Document:

FRP Holdings, Inc. 8-K

EXHIBIT 10.1 

TAX

MATTERS AGREEMENT

by

and between 

FRP

HOLDINGS, INC. 

 and

PATRIOT

TRANSPORTATION HOLDING, INC. 

Dated

as of January 30, 2014

    	 

    	 

    

 TABLE
OF CONTENTS

 

 

	 	 	Page
	Section 1. 	Definitions	1
	Section 2. 	Sole Tax Sharing Agreement	5
	Section 3. 	Federal Income Taxes	5
	Section 4.	State and Local Income Taxes	7
	Section 5. 	Foreign Income Tax	8
	Section 6. 	Estimated Tax Payments	8
	Section 7.	Settlement; Certain Other Tax Sharing Provisions	9
	Section 8.	Other Taxes	10
	Section 9. 	Certain Representations and Covenants	10
	Section 10.	Indemnities	13
	Section 11.	Guarantees	14
	Section 12. 	Communication and Cooperation	15
	Section 13. 	Audits and Contest	15
	Section 14.	Payments	16
	Section 15. 	Notices	17
	Section 16. 	Costs and Expenses	17
	Section 17. 	Effectiveness; Termination and Survival	18
	Section 18.	Section Headings	18
	Section 19.	Entire Agreement; Amendments and Waivers	18
	Section 20. 	Governing Law and Interpretation	18
	Section 21. 	Dispute Resolution	18
	Section 22. 	Counterparts	18
	Section 23.	Assignments; Third Party Beneficiaries	19
	Section 24.	Authorization, Etc	19

    	 

    	 

    

 

TAX

MATTERS AGREEMENT

 

THIS

TAX MATTERS AGREEMENT is entered into as of the 30th day of January, 2015, between FRP HOLDINGS, INC. (“FRP”),

a Florida corporation, on behalf of itself and the members of the FRP Group, as defined below, and PATRIOT TRANSPORTATION HOLDING,

INC. (“Patriot”), a Florida corporation, on behalf of itself and the members of the Patriot Group, as defined below. 

RECITALS

 

WHEREAS,

pursuant to the tax laws of various jurisdictions, certain members of the Patriot Group presently file certain tax returns on

an affiliated, consolidated, combined, unitary, fiscal unity or other, group basis (including as permitted by Section 1501

of the Internal Revenue Code of 1986, as amended (the “Code”)) with certain members of the FRP Group;

 

WHEREAS,

FRP and Patriot have entered into a Separation and Distribution Agreement, dated as of January 30, 2015 (the “Separation

Agreement”), providing for the separation of the Real Estate Businesses from the Transportation Business, pursuant to which

(a) FRP will own, directly and through its subsidiaries, the Real Estate Business, and Patriot will own, directly and through

its subsidiaries, the Transportation Business (the “Restructuring”), and (b) FRP will distribute to its shareholders

of all of the common stock of Patriot that is held by FRP (the “Distribution”) and certain other matters;

 

WHEREAS,

for U.S. federal income Tax purposes, it is intended that the Restructuring and the Distribution, taken together, shall qualify

as a tax-free transaction under Sections 355(a) and 368(a)(1)(D) of the Code;

 

WHEREAS,

FRP and Patriot desire to set forth their agreement on the rights and obligations of FRP, Patriot and the members of the FRP Group

and the Patriot Group, respectively, with respect to (A) the allocation between the parties of liabilities for Taxes, as

defined below, incurred in taxable periods beginning prior to, as a result of, and subsequent to the Distribution Date, as defined

below, and (B) provide for and agree upon various other tax matters;

 

NOW,

THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

 

Section

1.     Definitions. 

(a)As

used in this Agreement:

 

“Active

Business” shall mean an active trade or business relied upon to satisfy the requirements of Section 355 of the

Code as set forth in the opinion being delivered by counsel in connection with the Distribution.

 

    	1

    	 

    

  

“After-Tax

Amount” shall mean an additional amount necessary to reflect the hypothetical Tax consequences of the receipt or accrual

of any payment, using the maximum statutory rate (or rates, in the case of an item that affects more than one Tax) applicable

to the recipient of such payment for the relevant Taxable year, reflecting, for example, the effect of the deductions available

for interest paid or accrued and for Taxes, such as state and local income Taxes.

 

“AMT”

shall mean the alternative minimum tax, within the meaning of Section 55 of the Code.

 

“Closing

of the Books Method” shall mean the apportionment of items between portions of a Taxable period based on a closing of

the books and records on the Distribution Date (as if the Distribution Date were the end of the Taxable period), provided that

any items not susceptible to such apportionment shall be apportioned on the basis of elapsed days during the relevant portion

of the Taxable period.

 

“Code”

shall have the meaning ascribed thereto in the recitals.

 

“Combined

Apportionment Factor” shall mean the apportionment factor reflected on the applicable consolidated, combined or unitary

state or local income Tax return and utilized in computing the combined, consolidated or unitary state or local income Tax liability.

 

“Consolidated

Federal Return” shall mean a Pre-Deconsolidation Period Return filed in respect of federal income Taxes by a Consolidated

Group.

 

“Consolidated

Group” shall mean any group consisting of (i) at least one member of the FRP Group that filed (or will file) any

Pre-Deconsolidation Period Return that reflects the income, assets or operations of any member of the Patriot Group or (ii) at

least one member of the Patriot Group that filed (or will file) any Pre-Deconsolidation Period Return that reflects the income,

assets or operations of any member of the FRP Group.

 

“Consolidated

State Return” shall mean a Pre-Deconsolidation Period Return filed in respect of state or local income Taxes by a Consolidated

Group, including, for the avoidance of doubt, any combined state income tax return.

 

“Deconsolidation

Date” shall mean with respect to a Return the date on which any member of the Patriot Group is no longer consolidated,

combined or in a unitary relationship (as the case may be) with any member of the FRP Group in filing such Return.

 

“Distribution”

shall have the meaning ascribed thereto in the recitals.

 

“Distribution

Date” shall mean the date on which the Distribution occurs.

 

“Equity

Securities” shall mean any stock or other securities treated as equity for tax purposes, options, warrants, rights,

convertible debt, or any other instrument or security that affords

any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the

value of stock.

 

    	2

    	 

    

 

 “Final

Determination” shall mean (i) with respect to federal income Taxes, (A) a “determination” as defined

in Section 1313(a) of the Code, or (B) execution of an IRS Form 870-AD (or any successor form thereto), as a final resolution

of Tax liability for any Taxable period, except that a Form 870-AD (or successor form thereto) that reserves the right of the

taxpayer to file a claim for Refund or the right of the IRS to assert a further deficiency shall not constitute a Final Determination

with respect to the item or items so reserved; (ii) with respect to Taxes other than federal income Taxes, any final determination

of liability in respect of a Tax that, under applicable law, is not subject to further appeal, review or modification through

proceedings or otherwise; (iii) with respect to any Tax, any final disposition by reason of the expiration of the applicable

statute of limitations; or (iv) with respect to any Tax, the payment of Tax by any member of the FRP Group or the Patriot

Group, whichever is responsible for payment of such Tax under applicable law, with respect to any item disallowed or adjusted

by a Taxing Authority, provided that the provisions of Section 13 hereof have been complied with, or, if such section is

inapplicable, that the party responsible under the terms of this Agreement for such Tax is notified by the party paying such Tax

that it has determined that no action should be taken to recoup such disallowed item, and the other party agrees with such determination.

 

“FRP”

shall have the meaning ascribed thereto in the recital.

 

“FRP

Assumed Liability Payment” means a payment by any member of the FRP Group in respect of a FRP Liability, as defined

in the Separation Agreement.

 

“FRP

Group” shall mean FRP and each of its direct and indirect Subsidiaries other than those entities comprising the Patriot

Group.

 

“Group”

shall mean the Patriot Group or the FRP Group, as appropriate.

 

“IRS”

shall mean the Internal Revenue Service.

 

“Patriot”

shall have the meaning ascribed thereto in the recitals.

 

“Patriot

Group” shall mean shall mean Patriot and each of its direct and indirect Subsidiaries immediately after the Distribution,

including any predecessors thereto.

 

“Person”

shall have the meaning ascribed to it in Section 7701(a)(1) of the Code.

 

“Post-Deconsolidation

Period” shall mean any Taxable period (or portion thereof) beginning after the Deconsolidation Date.

 

“Pre-Deconsolidation

Period” shall mean any Taxable period (or portion thereof) ending on or before the Deconsolidation Date.

 

    	3

    	 

    

 

“Refund”

shall mean any refund of Taxes, including any reduction in Taxes by means of a credit, offset or otherwise.

 

“Return”

shall mean any Tax return, statement, report, form, election, claim or surrender (including estimated Tax returns and reports,

extension requests and forms, and information returns and reports) required to be filed with any Taxing Authority.

 

“Separate

Group Tax Liability” shall mean (i) with respect to federal income Taxes, the product of a Group’s Separate

Group Taxable Income, computed for federal income Tax purposes, and the highest federal income Tax rate imposed under the Code

on the Taxable income of a corporation for the relevant Taxable period (or portion thereof), reduced by any Tax credits that the

Group would be able to use if it were calculating its federal income Tax liability on a stand-alone basis and (ii) with respect

to the Taxes of a particular state or locality, the product of the Group’s Separate Group Taxable Income and the Combined

Apportionment Factor and the State Tax Rate, reduced by any applicable Tax credits that the Group would be able to use if it were

calculating its Tax liability on a stand-alone basis.

 

“Separate

Group Taxable Income” shall mean, with respect to a Group, such Group’s Taxable income computed as if such Group

were a separate consolidated, combined or unitary group, and applying the Tax principles, including limitations and carryovers

(excluding limits for charitable contributions and dividends received deduction, and accounting for deferred intercompany transactions

consistent with the deferral and recognition rules of Treasury Regulations Section 1.1502-13 (or any successor rule) or analogous

state or local rule), that would have been applicable to such Group had such Group never been part of the Consolidated Group or

any other consolidated, combined or unitary group. In the context of state and local Tax, Separate Group Taxable Income shall

be computed prior to the application of any apportionment formula.

 

“Separate

Group Taxable Loss” shall mean, with respect to a Group, such Group’s Taxable loss computed as if such Group were

a separate consolidated, combined or unitary group, and applying the Tax principles, including limitations and carryovers (excluding

limits for charitable contributions and dividends received deduction, and accounting for deferred intercompany transactions consistent

with the deferral and recognition rules of Treasury Regulations Section 1.1502-13 (or any successor rule) or analogous state

or local rule), that would have been applicable to such Group had such Group never been part of the Consolidated Group or any

other consolidated, combined or unitary group. In the context of state and local Tax, Separate Group Taxable Loss shall be computed

prior to the application of any apportionment formula.

 

“Separation

Agreement” shall have the meaning ascribed thereto in the recitals.

 

“State

Tax Rate” shall mean, with respect to a particular state or locality, the highest applicable Tax rate imposed under

applicable law on the Separate Group Taxable Income of the Group for the relevant Taxable period (or portion thereof).

 

    	4

    	 

    

 

“Subsidiary”

of any Person shall mean any corporation, partnership or other entity directly or indirectly owned more than 50 percent (by vote

or value) by such Person.

 

“Tax”

(and the correlative meaning, “Taxes,” “Taxing” and “Taxable”) shall

mean (A) any tax imposed under Subtitle A of the Code, or any net income, gross income, gross receipts, alternative or add-on

minimum, sales, use, business and occupation, value-added, trade, goods and services, ad valorem, franchise, profits, license,

business royalty, withholding, payroll, employment, capital, excise, transfer, recording, severance, stamp, occupation, premium,

property, asset, real estate acquisition, environmental, custom duty, or other tax, governmental fee or other like assessment

or charge of any kind whatsoever, together with any interest and any penalty, addition to tax or additional amount imposed by

a Taxing Authority; or (B) any liability of a member of the FRP Group or the Patriot Group for the payment of any amounts

described in clause (A) as a result of any express or implied obligation to indemnify any other Person.

 

“Tax

Proceeding” shall mean any Tax audit, dispute or proceeding (whether administrative, judicial or contractual).

 

“Taxing

Authority” shall mean any governmental authority (domestic or foreign), including, without limitation, any state, municipality,

political subdivision or governmental agency, responsible for the imposition of any Tax.

 

(b)All

capitalized terms used but not defined herein shall have the same meanings as in the Separation Agreement. Any term used in this

Agreement which is not defined in this Agreement or the Separation Agreement shall, to the extent the context requires, have the

meaning assigned to it in the Code or the applicable Treasury regulations thereunder (as interpreted in administrative pronouncements

and judicial decisions), or in comparable provisions of applicable law.

 

Section 2.     Sole
Tax Sharing Agreement. 

Any

and all existing Tax sharing agreements or arrangements, written or unwritten, between any member of the FRP Group, on the one

hand, and any member of the Patriot Group, on the other hand, shall be or shall have been terminated on or before the Distribution

Date. Following the Distribution, neither the members of the Patriot Group nor the members of the FRP Group shall have any further

rights or liabilities thereunder, and this Agreement shall be the sole Tax sharing agreements between the members of the Patriot

Group, on the one hand, and the members of the FRP Group, on the other hand. FRP and Patriot shall act in good faith in the performance

of this Agreement. 

Section
3.     Federal Income Taxes. 

(a)Return

Filing.

 

(i)FRP

shall have the exclusive obligation and right to prepare and file, or cause to be prepared and filed, Consolidated Federal Returns

for which the Consolidated Group is required or permitted to file a Consolidated Federal Return for any Pre-Deconsolidation Period,

using, inter alia, information previously provided by Patriot. Patriot

shall maintain all necessary information to file a Consolidated Federal Return and shall provide FRP with all such necessary information

in accordance with past practice and in no event later than 45 days before such return is due. Each member of the Consolidated

Group shall execute and file such consents, elections and other documents as may be required or appropriate for the filing of

such Consolidated Federal Returns.

 

    	5

    	 

    

 

(ii)To

the extent that Patriot or any member of the Patriot Group is included in any Consolidated Federal Return for a Taxable period

that includes the Distribution Date, FRP shall include in such Consolidated Federal Return the results of Patriot or of the member

of the Patriot Group on the basis of the Closing of the Books Method.

 

(iii)Subject

to the provisions of Sections 3(b), 6 and 7, FRP shall pay, or cause to be paid, any and all federal income Taxes due or required

to be paid with respect to, or required to be reported on, any such Consolidated Federal Return filed in accordance with Section 3(a)(i).

 

(b)Allocated

Tax Charge.

 

(i)FRP

shall be responsible for calculating the Separate Group Taxable Income or Separate Group Taxable Loss, as the case may be, for

each Group included in a Consolidated Federal Return. Each Group included in a Consolidated Federal Return shall bear its Separate

Group Tax Liability, if any. For purposes of such calculation, the deduction for state and local Taxes to which each Group is

entitled will be determined in a manner consistent with Section 4 of this Agreement.

 

(ii)If

the Patriot Group included in the Consolidated Federal Return incurs a Separate Group Taxable Loss, FRP shall pay to the Patriot

Group (A) the amount, if any, by which the federal income Taxes payable with respect to the Consolidated Federal Return are

reduced by reason of the Patriot Group’s Separate Group Taxable Loss and (B) any Refund of federal income Taxes or

other federal income Tax benefit attributable to such Separate Group Taxable Loss that is actually realized, in each case as determined

by FRP in its sole discretion. To the extent the Patriot Group receives a payment from FRP in respect of a Separate Company Taxable

Loss pursuant to this Section 3(b)(ii), such loss shall not be carried forward or carried back by the Patriot Group for purposes

of determining Separate Group Taxable Income or Separate Group Taxable Loss in any other Taxable period (or portion thereof).

To the extent the Patriot Group does not receive a payment from FRP in respect of a Separate Group Taxable Loss pursuant to this

Section 3(b)(ii), such loss may be carried forward or carried back, subject to any applicable limitation with respect to

carry forward or carry back losses, by the Patriot Group for purposes of determining Separate Group Taxable Income or Separate

Group Taxable Loss in another Taxable period (or portion thereof).

 

(iii)In

the event a Consolidated Group incurs an AMT liability with respect to any Taxable period (or portion thereof), FRP shall be solely

responsible for such liability. Any Tax benefit arising from the utilization of a consolidated federal AMT credit shall be for

the sole benefit of FRP.

 

    	6

    	 

    

 

Section
4.     State and Local Income Taxes. 

(a)Return

Filing.

 

(i)FRP

shall prepare and file, or cause to be prepared and filed, Consolidated State Returns for which the Consolidated Group is required

or permitted to file a Consolidated State Return using, inter alia, information previously provided by Patriot. Patriot shall

maintain all necessary information to file a Consolidated State Return and shall provide FRP with all such necessary information

in accordance with past practice and in no event later than 45 days before such return is due. Each member of the Consolidated

Group shall execute and file such consents, elections and other documents as may be required or appropriate for the filing of

such Consolidated State Returns.

 

(ii)To

the extent that Patriot or any member of the Patriot Group is included in any Consolidated State Return for a Taxable period that

includes the Distribution Date, FRP shall include in such Consolidated State Return the results of Patriot or of the member of

the Patriot Group on the basis of the Closing of the Books Method.

 

(iii)Subject

to the provisions of Sections 4(b), 6 and 7, FRP shall pay, or cause to be paid, any and all income Taxes due or required to be

paid with respect to, or required to be reported on, any such Consolidated State Return filed in accordance with Section 4(a)(i).

 

(iv)In

the event a Consolidated State Return is not filed, each relevant member of the FRP Group and Patriot Group shall be responsible

for (A) filing its own Return as a separate entity in respect of state and local income Taxes, or its own Return in respect

of state and local income Taxes relating to a group consisting solely of members of the FRP Group or members of the Patriot Group,

as the case may be, on behalf of the separate group, in each case including requests for extension, as if this Agreement were

not in effect and (B) making Tax payments (including estimated Tax payments, if necessary). Each such member filing a Return

as a separate entity pursuant to this Section 4(a)(iv) shall be entitled to any Tax benefit and shall be liable for any Tax

burden resulting from the filing of such separate Return.

 

(b)Allocated

Tax Charge.

 

(i)FRP

shall be responsible for calculating the Separate Group Taxable Income or Separate Group Taxable Loss, as the case may be, for

each Group included in a Consolidated State Return. Each Group included in a Consolidated State Return shall bear its Separate

Group Tax Liability, if any.

 

 

    	7

    	 

    

 

(ii)If
the Patriot Group included in a Consolidated State Return incurs a Separate Group Taxable Loss, FRP shall pay, or shall
cause to be paid, to the Patriot Group (A) the amount, if any, by which the state or local income Taxes reflected on
such Return are reduced by reason of the Patriot Group’s Separate Group Taxable Loss and (B) any Refund of state
or local income Taxes or other state or local income Tax benefit attributable to such Separate Group Taxable Loss that
is actually realized, in each case as determined by FRP in its sole discretion. To the extent the Patriot Group receives a
payment from FRP in respect of a Separate Group Taxable Loss pursuant to this Section 4(b)(ii), such loss shall not be
carried forward or carried back by the Patriot Group for purposes of determining Separate Group Taxable Income or Separate
Group Taxable Loss in any other Taxable period (or portion thereof). To the extent the Patriot Group does not receive a
payment from FRP in respect of a Separate Group Taxable Loss pursuant to this Section 4(b)(ii), such loss may be carried
forward or carried back, subject to any applicable limitation with respect to carry forward or carry back losses, by the
Patriot Group for purposes of determining Separate Group Taxable Income or Separate Group Taxable Loss in another Taxable
period (or portion thereof).

 

Section
5.     Foreign Income Tax. 

With

respect to the calculation of each Group’s Tax liability for foreign Taxes, the principles set forth in Section 4 shall

apply mutatis mutandis. 

Section
6.     Estimated Tax Payments. 

(a)If

estimated Tax payments are required with respect to a Consolidated Group for a Pre-Deconsolidation Period, FRP shall pay, or cause

to be paid, to the IRS, and/or to each relevant state, local and foreign Taxing Authority, on behalf of the members of such Consolidated

Group, those estimated Tax payments that are due on the relevant dates prescribed by applicable law. On December 15 (or the

proper due date under applicable law) of the year following the current Tax year, FRP shall pay to the IRS, and to each relevant

state, local and foreign Taxing Authority, on behalf of the members of any Consolidated Group, the payment, if any, required to

be made with a request for an extension of time in which to file a Consolidated Federal Return or a Consolidated State Return,

as the case may be. Each Group’s share of such estimated Tax payments, and payments required to be made with a request for

an extension of time in which to file a Consolidated Federal Return or a Consolidated State Return, shall be determined in a manner

consistent with the methods set forth in Sections 3, 4 and 5 of this Agreement. Reimbursement to FRP of the Patriot Group’s

share of any quarterly estimated tax payments or any payment made with a request for an extension of time in which to file a Consolidated

Federal Return or a Consolidated State Return, shall be made in immediately available funds within 20 business days after receiving

notice of such liability from FRP.

 

(b)Notwithstanding

the provisions of Section 6(a), if FRP requests in writing an advance reimbursement from the Patriot Group of the Patriot

Group’s share of a quarterly estimated Tax payment or any payment required to be made with a request for an extension of

time in which to file a Consolidated Federal Return or a Consolidated State Return, which request shall be not more than 10 business

days and not less than 5 business days prior to the due date of such payment, the Patriot Group shall reimburse FRP not later

than the due date of such estimated Tax payment.

 

    	8

    	 

    

 

Section
7.     Settlement; Certain Other Tax Sharing Provisions. 

(a)FRP

shall calculate settlement of the final federal, state, local and foreign Tax liability for all Pre-Deconsolidation Periods, and

notify the Patriot Group of such settlement. Subject to Section 21 of this Agreement (relating to dispute resolution procedures),

the Patriot Group shall pay to FRP its share of such Tax liability, as determined under Sections 3, 4 and 5 of this Agreement,

within 20 business days after receiving notice of such Tax liability from FRP. Any amounts paid by any member of the Patriot Group

pursuant to Section 6 and any amounts receivable by the Patriot Group in respect of a Separate Group Taxable Loss or Tax

credit shall be included in determining the payments due from the Patriot Group. If the sum of any payments by the Patriot Group

pursuant to Section 6, and any amounts receivable by the Patriot Group in respect of a Separate Group Taxable Loss or Tax

credit exceed its Tax liability, such excess shall be refunded to the Patriot Group. Interest will be due on any underpayment

or overpayment of Tax, computed from the date on which a final Return is filed at the rate equal to the “prime” rate

as published in the Wall Street Journal, Eastern Edition on such date.

 

(b)If

a portion or all of an unused loss or Tax credit is allocated to a member of the Consolidated Group, pursuant to Treasury Regulations

Section 1.1502-21(b) or Treasury Regulations Section 1.1502-79, and is carried back or forward to a Taxable year in

which such member filed a separate Return or consolidated, combined or unitary Return with an affiliated group that is not a Consolidated

Group, any Refund or reduction in Tax liability arising from such carry back or carryover shall be retained by such member, subject

to future audit adjustments. Notwithstanding the foregoing, FRP, in its sole discretion, (i) shall determine whether an election

shall be made to relinquish the entire carry back period with respect to part or all of a consolidated net operating loss for

any Pre-Deconsolidation Period in accordance with Treasury Regulations Section 1.1502-21(b)(3) and (ii) may require

Patriot to make an election to relinquish the entire carry back period with respect to all net operating losses and consolidated

net operating losses attributable to Patriot in accordance with Proposed Treasury Regulations Section 1.1502-72(e)(1) (or

any final, amended or successor version thereof that is substantively comparable).

 

(c)Notwithstanding

Section 7(b) above, no member of the Patriot Group shall make any election to carry back any Tax item from a Post-Deconsolidation

Period to a Pre-Deconsolidation Period without FRP’s consent. In the event that FRP consents to the carry back of any Tax

item by a member of the Patriot Group from a Post-Deconsolidation Period to a Pre-Deconsolidation Period or in the event that

a member of the Patriot Group is required by applicable law to carry back a Tax item from a Post-Deconsolidation Period to a Pre-Deconsolidation

Period, FRP shall currently compensate the Patriot Group only for a Tax item that is carried back which does not result in the

loss or deferral of any Tax attribute of any member of the FRP Group. In the event that such item of a member of the FRP Group

is only deferred, FRP shall make a payment to the Patriot Group in respect of such deferred item at the time the FRP Group actually

realizes the deferred Tax attribute. To the extent the FRP Group suffers a permanent loss of such Tax attribute, no payment shall

be made to the Patriot Group.

 

(d)In

the event that the Patriot Group is entitled to a Tax benefit by reason of a FRP Assumed Liability Payment, Patriot shall pay

to FRP (A) the amount, if any, by which any Taxes payable by the Patriot Group are reduced by reason of the FRP Assumed Liability

Payment and (B) any Refund of Taxes or other Tax benefit attributable thereto that is actually realized, in each case as

determined by Patriot in consultation with FRP.

 

    	9

    	 

    

 

 (e)Patriot

and FRP hereby acknowledge and agree that Sections 6 and 7(a) are applicable only with respect to Pre-Deconsolidation Periods

for which a final Return is filed after the date hereof.

 

(f)Deductions

and Reporting for Certain Equity-Based Awards.

 

(i)

The entity issuing the equity awards and other incentive compensation described in Section 3.3 of the Employee Matters Agreement

shall be entitled to claim any Tax deduction in respect of such equity awards and other incentive compensation on its respective

Tax Return associated with such event. 

(ii)

If, by reason of a subsequent Final Determination as to the treatment of any Tax deduction related to the equity awards and other

incentive compensation referred to in subsection (f)(i) above, a Taxing Authority determines that (A) FRP or a member of the FRP

Group is entitled to a deduction to which Patriot or a member of the Patriot Group is entitled pursuant to subsection (f)(i),

then FRP shall, and shall cause the FRP Group to, pay to Patriot the amount of any resulting Tax benefits within 30 days of demand

therefor, or (B) Patriot or a member of the Patriot Group is entitled to a deduction to which FRP or a member of the FRP Group

is entitled pursuant to subsection (f)(i), then Patriot shall, and shall cause the Patriot Group to, pay to FRP the amount of

any resulting Tax benefits within 30 days of demand therefor.  

(g)Except

as specifically provided herein, with respect to any Tax Return that FRP has the obligation and right to file for any Pre-Deconsolidation

Periods, such Tax Return shall be prepared in accordance with past practices, accounting methods, elections, or conventions (“Past

Practices”) used by the Consolidated Group with respect to the Tax Return in question (unless there is no reasonable basis

for the use of such Past Practices), and to the extent any items are not covered by Past Practices (or in the event that there

is no reasonable basis for the use of such Past Practices), in accordance with reasonable Tax accounting practices. Neither FRP

nor Patriot shall take a position on any Tax Return that is reasonably expected to cause a Tax Detriment to the other party without

the written consent of such party, such consent not to be unreasonably withheld or delayed. 

 

Section
8.     Other Taxes. 

All

federal, state, local, foreign and other Taxes that are (i) not otherwise expressly dealt with herein or (ii) determined

on a single-entity basis (including any federal excise Taxes and any franchise Taxes), and the filing of any Returns with respect

to such Taxes, shall be the responsibility of the Person who is liable for such Taxes or is responsible for filing such Returns

under applicable law. 

Section
9.     Certain Representations and Covenants. 

(a)Patriot

Representations. Patriot and each member of the Patriot Group represents that as of the date hereof, and covenants that on

the Distribution Date, there is no plan or intention:

    	10

    	 

    

(i)to

liquidate Patriot or to merge or consolidate Patriot, or any member of the Patriot Group, with any other Person subsequent to

the Distribution;

(ii)to

sell or otherwise dispose of any material asset of Patriot or any member of the Patriot Group subsequent to the Distribution,

except in the ordinary course of business;

 (iii)to

take any action inconsistent with the written information and representations furnished to counsel in connection with any opinion

being delivered by counsel with respect to the Distribution, regardless of whether such information and representations were included

in the opinion of counsel;

 (iv)to

repurchase stock of Patriot other than in a manner that satisfies the requirements of IRS Revenue Procedure 96-30, as modified

by IRS Revenue Procedure 2003-48;

 (v)to

take any action that management of Patriot knows, or should have known, is reasonably likely to contravene any agreement with

a Taxing Authority entered into prior to the Distribution Date to which any member of the Patriot Group or the FRP Group is a

party; or

 (vi)to

enter into any negotiations, agreements, or arrangements with respect to transactions or events (including stock issuances, pursuant

to the exercise of options or otherwise, option grants, the adoption of, or authorization of shares under, a stock option plan,

capital contributions, or acquisitions, but not including the Distribution) that could reasonably be expected to cause the Distribution

to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly Patriot stock representing

a “50-percent or greater interest” within the meaning of Section 355(d)(4) of the Code. 

(b)Patriot

Covenants. Patriot covenants to FRP that, without the prior written consent of FRP,

 

(i)during

the two-year period following the Distribution Date, (A) neither Patriot, nor any member of the Patriot Group conducting an Active

Business, will, or will agree to, discontinue such business or dissolve, liquidate or engage in any transaction involving a merger,

consolidation or other reorganization, and (B) none of Patriot or any other member of the Patriot Group will, or will agree to,

sell, exchange, distribute or otherwise dispose of any asset of any member of the Patriot Group, except in the ordinary course

of business or as set forth on Schedule 9(b)(i);

(ii)Patriot

will not, nor will it permit any member of the Patriot Group to, take any action inconsistent with the information and representations

furnished to counsel in connection with any opinion being delivered by counsel with respect to the Distribution, regardless of

whether such information and representations were included in the opinion of counsel;

 

    	11

    	 

    

 

(iii)Patriot

will not, nor will it permit any member of the Patriot Group to, take any action that management of Patriot knows, or should have

known, is reasonably likely to contravene any agreement with a Taxing Authority entered into prior to the Distribution Date to

which any member of the Patriot Group or the FRP Group is a party;

 (iv)during

the two-year period following the Distribution Date, Patriot will not repurchase stock of Patriot in a manner contrary to the

requirements of IRS Revenue Procedure 96-30, as modified by IRS Revenue Procedure 2003-48, or in a manner contrary to the representations

made to counsel in connection with the opinion of counsel;

 (v)on

or after the Distribution Date, Patriot will not, nor will it permit any member of the Patriot Group to, make or change any accounting

method, amend any Return or take any Tax position on any Return, take any other action or enter into any transaction that results

in any increased Tax liability or reduction of any Tax asset of the FRP Group or any member thereof in respect of any Pre-Deconsolidation

Period;

 (vi)during

the two-year period following the Distribution Date, none of Patriot or any other member of the Patriot Group will, or will agree

to, sell or otherwise issue to any Person, or redeem or otherwise acquire from any Person, any Equity Securities of Patriot or

any other member of the Patriot Group; provided, however, that Patriot may repurchase stock of Patriot as permitted by Section 9(b)(iv)

hereof and may issue such Equity Securities to the extent such issuances satisfy Safe Harbor VIII (relating to acquisitions in

connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of

an employer) of Treasury Regulation Section 1.355-7(d); and

 (vii)during

the two-year period following the Distribution Date, none of Patriot or any other member of the Patriot Group will (A) solicit

any Person to make a tender offer for, or otherwise acquire or sell, the Equity Securities of Patriot, (B) participate in or support

any unsolicited tender offer for, or other acquisition, issuance or disposition of, the Equity Securities of Patriot or (C) approve

or otherwise permit any proposed business combination or any transaction which, in the case of clauses (A) or (B), individually

or in the aggregate, together with any transaction occurring within the four-year period beginning on the date which is two years

before the Distribution Date and any other transaction which is part of a plan or series of related transactions (within the meaning

of Section 355(e) of the Code) that includes the Distribution, could result in one or more Persons acquiring (except for

acquisitions that otherwise satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance

of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355–7(d))

directly or indirectly stock representing a 40% or greater interest, by vote or value, in Patriot (or any successor thereto). 

    	12

    	 

    

 

(c)Patriot

Covenants Exceptions. Notwithstanding the foregoing, Patriot and the members of Patriot Group may take actions inconsistent

with the covenants contained in Section 9(b) above, if:

 

(i)In

the case of any disposition of assets that could otherwise be subject to Section 9(b)(i) or (ii), the aggregate book value

of such assets does not exceed 5 percent of total assets; or

(ii)In

the case of any other action: (A) Patriot notifies FRP of its proposal to take such action and Patriot and FRP obtain a ruling

from the IRS to the effect that such actions will not result in the Distribution being taxable to FRP or its shareholders, provided

that Patriot agrees in writing to bear any expenses associated with obtaining such a ruling and, provided further, that Patriot

shall not be relieved of any liability under Section 10(a) of this Agreement by reason of seeking or having obtained such

a ruling; or (B) Patriot notifies FRP of its proposal to take such action and obtains an opinion of counsel recognized as

an expert in federal income tax matters and acceptable to FRP to the same effect as in Section 9(c)(ii)(A) , provided that

such opinion is acceptable to FRP in its sole discretion; provided further, that Patriot shall not be relieved of any liability

under Section 10(a) of this Agreement by reason of having obtained such an opinion.

 

Section

10.     Indemnities.

 (a)Patriot

Indemnity. Patriot and each member of the Patriot Group will jointly and severally indemnify FRP and the members of the FRP

Group against, and hold them harmless from: 

(i)any

Tax liability of the Patriot Group as determined in accordance with this Agreement;

(ii)any

liability or damage resulting from a breach by Patriot or any member of the Patriot Group of any representation or covenant made

by Patriot herein;

(iii)any

Tax liability of FRP that is attributable to any action of Patriot or any member of the Patriot Group, other than any action required

by the Separation Agreement without regard to whether FRP has consented to such action; and

(iv)all

liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and

expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or

assertion of any Tax liability or damage described in (i), (ii), or (iii), including those incurred in the contest in good faith

in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage.

(b)FRP

Indemnity. FRP and each member of the FRP Group will jointly and severally indemnify Patriot and the members of the Patriot

Group against, and hold them harmless from:

  

    	13

    	 

    

 

(i)any

Tax liability of the Consolidated Group, other than any such liabilities described in Section 10(a);

(ii)any

Taxes imposed on Patriot or any member of the Patriot Group under Treasury Regulation 1.1502-6 (or similar provision of state,

local or foreign law) solely as a result of Patriot or any such member being or having been a member of a Consolidated Group;

and

(iii)all

liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and

expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or

assertion of any income Tax liability or damage described in (i) or (ii) including those incurred in the contest in

good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such income Tax, liability or

damage.

 

(c)Discharge

of Indemnity. Patriot, FRP and the members of the Patriot Group and FRP Group, respectively, shall discharge their obligations

under Sections 10(a) and 10(b) hereof, respectively, by paying the relevant amount within 30 days of demand therefor. Any such

demand shall include a statement showing the amount due under Section 10(a) or 10(b), as the case may be. Items described

in Sections 10(a)(i) and 10(b)(i) shall be calculated as set forth in Sections 3, 4 and 5. Notwithstanding the foregoing, if either

Patriot, FRP or any member of the Patriot Group or FRP Group disputes in good faith the fact or the amount of its obligation under

Section 10(a) or Section 10(b), then no payment of the amount in dispute shall be required until any such good faith

dispute is resolved in accordance with Section 21 hereof; provided, however, that any amount not paid within 30 days of demand

therefor shall bear interest as provided in Section 14.

 

(d)Tax

Benefits. If an indemnification obligation of any member of the FRP Group or any member of the Patriot Group, as the case

may be, under this Section 10 with respect to a Consolidated Group arises in respect of an adjustment that makes allowable

to a member of the Patriot Group or a member of the FRP Group, respectively, any Tax benefit which would not, but for such adjustment,

be allowable, then any payment by any member of the FRP Group or any member of the Patriot Group, respectively, pursuant to this

Section 10 shall be an amount equal to (x) the amount otherwise due but for this subsection (d), minus (y) the

present value of the product of the Tax benefit multiplied (i) by the maximum applicable federal, foreign, state or local,

as the case may be, corporate Tax rate in effect at the time such Tax benefit becomes allowable to a member of the Patriot Group

or a member of the FRP Group (as the case may be) or (ii) in the case of a credit, by 100 percent. The present value of such

product shall be determined by discounting such product from the time the Tax benefit becomes allowable at the rate equal to the

“prime” rate as published in the Wall Street Journal, Eastern Edition on the date of such determination.

 

Section
11.     Guarantees.

 

FRP

or Patriot, as the case may be, shall guarantee or otherwise perform the obligations of each member of the FRP Group or the Patriot

Group, respectively, under this Agreement

 

    	14

    	 

    

 

Section
12.     Communication and Cooperation. 

(a)

Consult and Cooperate. Patriot and FRP shall consult and cooperate (and shall cause each member of the Patriot Group or

the FRP Group, respectively, to cooperate) fully at such time and to the extent reasonably requested by the other party in connection

with all matters subject to this Agreement. Such cooperation shall include, without limitation,

 

(i)the

retention, and provision on reasonable request, of any and all information including all books, records, documentation or other

information pertaining to Tax matters relating to the FRP Group and the Patriot Group, any necessary explanations of information,

and access to personnel, until one year after the expiration of the applicable statute of limitation (giving effect to any extension,

waiver, or mitigation thereof);

(ii)the

execution of any document that may be necessary (including to give effect to Section 13) or helpful in connection with any

required Return or in connection with any audit, proceeding, suit or action; and

(iii)the

use of the parties’ best efforts to obtain any documentation from a governmental authority or a third party that may be

necessary or helpful in connection with the foregoing. 

(b)Provide

Information. FRP and Patriot shall keep each other fully informed with respect to any material development relating to the

matters subject to this Agreement.

 

(c)Tax

Attribute Matters. FRP and Patriot shall promptly advise each other with respect to any proposed Tax adjustments relating

to a Consolidated Group, which are the subject of an audit or investigation, or are the subject of any proceeding or litigation,

and which may affect any Tax liability or any Tax attribute of FRP, Patriot, the FRP Group, the Patriot Group or any member of

the Patriot Group or the FRP Group (including, but not limited to, basis in an asset or the amount of earnings and profits).

 

Section
13.     Audits and Contest. 

(a)Notice.

FRP or Patriot shall promptly notify the other in writing upon the receipt of any notice of Tax Proceeding from the relevant Taxing

Authority; provided, that a party’s right to indemnification under this Agreement shall not be limited in any way by a failure

to so notify, except to the extent that the indemnifying party is materially prejudiced by such failure.

 

(b)FRP

Control. Notwithstanding anything in this Agreement to the contrary, except to the extent provided in paragraphs (c), (d) and

(e) below, FRP shall have the right to control all matters relating to any Tax Return or any Tax Proceeding with respect

to any Tax matters of a Consolidated Group or any member of a Consolidated Group. FRP shall have absolute discretion with respect

to any decisions to be made, or the nature of any action to be taken, with respect to any Tax matter described in the preceding

sentence; provided, however, that FRP shall keep Patriot informed of all material developments and events relating to such matters

to the extent they affect the Separate Group Tax Liability of the Patriot Group or may give rise to a claim for indemnity by FRP

against Patriot under Section 10(a) of this Agreement; and at its own cost and expense, Patriot shall have the right to participate

in (but not to control) the defense of any such tax claim.

 

    	15

    	 

    

 

(c)Patriot

Assumption of Control; Non-Section 355 Matters. If FRP determines that the resolution of any matter relating to a Tax

Return or Tax Proceeding (other than a Tax Proceeding relating to the qualification of the Distribution under Sections 355 and

368(a)(1)(D) of the Code) is reasonably likely to have an adverse effect on Patriot Group with respect to any Post-Deconsolidation

Period, FRP may permit Patriot to elect to assume control over disposition of such matter at Patriot’s sole cost and expense;

provided, however, that if Patriot so elects, it will (i) be responsible for the payment of any liability arising from the

disposition of such matter notwithstanding any other provision of this Agreement to the contrary and (ii) indemnify the FRP

Group for any increase in a liability and any reduction of a Tax asset of the FRP Group arising from such matter.

 

(d)Patriot

Assumption of Control; Section 355 Matters. In the event of a Tax Proceeding relating to the qualification of the Distribution

under Sections 355 and 368(a)(1)(D) of the Code, FRP shall have the right to control the defense of the matter in all proceedings

before the IRS, provided that FRP shall keep Patriot fully informed of all material developments and shall permit Patriot a reasonable

opportunity to participate in the defense of the matter.

 

(e)Patriot

Control. Patriot shall have full control over all matters relating to any Tax Proceeding with respect to Returns of Patriot

Group relating to any Post-Deconsolidation Period.

 

Section
14.     Payments.

(a)Timing,

After-Tax Amounts. All payments to be made hereunder shall be made in immediately available funds. Except as otherwise provided,

all payments required to be made pursuant to this Agreement will be due 30 days after the receipt of notice of such payment or,

where no notice is required, 30 days after the fixing of liability or the resolution of a dispute. Payments shall be deemed made

when received. Any payment that is not made when due shall bear interest at the rate equal to the “prime” rate as

published on such date in the Wall Street Journal, Eastern Edition. If, pursuant to a Final Determination, any amount paid by

FRP or the members of the FRP Group or Patriot or the members of the Patriot Group, as the case may be, pursuant to this Agreement

results in any increased Tax liability or reduction of any Tax asset of Patriot or any member of the Patriot Group or FRP or any

member of the FRP Group, respectively, then FRP or Patriot, as appropriate, shall indemnify the other party and hold it harmless

from any interest or penalty attributable to such increased Tax liability or the reduction of such Tax asset and shall pay to

the other party, in addition to amounts otherwise owed, the After-Tax Amount. With respect to any payment required to be made

or received under this Agreement, FRP has the right to designate, by written notice to Patriot, which member of the FRP Group

will make or receive such payment.

 

    	16

    	 

    

  

(b)Netting

of Payments. If, on the day payment is due under this Agreement, each of FRP and Patriot (each, a “Party”) owes

an amount to the other Party pursuant to this Agreement and any other agreement between the Parties, including, without limitation,

the Separation Agreement and any Ancillary Agreement, as defined in the Separation Agreement, the Parties shall satisfy their

respective obligations to each other by netting the aggregate amounts due to one Party against the aggregate amounts due to the

other Party, with the Party, if any, owning the greater aggregate amount paying the other Party the difference between the amounts

owed. Such net payment shall be made pursuant to the provision of Section 14(a).

 

Section
15.     Notices. 

Any

notice, demand, claim, or other communication under this Agreement shall be in writing and shall be deemed to have been given

upon the delivery or mailing, thereof, as the case may be, if delivered personally or sent by certified mail, return receipt requested,

postage prepaid, to the parties at the following addresses (or at such other address as a party may specify by notice to the other): 

If

to FRP or the FRP Group, to:

 

FRP

Holdings, Inc.

Attn:

President

200

W. Forsyth Street, 7th Floor

Jacksonville,

Florida 32202

 

If

to Patriot or the Patriot Group, to:

 

Patriot

Transportation Holding, Inc. 

Attn:

President 

200

W. Forsyth Street, 7th Floor 

Jacksonville,

Florida 32202

 Section

16.     Costs and Expenses.

 (a)Except

as expressly set forth in this Agreement, each party shall bear its own costs and expenses incurred pursuant to this Agreement.

For purposes of this Agreement, costs and expenses shall include, but not be limited to, reasonable attorneys’ fees, accountant

fees and other related professional fees and disbursements. Notwithstanding anything to the contrary in this Agreement, each of

the Patriot Group and the FRP Group will be responsible for its allocable portion, as determined by FRP, of (i) all costs

and expenses attributable to filing any Return that reflects the income, assets or operations of the Patriot Group or the FRP

Group, respectively and (ii) all costs and expenses incurred by FRP or Patriot, respectively, in complying with the provisions

of Section 12 of this Agreement.

 (b)With

respect to all Tax Proceedings, including any pending litigation with any Taxing Authority, costs shall be allocated in good faith

by FRP. Each party hereto shall be liable for its allocable portion of such costs as provided in Section 10.

 

    	17

    	 

    

 

Section 17.
     Effectiveness; Termination and Survival.

 This

Agreement shall become effective upon the consummation of the Distribution. All rights and obligations arising hereunder shall

survive until they are fully effectuated or performed; provided, further, that notwithstanding anything in this Agreement to the

contrary, this Agreement shall remain in effect and its provisions shall survive for one year after the full period of all applicable

statutes of limitation (giving effect to any extension, waiver or mitigation thereof) and, with respect to any claim hereunder

initiated prior to the end of such period, until such claim has been satisfied or otherwise resolved.

Section
18.     Section Headings. 

The

headings contained in this Agreement are inserted for convenience only and shall not constitute a part hereof or in any way affect

the meaning or interpretation of this Agreement. 

Section
19.     Entire Agreement; Amendments and Waivers.

 (a)Entire

Agreement. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained

herein. No alteration, amendment, modification, or waiver of any of the terms of this Agreement shall be valid unless made by

an instrument signed by an authorized officer of each of FRP and Patriot, or in the case of a waiver, by the party against whom

the waiver is to be effective. 

(b)Amendments

and Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver

hereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any

right, power or privilege. This Agreement shall not be waived, amended or otherwise modified except in writing, duly executed

by all of the parties hereto.

 

Section
20.     Governing Law and Interpretation. 

This

Agreement shall be construed and enforced in accordance with the laws of the State of Florida without giving, effect to laws and

principles relating to conflicts of law.

Section
21.     Dispute Resolution. 

In

the event of any dispute relating to this Agreement, including but not limited to whether a Tax liability is a liability of the

FRP Group or the Patriot Group, the parties shall work together in good faith to resolve such dispute within 30 days. If the parties

are unable to resolve such dispute within 30 days, such dispute shall be resolved by an accounting firm whose selection shall

be reasonably satisfactory to both parties and whose fees and costs shall be shared equally by FRP and Patriot. 

Section
22.     Counterparts. 

This

Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together

shall constitute one and the same Agreement. 

    	18

    	 

    

Section
23.     Assignments; Third Party Beneficiaries. 

Except

as provided below, this Agreement shall be binding upon and shall inure only to the benefit of the parties hereto and their respective

successors and assigns, by merger, acquisition of assets or otherwise (including but not limited to any successor of a party hereto

succeeding to the Tax attributes of such party under applicable law). This Agreement is not intended to benefit any person other

than the parties hereto and such successors and assigns, and no such other person shall be a third party beneficiary hereof. 

Section
24.     Authorization, Etc. 

Each

of the parties hereto hereby represents and warrants that it has the power and authority to execute, deliver and perform this

Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this

Agreement constitutes a legal, valid and binding obligation of each such party, and that the execution, delivery and performance

of this Agreement by such party does not contravene or conflict with any provision or law or of its charter or bylaws or any agreement,

instrument or order binding on such party. 

IN

WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first written above.

 

	 	 	FRP

    HOLDINGS,     INC., a Florida corporation, on its behalf and on behalf of the members

    of the FRP Group
	 	 	 
	 	 	By:  ___________________________________________
	 	 	Name: _________________________________________
	 	 	Title: __________________________________________

 

	 	 	PATRIOT

    TRANSPORTATION HOLDING, INC., a Florida corporation, on its behalf and on behalf of the

    members of the Patriot Group
	 	 	 
	 	 	By:  ___________________________________________
	 	 	Name: _________________________________________
	 	 	Title: __________________________________________

 

 

19FRP Holdings, Inc. 8-K

EXHIBIT

10.2

EMPLOYEE MATTERS AGREEMENT

 

by and between 

 

FRP HOLDINGS, INC. 

 

and

 

PATRIOT TRANSPORTATION HOLDING, INC. 

 

Dated as of January 30, 2015

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	 	Page

	ARTICLE
    1 DEFINITIONS	1
	 	 
	Section 1.1	Definitions	1
	 	 	 
	ARTICLE
    2 GENERAL ALLOCATION OF LIABILITIES	4
	 	 
	Section 2.1 	Allocation of Liabilities Generally	4
	Section 2.2 	Method of Settlement	5
	Section 2.3 	Further Assurances	5
	Section 2.4	Assignment of Certain Rights; Non-Solicitation	6
	 	 	 
	ARTICLE
    3 EMPLOYEES; ASSUMPTION AND/OR ADOPTION OF PLANS; OPTION ADJUSTMENTS	6
	 	 
	Section 3.1	Employees	6
	Section 3.2 	Adoption of Plans	6
	Section 3.3 	Existing Equity-Based Plan Retention; Option Adjustments; Bonus
    Payments	7
	 	 	 
	ARTICLE
    4 PROFIT SHARING PLAN	7
	 	 
	ARTICLE
    5 HEALTH AND WELFARE PLANS	7
	 	 
	Section 5.1	Assumption of Health and Welfare Plan Liabilities; General Provisions	7
	Section 5.2 	Post-retirement Health Insurance Benefits	8
	Section 5.3	Effect of Change in Rates	8
	Section 5.4 	COBRA and HIPPA	9
	Section 5.5	Leave of Absence Programs and FMLA	9
	Section 5.6 	Patriot Workers’ Compensation Program	10
	Section 5.7 	Flexible Benefit Plans	10
	Section 5.8 	Application of Article 5 to the Real Estate Group	10
	 	 	 
	ARTICLE
    6 INDEMNIFICATION	11
	 	 
	ARTICLE
    7 GENERAL PROVISIONS	11
	 	 
	Section 7.1 	Notices	11
	Section 7.2	Amendments; No Waivers	11
	Section 7.3	Successors and Assigns	12
	Section 7.4	Governing Law	12
	Section 7.5	Counterparts; Effectiveness	12
	Section 7.6	Entire Agreement; No Change in Control or Severance Event	12
	Section 7.7 	Dispute Resolution	13
	Section 7.8 	No Third Party Beneficiaries	13
	Section 7.9	Headings	13
	Section 7.10 	Severability	13
	Section 7.11	Schedules	13
	Section 7.12 	Cooperation and Coordination	13
	Section 7.13 	Withholdings	13

 

    	i

    	 

    

 

EMPLOYEE MATTERS AGREEMENT

 

THIS EMPLOYEE MATTERS AGREEMENT

(the “Agreement”) is made as of January 30, 2015, between FRP Holdings, Inc., a Florida corporation (“FRP”)

and Patriot Transportation Holding, Inc., a Florida corporation (“Patriot”).

 

RECITALS

 

WHEREAS, FRP has decided

to distribute the common stock of Patriot to the holders of FRP Common Stock, $.10 par value, (the “Distribution”);

and

 

WHEREAS, in furtherance

of the foregoing, FRP and Patriot have entered into the Separation Agreement (as defined below) and certain other agreements that

will govern certain matters relating to the Distribution and the relationship of FRP and Patriot and their respective Subsidiaries

following the Distribution; and

 

WHEREAS, pursuant to the

Separation Agreement, FRP and Patriot have agreed to enter into this Agreement for the purpose of allocating between them assets,

liabilities, and responsibilities with respect to certain employee compensation and benefit plans and programs;

 

WHEREAS, FRP and Patriot

have agreed that, except as otherwise specifically provided herein, the general approach and philosophy underlying this Agreement

is to allocate assets, liabilities and responsibilities between FRP and Patriot on the basis of the employment relationships in

effect at the time of the Distribution;

 

NOW, THEREFORE, in consideration

of the mutual promises contained herein and in the Separation Agreement, the parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.1     Definitions.

 

(a)The following

terms, as used herein, shall have the meanings set forth below, provided, however, that capitalized terms used and not defined

herein shall have the meanings set forth in the Separation Agreement:

 

“Applicable

Law” shall have the meaning set forth in the Separation Agreement.

 

“Close

of the Distribution Date” means 11:59:59 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be

in effect), on the Distribution Date.

 

“COBRA”

means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget

Reconciliation Act of 1985, as amended, and as codified in Code § 4980B and ERISA §§ 601 through 608.

 

“Code”

shall have the meaning set forth in the Separation Agreement.

 

    	1

    	 

    

  

“Distribution

Date” shall have the meaning set forth in the Separation Agreement.

 

“Distribution”

has the meaning set forth in the recitals to this Agreement.

 

“ERISA”

means the Employee Retirement Income Security Act of 1974, as amended, or any successor federal labor or employment law. Reference

to a specific ERISA provision also includes any proposed, temporary, or final regulation in force under that provision.

 

“Existing

Equity-Based Plans” means the Patriot Transportation Holding, Inc. 2000 Stock Option Plan and the 2006 Stock Incentive

Plan.

 

“FMLA”

means the Family Leave and Medical Act of 1993, as amended.

 

“FRP

Common Stock” shall have the meaning set forth in the Separation Agreement.

 

“FRP

Employee” means each Person who, on the Distribution Date, is means each Person who, on the Distribution Date (a) is

actively employed in the Real Estate Business who is listed on the payroll records of any member of the Real Estate Group, (b) is

on short-term disability leave, authorized leave of absence, military service or lay-off with recall rights and who was last actively

employed by any member of the Real Estate Group, or (c) is an inactive or former employee and who was last actively employed

by any member of the Real Estate Group, including any former employee who has been on long-term disability leave or unauthorized

leave of absence or who has terminated his or her employment, retired or died on or before the Distribution Date, and, in each

case, their respective beneficiaries and dependents.

 

“Immediately

after the Distribution Date” means 12:00 A.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be

in effect), on the day after the Distribution Date.

 

“Liabilities”

shall have the meaning set forth in the Separation Agreement.

 

“New

FRP Plans” means new, duplicate or mirror plans, policies or programs, as applicable, adopted or to be adopted by FRP

that correspond to the Patriot Plans, with such changes therein as are necessary or appropriate to effectuate the terms of this

Agreement.

 

“Patriot

Employee” means each Person who, on the Distribution Date (a) is actively employed in the Transportation Business

who is listed on the payroll records of any member of the Transportation Group, (b) is on short-term disability leave, authorized

leave of absence, military service or lay-off with recall rights and who was last actively employed in the Transportation Business

by any member of the Transportation Group, (c) is an inactive or former employee and who was last actively employed in the

Transportation Business by any member of the Transportation Group, including any former employee who has been on long-term disability

leave or unauthorized leave of absence or who has terminated his or her employment, retired or died on or before the Distribution

Date, and, in each case, their respective beneficiaries and dependents or (d) is an individual set forth on Schedule 1.1(a)-1.

Patriot Employees shall not include the individuals set forth on Schedule 1.1(a)-2.

 

    	2

    	 

    

 

 “Patriot

MIC Plan” shall mean the Patriot Transportation Holding, Inc. Management Incentive Compensation Plan.

 

“Patriot

Plans” means the plans described in Schedule 1.1(a)-3 attached hereto.

 

“Profit

Sharing Plan” means the Patriot Transportation Holding, Inc. Profit Sharing and Deferred Earnings Plan.

 

“Real

Estate Businesses” shall have the meaning set forth in the Separation Agreement.

 

“Real

Estate Group” shall have the meaning set forth in the Separation Agreement.

 

“Separation

Agreement” means the Separation and Distribution Agreement by and between FRP and Patriot, dated as of January 30, 2015.

 

“Specified

FRP Rights” means any and all rights to enjoy, benefit from or enforce any and all restrictive covenants including, without

limitation covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or trade secrets, applicable

or related, in whole or in part, to the Real Estate Businesses that are provided for, contained or set forth in the FRP Equity-Based

Plans or any stock option or other award agreement issued thereunder, or pursuant to any non-competition, consulting, employment,

termination, separation or severance agreement or arrangement with any Patriot Employee or FRP Employee and to which any member

of the Transportation Group or the Real Estate Group is a party.

 

“Specified

Patriot Rights” means any and all rights to enjoy, benefit from or enforce any and all restrictive covenants including,

without limitation covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or trade secrets, applicable

or related, in whole or in part, to the Patriot Business that are provided for, contained or set forth in the FRP Equity-Based

Plans or any stock option or other award agreement issued thereunder, or pursuant to any non-competition, consulting, employment,

termination, separation or severance agreement or arrangement with any Patriot Employee or FRP Employee and to which any member

of the Transportation Group or Real Estate Group is a party.

 

“Tax

Matters Agreement” shall have the meaning set forth in the Separation Agreement.

 

“Transportation

Business” shall have the meaning set forth in the Separation Agreement.

 

“Transportation

Group” shall have the meaning set forth in the Separation Agreement.

 

(b)Each of

the following terms is defined in the Article or Section set forth opposite such term:

 

    	3

    	 

    

  

	TERMS	ARTICLE/SECTION
	Employee Withholding Documents	 Section 7.13
	FRP Bonus Liabilities	Section 3.3
	FRP Profit Sharing Plan Liabilities 	Article 4
	FRP Health and Welfare Liabilities	Section 5.1
	FRP WCP Liabilities	Section 5.6
	New FRP Health and Welfare Plans	Section 5.1
	Patriot HCSAP	Section 5.7
	Patriot Health and Welfare Liabilities	Section 5.1
	Patriot Health and Welfare Plans	Section 5.1
	Patriot WCP Liabilities	Section 5.6
	Retained Profit Sharing Plan Liabilities	Section 4.1
	Standard Procedure	Section 7.13

  

ARTICLE 2

GENERAL ALLOCATION OF LIABILITIES

 

Section 2.1     Allocation
of Liabilities Generally. 

 

(a)Subject

to the terms and conditions of this Agreement, effective as of the Close

of the Distribution Date, FRP hereby assumes and agrees to pay when due, honor and

discharge, the following Liabilities, whether incurred before, on or after the Distribution Date:

 

(i)all Liabilities

arising under any employment, separation, change-in-control or retirement agreement or arrangement to the extent applicable to

any Real Estate Employee;

 

(ii)the New

FRP Plans, FRP Bonus Liabilities, FRP WCP Liabilities, FRP Health and Welfare Liabilities, FRP Profit Sharing Plan Liabilities

and all Liabilities arising under the Existing Equity-Based Plans;

 

(iii)all Liabilities

arising under any other employee benefit plan or arrangement maintained at any time after the Distribution Date by any member of

the Real Estate Group;

 

(iv)all Liabilities

arising under any federal, state, local or foreign law, order or regulation (including, without limitation, ERISA and the Code)

to the extent they relate to participation by any FRP Employee in any employee benefit plan sponsored or maintained by any member

of the Real Estate Group, whether relating to events occurring on, prior to or after the Close of the Distribution Date or arising

by reason of the transactions contemplated by this Agreement or otherwise;

 

(v)all statutory

Liabilities to any FRP Employee, which arise, directly or indirectly, by reason of the transactions contemplated by this Agreement;

and

 

    	4

    	 

    

 

(vi)all other

Liabilities attributable to actions specified to be taken by FRP under this Agreement.

 

(b)Subject

to the terms and conditions of this Agreement, effective as of Immediately

after the Distribution Date, Patriot hereby assumes and agrees to pay when due, honor

and discharge, the following Liabilities, whether incurred before, on or after the Distribution Date:

 

(i)all Liabilities

arising under any employment, separation, change-in-control or retirement agreement or arrangement to the extent applicable to

any Patriot Employee;

 

(ii)Patriot

Bonus Liabilities, Retained Profit Sharing Liabilities, Patriot Health and Welfare Liabilities, Patriot WCP Liabilities, and any

other Liabilities arising the Liabilities under the Patriot Plans;

 

(iii)all Liabilities

arising under any other employee benefit plan or arrangement maintained at any time after the Distribution Date by any member of

the Transportation Group;

 

(iv)all Liabilities

arising under any federal, state, local or foreign law, order or regulation (including, without limitation, ERISA and the Code)

to the extent they relate to participation by any Patriot Employee in any Patriot Plan, relating to events occurring on or after

the time Immediately after the Distribution Date;

 

(v)all statutory

Liabilities to any Patriot Employee which arise, directly or indirectly, by reason of the transactions contemplated by this Agreement;

and

 

(vi)all other

Liabilities attributable to actions specified to be taken by Patriot under this Agreement.

 

Section
2.2     Method of Settlement.

 

Notwithstanding anything

herein to the contrary, to the extent possible, any transfer or assumption of Liabilities pursuant to this Article 2 shall be effected,

prior to the Distribution Date or as soon thereafter as is reasonably practicable, through a corresponding adjustment in the relevant

intercompany account balances of the parties hereto.

 

Section 2.3     Further
Assurances.

 

On and after the date hereof,

each of the parties will, at the reasonable request of the other party, execute, acknowledge and deliver all such endorsements,

assurances, consents, assignments, transfers, conveyances, powers of attorney and other instruments and documents, and take such

other actions necessary (i) to assign, transfer, convey and deliver to the other party, acting in its fiduciary capacity,

all assets to be transferred to the other party pursuant to this Agreement and (ii) to assist the other party in obtaining

the consent and approval of all Governmental Authorities and other Persons required to be obtained to effect the transfer thereof

and the assumption of any Liabilities by the other party or otherwise appropriate to carry out the transactions contemplated hereby.

 

    	5

    	 

    

  

Section 2.4     Assignment
of Certain Rights; Non-Solicitation.

 

(a)To the

extent permitted by applicable law, FRP hereby assigns, to the maximum extent possible,

on behalf of itself and the Real Estate Group, the Specified

Patriot Rights, to Patriot and FRP shall take

such actions to effect such assignment pursuant to Section 2.3 as Patriot

may reasonably request.

 

(b)To the

extent permitted by applicable law, Patriot hereby assigns, to the maximum extent possible,

on behalf of itself and each of the Transportation Group, the Specified FRP Rights, to FRP

and Patriot shall take such actions to effect such assignment pursuant to Section 2.3

as FRP may reasonably request.

 

(c)FRP

and Patriot agree that neither party shall, without the prior written approval of

the other, directly or indirectly for 12 months after the Distribution Date, solicit any

employee of the other party to terminate his or her relationship with any member of the Transportation

Group or Real Estate Group, respectively, provided that the foregoing shall not apply

(i) to the use of an independent employment agency (so long as the agency was not directed to solicit such person) or (ii) as

a result of the use of a general solicitation (such as an advertisement) not specifically directed to employees of the other party.

 

ARTICLE 3

EMPLOYEES; ASSUMPTION AND/OR

ADOPTION OF PLANS; OPTION ADJUSTMENTS

 

Section 3.1     Employees.

 

No provision of this Agreement

shall require FRP or Patriot or any of their respective Subsidiaries to continue the employment of any of their respective employees

following the Distribution Date.

 

Section 3.2     Adoption
of Plans.

 

(a)Effective

as of not later than Immediately after the Distribution Date, FRP

shall adopt the New FRP Plans, provided that nothing shall prevent FRP

from terminating or amending such plans except to the extent precluded by Applicable Law, as would result in the loss of

grandfathered status under the Patient Protection and Affordable Care Act or as otherwise

provided herein.

 

(b)The New

FRP Plans shall be, with respect to all FRP Employees, in all respects the successors

in interest to any corresponding Patriot Plans. With respect to FRP

Employees, each New FRP Plan and any other benefit plan, arrangement or policy applicable

after the Distribution Date for FRP Employees shall provide that all service, compensation,

and other benefit-affecting determinations, as of the Close of the Distribution Date, that

were otherwise recognized under the corresponding Patriot Plan (for periods ending on the

Distribution Date) shall, as of Immediately after the Distribution Date, receive full recognition

and credit to the extent the recognition or credit can validly be taken into account under the New

FRP Plan to the same extent as if those items occurred under the Patriot Plans, except

to the extent that duplication of benefits would result. Patriot shall provide appropriate

data to FRP about such past service.

 

    	6

    	 

    

 

Section 3.3     Existing
Equity-Based Plan Retention; Option Adjustments; Bonus Payments.

 

(a)In connection

with the Distribution, FRP shall adopt the Existing

Equity-Based Plans and Patriot will adopt an equity incentive plan that permits the

issuance of stock options as contemplated below. FRP and Patriot

shall cause such actions to be taken under such Plans as are necessary or appropriate to

reflect the Distribution as provided in this Section 3.3.

 

(b)In connection

with the Distribution and effective as of the Distribution

Date, all outstanding options to purchase shares of FRP Common Stock, whether held

by a current or a former FRP Employee, a current or a former Patriot

Employee or a current or former non-employee director of FRP will be adjusted pursuant

to the terms of the applicable existing Equity-Based Plan and Applicable Law by replacing

such options with an option to purchase FRP Common Stock and an

option to purchase Patriot Common Stock which, in the aggregate, have the same intrinsic value of the original option grant

and the same ratio of the exercise price to the fair market value of FRP

Common Stock on the Distribution Date. The manner in which the terms of such replacement options shall be calculated are

set forth in Schedule 3.3(b), attached hereto.

 

(c)FRP

hereby assumes Liability for all annual bonus payments to Real Estate Employees under

the Patriot MIC Plan (all such Liabilities, the “FRP

Bonus Liabilities”).

 

ARTICLE 4

PROFIT SHARING PLAN

 

FRP and Patriot shall take

all such actions as are necessary or appropriate for FRP to adopt the Profit Sharing Plan so that it shall thereafter be treated

as a “multiple employer plan” for the benefit of FRP Employees and Patriot Employees. FRP shall assume all Liabilities

and obligations in respect of benefits accrued by each FRP Employee under the Profit Sharing Plan (the “FRP Profit Sharing

Plan Liabilities”). Any Profit Sharing Plan fund relating to FRP Common Stock shall be administered so as to permit transfers

out of, but not additions to, such fund. After the Distribution Date, Patriot shall retain all Liabilities and obligations under

the Profit Sharing Plan in respect of benefits accrued by each Patriot Employee under the Profit Sharing Plan.

 

ARTICLE 5

HEALTH AND WELFARE PLANS

 

Section 5.1     Assumption
of Health and Welfare Plan Liabilities; General Provisions.

 

(a)Effective

as of Immediately after the Distribution Date and except to the extent provided in this

Article 5, all Liabilities relating to claims incurred prior to, on or after the Distribution

Date by each FRP Employee under the “Patriot

Health and Welfare Plans” (designated as such on Schedule 3 hereto) shall

cease to be Liabilities of the Patriot Health and Welfare Plans and shall be transferred to and assumed by FRP

as of Immediately after the Distribution Date (“FRP

Health and Welfare Liabilities”) under the New FRP Plans that correspond

to the Patriot Health and Welfare Plans (the “New

FRP Health and Welfare Plans”). Patriot shall retain all other Liabilities

under the Patriot Health and Welfare Plans (“Patriot

Health and Welfare Liabilities”).

 

    	7

    	 

    

 

(b)FRP

shall cause the New FRP Health and Welfare Plans to recognize and maintain all coverage

and contribution elections made by FRP Employees under the Patriot

Health and Welfare Plans as of the Distribution Date and apply such elections under the New

FRP Health and Welfare Plans for the remainder of the period or periods for which such elections are by their terms applicable.

The transfer or other movement of employment from Patriot to FRP

at any time before the Close of the Distribution Date shall neither constitute nor

be treated as a “status change” under the New

FRP Health and Welfare Plans or the Patriot Health and Welfare Plans.

 

(c)FRP

shall cause the New FRP Health and Welfare Plans to recognize and give credit for

all amounts applied to deductibles, out-of-pocket maximums, and other applicable benefit coverage limits with respect to which

such expenses have been incurred by FRP Employees under the Patriot

Health and Welfare Plans for the remainder of the year in which the Distribution Date occurs

to the extent recognized under the comparable Patriot Health and Welfare Plans.

 

(d)FRP

shall provide coverage to FRP Employees under the New

FRP Health and Welfare Plans without the need to undergo a physical examination or otherwise provide evidence of insurability

to the extent provided under the comparable Patriot Health and Welfare Plans.

 

(e)FRP

shall cause the New FRP Health and Welfare Plans to recognize and credit all service

of each FRP Employee recognized by the corresponding Patriot

Health and Welfare Plans before the Close of the Distribution Date for all purposes,

including, but not limited to, severance, disability, vacation and paid time off purposes. On or as soon as reasonably practicable

after the Distribution Date, Patriot shall deliver

to FRP a schedule setting forth the accrued and unused vacation and paid time off for each

FRP Employee as of the Distribution Date, and FRP

shall assume and be responsible for all Liabilities therefor which, for the avoidance

of doubt, shall be included in FRP Health and Welfare Liabilities.

 

Section 5.2     Post-retirement

Health Insurance Benefits.

 

Patriot shall be responsible

for providing to Patriot Employees who are eligible to receive post-retirement medical insurance coverage under the Patriot Health

and Welfare Plans and retire prior to the Close of the Distribution Date, in each case pursuant to the terms of the applicable

Patriot Health and Welfare Plans.

 

Section 5.3     Effect of
Change in Rates.

 

Patriot and FRP shall use

their reasonable efforts to cause each of the insurance companies, HMOs, point-of-service vendors and third-party administrators

providing services and benefits under the New FRP Health and Welfare Plans and the Patriot Health and Welfare Plans to maintain

the premium and/or administrative rates based on the aggregate number of participants in both the New FRP Health and Welfare Plans

and the Patriot Health and Welfare Plans through the expiration of the financial fee or rate guarantees in effect as of the Close

of the Distribution Date under the respective contracts, policies, and agreements separately rated or adjusted for the demographics,

experience or other relevant factors related to the covered participants of Patriot and FRP, respectively. To the extent they are

not successful in such efforts, Patriot and FRP shall each bear the revised premium or administrative rates attributable to the

individuals covered by their respective health and welfare plans.

 

    	8

    	 

    

 

Section 5.4     COBRA
and HIPPA.

 

(a)Patriot

shall be responsible for administering compliance with the health care continuation coverage

requirements of COBRA and the Patriot Health and

Welfare Plans (i) with respect to Patriot Employees and, (ii) with respect

to FRP Employees and their dependents who incur a COBRA

qualifying event other than under an FRP Assumed Plan prior to the Distribution Date.

 

(b)Effective

as of Immediately after the Distribution Date, FRP shall

solely be responsible for administering compliance with the health care continuation coverage

requirements of COBRA and the New FRP Health and

Welfare plans with respect to FRP Employees and

their dependents who incur a COBRA qualifying event (i) under an FRP

Assumed Plan prior to the Distribution Date, and (ii) in all cases on or after the Distribution Date.

 

(c)For periods

before the Distribution Date, Patriot shall be responsible

for administering compliance with the portability requirements under the Health Insurance

Portability and Accountability Act of 1996 with respect to FRP Employees and beginning

not later than Immediately after the Distribution Date FRP shall be responsible for filing all

necessary employee change notices with respect to FRP Employees in accordance with applicable

FRP policies and procedures. Effective Immediately after

the Distribution Date, FRP shall be solely responsible for administering compliance with

such health care continuation coverage and portability requirements with respect to FRP

Employees, and Patriot shall be solely responsible for administering compliance with

such requirements with respect to Patriot Employees.

 

Section 5.5     Leave
of Absence Programs and FMLA.

 

(a)Patriot

shall be responsible for administering compliance with the Patriot leave of absence programs

and FMLA with respect to Patriot Employees.

 

(b)Effective

as of Immediately after the Distribution Date: (i) FRP

shall adopt, and shall cause each member of the Real Estate Group to adopt, leave

of absence programs; (ii) FRP shall honor, and shall cause each

member of the Real Estate Group to honor, all terms and conditions of leaves of absence which have been granted to

any FRP Employee under an FRP leave of absence program

or FMLA before the Distribution Date, including such leaves that are to commence after the

Distribution Date; (iii) Patriot and each member of

the Transportation Group shall be solely responsible for administering leaves of

absence and compliance with FMLA with respect to their employees; and (iv) FRP

and each member of the Real Estate Group shall recognize all periods of service of

each FRP Employee with the Real Estate Group to the

extent such service is recognized by Patriot for the purpose of eligibility for leave entitlement

under the Patriot leave of absence programs and FMLA.

 

    	9

    	 

    

 

(c)As soon

as administratively possible and not later than the Close of the Distribution Date, Patriot

shall provide to FRP copies of all records pertaining to the Patriot

leave of absence programs and FMLA with respect to all FRP

Employees to the extent such records have not been provided previously to FRP or

a member of the Real Estate Group.

 

Section 5.6     Patriot

Workers’ Compensation Program.

 

(a)Effective

Immediately after the Distribution Date,

 

(ii)Patriot

shall assume, retain and be responsible for all workers’ compensation Liabilities relating to Patriot Employees (the “Patriot

WCP Liabilities”).

 

(iii)FRP shall

assume, retain and be responsible for all workers compensation Liabilities relating to FRP Employees (“FRP WCP Liabilities”).

 

(b)For the

avoidance of doubt, workers’ compensation Liabilities in respect of any current or former employee shall be the responsibility

of such employee’s employer on the Distribution Date or, in the case of former employees, any such former employee’s

last employer prior to the Distribution Date.

 

(c)FRP

and Patriot shall cooperate with respect to the issuance of new, or transfer of,

existing workers’ compensation policies and licenses.

 

Section 5.7     Flexible
Benefit Plans.

 

To the extent any FRP Employee

contributed to an account under the Patriot Health Care Spending Account Plan (“Patriot HCSAP”) during the calendar

year that includes the Distribution Date, effective as of Immediately after the Distribution Date, Patriot shall transfer to the

corresponding New FRP Health and Welfare Plan the account balances of such FRP Employees for such calendar year under the Patriot

HCSAP, regardless of whether the account balance is positive or negative.

 

Section 5.8     Application
of Article 5 to the Real Estate Group.

 

Any reference in this Article

5 to “FRP” shall include a reference to the Real Estate Group when and to the extent FRP has caused a member of the

Real Estate Group to (a) become a party to a vendor contract, group insurance contract, or HMO letter agreement associated

with a New FRP Health and Welfare Plan, (b) become a self-insured entity for the purposes of one or more New FRP Health

and Welfare Plans, (c) assume all or a portion of the liabilities or administrative responsibilities for benefits which arose

before the Distribution Date under a Patriot Health and Welfare Plan and which were expressly assumed by FRP pursuant to the terms

of this Agreement, or (d) take any other action, extend any coverage, assume any other liability or fulfill any other

responsibility that FRP would otherwise be required to take under the terms of this Article 5, unless it is clear from the context

that the particular reference is not intended to include a member of the Real Estate Group. In all such instances in which a reference

in this Article 5 to “FRP” includes a reference to a member of the Real Estate Group, FRP shall be responsible to Patriot

for ensuring that the member of the Real Estate Group complies with the applicable terms of this Agreement.

 

    	10

    	 

    

 

ARTICLE 6

INDEMNIFICATION

 

With respect to indemnification, the parties

hereto agree as set forth in the Separation Agreement.

 

ARTICLE 7

GENERAL PROVISIONS

 

Section 7.1     Notices.

 

Any notice, instruction,

direction or demand under the terms of this Agreement required to be in writing shall be duly given upon delivery, if delivered

by hand, facsimile transmission, or mail, to the following addresses:

 

	If to FRP, to:	FRP Holdings, Inc. 
	 	200 W. Forsyth Street 
	 	7th Floor 
	 	Jacksonville, Florida 32202 
	 	Attn: President
	 	Facsimile: 904.353.2207
	 	 
	With a copy to:	Nelson Mullins Riley & Scarborough LLP 
	 	50 N. Laura Street, Suite 2850 
	 	Jacksonville, Florida 32202 
	 	Attn: Daniel B. Nunn, Jr.
	 	Facsimile: 904-665-3621
	 	 
	If to Patriot, to:	Patriot Transportation Holding, Inc. 
	 	200 W. Forsyth Street, 7th Floor
	 	Jacksonville, Florida 32202 
	 	Attn: President
	 	Facsimile: 904.353.2207

   

or to such other addresses or telecopy numbers

as may be specified by like notice to the other party. All such notices, requests and other communications shall be deemed given,

(a) when delivered in person or by courier or a courier services, (b) if sent by facsimile transmission (receipt confirmed)

on a business day prior to 5 p.m. in the place of receipt, on the date of transmission (or, if sent after 5 p.m. or on a day

other than a business day, on the following business day) or (c) if mailed by certified mail (return receipt requested), on

the date specified on the return receipt.

 

Section 7.2     Amendments;
No Waivers.

 

(a)Any provision

of this Agreement may be amended or waived if, and only if, such amendment or waiver is

in writing and signed, in the case of an amendment, by FRP and Patriot,

or in the case of a waiver, by the party against whom the waiver is to be effective.

 

    	11

    	 

    

 

(b)No failure

or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single

or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 7.3     Successors
and Assigns.

 

The provisions of this

Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided

that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the

consent of the other parties hereto.

 

Section 7.4     Governing
Law.

 

This Agreement shall be

construed in accordance with and governed by the law of the State of Florida, without regard to the conflicts of laws rules thereof.

 

Section 7.5     Counterparts;
Effectiveness.

 

This Agreement may be signed

in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto

were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof

signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto,

this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral

or written agreement or other communication).

 

Section 7.6     Entire
Agreement; No Change in Control or Severance Event.

 

(a)This Agreement

constitutes the entire understanding of the parties with respect to the subject matter hereof and thereof and supersedes

all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter

hereof and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been

made or relied upon by any party hereto or any member of their Group with respect to the transactions contemplated by this Agreement.

To the extent that the provisions of this Agreement are inconsistent with the provisions

of the Tax Matters Agreement, the provisions of the Tax Matters Agreement shall prevail.

 

(b)Neither

the Distribution nor the consummation of the transactions contemplated herein or under the

Separation Agreement shall constitute a change in control for purposes of, or trigger or

otherwise give rise to any severance obligations or entitlements under, any FRP or Patriot

plan, program, agreement or arrangement.

 

    	12

    	 

    

 

Section 7.7     Dispute

Resolution.

 

Any dispute hereunder or

with respect to the rights, duties and Liabilities of the parties hereto shall be resolved pursuant to the applicable provisions,

including Article 8, of the Separation Agreement.

 

Section 7.8     No Third

Party Beneficiaries.

 

Nothing contained in this

Agreement is intended to constitute an amendment to any plan or arrangement governed by ERISA, or to confer upon any person or

entity other than the parties hereto and their respective successors and permitted assigns, any benefit, right or remedies under

or by reason of this Agreement.

 

Section 7.9     Headings.

 

The section and other headings

contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this

Agreement.

 

Section 7.10     Severability.

 

If any one or more of the

provisions contained in this Agreement should be declared invalid, illegal or unenforceable in any respect, the validity, legality

and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby

so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse

to any party. Upon such a declaration, the parties shall modify this Agreement so as to effect the original intent of the parties

as closely as possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated

to the fullest extent possible.

 

Section 7.11     Schedules.

 

FRP and Patriot shall cooperate

and mutually agree on each of the schedules to this Agreement. FRP and Patriot shall have the right to amend or supplement the

information set forth in any schedule hereto from time to time until two business days prior to the Distribution Date.

 

Section 7.12     Cooperation
and Coordination.

 

The parties agree to share,

and furnish each other with, such information concerning employees and employee benefit plans, and to take all such other action,

as is necessary and appropriate to effect the transactions contemplated hereby, and to coordinate, in advance, the time, form and

content of communications to current and former employees of the parties relating to such transactions.

 

Section 7.13     Withholdings.

 

(a)To the

extent consistent with the terms of the Tax Matters Agreement, the party that is responsible for making a payment hereunder shall

be responsible for making the appropriate withholdings, if any, attributable to such payments.

 

    	13

    	 

    

 

(b)To the

extent applicable, FRP and Patriot agree to comply

with the Standard Procedure described in Section 4 of Revenue Procedure 2004-53, 2004-2

C.B. 320 (the ”Standard Procedure”). With respect to each Patriot

Employee, FRP shall, in accordance with Revenue

Procedure 2004-53, assume all responsibility for preparing and filing Form W-2, Wage and

Tax Statements; Form W-3, Transmittal of Income and Tax Statements; Form 941, Employer’s

Quarterly Federal Tax Returns; Form W-4, Employee’s

Withholding Allowance Certificates; and Form W-5, Earned Income Credit Advance Payment Certificates

(collectively, the “Employee Withholding Documents”) with regard

to wages paid during the period through the Close of the Distribution Date. Patriot

shall assume all responsibility for preparing and filing the Employee Withholding Documents

with regard to wages paid to each Patriot Employee after the Close

of the Distribution Date. Patriot and FRP shall

cooperate in good faith to the extent necessary to permit each of them to comply with the Standard

Procedure.

 

[Signature Page Follows]

 

    	14

    	 

    

 

IN WITNESS WHEREOF the

parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above

written.

 

	 	 	FRP

HOLDINGS, INC.,

a Florida corporation
	 	 	 
	 	 	By:  ____________________________________________
	 	 	Name:  __________________________________________
	 	 	Title:  ___________________________________________

 

	 	 	PATRIOT

TRANSPORTATION HOLDING, INC,

a Florida corporation
	 	 	 
	 	 	By:  ____________________________________________
	 	 	Name:  __________________________________________
	 	 	Title:  ___________________________________________

 

[Signature Page to Employee Matters Agreement]

 

    	15

    	 

    

 

SCHEDULE 1.1(a)-1

 

Patriot Employees

 

		•	Thompson S. Baker II

 

		•	John D. Milton, Jr.

 

		•	John D. Klopfenstein

 

		•	Robert E. Sandlin

 

 

Schedule 1.1(a)-1 

    	 

    	 

    

 

 

SCHEDULE 1.1(a)-2

 

Non-Patriot Employees

 

		•	David H. deVilliers, Jr.

 

 

Schedule 1.1(a)-2 

    	 

    	 

    

 

SCHEDULE 1.1(a)-3

 

Patriot Plans

 

		1.	Patriot Health and Welfare Plans:

 

		•	Patriot Basic Life Insurance Plan

 

		•	Patriot Supplemental Life Insurance Plan

 

		•	Patriot Accidental Death and Dismemberment Plan

 

		•	Patriot Travel Accident Plan

 

		•	Patriot Short-Term Disability Plan

 

		•	Patriot Long Term Disability Plan

 

		•	Patriot Medical Plan

 

		•	Patriot Dental Plan

 

		•	Patriot Vision Plan

 

		•	Patriot Express Scripts Prescription Drug Plan

 

		•	Patriot Employee Assistance Program

 

		•	Patriot TASC Plan (flex spending accounts)

 

		2.	Patriot Management Incentive Compensation Plan (“MIC Plan”)

 

		3.	Management and Security Plan

 

		4.	Profit Sharing Plan

 

		5.	2000 Stock Option Plan

 

		6.	2006 Stock Incentive Plan

 

 

Schedule 1.1(a)-3 

    	 

    	 

    

 

 

SCHEDULE 3.3(b)

 

Option Adjustment Methodology

 

		•	Each existing FRP stock option will be replaced with an option to purchase FRP common stock and

a separate option to purchase Patriot common stock with a combined intrinsic (in-the-money) value equal to the intrinsic value

of the existing option.

 

		•	Each option will retain its existing vesting schedule and expiration date.

 

		•	Each replacement option will preserve the same ratio of the option exercise price to fair market

value.

 

		•	The intrinsic value of the replacement options will be allocated between FRP and Patriot based

on the relative total market capitalization of FRP and Patriot.

 

		•	The intrinsic value of the existing options will be determined based on the closing price of Patriot

stock on the date of the spin-off (the spin-off occurs after market close). If FRP stock is being traded “ex-dividend”

and Patriot stock is being traded “when issued,” the combined values will be used.

 

		•	The relative values of FRP and Patriot stock will be determined based on the market capitalization

of each company, using “ex-dividend” and “when issued” prices on the date of the spin-off, if so traded,

or based on the relative closing prices on the next trading day, if there is no “when issued” and “ex-dividend”

trading.

 

		•	If the stock trades “when issued” and “ex-dividend,” the intrinsic value

of the replacement options will be determined using the closing prices on the date of the spin-off.

 

		•	If there is no “when issued” and “ex-dividend” trading, the intrinsic value

of the replacement options will be determined using the closing prices on the day after the spin-off.

 

		Note:	The outstanding FRP stock options held by David H. deVilliers, Jr. will be replaced with options

to purchase FRP common stock with the same intrinsic value as the existing FRP stock options, and the outstanding FRP stock options

held by Robert E. Sandlin will be replaced with options to purchase Patriot common stock with the same intrinsic value as the existing

Patriot stock options.

  

 

Schedule 3.3(b)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}]]