Document:

New Patriot Transportation Holding, 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.	17
	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.	18
	Section 24.	Authorization, Etc.	19

 

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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.

 

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“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.

 

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“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.

“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.

 

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“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).

 

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“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.

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(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.

 

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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.

 

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(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.

 

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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.

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(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:

(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;

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(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).

(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:

    	12

    	 

    

 

(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:

(i)

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

    	13

    	 

    

 

(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.

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.

    	17

    	 

    

 

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.

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.

    	18

    	 

    

 

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: 	 

 

 

    	19New Patriot Transportation Holding, 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)

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