LOAN AGREEMENT

This Loan Agreement (“Agreement”) is entered into as of July 24, 2015 (the
“Effective Date”), by and between FRP DEVELOPMENT CORP., a Maryland corporation,
and FRP Manassas LLC, a Maryland limited liability company (individually and
collectively, “Borrower”), whose address is Attn:  Chief Financial Officer, 200
West Forsyth Street, 7th Floor, Jacksonville, Florida 32202, and FIRST TENNESSEE
BANK NATIONAL ASSOCIATION (“Lender”), whose address, for purposes of this
Agreement, is 2000 West First Street, Suite 100, Winston-Salem, North Carolina
27104, Attention: Commercial Real Estate.

PRELIMINARY STATEMENTS

Lender has agreed to make: (a) a revolving line of credit loan to Borrower in an
amount not to exceed EIGHTEEN MILLION AND NO/100THS DOLLARS ($18,000,000.00) the
proceeds of which are to be used by Borrower to finance future commercial real
estate acquisition and development with primary concentration in the office,
industrial, and warehouse sectors (the “Development Line of Credit”); and (b) a
revolving line of credit loan to Borrower in an amount not to exceed TWO MILLION
AND NO/100THS DOLLARS ($2,000,000.00) the proceeds of which are to be used by
Borrower for general business purposes (the “Working Line of Credit,” and
together with the Development Line of Credit, collectively, the “Loan”).
Pursuant to the Deed of Trust (as defined below), the Loan is secured, in part,
by a lien on the Property and Improvements (as such terms are defined below),
which Property and Improvements are owned and pledged by Borrower FRP Manassas
LLC, a Maryland limited liability company (“Property Grantor”).

In connection with the funding and administration of the Loan, the parties
hereto agree as follows:

ARTICLE 1. DEFINITIONS

The following terms as used in this Agreement or in the other Loan Documents
shall have the following meanings:

1.1.

Appraisal. As defined in Section 4.8 of this Agreement.

1.2.

Authorized Agent. Either Thompson S. Baker II or John D. Milton, Jr. are
authorized to execute and deliver a Request for Advance of Loan Proceeds under
this Agreement.

1.3.

Bankruptcy Code.  Means 11 U.S.C. §101, et seq., as the same may be amended from
time to time.

1.4.

Bankruptcy Proceeding.  Means any voluntary or involuntary petition or other
similar filing for relief under any applicable Debtor Relief Law.

1.5.

Business Day. Any day that is not a Saturday, Sunday or banking holiday in the
State.

 

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1.6.

Costs. All fees, charges, costs and expenses of any nature whatsoever incurred
at any time and from time to time (whether before or after a Default) by Lender
in making, funding, administering or modifying the Loan, in negotiating or
entering into any “workout” of the Loan, or in exercising or enforcing any
rights, powers and remedies provided in the Security Documents or any of the
other Loan Documents, including reasonable attorneys’ fees, court costs,
receiver’s fees, management fees and costs incurred in the repair, maintenance
and operation of, or taking possession of, or selling, the Project.

1.7.

Debtor Relief Law.  Means the Bankruptcy Code, or any other present or future
state or federal law regarding bankruptcy, reorganization or other similar
relief to debtors.

1.8.

Deed of Trust. The Credit Line Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing of even date herewith, from Borrower to
Lender encumbering the Premises and securing repayment of the Obligations.

1.9.

Default. The occurrence of any of the events described in Article 8 of this
Agreement, including expiration of any applicable notice and cure period set
forth therein.

1.10.

Default Rate. A rate equal to the lesser of (a) the interest rate payable under
the Note at the time a Default occurs, plus five percent (5.00%) per annum, and
(b) the highest rate of interest allowed by Law.

1.11.

Development Line of Credit.  As defined in the Preliminary Statements above.

1.12.

Development Note. That certain Promissory Note of even date herewith, from
Borrower to Lender in the principal amount of up to $18,000,000.00, which note
evidences the Development Line of Credit.

1.13.

DSCR.  The debt service coverage ratio for the Project, to be calculated in
accordance with the provisions of this Agreement.

1.14.

DSCR Test Date.  As defined in Section 7.14 of this Agreement.

1.15.

Environmental Due Diligence. Environmental due diligence for the Project
acceptable to Lender, which may include, at Lender’s discretion, a phase I
environmental site assessment.

1.16.

Equity. A minimum of $20,000,000.00 of up-front equity in the Project.

1.17.

Governmental Authority. Any governmental or quasi-governmental entity, including
any court, department, commission, board, bureau, agency, administration,
service, district or other instrumentality of any governmental entity.

1.18.

Guarantor. FRP HOLDINGS, INC., a Florida corporation.

1.19.

Guaranty or Guaranty Agreement. That certain Guaranty and Suretyship Agreement
of even date herewith guaranteeing all the Obligations of Borrower under the
Loan Documents, executed by the Guarantor in favor of Lender.

 

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1.20.

Improvements. The existing improvements on the Land consisting of an
approximately 125,550 square feet industrial building located at 11800 Brewers
Spring Road, an approximately 117,600 square feet industrial building located at
11801 Brewers Spring Road, and an approximately 129,850 square feet industrial
building located at 7600 Doane Drive, Manassas, Prince William County, Virginia,
all of which are situated on the Real Property, together with all amenities and
on-site parking spaces, and together with any future improvements made to the
Project.

1.21.

Indemnity Agreement. That certain Environmental Indemnity Agreement of even date
herewith, signed by Borrower and Guarantor in favor of Lender.

1.22.

Interest Rate Swap. Any agreement, whether or not in writing, relating to any
interest rate swap transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap or option, bond option,
interest rate option (swaption), foreign exchange transaction, interest rate cap
transaction, interest rate floor transaction, interest rate collar transaction,
currency swap transaction, currency option, or any other similar transaction,
including, unless the context otherwise clearly requires, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement, entered into by Borrower (or its
affiliate), in connection with the Loan, together with any related schedule and
confirmation, as amended, supplemented, superseded or replaced from time to
time.

1.23.

Land. The real property described in Exhibit A attached hereto.

1.24.

Laws. All federal, state and local laws, statutes, rules, ordinances,
regulations, codes, licenses, authorizations, decisions, injunctions,
interpretations, orders or decrees of any court or other Governmental Authority
applicable to the Loan and/or having jurisdiction over the Project, as may be in
effect from time to time.

1.25.

Leases. All leases and other similar agreements, whether now existing or
hereafter entered into, for space at the Premises, including all lease
guaranties related thereto, as the same may be amended or modified from time to
time.

1.26.

Loan. Collectively, the Development Line of Credit, as evidenced by the
Development Note, and the Working Line of Credit, as evidenced by the Working
Note. The total amount advanced under the Note shall not exceed fifty percent
(50.00%) of the appraised value of the Project, as determined by Lender based
upon an appraisal provided by Borrower. The terms of the Loan are provided for
herein and in the Note and the other Loan Documents.

1.27.

Loan Documents. The Note, the Security Documents, the Indemnity Agreement, the
Guaranty, any Interest Rate Swap entered into in connection with the Loan, this
Agreement and any other documents or instruments evidencing or securing the
Loan.

1.28.

Loan Proceeds. The Loan funds disbursed or to be disbursed under the Note
pursuant to this Agreement.

 

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1.29.

Maturity Date. July 24, 2020, or such earlier date on or prior to the Conversion
Deadline (as defined in the Note) in the event that the Loan is converted into a
ten (10) year term loan in compliance with the terms of the Note.

1.30.

Net Operating Income.  With respect to any applicable period, all Rents received
under any Lease on a current actual rent roll for tenants occupying space and
paying rent, minus normalized annual expenses acceptable to Lender for such
period, to include a 4.00% management fee and a $0.15 per square foot
replacement reserve.

1.31.

Note. Collectively, the Development Note and the Working Note.

1.32.

Obligations. All present and future debts, obligations and liabilities of
Borrower to Lender arising pursuant to, or on account of, the provisions of this
Agreement, the Note or any of the other Loan Documents, including the
obligations: (a) to pay all principal, interest, late charges, prepayment
premiums (if any) and other amounts due at any time under the Note; (b) to pay
all Costs, expenses, indemnification payments, fees and other amounts due at any
time under the Security Documents or any of the other Loan Documents, together
with interest as provided in the Loan Document; (c) to pay and perform all
obligations of Borrower (or its affiliate) under any Interest Rate Swap; and (d)
to perform, observe and comply with all of the terms, covenants and conditions,
expressed or implied, which Borrower is required to perform, observe or comply
with pursuant to the terms of the Loan Documents.

1.33.

Operating Account.  The operating account of Borrower for the Project, to be
established and maintained with Lender and into which all income and revenue
generated by the Project, including without limitation the security deposits
received by the Borrower from each property tenant, shall be deposited pursuant
to the terms of this Agreement.

1.34.

Person. An individual, a corporation, a partnership, a joint venture, a limited
liability company, a trust, an unincorporated association, any Governmental
Authority or any other entity.

1.35.

Premises or Property. The Land, and all of the estate, right, title and interest
of Borrower at law or in equity in and to the Land, and all of the buildings,
structures and improvements of every nature whatsoever now or hereafter situated
on the Land and all fixtures, machinery, appliances, equipment, furniture and
personal property of every kind whatsoever now or hereafter owned by Borrower
and located in or on, or attached to, and used or intended to be used in
connection with the Land.

1.36.

Project. The operation of the Improvements on the Land, as contemplated by this
Agreement.

1.37.

Property Management Agreement.  Any current or future property management
agreement for the Property between Borrower and the Property Manager, which
agreement shall be subject to the approval of Lender in its reasonable
discretion.

1.38.

Property Manager.  Any current or future property manager for the Project, which
manager shall be subject to the approval of the Lender in its reasonable
discretion. 

 

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1.39.

Release Parcel. As defined in Section 7.17 of this Agreement.

1.40.

Release Price Percentage. As defined in Section 7.17 of this Agreement.

1.41.

Replaced Parcel. As defined in Section 7.18 of this Agreement.

1.42.

Request for Advance. Only with respect to the Development Line of Credit, a draw
request executed by an Authorized Agent and submitted by Borrower on Lender’s
form attached hereto as Exhibit B, together with supporting documentation as may
be required by Lender, and which shall set forth the amount of the Development
Line of Credit requested to be disbursed, and such other statements as Lender
may require to process the request and administer the Development Line of
Credit.

1.43.

Rents.  Means all of the rents, royalties, issues, profits, revenues, earnings,
income and other benefits of the Property, or arising from the use or enjoyment
of the Property, including all such amounts paid under or arising from any of
the Leases and all fees, charges, accounts or other payments for the use or
occupancy of rooms or other public facilities within the Property.

1.44.

Security Documents. The Deed of Trust, any UCC financing statements registered
in connection with the Loan, the Assignment of Management Agreement, and any and
all other Loan Documents which secure the Obligations.

1.45.

State. The State of North Carolina.

1.46.

Substitute Parcel. As defined in Section 7.18 of this Agreement.

1.47.

Title Insurance Agent. Walker Title, LLC

Contact Information:      11781 Lee Jackson Memorial Highway, Suite 300  
Fairfax, Virginia 22033   Attention: Thomas F. Digges   Telephone: (703)
591-2325   Facsimile: (703) 591-2328

1.48.

Title Insurance Commitment. An American Land Title Association (“ALTA”)
mortgagee’s title insurance commitment to be issued by the Title Insurance
Company in such form as is acceptable to Lender.

1.49.

Title Insurance Company. First American Title Insurance Company.

1.50.

Title Insurance Policy. An ALTA mortgagee’s title insurance policy to be issued
by the Title Insurance Company in the amount of the Note showing fee simple
title to the Premises to be vested in Borrower and insuring the Deed of Trust as
a first lien on the Premises, subject only to exceptions permitted by Lender,
and otherwise in form and substance acceptable to Lender.

1.51.

Working Line of Credit.  As defined in the Preliminary Statements above.

 

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1.52.

Working Note. That certain Promissory Note of even date herewith, from Borrower
to Lender in the principal amount of up to $2,000,000.00, which note evidences
the Working Line of Credit.

ARTICLE 2. WARRANTIES AND REPRESENTATIONS

In consideration for Lender committing to fund the Loan, Borrower hereby
represents and warrants to Lender on the date of this Agreement and continuing
thereafter, as follows:

2.1.

Purpose of Loan. The Development Line of Credit shall be used for the payment of
certain approved transaction costs, to finance and refinance commercial real
estate acquisition and development costs incurred in Borrower’s regular course
of business, and for no other purpose. The Working Line of Credit shall be used
for the general business purposes of Borrower and Guarantor. The Loan is for
commercial purposes. As more particularly set forth in the Development Note,
until such time as the Development Note is converted to a term loan in
compliance with the terms of Section 4 of the Development Note, Borrower may
from time to time borrow, partially or wholly repay its outstanding borrowings,
and reborrow the Development Line of Credit funds, subject to all of the
limitations, terms and conditions of the Development Note, this Agreement, and
of any agreement executed in connection herewith, provided that the outstanding
principal balance of the Development Note shall at no time exceed the
Development Line of Credit amount. As more particularly set forth in the Working
Note, until such time as the Working Note is converted to a term loan in
compliance with the terms of Section 4 of the Working Note, Borrower may from
time to time borrow, partially or wholly repay its outstanding borrowings, and
reborrow the Working Line of Credit funds, subject to all of the limitations,
terms and conditions of the Working Note, this Agreement, and of any agreement
executed in connection herewith, provided that the outstanding principal balance
of the Working Note shall at no time exceed the Working Line of Credit amount.

2.2.

Pending Suits. There are no suits, judgments, bankruptcies or executions pending
or threatened against Borrower or the Premises, which have not been disclosed to
Lender as of the Effective Date.

2.3.

Financial Statements. The Financial Statements delivered by Borrower and
Guarantor to Lender are true and correct in all material respects, fairly
present the respective financial condition of the subject thereof as of the
respective dates thereof, no material adverse change has occurred in the
financial condition reflected therein since the respective dates thereof, and no
additional borrowings have been made by Borrower since the date thereof other
than the borrowing contemplated hereby or other borrowing approved by Lender.

2.4.

No Mechanic’s or Materialmen’s Liens. Borrower has, as of the date hereof,
permitted no work at the Premises or the delivery of any materials to the
Premises which could give rise to a lien on the Premises or the Improvements
that has not been paid in full.

2.5.

No Violation of Other Agreements. The consummation of the transactions
contemplated by this Agreement and the performance of this Agreement and the
other Loan Documents will not result in any breach of, or constitute a Default
under, the Borrower’s organizational documents or any other instrument or
agreement to which Borrower is a party or by which it may be bound or affected.

 

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2.6.

Effect of Request for Advance. Each Request for Advance, and the receipt of the
funds requested thereby, will constitute an affirmation by Borrower that the
representations and warranties of this Article 2 remain true and correct as of
the date thereof and, unless Lender is notified to the contrary prior to the
disbursement of the requested advance, will be so on the date of such advance.
Each Request for Advance shall also constitute a representation and warranty
that the information set forth in such Request for Advance is true and correct.

2.7.

Zoning/Land Use. The Land is zoned to permit the ownership and operation of the
Improvements for the intended purpose, and Borrower has all zoning approvals,
licenses and permits necessary for the ownership and operation of the Project.
The Project includes adequate parking for the operation of the Project in
accordance with applicable law.

2.8.

Access. The Land has access to publicly dedicated rights of way, as necessary,
for the intended use and operation of the Project.

2.9.

Leases. Borrower has provided Lender with a current rent roll and a copy of all
existing Leases. All existing Leases are in full force and effect, and no
default exists under the Leases as at the date hereof.

2.10.

Borrower Organization.  Borrower FRP Development Corp. is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Maryland. Borrower FRP Manassas LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Maryland, and is qualified to transact business in the State of Virginia.
 Borrowers have full power and authority to conduct their business as presently
conducted, to acquire the Property, to enter into this Agreement and the other
Loan Documents, and to perform all of their duties and obligations thereunder. 
Such execution and performance have been duly authorized pursuant to the
Borrowers’ organizational documents.

ARTICLE 3. THE LOAN

3.1.

Use and Purposes. Borrower agrees to borrow from Lender and Lender agrees to
lend to Borrower the Loan Proceeds from time to time upon request as set forth
herein, such Loan Proceeds to be used for the purposes and subject to all of the
terms, provisions and conditions of this Agreement.

3.2.

Advances Secured by Security Documents. All disbursements, advances or payments
made by Lender hereunder, from time to time, and any amounts expended by Lender
under this Agreement or the other Loan Documents, and all other Costs, loan
expenses, including reasonable attorneys fees, as and when advanced or incurred,
will be deemed to be a part of the Obligations and as such will be secured by
the Security Documents to the same extent and effect as if the terms and
provisions of this Agreement were set forth therein.

 

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ARTICLE 4. CONDITIONS TO DISBURSEMENT OF LOAN PROCEEDS

Unless otherwise agreed by Lender in writing, Lender will not be obligated to
close the Loan and disburse any Loan Proceeds unless and until the following
conditions have been satisfied (all in a manner acceptable to Lender):

4.1.

Loan Documents. Borrower shall have furnished or delivered to Lender, in form
and substance acceptable to Lender, the Loan Documents executed by Borrower and
Guarantor, as applicable.

4.2.

Closing Costs. Borrower shall have paid all Costs incurred by Lender in
connection with the Loan, including the reasonable fees of counsel for the
Lender.

4.3.

Financial Statements and Tax Returns. Borrower and Guarantor shall have
delivered to Lender current financial statements for Borrower and Guarantor
certified to be true, correct and complete. Said financial statements must be
current within the last twelve (12) months. Borrower shall have delivered to
Lender complete copies of the 2013 filed tax returns for Borrower and Guarantor.

4.4.

Title Insurance Commitment. Borrower shall have procured the Title Insurance
Commitment, in a form acceptable to Lender.

4.5.

Survey. Borrower shall have provided Lender with current ALTA/ACSM as-built
surveys of the Premises in form and substance satisfactory to Lender, prepared
by a licensed surveyor satisfactory to the Lender, which surveys shall show the
location of all existing Improvements and all easements or encumbrances set
forth in the Title Insurance Commitment and shall comply with Lender’s survey
requirements. The surveys shall include surveyor’s certifications in form and
substance satisfactory to Lender including certifications that the Project is
not in a flood hazard area. The surveys shall be sufficient to allow the Title
Company to issue its Title Insurance Commitment without a general survey
exception and with a “same-as-survey” title endorsement.

4.6.

Insurance. Borrower shall have furnished to Lender evidence, either in the form
of duplicate policies, binders or certificates, acceptable to Lender
(identifying each insurance policy, name of insurer, amount of coverage,
deductible provisions and expiration date) that Borrower has purchased, and has
in full force and effect, policies of insurance, as required by Lender and the
Loan Documents.

4.7.

Evidence of Compliance. Borrower shall have furnished to Lender evidence
satisfactory to Lender that the Land and Improvements are in compliance with all
Laws and all rules and regulations promulgated thereunder, and any restrictions
of record affecting the Premises, including those dealing with condominiums,
horizontal property regimes, building, zoning, environmental impact, setbacks,
Americans With Disabilities Act, wetlands, and safety and pollution control.

4.8.

Appraisal. Lender shall have obtained a narrative appraisal of the Premises and
Improvements, on a completed, stabilized basis, which is satisfactory to Lender
in amount, form and substance (the “Appraisal”). Borrower shall pay for the cost
of the Appraisal.

 

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4.9.

Organizational Documents. Lender shall be provided with a copy of each
Borrower’s and Guarantor’s organizational and formation documents and evidence
of authority to sign this Agreement and the other Loan Documents.

4.10.

Environmental Due Diligence. Lender shall be provided with such Environmental
Due Diligence for the Property as Lender may require, to be in form and content
acceptable to Lender. All reports shall be addressed to Lender. Borrower shall
pay for the cost of the Environmental Due Diligence.

4.11.

Opinion of Counsel. Borrower shall provide Lender with opinions from North
Carolina, Virginia, Maryland and Florida counsel to Borrower and Guarantor, as
applicable, in such form and content as required by Lender.

4.12.

Leases. Lender shall have received and approved executed copies of all Leases.
If required by Lender each Lease shall be accompanied by an executed
subordination, nondisturbance and attornment agreement and an executed estoppel
certificate, each in a form acceptable to Lender.

4.13.

Initial Commitment Fees. Borrower will pay Lender an initial loan commitment fee
for the Development Line of Credit in the amount of $67,500.00 and an initial
loan commitment fee for the Working Line of Credit in the amount of $7,500.00.

4.14.

Annual Commitment Fees. Borrower shall pay Lender an annual loan commitment fee
for the Development Line of Credit in the amount of $18,000.00 and an annual
loan commitment fee for the Working Line of Credit in the amount of $2,000.00,
said fees to be due and payable each year on the anniversary date of this
Agreement.

4.15.

Payoff of Existing Debt. Lender shall have received and approved a payoff letter
for any existing debt being repaid or refinanced with the proceeds of the
Development Line of Credit, which shall be in form and substance acceptable to
Lender.

4.16.

Equity.  The Equity shall be fully funded as of the Effective Date.

4.17.

Property Management Agreement.  If applicable, Lender shall have received and
approved any Property Management Agreement for the Property.

4.18.

Loan to Value Verification. Lender shall be provided evidence satisfactory to
Lender in its sole discretion that the full principal amount of the Loan does
not exceed fifty percent (50.00%) of the approved “as-is” appraised value of the
Project, as determined by Lender based upon a current appraisal provided to
Lender.

4.19.

DSCR Verification.  Lender will not be obligated to close the Loan unless and
until Lender is provided evidence satisfactory to Lender in its sole discretion
that, following said requested disbursement, the Property meets a minimum DSCR
of 1.25 to 1.00 as of the Effective Date. For purposes of this Section, the DSCR
will be based on (A) the forecasted Net Operating Income of the Property for the
12-month period subsequent to closing as supported by the existing Leases for
tenants occupying space and paying rent based on the Appraisal, with normalized
annual expenses customary to the Property, provided that (i) a minimum
management fee of four percent (4.00%) and (ii) minimum replacement reserves of
$0.15 per square foot, shall be used, and (B) debt service equal to computed
debt service at a rate of six and one-quarter percent (6.25%) and an assumed
amortization of fifteen (15) years.

 

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ARTICLE 5. COLLATERAL FOR THE LOAN

The Obligations shall be secured by a first priority lien on the Premises and
all materials and other personal property related to the operation of the
Project, as evidenced by the Security Documents. In addition, the Guarantor
shall execute and deliver the Guaranty Agreement.

ARTICLE 6. REQUIREMENTS FOR EACH DISBURSEMENT

In addition to satisfaction of the conditions set forth in Article 4 of this
Agreement (other than the condition set forth in Section 4.19), Lender will not
be required to make any disbursement of Loan Proceeds unless and until the
following conditions have been satisfied:

6.1.

Warranties and Representations True. All warranties and representations made
hereunder shall remain true and correct in all material respects.

6.2.

Request for Advance. With respect to the Development Line of Credit, a Request
for Advance shall have been submitted by Borrower to Lender, and Lender shall
have up to five (5) Business Days to comply with such Request for Advance.

6.3.

Automated Advances. The Working Line of Credit shall be an automated line of
credit linked to the Operating Account with a “daily sweep” feature. Pursuant to
the terms of that certain Automated Transfer Facility agreement executed by
Borrower and Lender concurrently herewith, principal amounts from the Working
Line of Credit will automatically be deposited in the Operating Account upon (i)
initiation of an electronic funds transfer by Borrower or (ii) a cash shortfall
in the Operating Account, and payments will automatically be made from the
Operating Account when funds are available to reduce any outstanding principal
balance of the Working Line of Credit until it is fully paid down. Transfers to
and from the Working Line of Credit will occur in such manner each Business Day,
as applicable.

6.4.

No Damage. Any structure or improvement on the Premises shall not have been
materially damaged by fire or other casualty unless Lender shall have received
insurance proceeds sufficient, in the sole judgment of Lender, to effect the
satisfactory restoration of the Premises.

6.5.

No Default. No Default shall have occurred which is continuing under this
Agreement, the Loan Documents or any other instrument evidencing, securing or
otherwise relating to the Loan.

6.6.

Updated Title Endorsement. With respect only to a Request for Advance under the
Development Line of Credit, at Lender’s request, the Title Insurance Company
shall give Lender an updated endorsement to the Title Insurance Policy, in a
form acceptable to Lender. Any costs related to such endorsement shall be paid
by Borrower.

 

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6.7.

No Liens. No lien for the performance of work or supplying of labor or materials
to the Project shall have been claimed by written notice, or filed against the
Land, and remain unsatisfied.

6.8.

Material Adverse Change. No material adverse change shall have occurred with
respect to the Project or the financial condition of the Borrower or Guarantor.

6.9.

Other Requirements. All other requirements, conditions and covenants of this
Agreement or the other Loan Documents shall have been complied with.

6.10.

Disbursements. Disbursements shall be made to Borrower as set forth herein,
provided, however, that following a Default, Lender may, at Lender’s option,
disburse: (a) directly to Lender for all amounts then due Lender, including,
without limitation, interest expense and delinquent payment fees; or (b) as
otherwise determined by Lender.

6.11.

Acquiescence Not A Waiver. To the extent that Lender may have acquiesced in
noncompliance with any requirements precedent to the disbursement of Loan
Proceeds, such acquiescence will not constitute a waiver by Lender and Lender at
any time after such acquiescence may require Borrower to comply with all such
requirements.

6.12.

Liability of Lender. Lender shall in no event be responsible or liable to any
Person other than Borrower for the disbursement of or failure to disburse the
Loan Proceeds or any part thereof.

6.13.

DSCR Verification.  Lender will not be obligated to disburse any Loan Proceeds
unless and until Lender is provided evidence satisfactory to Lender in its sole
discretion that the Property meets a minimum DSCR of 1.25 to 1.00 in accordance
with the terms of Section 7.14 below.

ARTICLE 7. COVENANTS AND AGREEMENTS

Borrower covenants and agrees with Lender as follows:

7.1.

Costs. Borrower will pay all Costs required to satisfy the conditions of this
Agreement, including, but not limited to, all taxes and recording expenses,
Lender’s attorneys fees, real estate taxes, and fees due in connection with
surveys, appraisals, title insurance, title updates, and insurance policies.

7.2.

Inspections. Borrower will permit Lender and its representatives to enter upon
the Premises at all reasonable times upon forty-eight (48) hours prior written
notice to Borrower to inspect the Improvements and to examine all records which
relate to the ownership and operation of the Improvements and will cooperate,
and cause the Property Manager, if applicable, to cooperate with Lender in such
inspections, which shall be conducted in a manner so as to cause as minimal
interruption as possible to tenants’ business and operations of the
Improvements.

 

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7.3.

Brokers. Borrower will indemnify and hold harmless Lender from and against all
claims of brokers and agents employed or retained by, or on behalf of, Borrower
and arising by reason of the Loan or the execution of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, any claims of lien filed by a broker under N.C.G.S. § 44A-24.1 et
seq.

7.4.

Advances to Cure Default. In the event that Borrower fails to perform any of
Borrower’s covenants or agreements under this Agreement or any other Loan
Document, and fails to commence a cure of such failure within ten (10) days
after written notice from Lender specifying the failure and the action required
to cure same, Lender may, but shall not be required to, perform any or all of
such covenants and agreements, and any amounts expended by Lender in so doing
will be deemed to be a part of the Obligations under this Agreement and, as
such, shall be secured by the Security Documents.

7.5.

Operating Account. Given that all rents and profits from the Project are pledged
to Lender as collateral security for the Loan, for so long as the Loan is
outstanding, Borrower agrees that the Operating Account for the Project shall be
established and maintained with Lender, and that all income and revenue
generated by each property constituting the Property, including without
limitation the security deposits received by Borrower from each property tenant,
will be deposited in the Operating Account; provided, however, Borrower shall
have one hundred eighty (180) days from the Effective date of this Agreement to
comply with this requirement. Notwithstanding anything to the contrary herein,
at all times until the occurrence of a Default, Borrower shall have the sole
right to withdraw funds on deposit in the Operating Account, excluding any funds
constituting property tenant security deposits, after payment of all debt
service and other amounts due under the Loan Documents.  Funds constituting
property tenant security deposits shall not be withdrawn from the Operating
Account unless and until such funds are legally required to be returned to the
applicable tenant. Borrower hereby grants to Lender a security interest in the
Operating Account and the funds on deposit therein, provided such funds may be
used by the Borrower in accordance with this Agreement.

7.6.

Compliance with Laws. The Land and all Improvements shall be owned and operated
in accordance with all applicable Laws, including, without limitation, all
zoning, land use, code, setback and other applicable regulations and
restrictions.

7.7.

Books and Records; Financial Statements; Tax Returns.

(a)

Borrower will keep and maintain full and accurate books and records administered
in accordance with sound accounting principles, consistently applied, showing in
detail the earnings and expenses of the Property and Borrower shall permit
Lender and Lender’s representatives, to examine such books and records
(regardless of where maintained) and all supporting data and to make copies
therefrom at all reasonable times and as often as may be requested by Lender.

 

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(b)

Borrower will furnish or cause to be furnished to Lender (i) beginning December
31, 2015, copies of GAAP or IFRS Audited consolidated annual financial
statements of Borrower within one hundred twenty (120) days of each year end
during the term of the Loan, (ii) beginning June 30, 2015, copies of GAAP or
IFRS Audited consolidated quarterly operating statements for Borrower within
forty-five (45) days of each fiscal quarter-end during the term of the Loan,
(iii) an annual global property schedule for Borrower and Guarantor, and (iv)
such other financial statements and information as Lender may request from time
to time, all in form and detail satisfactory to Lender.

(c)

Borrower will furnish or cause to be furnished to Lender (i) beginning December
31, 2015, copies of annual balance sheets and income statements for the Project
within one hundred twenty (120) days of each year end during the term of the
Loan, (ii) beginning June 30, 2015, copies of operating statements, balance
sheets, and rent rolls as to the Project within forty-five (45) days of each
fiscal quarter-end during the term of the Loan, and (iii) such other financial
statements and information as Lender may request from time to time, all in form
and detail satisfactory to Lender.

(d)

Borrower shall also cause the Guarantor to provide the financial reports and
information required in the Guaranty.

7.8.

Estoppel Certificates. Within ten (10) days after any request by Lender,
Borrower shall certify in writing to Lender, the then unpaid balance of the Loan
and whether Borrower claims any right of defense or setoff to the payment or
performance of any of the Obligations, and if Borrower claims any such right of
defense or setoff, Borrower shall give a detailed written description of such
claimed right.

7.9.

Notification by Borrower. Borrower will promptly give written notice to Lender
of (i) the occurrence of any Default, and (ii) any claim by Borrower of a
default by any other party under any Lease.

7.10.

Indemnification by Borrower. Borrower agrees to indemnify Lender and to hold
Lender harmless from and against, and to defend Lender by counsel approved by
Lender against, any and all claims directly or indirectly arising out of or
resulting from any transaction, act, omission, event or circumstance in any way
connected with the Property or the Obligations (a “Claim”), including any Claim
arising out of or resulting from (a) the condition of the Improvements,
including any defective workmanship or materials; (b) any failure by Borrower to
comply with the requirements of any Laws or to comply with any agreement that
applies to the Property; (c) any failure by Borrower to observe and perform any
of the obligations imposed upon the landlord under the Leases; (d) any other
Default hereunder or under any of the other Loan Documents; or (e) any assertion
or allegation that Lender is liable for any act or omission of Borrower or any
other Person in connection with the ownership, development, financing, leasing,
operation or sale of the Property; provided, however, that Borrower shall not be
obligated to indemnify Lender with respect to any Claim arising solely from the
gross negligence or willful misconduct of Lender. The agreements and
indemnifications contained in this Section shall apply to Claims arising both
before and after the repayment of the Loan and shall survive the repayment of
the Loan, any foreclosure or deed, assignment or conveyance in lieu thereof and
any other action by Lender to enforce the rights and remedies of Lender
hereunder or under the other Loan Documents.

 

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7.11.

Appraisals. Lender may obtain from time to time an appraisal of all or any part
of the Property, prepared in accordance with written instructions from Lender,
from a third-party appraiser satisfactory to, and engaged directly by, Lender.
The cost of one such appraisal obtained by Lender in each calendar year and the
cost of each such appraisal obtained by Lender following the occurrence of a
Default shall be paid by Borrower on demand.

7.12.

Leasing Matters.

(a)

Borrower represents and warrants that Borrower has delivered to Lender a true
and correct copy of all Leases, including all amendments and exhibits, and any
guaranty(ies) thereof, affecting any part of the Improvements, together with an
accurate and complete rent roll for the Property.

(b)

Borrower shall not enter into any Lease of space in the Improvements or modify
any existing Lease unless approved or deemed approved by Lender. Borrower
represents and warrants that Borrower has delivered to Lender a true and correct
copy of all Leases and any guaranty(ies) thereof which exist at the Property,
together with a current rent roll for the Property. From time to time upon
Lender’s request, Borrower shall promptly deliver to Lender (i) complete
executed originals of each Lease, (ii) a complete rent roll of the Property in
such detail as Lender may require, together with such operating statements and
leasing schedules and reports as Lender may require, and (iii) any and all
financial statements of the tenants, subtenants and any lease guarantors to the
extent available to Borrower. If, however, the provisions of any Lease or any
agreement between Borrower and a tenant shall prohibit any such disclosures,
Borrower shall not be required to make any such delivery, and Lender expressly
waives any such requirement.

7.13.

Loan to Value Requirement. The outstanding balance of the Loan shall not exceed,
at any time fifty percent (50.00%) of the approved “as-is” appraised value of
the Project, as determined by Lender based upon a current appraisal provided to
Lender. If the Lender determines, based on the Lender’s review of updated
appraisal information, that the loan to value ratio of the Project exceeds the
required 50.00% ratio, Lender shall give written notice to Borrower, and
Borrower shall pay down the Loan to an amount necessary to maintain the required
50.00% loan to value ratio. Failure of Borrower to pay down the Loan as required
within ten (10) days from the date of such notice shall be deemed to be a
Default under the Loan Documents.

7.14.

DSCR Requirement.

(a)

Borrower shall cause the Property to maintain a minimum DSCR of 1.25 to 1.00, to
be tested semiannually, commencing December 31, 2015, and on each December 31
and June 30 thereafter (each a “DSCR Test Date”) through June 30, 2018.  For
purposes of this Subsection (a), the DSCR will be based on (A) the trailing
180-day Net Operating Income of the Property annualized with expenses customary
to the Property, provided that (i) a minimum management fee of four percent
(4.00%) and (ii) minimum replacement reserves of $0.15 per square foot, shall be
used, and (B) debt service (based on the then-outstanding principal balance of
the Loan) equal to the greater of (1) actual annual debt service of the Loan, or
(2) annual debt service based on a rate of six percent (6.00%) and an assumed
amortization of fifteen (15) years.

 

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(b)

Borrower shall cause the Property to maintain a minimum DSCR of 1.25 to 1.00, to
be tested semiannually, commencing December 31, 2018, and on each December 31
and June 30 thereafter (each a “DSCR Test Date”) through the Maturity Date.  For
purposes of this Subsection (a), the DSCR will be based on (A) the trailing
180-day Net Operating Income of the Property annualized with expenses customary
to the Property including, without limitation, a management fee of 4.00% and
replacement reserves of $0.15 per square foot, and (B) debt service (based on
the then-outstanding principal balance of the Loan) equal to the greater of (1)
actual annual debt service of the Loan, (2) annual debt service based on a rate
of six percent (6.00%) and an assumed amortization of fifteen (15) years, or (3)
annual debt service based on a rate of the then prevailing 10-year Treasury plus
2.25% and an assumed amortization of fifteen (15) years.

(c)

If, as of any semiannual DSCR test, the DSCR drops below 1.25 to 1.00, Lender
shall give Borrower written notice of such event, and if the DSCR does not
return to the minimum level of 1.25 to 1.00 within sixty (60) days following
such notice, then Borrower shall, within thirty (30) days following written
notice from the Lender, make a mandatory principal payment on the Loan in an
amount sufficient to reduce the principal balance of the Loan so that the
Property meets the required minimum DSCR of 1.25 to 1.00.  Failure to make such
mandatory principal payment on or before the expiration of such thirty (30) day
period, shall be a default under this Agreement.

(d)

The remedies set forth in this Section shall be in addition to all other
remedies available to Lender under the Loan Documents or at law or equity.

7.15.

Limitations on Additional Indebtedness; Other Prohibited Transactions.

(a)

FRP Manassas, LLC shall not, without the prior written consent of Lender granted
in its sole discretion, incur any additional indebtedness of any kind.

(b)

Except for any Interest Rate Swap, FRP Manassas, LLC shall not engage, directly
or indirectly, in any off balance sheet, hedge or derivative transactions,
including, without limitation, interest rate swaps and interest rate caps.

7.16.

Partial Releases.  In the event Borrower elects to sell any of the three (3)
separately subdivided parcels constituting the Premises to an arm-length third
party (such parcel, a “Release Parcel”) during the term of the Loan, Lender
agrees, at Borrower’s request, to release such Release Parcel from the lien of
the Security Documents pursuant to a form of release acceptable to Lender upon
the sale thereof; provided, however, that prior to or simultaneously with such
release of the Release Parcel all of the following conditions shall be
satisfied:

(a)

No default shall exist under the Loan Documents, or would exist with notice or
passage of time, or both;

(b)

Lender shall have received any and all sums then due and owing under the Loan
Documents (excluding regularly scheduled principal and interest payments not yet
due and payable) together with proof of payment of costs related to preparing
and executing such partial release, including, without limitation all escrow
costs, closing and recording costs, costs of preparing and delivering such
partial release, and the cost of any title insurance endorsements required by
Lender;

 

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(c)

At Borrower’s sole cost, Lender shall have received any title insurance
endorsements requested by Lender modifying the Title Insurance Policy;

(d)

Lender shall have received the required release price for the Release Parcel
equal to (i) the Release Price Percentage for the Release Parcel, multiplied by
(ii) the full principal amount of the Loan, disbursed or undisbursed, as of the
date of the release of the Release Parcel.  In any case, such release price
shall be applied by Lender to reduce the total committed principal amount of the
Development Line of Credit. As used herein, “Release Price Percentage” shall be
defined as the percentage equal to (a) 110% of (b) the pro-rata allocated Loan
amount (as set forth in the following chart) for the Release Parcel. As an
example, the current Release Prices and Release Price Percentages calculated
based on the collateral pool constituting the Property as of the date of this
Agreement are set forth in the following chart, although these Release Price
Percentages may be adjusted from time to time as properties may be added to or
removed from the collateral pool.

Release Parcel Pro-Rata Allocated
Loan Amount Pro-Rata
Collateral Value Pro-Rata
Release Price Release Price
Percentage 11800 Brewers
Spring Road $6,732,000.00 33.660% $7,405,200.00 37.0260% 11801 Brewers
Spring Road $6,305,600.00 31.528% $6,936,160.00 34.6808% 7600 Doane
Drive $6,962,400.00 34.812% $7,658,640.00 38.2932% TOTAL $20,000,000.00 100.00%
$22,000,000.00 110.00%

 

(e)

Lender shall have received a written release satisfactory to Lender of any set
aside letter, letter of credit or other form of undertaking which Lender has
issued to any surety, governmental agency or any other party in connection with
the Loan and/or the Premises; and

(f)

Lender shall have received evidence satisfactory to Lender that any tax, bond or
assessment which constitutes a lien against the Premises has been properly paid.

Neither the acceptance of any payment nor the issuance of any partial release of
the Release Parcel by Lender shall affect Borrower’s obligation to repay all
amounts owing under the Loan Documents or the lien of the Security Documents on
the remainder of the Premises which is not released.

 

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7.17.

Substitute Parcel.  In the event, during the term of the Loan, Borrower elects
to remove one of the three (3) separately subdivided parcels constituting the
Premises from the lien of the Security Documents (such parcel, a “Removed
Parcel”) and to substitute for said Removed Parcel a replacement property (such
property, a “Substitute Parcel”), Lender agrees, at Borrower’s request, to
release such Removed Parcel from the lien of the Security Documents pursuant to
a form acceptable to Lender; provided, however, that prior to or simultaneously
with such release of the Removed Parcel all of the following conditions shall be
satisfied:

(a)

No default shall exist under the Loan Documents, or would exist with notice or
passage of time, or both;

(b)

Lender shall have received any and all sums then due and owing under the Loan
Documents (excluding regularly scheduled principal and interest payments not yet
due and payable) together with proof of payment of costs related to preparing
and executing such partial release, including, without limitation all escrow
costs, closing and recording costs, costs of preparing and delivering such
partial release, and the cost of any title insurance endorsements required by
Lender;

(c)

The Substitute Parcel shall have an approved “as-is” appraised value of an
amount equal to or greater than the “Appraised Value” of the Replaced Parcel set
forth in the following chart. Any and all appraisals obtained for the purpose of
determining the appraised value of the Substitute Parcel will be a prepared in
accordance with written instructions from Lender, satisfactory to Lender in form
and substance, from a third-party appraiser satisfactory to and engaged directly
by Lender, and paid for by Borrower on demand. Borrower agrees that it will
cooperate with the appraiser conducting any such appraisal, allow access to the
Substitute Parcel, and provide copies of leases, operating statements, plans and
any other information requested by such appraiser.

Removed Parcel Appraised
Value 11800 Brewers
Spring Road $16,223,571.00 11801 Brewers
Spring Road $15,196,272.00 7600 Doane Drive $16,779,217.00 TOTAL $48,199,060.00

 

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(d)

The addition of any Substitute Parcel shall be subject to underwriting approval
by Lender in all respects in its sole discretion.  Furthermore, the Substitute
Parcel shall not be accepted until Lender has received, reviewed and approved
the following requirements with respect to any such Substitute Parcel, all of
which shall be satisfactory to Lender in its sole discretion: (i) an appraisal
obtained in accordance with the requirements set forth in subsection (d) above;
(ii) annual operating statements for such Substitute Parcel for the most recent
three (3) year period; (iii) a current rent roll for the Substitute Parcel; (iv)
fully executed copies of all leases and lease amendments for tenants on the
Substitute Parcel; (v) fully executed subordination, nondisturbance and
attornment agreements and executed estoppel certificates, each in a form
acceptable to Lender, for all such tenants; (vi) a Phase I Environmental Report
reviewed in accordance with Lender’s standard underwriting procedures and
guidelines; (vii) an ALTA-ACSM Land Title Survey; (viii) an ASTM Property
Condition Assessment; (ix) all zoning approvals, licenses and permits necessary
for the ownership and operation of the Substitute Parcel; (x) any other
documentation and/or due diligence requirements as Lender may reasonably
request, including, without limitation, properly executed and delivered
modification(s) to the Loan Documents satisfactory to Lender in all respects and
recorded as may be required by Lender, and a guaranty and an environmental
indemnity agreement from Guarantor and Borrower, as applicable, in form and
content satisfactory to Lender with respect to such modified Security Documents
and Substitute Parcel, and all due diligence required by Lender with respect to
any non-Borrower grantor as the owner of such Substitute Parcel and such other
items and requirements as Lender may reasonably impose; and (xi) title insurance
endorsements requested by Lender modifying the Title Insurance Policy in certain
respects, including, without limitation, to insure the first priority lien of
the Security Documents, as modified, on the Substitute Parcel, and otherwise in
form and content satisfactory to Lender in its sole discretion.  Borrower shall
pay, on demand, all fees and costs related to the addition of the Substitute
Parcel and the release of the Replaced Parcel as security for the Secured
Obligations.

(e)

Lender shall have received a written release satisfactory to Lender of any set
aside letter, letter of credit or other form of undertaking which Lender has
issued to any surety, governmental agency or any other party in connection with
the Loan and/or the Premises; and

(f)

Lender shall have received evidence satisfactory to Lender that any tax, bond or
assessment which constitutes a lien against the Premises has been properly paid.

Neither the acceptance of the Substitute Parcel nor the issuance of any partial
release of the Removed Parcel by Lender shall affect Borrower’s obligation to
repay all amounts owing under the Loan Documents or the lien of the Security
Documents on the remainder of the Premises which is not released.

ARTICLE 8. DEFAULT

8.1.

Default by Borrower. The occurrence of any one or more of the following shall
constitute a “Default” as such term is used herein:

(a)

A failure to pay amounts due under the Note or the other Loan Documents, within
ten (10) days of the date when due;

(b)

Any representation, warranty or statement made by Borrower in this Agreement,
the other Loan Documents or any other instrument now or hereafter evidencing,
securing or in any manner relating to the Loan proves untrue in any material
respect;

(c)

A failure of Borrower to comply in all material respects with any of the terms
and conditions of this Agreement, or the other Loan Documents;

 

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(d)

A failure of Guarantor to comply in all material respects with any of the terms
and conditions of the Guaranty;

(e)

A lien for the performance of work or the supply of materials filed against the
Property, or any stop notice served on Borrower or Lender, remains unsatisfied
or unbonded for a period of thirty (30) days after the date of filing or
service;

(f)

If Borrower or Guarantor fails to pay any indebtedness (other than the Loan)
owed by Borrower or Guarantor to Lender when and as due and payable (whether by
acceleration or otherwise);

(g)

If, without the prior written consent of Lender (which consent may be
conditioned, among other matters, on the issuance of a satisfactory endorsement
to the title insurance policy insuring Lender’s interest under the Security
Documents), the full interest in Borrower FRP Manassas LLC ceases to be owned by
Borrower FRP Development Corp.;

(h)

If, in the opinion of Lender, the prospect of payment or performance of all or
any part of the Obligations has been impaired because of a material adverse
change in the financial condition or results of operations of the Project, or
the financial condition, business or properties of Borrower, Guarantor or any
other Person liable for the payment or performance of any of the Obligations;

(i)

If Borrower or Guarantor files a voluntary Bankruptcy Proceeding or is
adjudicated a bankrupt or insolvent, or files any petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the present or any future Debtor Relief Law, makes an
assignment for the benefit of creditors, or seeks or consents to or acquiesces
in the appointment of any trustee, receiver or liquidator for Borrower or
Guarantor for all or any substantial part of their properties or of the
Premises;

(j)

If within sixty (60) days after the commencement of any proceeding against
Borrower or Guarantor seeking any reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy act or any other present or future applicable federal, state
or other statute or Law, such proceeding is not dismissed, or if, within sixty
(60) days after the appointment, without the consent or acquiescence of Borrower
of any trustee, receiver or liquidator for Borrower or Guarantor for all or any
substantial part of their properties or of the Premises;

(k)

If Guarantor shall liquidate, dissolve, or otherwise terminate existence (other
than as set forth in subsection (i) above), and Borrower fails to provide to
Lender a substitute Guarantor acceptable to Lender, as determined in Lender’s
sole discretion, within sixty (60) days of such termination; or

(l)

If a third party obtains a judgment against Borrower, a Guarantor or the
Project, which (a) materially and adversely impacts the operation or financial
condition of the Property or the ability of the Borrower or a Guarantor to pay
or perform their respective obligations under the Loan Documents, and (b) is not
vacated and released within thirty (30) days at the date of such judgment.

 

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The occurrence of a Default under any other Loan Document shall be deemed a
Default under all other Loan Documents.

8.2.

Lender’s Remedies in the Default. Upon the occurrence of any Default, Lender, in
addition to all remedies conferred upon Lender by Law or equity, and by the
terms of the Loan Documents, may, in its sole discretion, pursue any one or more
of the following remedies concurrently or successively, it being the intent
hereof that none of such remedies shall be to the exclusion of any other:

(a)

Take possession of the Premises and operate the Improvements and do anything in
its sole judgment to fulfill the obligations of Borrower hereunder, any expense
incurred by Lender being deemed to be part of the Obligations, including either
the right to avail itself of or procure performance of existing contracts or
Leases, under the Security Documents or otherwise, or let any contracts with the
same vendors or others. Without restricting the generality of the foregoing and
for purposes aforesaid, Borrower hereby appoints and constitutes Lender its
lawful attorney-in-fact with full power of substitution for the Project to
operate the Improvements in the name of Borrower; to use funds remaining under
this Agreement or which may be reserved, or escrowed or set aside for any
purpose hereunder at any time to operate the Improvements; it being understood
and agreed that this power of attorney shall be a power coupled with an interest
and cannot be revoked;

(b)

Lender may apply to any court of competent jurisdiction for, and obtain
appointment of, a receiver for the Property;

(c)

Lender may set off the amounts due Lender under the Loan Documents against any
and all accounts, credits, money, securities or other property of Borrower now
or hereafter on deposit with, held by or in the possession of Lender to the
credit or for the account of Borrower, without notice to or the consent of
Borrower;

(d)

Withhold further disbursement of the Loan Proceeds, if applicable;

(e)

Declare the entire balance of the Obligations, without demand or notice of any
kind (which are hereby expressly waived) to be due and payable at once and, in
such event, such Obligations shall become immediately due and payable;

(f)

Pursue such other remedies as may be available to Lender under the Loan
Documents or at Law or equity.

Borrower shall not be relieved of any of the Obligations by reason of the
failure of Lender to comply with any request of Borrower or of any other Person
to take action to foreclose on the Property under the Security Documents or
otherwise to enforce any provision of the Loan Documents, or by reason of the
release, regardless of consideration, of all or any part of the Property. No
delay or omission of Lender to exercise any right, power or remedy accruing upon
the happening of a Default shall impair any such right, power or remedy or shall
be construed to be a waiver of any such Default or any acquiescence therein. No
remedy available to Lender under the Loan Documents or otherwise, is intended to
be exclusive of any other remedies provided for in the Loan Documents, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder, or under the Loan Documents, or now or hereafter
existing at Law or in equity. Every right, power and remedy given by the Loan
Documents to Lender shall be concurrent and may be pursued separately,
successively or together against Borrower or the Property or any part thereof,
and every right, power and remedy given by the Loan Documents may be exercised
from time to time as often as may be deemed expedient by Lender;

 

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ARTICLE 9. GENERAL COVENANTS

9.1.

No Assignments by Borrower. This Agreement may not be assigned by Borrower
without the prior written consent of Lender. Borrower will remain liable for
payment of all sums advanced hereunder before and after such assignment.

9.2.

Assignment by Lender. This Agreement, the Loan Documents and any other
instrument now or hereafter evidencing, securing or in any manner affecting the
Loan may be endorsed, assigned and transferred in whole or in part by Lender,
and any such holder and assignee of the same will succeed to and be possessed of
the rights of Lender under all of the same to the extent transferred and
assigned.

9.3.

Interest Not to Exceed Maximum Allowed by Law. If from any circumstances
whatsoever, by reason of acceleration or otherwise, the fulfillment of any
provision of this Agreement or any other Loan Document involves transcending the
limit of validity prescribed by any applicable usury statute or any other
applicable Law, with regard to obligations of like character and amount, then
the obligations to be fulfilled will be reduced to the limit of such validity as
provided in such statute or Law, so that in no event shall any payment of
interest or other like charges be possible under this Agreement or the other
Loan Documents in excess of the limit of such validity.

9.4.

Time of the Essence. Time is of the essence of this Agreement.

9.5.

No Agency. Lender is not the agent or representative of Borrower, and Borrower
is not the agent or representative of Lender, and nothing in this Agreement will
be construed to make Lender liable to anyone for goods delivered or services
performed upon the Premises or for debts or claims accruing against Borrower.

9.6.

No Partnership or Joint Venture. Neither anything contained herein nor the acts
of the parties hereto will be construed to create a partnership or joint venture
between Borrower and Lender.

9.7.

No Third Party Beneficiaries. All conditions to the obligations of Lender to
make advances hereunder are imposed solely and exclusively for the benefit of
Lender and its assigns and no other person will have standing to require
satisfaction of such conditions or be entitled to assume that Lender will not
make disbursements in the absence of strict compliance with any or all thereof
and no other person, under any circumstances, will be deemed to be beneficiary
of such conditions, any or all of which may be waived in whole or in part by
Lender at any time if Lender in its sole discretion deems it advisable to do so.

 

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9.8.

Waiver. No delay or omission by Lender to exercise any right or power arising
from any Default will impair any such right or power or be considered to be a
waiver of any such Default or any acquiescence therein nor shall the action or
nonaction of Lender in case of Default on the part of Borrower impair any right
or power arising therefrom. No disbursement of the Loan hereunder shall
constitute a waiver of any of the conditions to Lender’s obligation to make
further disbursements nor, in the event Borrower is unable to satisfy any such
condition, shall any such disbursement have the effect of precluding Lender from
thereafter declaring such inability to be a Default as hereinabove provided.

9.9.

Notices. All notices, requests, demands and other communications required or
permitted to be given hereunder will be sufficiently given if in writing and
delivered in person or sent by United States certified mail, return receipt
requested, postage prepaid, to the party being given such notice at the
appropriate address set forth in the first paragraph of this Agreement, or to
such other address as either party may give to the other in writing for such
purpose. All such notices, requests, demands and other communications, if so
mailed, will be deemed to be given when so mailed.

9.10.

Partial Invalidity. In the event any one or more of the provisions contained in
this Agreement shall be for any reason be held to be invalid, illegal or
unenforceable in any respect, such validity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been set forth herein.

9.11.

Entire Agreement. This Agreement, the Loan Documents and the other contracts,
agreements and instruments described herein contain all of the terms and
conditions related to the disbursement of the Loan by Lender and the use of the
Loan by Borrower. This Agreement may not be modified or amended except in
writing signed by Borrower and Lender.

9.12.

Publicity. Borrower hereby gives Lender permission to release articles
concerning financing of the Premises.

9.13.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND
LENDER HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE
OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER
AND LENDER EACH REPRESENT TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY GIVEN.

9.14.

Further Assurances. Borrower agrees that at any time, and from time to time,
after execution and delivery of this Agreement, it shall, upon the request of
Lender, execute and deliver such further documents and do such further things as
Lender may request in order to more fully effectuate the purposes of this
Agreement.

9.15.

Governing Law. This Agreement shall be governed by and construed in accordance
with the Laws of the State of North Carolina.

 

22 

 

 

9.16.

Severability. In the case one or more of the provisions of this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity of the
remaining provisions shall be in no way affected, prejudiced or disturbed
thereby.

9.17.

Assignments and Participations. Lender may sell or offer to sell the Loan or
interests therein to one or more assignees or participants. Borrower shall
execute, acknowledge and deliver any and all instruments requested by Lender in
connection therewith, and to the extent, if any, specified in any such
assignment or participation, such assignee(s) or participant(s) shall have the
same rights and benefits with respect to the Loan Documents as such Person(s)
would have if such Person(s) were Lender hereunder. Lender may disseminate any
information it now has or hereafter obtains pertaining to the Loan, including
any security for the Loan, any credit or other information on the Property
(including environmental reports and assessments), Borrower, any of Borrower’s
principals or Guarantor, to any actual or prospective assignee or participant,
to Lender’s affiliates, to any regulatory body having jurisdiction over Lender,
to any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to Borrower and the Loan, or to any other party
as necessary or appropriate in Lender’s judgment.

9.18.

Electronic Transmission of Data. Lender and Borrower agree that certain data
related to the Loan (including confidential information, documents, applications
and reports) may be transmitted electronically, including transmission over the
Internet to the parties, the parties affiliates, agents and representatives, and
other Persons involved with the subject matter of this Agreement. Borrower
acknowledges and agrees that (a) there are risks associated with the use of
electronic transmission and that Lender does not control the method of
transmittal or service providers, (b) Lender has no obligation or responsibility
whatsoever and assumes no duty or obligation for the security, receipt or third
party interception of any such transmission, and (c) Borrower will release, hold
harmless and indemnify Lender from any claim, damage or loss, including that
arising in whole or part from Lender’s strict liability or sole, comparative or
contributory negligence, which is related to the electronic transmission of
data.

9.19.

Forum. Borrower hereby irrevocably submits generally and unconditionally for
itself and in respect of its property to the jurisdiction of any state court or
any United States federal court sitting in North Carolina with respect to any
matter or dispute (a “Dispute”) arising in connection with the Loan, the Project
or Premises. Borrower hereby irrevocably waives, to the fullest extent permitted
by Law, any objection that Borrower may now or hereafter have to the laying of
venue in any such court and any claim that any such court is an inconvenient
forum. Borrower hereby agrees and consents that, in addition to any methods of
service of process provided for under applicable Law, all service of process in
any such Dispute may be made by certified or registered mail, return receipt
requested, directed to Borrower at its address for notice set forth in this
Agreement, and service so made shall be complete upon receipt. Nothing herein
shall affect the right of Lender to serve process in any manner permitted by Law
or limit the right of Lender to bring proceedings against Borrower in any other
court or jurisdiction.

 

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9.20.

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

9.21.

Joint and Several Liability. Borrowers shall be jointly and severally bound by
and liable for this Agreement.

[EXECUTION PAGE FOLLOWS]

 

24 

 

 

The undersigned hereby execute this Agreement as of the day and year first above
written.

BORROWER:

FRP DEVELOPMENT CORP.,
a Maryland corporation

By:   Name:   Title:  

 

[CORPORATE SEAL]

 

 

BORROWER / PROPERTY GRANTOR:

FRP MANASSAS LLC,
a Maryland limited liability company (SEAL)

By: FRP DEVELOPMENT CORP.,   a Maryland corporation, its sole member            
  By:     Name:     Title:              [CORPORATE SEAL]

 

LENDER:

FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
a national banking association

By:   Name:   Title:  

 

25 

 

 

EXHIBIT A

REAL ESTATE

All that certain real property located in Prince William County, Virginia being
more particularly described as follows:

Lot 1 containing 438,068 square feet or 10.0566 acres, more or less, property of
FRP Manassas, LLC as created by Deed of Subdivision recorded in Instrument No.
201206010051012 and shown on Plat recorded in Instrument No. 201206010051013
among the land records of Prince William County, Virginia.

Lot 2, containing 345,440 square feet or 7.9302 acres, more or less, and Lot 2A,
containing 341,903 square feet or 7.84901 acres, more or less, as created by
Deed of Subdivision, Easement and Vacation of the Property of FRP Manassas, LLC
as the same appears duly dedicated platted and recorded in Instrument No.
201306040056676 with Plat recorded in Instrument No. 201306040056677 among the
land records of Prince William County, Virginia.

Together with that 48’ingress/egress easement over Brewers Spring Road as
provided in the Deed of Dedication, Easements, Designation and Vacation recorded
as Instrument #200810200100255 with plat recorded as Instrument #200810200100256
among the aforesaid land records.

Together with a perpetual non-exclusive easement for pedestrian and vehicular
traffic over, upon and through Lot 1 and labeled as Brewers Spring Road as
provided in Declaration of Easements and conditions recorded as Instrument
#201206190057014 with plat recorded as Instrument #201206190057015 among the
aforesaid land records.

Together with the mutual ingress egress easement, temporary construction
easement and private force main easement as provided in the declaration of
Easements and Conditions Lots 2-2A as recorded as Instrument #201307120071261
among the aforesaid land records.

Tax Parcel Numbers:       7597-42-1456   7597-42-1295   7597-42-2107

 

 

 

 

EXHIBIT B

REQUEST FOR ADVANCE

DATE: ________________________ BORROWER: FRP DEVELOPMENT CORP. and FRP MANASSAS
LLC ACCOUNT NUMBER: ________________________ AMOUNT: $_______________

 

TO: FIRST TENNESSEE BANK   ATTN: DENISE BENNETT   300 Court Avenue, 5th Floor  
Memphis, TENNESSEE  38103

 

In accordance with the Loan Agreement in the amount of $20,000,000.00, dated
______________________, 2015, between Borrower and Lender, Borrower requests
that $____________________ be advanced. The proceeds should be credited to the
account of:

Account Name:        Account No.:   Bank Name:   ABA #:  

 

This request for an advance made by Borrower pursuant to the Loan Agreement or
any of the other Loan Documents shall constitute a representation and warranty
by the Borrower to the Lender (i) that there does not exist any default or Event
of Default and (ii) as of the date hereof, that all of the representations and
warranties of Borrower contained in the Loan Agreement and the other Loan
Documents are true in all material respects.

FRP DEVELOPMENT CORP.,
a Maryland corporation

By:   Name:   Title:  

 

[CORPORATE SEAL]

 

FRP MANASSAS LLC,
a Maryland limited liability company (SEAL)

By: FRP DEVELOPMENT CORP.,   a Maryland corporation, its sole member            
  By:     Name:     Title:           [CORPORATE SEAL]

 

 

 

 

PROMISSORY NOTE

$18,000,000.00 Winston-Salem, North Carolina   July 24, 2015

FOR VALUE RECEIVED, the undersigned, FRP DEVELOPMENT CORP., a Maryland
corporation, and FRP Manassas LLC, a Maryland limited liability company
(individually and collectively, “Borrower”), jointly and severally promise to
pay to the order of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national
banking association (the “Lender”), at its offices at 2000 West First Street,
Suite 100, Winston-Salem, North Carolina 27104, Attention: Commercial Real
Estate, or such other place as Lender shall designate in writing from time to
time, the principal sum of EIGHTEEN MILLION AND NO/100 DOLLARS ($18,000,000.00)
(the “Loan”), in United States Dollars, together with interest thereon as
hereinafter provided, or so much as is advanced pursuant to the Loan Agreement
of even date herewith (as amended from time to time, the “Loan Agreement”)
between Lender and Borrower.  Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Loan Agreement.

1.

INTEREST RATE. Interest shall be charged on the outstanding principal balance
from the date advanced until the full amount of principal due hereunder has been
paid at a variable rate per annum equal to an independent index known as the
LIBOR Rate, as defined below (the “Index”) plus one and ninety hundredths
percent (1.90%) (the “Margin”). The interest rate payable hereunder is subject
to change from time to time based on changes in the LIBOR Rate, adjusted and
determined by Lender without notice to Borrower, as of the date of this Note and
on the first (1st) day of each calendar month thereafter (each an “Interest Rate
Change Date”). For purposes hereof, the LIBOR Rate shall mean the independent
index which is the London Interbank Offered Rate of interest for an interest
period of one (1) month, which appears on Bloomberg page BBAM under the column
heading “USD” on the day that is two London Business Days preceding each
Interest Rate Change Date (the “Reset Date”). “London Business Day” shall mean
any day on which commercial Lenders in London, England are open for general
business. If the LIBOR Rate, as defined above, is not available or is not
published for any Reset Date, then Lender shall, at its sole discretion, choose
a substitute source for the LIBOR Rate, which LIBOR Rate plus the Margin shall
become effective on the next Interest Rate Change Date. If the Index becomes
unavailable during the term of this Loan, Lender may designate a substitute
index and Margin after notice to Borrower. The interest rate payable on this
Loan is not necessarily the lowest rate charged by the Lender on its loans.
Borrower understands that Lender may make loans based on other rates as well.
Lender will tell Borrower the current interest rate payable on this Loan upon
Borrower’s request. The change in interest rate payable on this Loan will not
change more often than once each month. The current Index applicable to this
Loan is 0.189% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate per annum of the Margin over
the Index, resulting in an initial rate of 2.089% per annum.

The annual interest rate for this Note is computed on a 360/365 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding.

 

1 

 

 

2.

PAYMENT OF INTEREST; MATURITY DATE. Interest only on the outstanding principal
balance shall be due and payable in arrears on the first (1st) day of each month
commencing on September 1, 2015. The entire unpaid principal amount hereof,
together with accrued and unpaid interest thereon and all other amounts payable
hereunder, shall be due and payable in full on July 24, 2020 (the “Maturity
Date”).

3.

REVOLVING LINE OF CREDIT. Until such time as this Note is converted to a term
loan in compliance with the terms of Section 4 below, Borrower may from time to
time during the term of this Note borrow, partially or wholly repay its
outstanding borrowings, and reborrow the Loan funds, subject to all of the
limitations, terms and conditions of this Note, the Loan Agreement, and of any
agreement executed in connection with this Note, provided that the outstanding
principal balance of this Note shall at no time exceed the principal amount
stated above. The unpaid principal balance of this Note at any time shall be the
total amounts advanced hereunder by the holder hereof less the amount of
principal payments made hereon by or for the account of Borrower, which unpaid
principal balance may from time to time be evidenced by endorsements on this
Note or by the holder’s internal records, including daily computer print-outs.

4.

CONVERSION TO TERM LOAN.  On or prior to July 24, 2017 (the “Conversion
Deadline”), at Borrower’s option with ninety (90) days’ advance written notice
to Lender, this Note may be consolidated with that certain $2,000,000.00
revolving line of credit note of even date herewith made by Borrower to the
order of Lender and converted to a ten (10) year term loan bearing interest at
the Index plus the Margin, provided that: (a) no default exists under this Note
or any other Loan Document; (b) the terms of such conversion shall be subject to
Lender’s approval; (c) Borrower agrees to provide to Lender all necessary due
diligence including, without limitation, title endorsements, legal opinions, and
other items as may be required by Lender in connection with the conversion of
this Note; (d) Borrower shall provide substitute collateral to secure the
converted term loan, which collateral shall meet all conditions that a
Substitute Parcel is required to meet under Section 7.17 of the Loan Agreement;
(e) the loan amount for the converted term loan shall not exceed fifty percent
(50.0%) of the Lender-approved stabilized value of the proposed collateral, as
determined by Lender based on a current appraisal of such collateral to be
engaged, reviewed and approved by Lender prior to conversion; (f) the proposed
collateral shall have an actual in place Net Operating Income (as evidenced by
said current appraisal) sufficient to generate a minimum DSCR of 1.40 to 1.00,
with a DSCR based on (A) the trailing 180-day Net Operating Income of the
Property annualized with expenses customary to the Property including, without
limitation, a management fee of 4.00% and replacement reserves of $0.15 per
square foot, and (B) debt service (based on the proposed principal balance of
the converted loan) equal to the “Minimum Underwriting Rate” under Lender’s
credit policies at such time and an assumed amortization of twenty-five (25)
years; and (g) Borrower agrees to execute with Lender all documents required to
modify this Note and the other Loan Documents, as applicable, to set forth the
modified terms of the Loan in connection with the conversion of this Note to a
term loan, such modification documents to be in form and content satisfactory to
Lender.  In the event this Note is not converted to a term loan in accordance
herewith, this Note shall remain payable as set forth in section 2 above.

 

2 

 

 

5.

APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment or
prepayment, if any, made under this Note shall be applied to pay late charges,
accrued and unpaid interest, principal, and any other fees, costs and expenses
which Borrower is obligated to pay under this Note, in such order as Lender may
elect from time to time in its sole discretion.

6.

TENDER OF PAYMENT. All payments on this Note are payable on or before 2:00 p.m.
on the due date thereof, at the office of Lender specified above and shall be
credited on the date the funds become available lawful money of the United
States. All sums payable to Lender which are due on a day on which Lender is not
open for business shall be paid on the next succeeding business day and such
extended time shall be included in the computation of interest.

7.

LATE CHARGE. In the event that any installment of principal or interest required
to be made by Borrower under this Note shall not be received by Lender within
twenty (20) days after its due date, Borrower shall pay to Lender, on demand, a
late charge of four percent (4%) of such delinquent payment. The foregoing right
is in addition to, and not in limitation of, any other rights which Lender may
have upon Borrower’s failure to make timely payment of any amount due hereunder.
No late charge shall apply to the principal balance of this Note if not paid
when due.

8.

PREPAYMENT. The principal amount of this Note may be prepaid in whole or in part
at any time, and from time to time without penalty or premium, provided,
however, that if an Interest Rate Swap has been entered into in connection with
this Note, any full or partial prepayments of principal amounts due under this
Note may require termination or adjustment of the Interest Rate Swap and may
result in a payment due from Borrower per the terms and conditions of the
Interest Rate Swap.

9.

SECURITY FOR THE NOTE. This Note is executed and delivered in accordance with a
commercial transaction described in the Loan Agreement. As security for the
payment of the monies owing under this Note, Borrower has delivered or has
caused to be delivered to Lender the Security Documents. In addition, the
Guarantor has executed the Guaranty Agreement covering certain obligations, as
described in the Guaranty Agreement.

10.

DEFAULT RATE. Any amounts due hereunder which are not made as and when due,
whether by acceleration or otherwise, shall, at Lender’s option, bear interest
at the lesser of (i) the Default Rate, or (ii) the highest permissible rate
under applicable usury law, whichever is less. Such interest shall be payable
upon demand, but in no event later than when scheduled interest payments are
due, and shall also be charged on the amounts owed by Borrower to Lender
pursuant to any judgments entered in favor of Lender with respect to this Note.
The Default Rate shall apply both before and after any judgment on the
indebtedness evidenced by this Note.

11.

EVENTS OF DEFAULT. The occurrence of any Default, as defined in the Loan
Agreement, shall constitute a “Default” hereunder.

 

3 

 

 

12.

REMEDIES. If a Default exists, Lender may exercise any right, power or remedy
permitted by law or equity, or as set forth herein or in the Loan Agreement or
any other Loan Document including, without limitation, the right to declare the
entire unpaid principal amount hereof and all interest accrued hereon, and all
other sums secured by or owed under any other Loan Document, to be, and such
principal, interest and other sums shall thereupon become, immediately due and
payable.

13.

MISCELLANEOUS.

13.1.

Disclosure of Financial Information. Lender is hereby authorized to disclose any
financial or other information about Borrower to any regulatory body or agency
having jurisdiction over Lender and to any present, future or prospective
participant or successor in interest in any loan or other financial
accommodation made by Lender to Borrower. The information provided may include,
without limitation, amounts, terms, balances, payment history, return item
history and any financial or other information about Borrower. However, subject
to applicable law, Lender shall use reasonable efforts to protect the
confidentiality of the terms and conditions of the Loan in all other respects.

13.2.

Integration. This Note and the other Loan Documents constitute the sole
agreement of the parties with respect to the transaction contemplated hereby and
supersede all oral negotiations and prior writings with respect thereto.

13.3.

Attorneys’ Fees and Expenses. If Lender retains the services of counsel by
reason of a claim of a Default or the occurrence of a Default, or on account of
any matter involving this Note, or for examination of matters subject to
Lender’s approval under the Loan Documents, all costs of suit and all reasonable
attorneys’ fees and such other reasonable expenses so incurred by Lender shall
be paid by Borrower, on demand, and shall be deemed part of the obligations
evidenced hereby.

13.4.

No Implied Waiver. Lender shall not be deemed to have modified or waived any of
its rights or remedies hereunder unless such modification or waiver is in
writing and signed by Lender, and then only to the extent specifically set forth
therein. A waiver in one event shall not be construed as continuing or as a
waiver of or bar to such right or remedy in a subsequent event. After any
acceleration of, or the entry of any judgment on, this Note, the acceptance by
Lender of any payments by or on behalf of Borrower on account of the
indebtedness evidenced by this Note shall not cure or be deemed to cure any
Default or reinstate or be deemed to reinstate the terms of this Note absent an
express written agreement duly executed by Lender and Borrower.

13.5.

Waiver. Borrower, jointly and severally, waives demand, notice, presentment,
protest, demand for payment, notice of dishonor, notice of protest and diligence
of collection of this Note. Borrower consents to any and all extensions of time,
renewals, waivers, or modifications that may be granted by Lender with respect
to the payment or other provisions of this Note, and to the release of any
collateral, with or without substitution. Borrower agrees that Borrowers,
endorsers, guarantors and sureties may be added or released without notice and
without affecting Borrower’s liability hereunder. The liability of Borrower
shall not be affected by the failure of Lender to perfect or otherwise obtain or
maintain the priority or validity of any security interest in any collateral.
The liability of Borrower shall be absolute and unconditional and without regard
to the liability of any other party hereto.

 

4 

 

 

13.6.

No Usurious Amounts. Anything herein contained to the contrary notwithstanding,
Borrower does not agree and shall not be obligated to pay interest hereunder at
a rate which is in excess of the maximum rate permitted by law. If by the terms
of this Note, Borrower is at any time required to pay interest at a rate in
excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum legal rate and the portion of
all prior interest payments in excess of such maximum legal rate shall be
applied to and shall be deemed to have been payments in reduction of the
outstanding principal balance. Borrower agrees that in determining whether or
not any interest payable under this Note exceeds the highest rate permitted by
law, any non-principal payment, including without limitation, late charges,
shall be deemed to the extent permitted by law to be an expense, fee or premium
rather than interest.

13.7.

Partial Invalidity. The invalidity or unenforceability of any one or more
provisions of this Note shall not render any other provision invalid or
unenforceable. In lieu of any invalid or unenforceable provision, there shall be
added automatically a valid and enforceable provision as similar in terms to
such invalid or unenforceable provision as may be possible.

13.8.

Binding Effect. The covenants, conditions, waivers, releases and agreements
contained in this Note shall bind, and the benefits thereof shall inure to, the
parties hereto and their respective heirs, executors, administrators, successors
and assigns; provided, however, that this Note cannot be assigned by Borrower
without the prior written consent of Lender, and any such assignment or
attempted assignment by Borrower without consent shall be void and of no effect
with respect to Lender.

13.9.

Modifications. This Note may not be supplemented, extended, modified or
terminated except by an agreement in writing signed by the party against whom
enforcement of any such waiver, change, modification or discharge is sought.

13.10.

Sales or Participations. Lender may from time to time sell or assign, in whole
or in part, or grant participations in, the Loan, this Note and/or the
obligations evidenced thereby. The holder of any such sale, assignment or
participation, if the applicable agreement between Lender and such holder so
provides, shall be: (a) entitled to all of the rights, obligations and benefits
of Lender; and (b) deemed to hold and may exercise the rights of setoff or
banker’s lien with respect to any and all obligations of such holder to
Borrower, in each case as fully as though Borrower were directly indebted to
such holder. Lender shall give notice to Borrower of such sale, assignment or
participation; however, the failure to give such notice shall not affect any of
Lender’s or such holder’s rights hereunder.

 

5 

 

 

13.11.

Jurisdiction. Borrower irrevocably appoints each and every member and/or officer
of Borrower as its attorneys upon whom may be served, in writing, any notice,
process or pleading in any action or proceeding against it arising out of or in
connection with this Note or any other Loan Document; and Borrower hereby
consents that any action or proceeding against it be commenced and maintained in
any state or federal court sitting in North Carolina, by service of process on
any such owner, partner and/or officer; and Borrower agrees that such courts of
such State shall have jurisdiction with respect to the subject matter hereof and
the person of Borrower and all collateral securing the obligations of Borrower.
Borrower agrees not to assert any defense to any action or proceeding initiated
by Lender based upon improper venue or inconvenient forum.

13.12.

Governing Law. This Note shall be governed by and construed in accordance with
the substantive laws of the State of North Carolina.

13.13.

Continuing Enforcement. If, after receipt of any payment of all or any part of
this Note, Lender is compelled or agrees, for settlement purposes, to surrender
such payment to any person or entity for any reason (including, without
limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Note and the other Loan Documents shall continue in full
force and effect or be reinstated, as the case may be, and Borrower shall be
liable for, and shall indemnify, defend and hold harmless Lender with respect
to, the full amount so surrendered. The provisions of this Section shall survive
the cancellation or termination of this Note and shall remain effective
notwithstanding the payment of the obligations evidenced hereby, the release of
any security interest, lien or encumbrance securing this Note or any other
action which Lender may have taken in reliance upon its receipt of such payment.
Any cancellation, release or other such action shall be deemed to have been
conditioned upon any payment of the obligations evidenced hereby having become
final and irrevocable.

13.14.

Joint and Several Liability. Borrowers shall be jointly and severally bound by
and liable for this Note.

13.15.

Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND
LENDER AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY LENDER OR BORROWER, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY. LENDER AND BORROWER EACH HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF
THEIR RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT LENDER WOULD NOT EXTEND
CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF
THIS NOTE.

(Remainder of Page Intentionally Left Blank)

 

6 

 

 

IN WITNESS WHEREOF, Borrower, intending to be legally bound, has duly executed
under seal and delivered this Note as of the day and year first above written.

  BORROWER:           FRP DEVELOPMENT CORP.,   a Maryland corporation          
By:       Name:       Title:               [CORPORATE SEAL]           Tax ID
No.: 58-1794556           BORROWER:       FRP MANASSAS LLC,   a Maryland limited
liability company (SEAL)           By: FRP DEVELOPMENT CORP.,   a Maryland
corporation, its sole member                     By:       Name:       Title:  
            [CORPORATE SEAL]           Tax ID No.: 20-3971594

 

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PROMISSORY NOTE

$2,000,000.00 Winston-Salem, North Carolina   July 24, 2015

FOR VALUE RECEIVED, the undersigned, FRP DEVELOPMENT CORP., a Maryland
corporation, and FRP Manassas LLC, a Maryland limited liability company
(individually and collectively, “Borrower”), jointly and severally promise to
pay to the order of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national
banking association (the “Lender”), at its offices at 2000 West First Street,
Suite 100, Winston-Salem, North Carolina 27104, Attention: Commercial Real
Estate, or such other place as Lender shall designate in writing from time to
time, the principal sum of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) (the
“Loan”), in United States Dollars, together with interest thereon as hereinafter
provided, or so much as is advanced pursuant to the Loan Agreement of even date
herewith (as amended from time to time, the “Loan Agreement”) between Lender and
Borrower.  Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Loan Agreement.

1.

INTEREST RATE. Interest shall be charged on the outstanding principal balance
from the date advanced until the full amount of principal due hereunder has been
paid at a variable rate per annum equal to an independent index known as the
LIBOR Rate, as defined below (the “Index”) plus one and ninety hundredths
percent (1.90%) (the “Margin”). The interest rate payable hereunder is subject
to change from time to time based on changes in the LIBOR Rate, adjusted and
determined by Lender without notice to Borrower, as of the date of this Note and
on the first (1st) day of each calendar month thereafter (each an “Interest Rate
Change Date”). For purposes hereof, the “LIBOR Rate” shall mean the independent
index which is the London Interbank Offered Rate of interest for an interest
period of one (1) month, which appears on Bloomberg page BBAM under the column
heading “USD” on the day that is two London Business Days preceding each
Interest Rate Change Date (the “Reset Date”). “London Business Day” shall mean
any day on which commercial Lenders in London, England are open for general
business. If the LIBOR Rate, as defined above, is not available or is not
published for any Reset Date, then Lender shall, at its sole discretion, choose
a substitute source for the LIBOR Rate, which LIBOR Rate plus the Margin shall
become effective on the next Interest Rate Change Date. If the Index becomes
unavailable during the term of this Loan, Lender may designate a substitute
index and Margin after notice to Borrower. The interest rate payable on this
Loan is not necessarily the lowest rate charged by the Lender on its loans.
Borrower understands that Lender may make loans based on other rates as well.
Lender will tell Borrower the current interest rate payable on this Loan upon
Borrower’s request. The change in interest rate payable on this Loan will not
change more often than once each month. The current Index applicable to this
Loan is 0.189% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate per annum of the Margin over
the Index, resulting in an initial rate of 2.089% per annum.

The annual interest rate for this Note is computed on a 360/365 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding.

 

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2.

PAYMENT OF INTEREST; MATURITY DATE. Interest only on the outstanding principal
balance shall be due and payable in arrears on the first (1st) day of each month
commencing on September 1, 2015. In addition, principal payments shall
automatically be made on this Note from the Operating Account (as defined in the
Loan Agreement) as more particularly set forth in Section 6.3 of the Loan
Agreement. The entire unpaid principal amount hereof, together with accrued and
unpaid interest thereon and all other amounts payable hereunder, shall be due
and payable in full on July 24, 2020 (the “Maturity Date”).

3.

REVOLVING LINE OF CREDIT. Until such time as this Note is converted to a term
loan in compliance with the terms of Section 4 below, Borrower may from time to
time during the term of this Note borrow, partially or wholly repay its
outstanding borrowings, and reborrow the Loan funds, subject to all of the
limitations, terms and conditions of this Note, the Loan Agreement, and of any
agreement executed in connection with this Note, provided that the outstanding
principal balance of this Note shall at no time exceed the principal amount
stated above. The unpaid principal balance of this Note at any time shall be the
total amounts advanced hereunder by the holder hereof less the amount of
principal payments made hereon by or for the account of Borrower, which unpaid
principal balance may from time to time be evidenced by endorsements on this
Note or by the holder’s internal records, including daily computer print-outs.

4.

CONVERSION TO TERM LOAN.  On or prior to July 24, 2017 (the “Conversion
Deadline”), at Borrower’s option with ninety (90) days’ advance written notice
to Lender, this Note may be consolidated with that certain $18,000,000.00
revolving line of credit note of even date herewith made by Borrower to the
order of Lender and converted to a ten (10) year term loan bearing interest at
the Index plus the Margin, provided that: (a) no default exists under this Note
or any other Loan Document; (b) the terms of such conversion shall be subject to
Lender’s approval; (c) Borrower agrees to provide to Lender all necessary due
diligence including, without limitation, title endorsements, legal opinions, and
other items as may be required by Lender in connection with the conversion of
this Note; (d) Borrower shall provide substitute collateral to secure the
converted term loan, which collateral shall meet all conditions that a
Substitute Parcel is required to meet under Section 7.17 of the Loan Agreement;
(e) the loan amount for the converted term loan shall not exceed fifty percent
(50.0%) of the Lender-approved stabilized value of the proposed collateral, as
determined by Lender based on a current appraisal of such collateral to be
engaged, reviewed and approved by Lender prior to conversion; (f) the proposed
collateral shall have an actual in place Net Operating Income (as evidenced by
said current appraisal) sufficient to generate a minimum DSCR of 1.40 to 1.00,
with a DSCR based on (A) the trailing 180-day Net Operating Income of the
Property annualized with expenses customary to the Property including, without
limitation, a management fee of 4.00% and replacement reserves of $0.15 per
square foot, and (B) debt service (based on the proposed principal balance of
the converted loan) equal to the “Minimum Underwriting Rate” under Lender’s
credit policies at such time and an assumed amortization of twenty-five (25)
years; and (g) Borrower agrees to execute with Lender all documents required to
modify this Note and the other Loan Documents, as applicable, to set forth the
modified terms of the Loan in connection with the conversion of this Note to a
term loan, such modification documents to be in form and content satisfactory to
Lender.  In the event this Note is not converted to a term loan in accordance
herewith, this Note shall remain payable as set forth in section 2 above.

 

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5.

APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment or
prepayment, if any, made under this Note shall be applied to pay late charges,
accrued and unpaid interest, principal, and any other fees, costs and expenses
which Borrower is obligated to pay under this Note, in such order as Lender may
elect from time to time in its sole discretion.

6.

TENDER OF PAYMENT. All payments on this Note are payable on or before 2:00 p.m.
on the due date thereof, at the office of Lender specified above and shall be
credited on the date the funds become available lawful money of the United
States. All sums payable to Lender which are due on a day on which Lender is not
open for business shall be paid on the next succeeding business day and such
extended time shall be included in the computation of interest.

7.

LATE CHARGE. In the event that any installment of principal or interest required
to be made by Borrower under this Note shall not be received by Lender within
twenty (20) days after its due date, Borrower shall pay to Lender, on demand, a
late charge of four percent (4%) of such delinquent payment. The foregoing right
is in addition to, and not in limitation of, any other rights which Lender may
have upon Borrower’s failure to make timely payment of any amount due hereunder.
No late charge shall apply to the principal balance of this Note if not paid
when due.

8.

PREPAYMENT. The principal amount of this Note may be prepaid in whole or in part
at any time, and from time to time without penalty or premium, provided,
however, that if an Interest Rate Swap has been entered into in connection with
this Note, any full or partial prepayments of principal amounts due under this
Note may require termination or adjustment of the Interest Rate Swap and may
result in a payment due from Borrower per the terms and conditions of the
Interest Rate Swap.

9.

SECURITY FOR THE NOTE. This Note is executed and delivered in accordance with a
commercial transaction described in the Loan Agreement. As security for the
payment of the monies owing under this Note, Borrower has delivered or has
caused to be delivered to Lender the Security Documents. In addition, the
Guarantor has executed the Guaranty Agreement covering certain obligations, as
described in the Guaranty Agreement.

10.

DEFAULT RATE. Any amounts due hereunder which are not made as and when due,
whether by acceleration or otherwise, shall, at Lender’s option, bear interest
at the lesser of (i) the Default Rate, or (ii) the highest permissible rate
under applicable usury law, whichever is less. Such interest shall be payable
upon demand, but in no event later than when scheduled interest payments are
due, and shall also be charged on the amounts owed by Borrower to Lender
pursuant to any judgments entered in favor of Lender with respect to this Note.
The Default Rate shall apply both before and after any judgment on the
indebtedness evidenced by this Note.

11.

EVENTS OF DEFAULT. The occurrence of any Default, as defined in the Loan
Agreement, shall constitute a “Default” hereunder.

 

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12.

REMEDIES. If a Default exists, Lender may exercise any right, power or remedy
permitted by law or equity, or as set forth herein or in the Loan Agreement or
any other Loan Document including, without limitation, the right to declare the
entire unpaid principal amount hereof and all interest accrued hereon, and all
other sums secured by or owed under any other Loan Document, to be, and such
principal, interest and other sums shall thereupon become, immediately due and
payable.

13.

MISCELLANEOUS.

13.1.

Disclosure of Financial Information. Lender is hereby authorized to disclose any
financial or other information about Borrower to any regulatory body or agency
having jurisdiction over Lender and to any present, future or prospective
participant or successor in interest in any loan or other financial
accommodation made by Lender to Borrower. The information provided may include,
without limitation, amounts, terms, balances, payment history, return item
history and any financial or other information about Borrower. However, subject
to applicable law, Lender shall use reasonable efforts to protect the
confidentiality of the terms and conditions of the Loan in all other respects.

13.2.

Integration. This Note and the other Loan Documents constitute the sole
agreement of the parties with respect to the transaction contemplated hereby and
supersede all oral negotiations and prior writings with respect thereto.

13.3.

Attorneys’ Fees and Expenses. If Lender retains the services of counsel by
reason of a claim of a Default or the occurrence of a Default, or on account of
any matter involving this Note, or for examination of matters subject to
Lender’s approval under the Loan Documents, all costs of suit and all reasonable
attorneys’ fees and such other reasonable expenses so incurred by Lender shall
be paid by Borrower, on demand, and shall be deemed part of the obligations
evidenced hereby.

13.4.

No Implied Waiver. Lender shall not be deemed to have modified or waived any of
its rights or remedies hereunder unless such modification or waiver is in
writing and signed by Lender, and then only to the extent specifically set forth
therein. A waiver in one event shall not be construed as continuing or as a
waiver of or bar to such right or remedy in a subsequent event. After any
acceleration of, or the entry of any judgment on, this Note, the acceptance by
Lender of any payments by or on behalf of Borrower on account of the
indebtedness evidenced by this Note shall not cure or be deemed to cure any
Default or reinstate or be deemed to reinstate the terms of this Note absent an
express written agreement duly executed by Lender and Borrower.

13.5.

Waiver. Borrower, jointly and severally, waives demand, notice, presentment,
protest, demand for payment, notice of dishonor, notice of protest and diligence
of collection of this Note. Borrower consents to any and all extensions of time,
renewals, waivers, or modifications that may be granted by Lender with respect
to the payment or other provisions of this Note, and to the release of any
collateral, with or without substitution. Borrower agrees that Borrowers,
endorsers, guarantors and sureties may be added or released without notice and
without affecting Borrower’s liability hereunder. The liability of Borrower
shall not be affected by the failure of Lender to perfect or otherwise obtain or
maintain the priority or validity of any security interest in any collateral.
The liability of Borrower shall be absolute and unconditional and without regard
to the liability of any other party hereto.

 

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13.6.

No Usurious Amounts. Anything herein contained to the contrary notwithstanding,
Borrower does not agree and shall not be obligated to pay interest hereunder at
a rate which is in excess of the maximum rate permitted by law. If by the terms
of this Note, Borrower is at any time required to pay interest at a rate in
excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum legal rate and the portion of
all prior interest payments in excess of such maximum legal rate shall be
applied to and shall be deemed to have been payments in reduction of the
outstanding principal balance. Borrower agrees that in determining whether or
not any interest payable under this Note exceeds the highest rate permitted by
law, any non-principal payment, including without limitation, late charges,
shall be deemed to the extent permitted by law to be an expense, fee or premium
rather than interest.

13.7.

Partial Invalidity. The invalidity or unenforceability of any one or more
provisions of this Note shall not render any other provision invalid or
unenforceable. In lieu of any invalid or unenforceable provision, there shall be
added automatically a valid and enforceable provision as similar in terms to
such invalid or unenforceable provision as may be possible.

13.8.

Binding Effect. The covenants, conditions, waivers, releases and agreements
contained in this Note shall bind, and the benefits thereof shall inure to, the
parties hereto and their respective heirs, executors, administrators, successors
and assigns; provided, however, that this Note cannot be assigned by Borrower
without the prior written consent of Lender, and any such assignment or
attempted assignment by Borrower without consent shall be void and of no effect
with respect to Lender.

13.9.

Modifications. This Note may not be supplemented, extended, modified or
terminated except by an agreement in writing signed by the party against whom
enforcement of any such waiver, change, modification or discharge is sought.

13.10.

Sales or Participations. Lender may from time to time sell or assign, in whole
or in part, or grant participations in, the Loan, this Note and/or the
obligations evidenced thereby. The holder of any such sale, assignment or
participation, if the applicable agreement between Lender and such holder so
provides, shall be: (a) entitled to all of the rights, obligations and benefits
of Lender; and (b) deemed to hold and may exercise the rights of setoff or
banker’s lien with respect to any and all obligations of such holder to
Borrower, in each case as fully as though Borrower were directly indebted to
such holder. Lender shall give notice to Borrower of such sale, assignment or
participation; however, the failure to give such notice shall not affect any of
Lender’s or such holder’s rights hereunder.

 

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13.11.

Jurisdiction. Borrower irrevocably appoints each and every member and/or officer
of Borrower as its attorneys upon whom may be served, in writing, any notice,
process or pleading in any action or proceeding against it arising out of or in
connection with this Note or any other Loan Document; and Borrower hereby
consents that any action or proceeding against it be commenced and maintained in
any state or federal court sitting in North Carolina, by service of process on
any such owner, partner and/or officer; and Borrower agrees that such courts of
such State shall have jurisdiction with respect to the subject matter hereof and
the person of Borrower and all collateral securing the obligations of Borrower.
Borrower agrees not to assert any defense to any action or proceeding initiated
by Lender based upon improper venue or inconvenient forum.

13.12.

Governing Law. This Note shall be governed by and construed in accordance with
the substantive laws of the State of North Carolina.

13.13.

Continuing Enforcement. If, after receipt of any payment of all or any part of
this Note, Lender is compelled or agrees, for settlement purposes, to surrender
such payment to any person or entity for any reason (including, without
limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Note and the other Loan Documents shall continue in full
force and effect or be reinstated, as the case may be, and Borrower shall be
liable for, and shall indemnify, defend and hold harmless Lender with respect
to, the full amount so surrendered. The provisions of this Section shall survive
the cancellation or termination of this Note and shall remain effective
notwithstanding the payment of the obligations evidenced hereby, the release of
any security interest, lien or encumbrance securing this Note or any other
action which Lender may have taken in reliance upon its receipt of such payment.
Any cancellation, release or other such action shall be deemed to have been
conditioned upon any payment of the obligations evidenced hereby having become
final and irrevocable.

13.14.

Joint and Several Liability. Borrowers shall be jointly and severally bound by
and liable for this Note.

13.15.

Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND
LENDER AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY LENDER OR BORROWER, ON OR WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY. LENDER AND BORROWER EACH HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF
THEIR RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT LENDER WOULD NOT EXTEND
CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF
THIS NOTE.

(Remainder of Page Intentionally Left Blank)

 

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IN WITNESS WHEREOF, Borrower, intending to be legally bound, has duly executed
under seal and delivered this Note as of the day and year first above written.

  BORROWER:           FRP DEVELOPMENT CORP.,   a Maryland corporation          
By:       Name:       Title:               [CORPORATE SEAL]           Tax ID
No.: 58-1794556           BORROWER:       FRP MANASSAS LLC,   a Maryland limited
liability company (SEAL)           By: FRP DEVELOPMENT CORP.,   a Maryland
corporation, its sole member                     By:       Name:       Title:  
            [CORPORATE SEAL]           Tax ID No.: 20-3971594

 

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