt from the application of this Agreement to such Qualifying Offer so long as it
remains a Qualifying Offer, such exemption to be effective on the close of business on the tenth
(10th) Business Day after (i) the Outside Meeting Date or (ii) the date on which the
results of the vote on the Qualifying Offer Resolution at the Special Meeting
are certified as official by the appointed inspectors of election for the Special Meeting, as
the case may be (the “Exemption Date”). Notwithstanding anything herein to the contrary, no
action or vote, including action by written consent, by shareholders not in compliance with the
provisions of this Section 5.2 shall serve to exempt any offer from the terms of this Agreement.

     (h) Immediately upon the close of business on the Exemption Date, without any further action
and without any notice, the right to exercise the Rights with respect to the Qualifying Offer will
terminate.

     5.3 Expiration. The Rights and this Agreement shall expire at the Expiration Time and no Person shall have
any rights pursuant to this Agreement or any Right after the Expiration Time, except, if the Rights
are exchanged or redeemed, as provided in Section 3.1 or 5.1, respectively.

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     5.4 Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may
be approved by its Board of Directors to reflect any adjustment or change in the number or kind or
class of shares of stock purchasable upon exercise of Rights made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock
by the Company following the Separation Time and prior to the Expiration Time pursuant to the terms
of securities convertible or redeemable into shares of Common Stock (other than any securities
issued or issuable in connection with the exercise or exchange of Rights) or to options, in each
case issued or granted prior to, and outstanding at, the Separation Time, the Company shall issue
to the holders of such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance
or sale of such shares of Common Stock; provided, however, in each case, (i)
no such Rights Certificate shall be issued, if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of material adverse tax
consequences to the Company or to the Person to whom such Rights Certificates would be issued, (ii)
no such Rights Certificates shall be issued if, and to the extent that, appropriate adjustment
shall have otherwise been made in lieu of the issuance thereof, and (iii) the Company shall have no
obligation to distribute Rights Certificates to any Acquiring Person or Related Person of an
Acquiring Person or any transferee of any of the foregoing.

     5.5 Supplements and Amendments. The Company and the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Rights (i) prior to the Flip-in Date, in any respect and
(ii) on or after the Flip-in Date, to make

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any changes that the Company may deem necessary or
desirable and that shall not materially adversely affect the interests of the holders of Rights
generally or in order to cure any ambiguity or to correct or supplement any provision contained
herein which may be inconsistent with any other provisions herein or otherwise defective. Upon the
delivery of a certificate from an appropriate officer of the Company which states that a proposed
supplement or amendment is in compliance with this Section 5.5, the Rights Agent will duly execute
and deliver such supplement or amendment requested by the Company, provided that any
supplement or amendment shall become effective immediately upon execution by the Company, whether
or not also executed by the Rights Agent.

     5.6 Fractional Shares. If the Company elects not to issue certificates representing (or register on the stock
transfer books of the Company) fractional shares upon exercise, redemption or exchange of
Rights, the Company shall, in lieu thereof, in the sole discretion of the Board of Directors,
either (a) evidence such fractional shares by depositary receipts issued pursuant to an appropriate
agreement between the Company and a depositary selected by it, providing that each holder of a
depositary receipt shall have all of the rights, privileges and preferences to which such holder
would be entitled as a beneficial owner of such fractional share, or (b) pay to the registered
holder of such Rights the appropriate fraction of the Market Price per share in cash.

     5.7 Rights of Action. Subject to the terms of this Agreement (including Sections 3.1(b) and 5.15), rights of
action in respect of this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such holder’s own behalf
and for such holder’s own benefit and the benefit of

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other holders of Rights, enforce, and may
institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise
act in respect of, such holder’s right to exercise such holder’s Rights in the manner provided in
such holder’s Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Agreement.

     5.8 Holder of Rights Not Deemed a Shareholder. No holder, as such, of any Rights shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of shares or any other securities that may at any time be
issuable on the exercise of such Rights, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting shareholders (except as
provided in Section 5.9), or to receive dividends or subscription rights, or otherwise, until such
Rights shall have been exercised or exchanged in accordance with the provisions hereof.

     5.9 Notice of Proposed Actions. In case the Company shall propose at or after the Separation Time and prior to the
Expiration Time (i) to effect or permit a Flip-over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall
give to each holder of a Right, in accordance with Section 5.10, a notice of such proposed action,
which shall specify the date on which such Flip-

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over Transaction or Event, liquidation,
dissolution, or winding up is to take place, and such notice shall be so given at least 20 Business
Days prior to the date of the taking of such proposed action.

     5.10 Notices. Notices or demands authorized or required by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights to or on the Company shall be sufficiently given or
made if delivered or sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:

The St. Joe Company

133 South WaterSound Parkway

WaterSound, Florida 32413

Attention: Secretary

Any notice or demand authorized or required by this Agreement to be given or made by the Company or
by the holder of any Rights to or on the Rights Agent shall be sufficiently given or made if
delivered or sent by first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, NY 11219

Attention: General Counsel

Notices or demands authorized or required by this Agreement to be given or made by the Company or
the Rights Agent to or on the holder of any Rights shall be sufficiently given or made if delivered
or sent by first-class mail, postage prepaid, addressed to such holder at the address of such
holder as it appears upon the registry books of the Rights Agent or, prior to the Separation Time,
on the registry books of the transfer agent for the Common Stock. Any notice

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which is mailed in
the manner herein provided shall be deemed given, whether or not the holder receives the notice.

     5.11 Suspension of Exercisability. To the extent that the Board of Directors of the Company determines in good faith that some
action will or need be taken pursuant to Section 3.1 or to comply with federal or state securities
laws, the Board of Directors of the Company may suspend the exercisability of the Rights for a
reasonable period in order to take such action or comply with such laws. In the event of any such
suspension, the Company shall issue as promptly as practicable a public announcement stating that
the exercisability or exchangeability of the Rights has been temporarily suspended. Notice thereof
pursuant to Section 5.10 shall not be required.

     Failure to give a notice pursuant to the provisions of this Agreement shall not affect the
validity of any action taken hereunder.

     5.12 Costs of Enforcement. The Company agrees that if the Company or any other Person the securities of which are
purchasable upon exercise of Rights fails to fulfill any of its obligations pursuant to this
Agreement, then the Company or such Person will reimburse the holder of any Rights for the costs
and expenses (including legal fees) incurred by such holder in actions to enforce such holder’s
rights pursuant to any Rights or this Agreement.

     5.13 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or
the Rights Agent shall bind and inure to the benefit of their respective successors and assigns
hereunder.

     5.14 Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the holders of the Rights any legal or equitable right, remedy or claim under
this Agreement and this Agreement shall be

-52-

 

for the sole and exclusive benefit of the Company, the
Rights Agent and the holders of the Rights.

     5.15 Determination and Actions by the Board of Directors, etc. The Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the foregoing) done or
made by the Board, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board of Directors of the
Company to any liability to the holders of the Rights. Nothing contained herein shall be construed
to suggest or imply that the Board of Directors shall not be entitled to reject any Qualifying
Offer or any other tender offer or other acquisition proposal, or to recommend that holders of
Common Stock reject any Qualifying Offer or any other tender offer or other acquisition proposal,
or to take any other action (including, without limitation, the commencement, prosecution, defense
or settlement of any litigation and the submission of additional or alternative offers or other
proposals) with respect to any Qualifying Offer or any other tender offer or other acquisition
proposal that the Board of Directors believes is necessary or appropriate in the exercise of such
fiduciary duty.

     5.16 Descriptive Headings; Section References. Descriptive headings appear herein for convenience only and shall not control or affect the
meaning or construction of any of

-53-

 

the provisions hereof. Where a reference in this Agreement is
made to a Section, such reference shall be to a Section of this Agreement unless otherwise
indicated.

     5.17 GOVERNING LAW. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF FLORIDA AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE
TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.

     5.18 Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.

     5.19 Severability. If any term or provision hereof or the application thereof to any circumstance shall, in
any jurisdiction and to any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions hereof or the
application of such term or provision to circumstances other than those as to which it is held
invalid or unenforceable.

-54-

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	THE ST. JOE COMPANY

 	 
	 	By:  	/s/
Wm. Britton Greene 	 
	 	 	Name:  	Wm. Britton Greene 	 
	 	 	Title:  	President and CEO 	 
	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 	 
	 	By:  	/s/
David H. Brill 	 
	 	 	Name:  	David H. Brill 	 
	 	 	Title:  	General Counsel 	 

[Signature Page to Shareholder Protection Rights Agreement]

 

EXHIBIT A

Form of Rights Certificate (Together with Form of Election to Exercise)

	 	 	 

	Certificate No. R-

	 	_______ Rights

	 	 	NOT EXERCISABLE AFTER FEBRUARY 15, 2014 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT TO AN AGREEMENT
THAT DOES NOT CONSTITUTE A FLIP-OVER TRANSACTION OR EVENT OR UPON THE EARLIER
EXPIRATION TIME (AS DEFINED IN THE AGREEMENT) OF THE RIGHTS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 3.1(b) OF THE
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS
DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS, WILL BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

THE ST. JOE COMPANY

          This certifies that ________________, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of February 15, 2011, as the same may
be amended from time to time (the “Agreement”), between The St. Joe Company, a Florida corporation
(the “Company”), and American Stock Transfer & Trust Company, LLC, a Delaware limited liability
company, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the
Separation Time and prior to 5:00 P.M. (New York time) on February 15, 2014, at the offices of the
Rights Agent, or its successors as Rights Agent, designated for such purpose, one-half of one fully
paid, nonassessable share of Common Stock, no par value (the “Common Stock”), of the Company, at a
purchase price of $50.00 per one-half share of Common Stock, subject to adjustment (the “Purchase
Price”), upon

 

 

presentation and surrender of this Right Certificate with the Form of Election to Purchase and
certification duly executed. The number of Rights evidenced by this Right Certificate (and the
number of shares of Common Stock which may be purchased upon exercise thereof) set forth above, and
the Purchase Price set forth above, are the number and Purchase Price as of February 15, 2011,
based on the Common Stock as constituted at such date. Capitalized terms used in this Right
Certificate without definition shall have the meanings ascribed to them in the Agreement. As
provided in the Agreement, the Purchase Price and the number of shares of Common Stock which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

          This Right Certificate is subject to all of the terms, provisions and conditions of the
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent,
the Company and the holders of the Right Certificates. Copies of the Agreement are on file at the
principal offices of the Company and the Rights Agent.

          This Right Certificate, with or without other Right Certificates, upon surrender at the
offices of the Rights Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not
exercised.

 

 

          Subject to the provisions of the Agreement, the Board of Directors of the Company may, at its
option, (i) redeem the Rights evidenced by this Right Certificate at a redemption price of $.01 per
Right or (ii) exchange Common Stock for the Rights evidenced by this Certificate, in whole or in
part.

          No fractional Common Stock will be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment will be made, as provided in the Agreement.

          No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Common Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall anything contained in
the Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of directors or upon any
matter submitted to shareholder at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting shareholders (except
as provided in the Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in
the Agreement.

          If any term, provision, covenant or restriction of the Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of the Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

          This Right Certificate shall not be valid or binding for any purpose until it shall have been
countersigned by the Rights Agent.

 

 

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

Dated as of __________, 20__.

	 	 	 

	Attest:

	 	THE ST. JOE COMPANY

	 	 	 	 	 	 	 

	By

	 	 	 	By	 	 
	 

	 	 
	 	 	 	 
	 

	 	Title:
	 	 	 	Title:

Countersigned:

AMERICAN STOCK TRANSFER &

TRUST COMPANY, LLC,

as Rights Agent

By

      Authorized Signature               

 

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder

desires to transfer the Right Certificate.)

	 	 	 

	FOR VALUE RECEIVED
	 	 
	 

	 	 

	 	 	 	 	 

	hereby sells, assigns and transfers unto

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

(Please print name and address

of transferee)

Rights evidenced by this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint                     Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of substitution.

Dated:                    

                                                            

Signature

Signature Medallion Guaranteed:

                                                            

          Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended, which is a member of a
recognized Medallion Signature Guarantee Program.

 

 

The undersigned hereby certifies that:

	 	1.	 	the Rights evidenced by this Right Certificate are not Beneficially Owned by and
are not being assigned to an Acquiring Person or a Related Person of an Acquiring
Person; and
	 
	 	2.	 	after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or a Related Person
of an Acquiring Person.

Dated:                                        

                                                            

Signature

 

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise the Right Certificate.)

To: THE ST. JOE COMPANY

     The undersigned hereby irrevocably elects to exercise __________________ Rights represented by
this Right Certificate to purchase the Common Stock issuable upon the exercise of such Rights (or
such other securities or property of the Company or of any other Person which may be issuable upon
the exercise of the Rights) and requests that certificates for such stock (or such other securities
or property of the Company or of any other Person which may be issuable upon the exercise of the
Rights) be issued in the name of (or to, as the case may be):

____________________________________________

(Please print name and address)

___________________________________________________

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:

Please insert social security

or other identifying number__________________________________________

__________________________________________________

                (Please print name and address)

__________________________________________________

Dated: __________________

                                                            

Signature

Signature Medallion Guaranteed:

                                                            

 

 

     Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended, which is a member of a
recognized Medallion Signature Guarantee Program.

 

 

The undersigned hereby certifies that:

	 	1.	 	the Rights evidenced by this Right Certificate are not Beneficially Owned by and
are not being assigned to an Acquiring Person or a Related Person of an Acquiring
Person; and
	 
	 	2.	 	after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or a Related Person
of an Acquiring Person.

Dated:_______________

                                                            

Signature

NOTICE

     The signature in the foregoing Form of Assignment and Form of Election to Purchase must
conform to the name as written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.

     In the event the certification set forth above in the Form of Assignment or Form of Election
to Purchase is not completed, the Company will deem the Beneficial Owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or a Related Person of an Acquiring Person and
such Assignment or Election to Purchase will not be honored.exv10w3

Exhibit 10.3

     This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of November
29, 2010, is entered into by and between REVLON CONSUMER PRODUCTS CORPORATION, a Delaware
corporation (“RCPC” and, together with its parent Revlon, Inc. (“Revlon”) and its subsidiaries, the
“Company”), and David Kennedy (the “Executive”).

     WHEREAS, RCPC wishes to continue to employ the Executive and the Executive wishes to accept
continued employment with the Company on the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, RCPC and the Executive hereby agree as follows:

     1. Employment, Duties and Acceptance.

          1.1 Employment, Duties. RCPC hereby employs the Executive for the Term (as defined in
Section 2.1) to render services to the Company, in the capacity of Vice Chairman of the Board of
Directors of Revlon and RCPC, reporting to the Board of Directors of each of Revlon and RCPC, and
to perform such other duties and responsibilities consistent with such position (including
continuing to serve as a director of Revlon and RCPC and additional service as a director or
officer of any subsidiary of Revlon, if elected), as may be assigned by the Board of Directors of
Revlon. The Executive’s title shall be Vice Chairman of the Board of Directors of Revlon and RCPC.
The Executive’s duties shall include, without limitation, oversight of the formulation of the
Company’s strategy, including strategy related to brand equity, new products and innovation
processes and capabilities and talent development and succession planning for the Company’s key
employees. RCPC agrees to use its best efforts to cause the Executive to continue to be elected to
the Board of Directors of Revlon and of RCPC, so that the Executive may continue to serve as a
member of both Boards throughout the Term.

          1.2 Acceptance. The Executive hereby accepts such employment and agrees to render the
services described above. During the Term, the Executive agrees to serve the Company faithfully
and to the best of the Executive’s ability, and to use the Executive’s best efforts, skill and
ability to promote the Company’s interests.

          1.3 Performance Warranty. As an inducement for the Company to enter into this
Agreement, the Executive hereby represents that he is not a party to any contract, agreement or
understanding which prevents, prohibits or limits him in any way from entering into and fully
performing his obligations under this Agreement and any duties and responsibilities that may be
assigned to the Executive hereunder.

     2. Term of Employment; Certain Post-Term Benefits.

          2.1 The Term. The term of the Executive’s employment under this Agreement (the
“Term”) shall commence as of the date first set forth above (the “Effective Date”) and shall end
twenty-four months after RCPC provides to the Executive a notice of non-renewal, unless in either
case sooner terminated pursuant to Section 4. Non-extension of the Term shall not be

 

 

deemed to be a breach of this Agreement by RCPC for purposes of Section 4.4. Additionally, the
Executive may terminate the Term at any time upon sixty (60) days’ prior written notice to the
Company and such termination shall not be deemed a breach of this Agreement. During any period
that the Executive’s employment shall continue following the end of the Term, the Executive shall
be deemed an employee at will, provided, however, that the Executive shall be eligible for
severance on the terms and subject to the conditions of the Revlon Executive Severance Pay Plan as
in effect from time to time, or such plan or plans, if any, as may succeed it (the “Executive
Severance Plan”), provided that the Severance Period for the Executive under the Executive
Severance Plan shall be 24 months, subject to the terms and conditions of such plan.

          2.2 Special Curtailment. The Term shall end earlier than the date provided in Section
2.1, if sooner terminated pursuant to Section 4.

     3. Compensation; Benefits.

          3.1 Salary. As compensation for all services to be rendered pursuant to this
Agreement, RCPC agrees to pay the Executive during the Term a base salary, payable in bi-weekly
arrears, at the annual rate of not less than $150,000 (the “Base Salary”). All payments of Base
Salary or other compensation hereunder shall be less such deductions or withholdings as are
required by applicable law and regulations. The Base Salary shall be reviewed by Revlon’s Board of
Directors or Compensation Committee from time to time. In the event that Revlon’s Board of
Directors or Compensation Committee, in its sole discretion, determines to increase the Base
Salary, such increased amount shall, from and after the effective date of the increase, constitute
“Base Salary” for purposes of this Agreement.

          3.2 Incentive Compensation. The Executive shall not be eligible for further awards
under the Third Amended and Restated Revlon, Inc. Stock Plan (the “Stock Plan”), the Revlon
Executive Incentive Compensation Plan, or any plan that may replace either of such plans.

          3.3 Business Expenses. RCPC shall pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by the Executive during the Term in the performance of the
Executive’s services under this Agreement, subject to and in accordance with the Revlon Travel and
Entertainment Policy as in effect from time to time, or such policy or policies, if any, as may
succeed it.

          3.4 Vacation. During each year of the Term, the Executive shall be entitled to a
vacation period or periods in accordance with the vacation policy of the Company as in effect from
time to time, but not less than four weeks.

          3.5 Fringe Benefits. During the Term, the Executive shall be entitled to participate
in those qualified and non-qualified defined benefit, defined contribution, group life insurance,
medical, dental, disability and other benefit plans and programs of the Company as from time to
time in effect (or their successors) generally made available to other executives of the
Executive’s level and in such other plans and programs and in such perquisites as may be generally
made available to senior executives of the Company of the Executive’s level generally (other than
the Company’s incentive compensation plans). Further, during the Term, the

2

 

Executive will be
eligible (a) to participate in Revlon’s Executive Financial Counseling and Tax Preparation Program,
as from time to time in effect, or such program or programs, if any, as may succeed it, and (b) to
receive a car allowance at the rate of $15,000 per annum, which is intended to cover lease,
insurance, operating and maintenance costs under the car allowance program as in effect from time
to time, or such program or programs, if any, as may succeed it.

     4. Termination.

          4.1 Death. If the Executive shall die during the Term, the Term shall terminate and
no further amounts or benefits shall be payable hereunder, other than (i) for accrued, but unpaid,
Base Salary as of such date and (ii) pursuant to life insurance provided under Section 3.5.

          4.2 Disability. If during the Term the Executive shall become physically or mentally
disabled, whether totally or partially, such that the Executive is unable to perform the
Executive’s services hereunder for (i) a period of six consecutive months or (ii) shorter periods
aggregating six months during any twelve month period, RCPC may at any time after the last day of
the six consecutive months of disability or the day on which the shorter periods of disability
shall have equaled an aggregate of six months, by written notice to the Executive (but before the
Executive has returned to active service following such disability), terminate the Term and no
further amounts or benefits shall be payable hereunder.

          4.3 Cause. RCPC may at any time by written notice to the Executive terminate the Term
for “Cause” and, upon such termination, the Executive shall be entitled to receive no further
amounts or benefits hereunder, except for accrued, but unpaid, salary as of such date and as
required by law. As used herein the term “Cause” shall mean gross neglect by the Executive of the
Executive’s duties hereunder, conviction of the Executive of any felony, conviction of the
Executive of any lesser crime or offense involving the property of the Company or any of its
affiliates, misconduct by the Executive in connection with the performance of the Executive’s
duties hereunder or other material breach by the Executive of this Agreement (specifically
including, without limitation, Section 1.3), any breach of the Revlon Code of Business Conduct, or
the Employee Agreement as to Confidentiality and Non-Competition, or any other conduct on the part
of the Executive which would make the Executive’s continued employment by the Company prejudicial
in any material respect to the best interests of the Company.

          4.4 Company Breach; Other Termination. The Executive shall be entitled to terminate
the Term and the Executive’s employment upon 60 days’ prior written notice (if during such period
RCPC fails to cure any such breach) in the event that RCPC materially breaches any of its
obligations hereunder. In addition, RCPC shall be entitled to terminate the Term and the
Executive’s employment at any time and without prior notice (otherwise than pursuant to the
provisions of Section 4.2 or 4.3). In consideration of the Executive’s covenant in Section 5.2,
upon termination under this Section 4.4 by the Executive, or in the event RCPC so terminates the
Term otherwise than pursuant to the provisions of Section 4.2 or 4.3, RCPC agrees, and the
Company’s sole obligation arising from such termination shall be, for RCPC either:

               (i) to make payments in lieu of Base Salary in the amounts prescribed by Section 3.1 and to
continue the Executive’s participation in the medical, dental and group life

3

 

insurance plans and
other perquisites of the Company in which the Executive was entitled to
participate pursuant to Section 3.5 (in each case less amounts required by law to be withheld)
through the date on which the Term would have expired pursuant to Section 2.1, if RCPC had given
notice of non-renewal on the date of termination (such period shall be referred to as the
“Severance Period”), provided that (1) such benefit continuation is subject to the terms of such
plans, (2) life insurance continuation is subject to a limit of two years, (3) the Executive shall
cease to be covered by medical and/or dental plans of the Company at such time as the Executive
becomes covered by like plans of another company, (4) the Executive shall, as a condition, execute
such release, confidentiality, non-competition and other covenants as would be required in order
for the Executive to receive payments and benefits under the Executive Severance Plan referred to
in clause (ii) below, and (5) any cash compensation paid or payable or any non-cash compensation
paid or payable in lieu of cash compensation earned by the Executive from other employment or
consultancy during such period (but not including any pension or retirement benefits payable by The
Coca Cola Company or Coca Cola Amatil Limited) shall reduce the payments provided for herein
payable with respect to such other employment or consultancy, or

               (ii) to make the payments and provide the benefits prescribed by the Executive Severance Plan
of the Company as in effect from time to time, upon the Executive’s compliance with the terms and
conditions thereof, provided that the Severance Period for the Executive shall be 24 months.

The Company shall provide the greater of the payments and other benefits described under clauses
(i) and (ii) of this Section 4.4; provided, however, if the provision of any benefits
described above would trigger a tax under Section 409A, the Company shall instead promptly pay to
the Executive in a cash lump sum payment an amount equal to the value (based on the then-current
cost to the Company) of such benefits. Any compensation earned by the Executive from other
employment or a consultancy (but not including any pension or retirement benefits payable by The
Coca Cola Company or Coca Cola Amatil Limited) shall reduce the payments required pursuant to
clause (i) above or shall be governed by the terms of the Executive Severance Plan in the case of
clause (ii) above.

          4.5 Litigation Expenses. If RCPC and the Executive become involved in any action, suit
or proceeding relating to the alleged breach of this Agreement by RCPC or the Executive, or any
dispute as to whether a termination of the Executive’s employment is with or without Cause, then if
and to the extent that a final judgment in such action, suit or proceeding is rendered in favor of
the Executive, RCPC shall reimburse the Executive for all expenses (including reasonable attorneys’
fees) incurred by the Executive in connection with such action, suit or proceeding or the portion
thereof adjudicated in favor of the Executive.

          4.6 No Mitigation. In no event shall the Executive be obligated to seek other
employment.

          4.7 Internal Revenue Code Section 409A. Section 409A of the Code (as defined below)
and/or its related rules and regulations (“Section 409A”), imposes additional taxes and interest on
compensation or benefits deferred under certain “nonqualified deferred compensation plans” (as
defined under the Code). These plans may include, among others, nonqualified retirement plans,
bonus plans, stock option plans, employment agreements and severance agreements. The Company
reserves the right to provide compensation or benefits under any

4

 

such plan in amounts, at times and
in a manner that minimizes taxes, interest or penalties as a result of
Section 409A, including any required withholdings, and the Executive agrees to cooperate with
the Company in such actions. Specifically, and without limitation of the previous sentence, if the
Executive is a “specified employee,” as such term is defined under Section 409A (generally one of
the Company’s top 50 highest paid officers), to the extent required under Section 409A, the Company
will not make any payments to the Executive under this Agreement upon a “separation from service,”
as such term is defined under Section 409A, until six months after the Executive’s date of
separation from service or, if earlier, the date of the Executive’s death. Upon expiration of the
six-month period, or, if earlier, the date of the Executive’s death, the Company shall make a
payment to the Executive (or his beneficiary or estate, if applicable) equal to the sum of all
payments that would have been paid to the Executive from the date of separation from service had
the Executive not been a “specified employee” through the end of the six month period, and
thereafter the Company will make all the payments at the times specified in this Agreement or
applicable policy as the case may be. In addition, the Company and the Executive agree that, for
purposes of this Agreement, termination of employment (or any variation thereof) will satisfy all
of the requirements of “separation from service” as defined under Section 409A. For purposes of
this Agreement, the right to a series of installment payments, such as salary continuation or
severance payments, shall be treated as the right to a series of separate payments and shall not be
treated as a right to a single payment. For purposes of this Agreement, the term “Code” shall mean
the Internal Revenue Code of 1986, as amended, including all final regulations promulgated
thereunder, and any reference to a particular section of the Code shall include any provision that
modifies, replaces or supersedes such section.

     5. Protection of Confidential Information; Non-Competition.

          5.1 The Executive acknowledges that the Executive’s services will be unique, that they will
involve the development of Company-subsidized relationships with key customers, suppliers, and
service providers as well as with key Company employees and that the Executive’s work for the
Company will give the Executive access to highly confidential information not available to the
public or competitors, including trade secrets and confidential marketing, sales, product
development and other data and plans which it would be impracticable for the Company to effectively
protect and preserve in the absence of this Section 5 and the disclosure or misappropriation of
which could materially adversely affect the Company. Accordingly, the Executive agrees:

5

 

          5.1.1 except in the course of performing the Executive’s duties provided for in Section 1.1,
not at any time, whether during or after the Executive’s employment with the Company, to divulge to
any other entity or person any confidential information acquired by the Executive concerning the
Company’s or its affiliates’ financial affairs or business processes or methods or their research,
development or marketing programs or plans, any other of its or their trade secrets, any
information regarding personal matters of any directors, officers, employees or agents of the
Company or its affiliates or their respective family members, or any information concerning the
circumstances of the Executive’s employment and any termination of the Executive’s employment with
the Company or any information regarding discussions related to any of the foregoing. The
foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or
causing, participating in, assisting or providing any statement, opinion or information in
connection with the publication of) any diary, memoir, letter, story, photograph, interview,
article, essay, account or description (whether fictionalized or not) concerning any of the
foregoing, publication being deemed to include any presentation or reproduction of any written,
verbal or visual material in any communication medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio programming or commercial or over the
internet. In the event that the Executive is requested or required to make disclosure of
information subject to this Section 5.1.1 under any court order, subpoena or other judicial
process, the Executive will promptly notify RCPC, take all reasonable steps requested by RCPC to
defend against the compulsory disclosure and permit RCPC, at its expense, to control with counsel
of its choice any proceeding relating to the compulsory disclosure. The Executive acknowledges that
all information the disclosure of which is prohibited by this section is of a confidential and
proprietary character and of great value to the Company; and

          5.1.2 to deliver promptly to the Company on termination of the Executive’s employment with the
Company, or at any time that RCPC may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating to the Company’s
business and all property associated therewith, which the Executive may then possess or have under
the Executive’s control.

          5.2 In consideration of RCPC’s covenant in Section 4.4, the Executive agrees (i) in all
respects fully to comply with the terms of the Employee Agreement as to Confidentiality and
Non-Competition referred to in the Executive Severance Plan (the “Non-Competition Agreement”),
whether or not the Executive is a signatory thereof, with the same effect as if the same were set
forth herein in full, and (ii) in the event that the Executive shall terminate the Executive’s
employment otherwise than as provided in Section 4.4, the Executive shall comply with the
restrictions set forth in paragraph 9(e) of the Non-Competition Agreement through the date on which
the Term would then otherwise have expired pursuant to Section 2.1, subject only to the Company
continuing to make payments equal to the Executive’s Base Salary during such period,
notwithstanding the limitation otherwise applicable under paragraph 9(d) thereof or any other
provision of the Non-Competition Agreement.

          5.3 If the Executive commits a breach of any of the provisions of Sections 5.1 or 5.2 hereof,
RCPC shall have the following rights and remedies:

5.3.1 the right and remedy to immediately terminate all further payments and
benefits provided for in this Agreement, except as may otherwise be required by
law in the case of qualified benefit plans;

6

 

5.3.2 the right and remedy to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach will cause irreparable injury to the Company and
that money damages and disgorgement of profits will not provide an adequate
remedy to the Company, and, if the Executive attempts or threatens to commit a
breach of any of the provisions of Sections 5.1 or 5.2, the right and remedy to
be granted a preliminary and permanent injunction in any court having equity
jurisdiction against the Executive committing the attempted or threatened breach
(it being agreed that each of the rights and remedies enumerated above shall be
independent of the others and shall be severally enforceable, and that all of
such rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to RCPC under law or in equity); and

5.3.3 the right and remedy to require the Executive to account for and pay over
to the Company all compensation, profits, monies, accruals, increments or other
benefits (collectively “Benefits”) derived or received by the Executive as the
result of any transactions constituting a breach of any of the provisions of
Sections 5.1 or 5.2 hereof, and the Executive hereby agrees to account for and
pay over such Benefits as directed by RCPC.

          5.4 If any of the covenants contained in Sections 5.1, 5.2 or 5.3, or any part thereof,
hereafter are construed to be invalid or unenforceable, the same shall not affect the remainder of
the covenant or covenants, which shall be given full effect, without regard to the invalid
portions.

          5.5 If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, are held to
be unenforceable because of the duration of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce the duration and/or
area of such provision so as to be enforceable to the maximum extent permitted by applicable law
and, in its reduced form, said provision shall then be enforceable.

          5.6 The parties hereto intend to and hereby confer jurisdiction to enforce the covenants
contained in Sections 5.1, 5.2 and 5.3 upon the courts of any state or country within the
geographical scope of such covenants. In the event that the courts of any one or more of such
states or countries shall hold such covenants wholly unenforceable by reason of the breadth of such
covenants or otherwise, it is the intention of the parties hereto that such determination not bar
or in any way affect RCPC’s right to the relief provided above in the courts of any other states or
countries within the geographical scope of such covenants as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each state or country being
for this purpose severable into diverse and independent covenants.

          5.7 Any termination of the Term or the Executive’s employment shall have no effect on the
continuing operation of this Section 5.

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     6. Inventions and Patents.

          6.1 The Executive agrees that all processes, technologies and inventions (collectively,
“Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable
or not, conceived, developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive’s work with the Company or any of its
subsidiaries or affiliates, are related in any manner to the business (commercial or experimental)
of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company’s
time or with the use of the Company’s facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Company; (b) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive’s inventorship.

          6.2 If any Invention is described in a patent application or is disclosed to third parties,
directly or indirectly, by the Executive within two years after the termination of the Executive’s
employment with the Company, it is to be presumed that the Invention was conceived or made during
the Term.

          6.3 The Executive agrees that the Executive will not assert any rights to any Invention as
having been made or acquired by the Executive prior to the date of this Agreement, except for
Inventions, if any, disclosed to the Company in writing prior to the date hereof.

     7. Intellectual Property.

     Notwithstanding and without limitation of Section 6, the Company shall be the sole owner of
all the products and proceeds of the Executive’s services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages,
programs and other intellectual properties that the Executive may acquire, obtain, develop or
create in connection with or during the Term, free and clear of any claims by the Executive (or
anyone claiming under the Executive) of any kind or character whatsoever (other than the
Executive’s right to receive payments hereunder). The Executive shall, at the request of RCPC,
execute such assignments, certificates or other instruments as RCPC may from time to time deem
necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its
right, title or interest in or to any such properties.

     8. Revlon Code of Business Conduct.

     In consideration of the Company’s execution of this Agreement, the Executive agrees in all
respects to fully comply with the terms of the Revlon Code of Business Conduct, annexed at
Schedule A, whether or not he is a signatory thereof, with the same effect as if the same
were set forth herein in full.

8

 

     9. Indemnification.

     Subject to the terms, conditions and limitations of its by-laws and applicable Delaware law,
RCPC will defend and indemnify the Executive against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to which the Executive
may be made a party, brought by any shareholder of the Company directly or derivatively or by any
third party by reason of any act or omission of the Executive as an officer, director or employee
of the Company or of any subsidiary or affiliate of the Company.

     10. Notices.

     All notices, requests, consents and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered personally,
sent by overnight courier or mailed first class, postage prepaid, by registered or certified mail
(notices mailed shall be deemed to have been given on the date mailed) provided that all notices to
the Company shall be sent simultaneously by fax and email, as follows (or to such other address as
either party shall designate by notice in writing to the other in accordance herewith):

     If to the Company, to:

Revlon Consumer Products Corporation

237 Park Avenue

New York, New York 10017

Attention: Robert K. Kretzman, Executive Vice President, Chief Administrative

Officer and General Counsel

Fax: 212-527-5693

Email: robert.kretzman@revlon.com

     If to the Executive, to the Executive’s principal residence as reflected in the records of the
Company.

     11. General.

          11.1 This Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York applicable to agreements made between residents thereof and to be
performed entirely in New York.

          11.2 The section headings contained herein are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

          11.3 This Agreement sets forth the entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof including any offer letter or term sheets.
No representation, promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.

9

 

          11.4 This Agreement shall be binding on the parties hereto and their successors and permitted
assigns. This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned
by the Executive, nor may the Executive pledge, encumber or anticipate any payments or benefits due
hereunder, by operation of law or otherwise. RCPC may assign its rights, together with its
obligations, hereunder (i) to any affiliate or (ii) to a third party in connection with any sale,
transfer or other disposition of all or substantially all of any business to which the Executive’s
services are then principally devoted, provided that no assignment pursuant to clause (ii) shall
relieve RCPC from its obligations hereunder to the extent the same are not timely discharged by
such assignee.

          11.5 This Agreement may be amended, modified, superseded, canceled, renewed or extended and
the terms or covenants hereof may be waived, only by a written instrument executed by both of the
parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of the breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

          11.6 This Agreement may be executed in two or more counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same instrument.

     12. Subsidiaries and Affiliates. As used herein, the term “subsidiary” shall mean any
corporation or other business entity controlled directly or indirectly by the corporation or other
business entity in question, and the term “affiliate” shall mean and include any corporation or
other business entity directly or indirectly controlling, controlled by or under common control
with the corporation or other business entity in question.

     13. Change of Control

          13.1 Change of Control Payments and Benefits.

               (a) Extension of Term. In the event of any Change of Control, as defined on
Schedule B, the Term of the Executive’s Agreement shall be automatically extended for 24
months from the effective date (the “COC Effective Date”) of any such Change of Control (the
“Extended Term”).

               (b) Benefit Continuation; Bonus and Salary Payment. If during the Extended Term, the
Executive terminates the Term of his employment for “Good Reason” (as defined below in subclause
(b)(iii)) or if the Company terminates the Term of the Executive’s employment other than for
“Cause” (as defined in Section 4.3 of the Agreement):

          (i) to the extent available under applicable law and the Company’s benefit
programs, the Company shall provide for a period of two years from such
termination date all fringe benefits, if any, then provided to the Executive,
including, without limitation, qualified and non-qualified defined benefit, defined

10

 

contribution, insurance, medical, dental, disability, automobile, financial
planning, tax preparation and other benefit plans and programs of the Company as
from time to time in effect (or their successors) in which the Executive
participated on the COC Effective Date. To the extent that such benefits, if any,
are not available under applicable law or the Company’s benefit programs, or such
benefits, if any, would trigger a tax under Section 409A, the Company shall
immediately pay to the Executive in a cash lump sum payment an amount equal to the
value (based on the then current cost to the Company) of such benefits (or the
remaining eligible portion thereof, as the case may be) , if any, and shall have no
further obligation to continue to provide such benefits, if any, under this Section;

          (ii) the Company shall immediately pay to the Executive in a cash lump sum
payment two times the sum of (A) the greater of the Executive’s Base Salary in
effect on (1) the COC Effective Date or (2) such termination date plus (B) the
average amount of the gross bonus amounts earned by the Executive over the five
calendar years preceding such termination.

          (iii) “Good Reason” means, for purposes of this subclause (b) only (and not for
any other purpose or reason under this Agreement): (A) a material adverse change in
the Executive’s job responsibilities; (B) any reduction in the Executive’s Base
Salary; (C) any reduction in the Executive’s aggregate value of benefits, if any; or
(D) the Executive’s being required by the Company to relocate beyond a 50 mile
radius of the Executive’s then current residence.

          (iv) The Executive shall have no duty to mitigate by seeking other employment
or otherwise and no compensation earned by the Executive from other employment, a
consultancy or otherwise shall reduce any payments provided for under this Section
13.1.

               (c) Equity Compensation. In the event of any Change of Control, all then unvested
stock options and restricted shares held by the Executive shall immediately vest and be fully
exercisable and all restrictions shall lapse.

               (d) Governing Provision. In the event of any conflict between this Section 13 of the
Agreement and any other section or provision of the Agreement, the section which provides the
Executive with the most favored treatment in the event of a Change of Control shall govern and
prevail.

          13.2 Section 280G.

               (a) If the aggregate of all amounts and benefits (if any) due to the Executive under this
Agreement or any other plan, program, agreement or arrangement of the Company or any of its
Affiliates, which, if received by the Executive in full, would constitute “parachute payments” as
such term is defined in and under Section 280G of the Code (collectively, “Change of Control
Benefits”), reduced by all Federal, state and local taxes applicable thereto, including the excise
tax imposed pursuant to Section 4999 of the Code, is less than the amount the Executive would
receive, after all such applicable taxes, if the Executive received aggregate Change of Control
Benefits equal to an amount which is $1.00 less than three times the Executive’s “base amount,”

11

 

as
defined in and determined under Section 280G of the Code, then such Change of Control Benefits
shall be reduced or eliminated to the extent necessary so that the Change of Control Benefits
received by the Executive will not constitute parachute payments. If a reduction in the Change of
Control Benefits is necessary, reduction shall occur in the following order unless the Executive
elects in writing a different order, subject to the Company’s consent (which consent shall not be
unreasonably withheld): first, a reduction of cash payments not attributable to equity awards which
vest on an accelerated basis; second, the cancellation of accelerated vesting of stock awards;
third, the reduction of employee benefits, if any; and fourth, a reduction in any other “parachute
payments.” If acceleration of vesting of stock award compensation is to be reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of grant of the
Executive’s stock awards unless the Executive elects in writing a different order for cancellation.

               (b) It is possible that after the determinations and selections made pursuant to Section
13.2(a) above the Executive will receive Change of Control Benefits that are, in the aggregate,
either more or less than the amounts contemplated by Section 13.2(a) above (hereafter referred to
as an “Excess Payment” or “Underpayment”, respectively). If there is an Excess Payment, the
Executive shall promptly repay the Company an amount consistent with this Section 13.2. If there
is an Underpayment, the Company shall pay the Executive an amount consistent with this Section
13.2.

               (c) The determinations with respect to this Section 13.2 shall be made by an independent
auditor (the “Auditor”) compensated by the Company. The Auditor shall be the Company’s regular
independent auditor, unless the Executive objects to the use of that firm, in which event the
Auditor shall be a nationally-recognized United States public accounting firm chosen by the Company
and approved by the Executive (which approval shall not be unreasonably withheld or delayed).

12

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	REVLON CONSUMER PRODUCTS CORPORATION

 	 
	 	By:  	/s/ Robert K. Kretzman
 	 
	 	 	Name:  	Robert K. Kretzman 	 
	 	 	Title:  	Executive Vice President, Chief Administrative Officer and General Counsel 	 
	 
	 	 	 
	 	  	    /s/ David Kennedy
 	 
	 	 	David Kennedy 	 
	 	 	 	 
	 

13

 

SCHEDULE A

REVLON CODE OF BUSINESS CONDUCT

{copy on file}

 

SCHEDULE B

CHANGE IN CONTROL

A “Change of Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

(i) any Person, other than one or more Permitted Holders, is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of
this definition a Person will be deemed to have “beneficial ownership” of all shares that
any such Person has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of the Company; provided that under such circumstances the
Permitted Holders do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of the Company (for the
purposes of this clause (i) and clause (iii), such other Person will be deemed to
beneficially own any Voting Stock of a specified corporation held by a parent corporation,
if such other Person beneficially owns, directly or indirectly, more than 50% of the voting
power of the Voting Stock of such parent corporation and the Permitted Holders do not have
the right or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of such parent corporation);

(ii) during any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new directors
whose election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of 66-2/3% of the directors of the
Company then still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors of the Company then in office;

(iii) the shareholders of the Company approve a plan of complete liquidation or dissolution
of the Company or there is consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets to an entity in which any
Person, other than one or more Permitted Holders is or becomes the Beneficial Owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this
definition a Person will be deemed to have “beneficial ownership” of all shares that any
Person has the right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of securities of such entity representing 50%
or more of the combined voting power of such entity’s Voting Stock, and the Permitted
Holders “beneficially own” (as so defined) directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of such entity than such other
Person and do not have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board of Directors of such entity; or

(iv) a “Change of Control” shall have occurred under, and as defined in, the indenture
governing Revlon Consumer Products Corporation’s 8 5/8% Senior Subordinated Notes Due 2008
or any other Subordinated Obligations of Revlon Consumer Products Corporation so long as
such 8 5/8% Senior Subordinated Notes Due 2008 or Subordinated Obligations are outstanding.

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions immediately following
which the
record holders of the common stock of the Company immediately prior to such transaction or series
of

2

 

transactions continue to have substantially the same combined voting power of the Voting Stock
in an entity which owns all or substantially all of the assets of the Company immediately following
such transaction or series of transactions.

“Capital Stock” of any Person shall mean any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.

“Company” means Revlon, Inc. together with its subsidiaries, including, without limitation, Revlon
Consumer Products Corporation.

“8 5/8% Senior Subordinated Notes Due 2008” means Revlon Consumer Products Corporation’s 8 5/8%
Senior Subordinated Notes due 2008 and any notes exchanged therefor.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

“Permitted Holders” means Ronald O. Perelman (or in the event of his incompetence or death, his
estate, heirs, executor, administrator, committee or other personal representative (collectively,
“heirs”)) or any Person controlled, directly or indirectly, by Ronald O. Perelman or his heirs.

“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any
of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their ownership of stock
of the Company.

“Preferred Stock,” as applied to the Capital Stock of the Company, means Capital Stock of any class
or classes (however designated) which is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or dissolution of the Company,
over shares of Capital Stock of any other class of the Company.

“Subordinated Obligations” has the meaning ascribed thereto in the indenture for Revlon Consumer
Products Corporation’s 91/2% Senior Notes due 2011.

“Voting Stock” means all classes of Capital Stock of the Company then outstanding and normally
entitled to vote in the election of Directors.

3

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