8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K 

CURRENT REPORT  

Pursuant to Section 13 or 15(d)  

of the Securities Exchange Act of 1934 

Date of Report (Date of earliest event reported): January 30, 2015

FRP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Florida	0-17554	47-2449198
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

200 W. Forsyth St. 7th Floor, Jacksonville, FL	32202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (904) 396-5733

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

Spin-off of Transportation Group.

On January 30, 2015, FRP Holdings, Inc. (“FRP”) completed the tax-free spin-off of its transportation company, Patriot Transportation Holding, Inc. (“Patriot”) through the distribution of all the outstanding shares of Patriot to all of the shareholders as of the record date of January 9, 2015. In connection with the spin-off, FRP entered into the following agreements with Patriot Transportation Holding, Inc. (“Patriot”):

• Separation and Distribution Agreement;

• Tax Matters Agreement;

• Employee Matters Agreement; and

• Transition Services Agreement.

Separation and Distribution Agreement.

The Separation and Distribution Agreement sets forth Patriot’s agreement with FRP regarding the principal transactions necessary to separate Patriot from FRP.

Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement provides for certain transfers of assets and assumptions of liabilities that are necessary so that Patriot and FRP retain the assets of, and the liabilities associated with, their respective businesses. The Separation and Distribution Agreement requires Patriot and FRP to use reasonable efforts to obtain consents, approvals, and amendments required to novate or assign the assets and liabilities that are transferred.

The Distribution. The Separation and Distribution Agreement governs the rights and obligations of the parties regarding the distribution. The Separation and Distribution Agreement provides that FRP shall instruct the Distribution Agent to distribute, on or as soon as practicable after the Distribution Date, to each holder of record of FRP common stock as of the record date, by means of a pro rata dividend, one share of Patriot common stock for every three shares of FRP common stock held on the record date. Fractional shares will be aggregated and sold in the market, and the net proceeds will be distributed to the shareholders.

Conditions. The Separation and Distribution Agreement provides that the distribution is subject to several conditions that must be satisfied or waived by FRP in its sole discretion. All of the conditions to the distribution have been satisfied.

Insurance Matters. Patriot is responsible for obtaining and maintaining at its own cost all of its own insurance coverage following the separation. Following the separation, FRP is permitted to make claims under any applicable liability policies maintained by Patriot for events occurring before the separation without violating any anti-assignment provisions in the insurance policies. In no event shall either party (or their subsidiaries) have liability or obligation whatsoever to the other party (or its subsidiaries) in the event that any insurance policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

Releases and Indemnification. Except as otherwise provided in the Separation and Distribution Agreement, each party releases and forever discharges the other party and its subsidiaries and affiliates from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or any conditions existing or alleged to have existed on or before the separation. These releases will not extend to obligations or liabilities under any agreements between the parties that remain in effect following the separation pursuant to the Separation and Distribution Agreement, the Tax Matters Agreement, the Employee Matters Agreement or the Transition Services Agreement.

In addition, the Separation and Distribution Agreement provides for cross-indemnities that, except as otherwise provided in the Separation and Distribution Agreement, are principally designed to place financial responsibility for the obligations and liabilities of the transportation business with Patriot and financial responsibilities for the obligations of liabilities of the real estate business with FRP.

Tax Matters Agreement.

The Tax Matters Agreement governs FRP’s and our respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the distribution and certain related transactions to qualify as tax-free for federal income tax purposes), tax attributes, tax returns, tax contests and certain other tax matters.

In general, under the Tax Matters Agreement, responsibility for taxes for periods prior to the distribution will be allocated in the following manner:

• with respect to any U.S. federal income taxes of the affiliated group of which FRP is the common parent, Patriot generally will be responsible for such taxes to the extent attributable to the transportation business and all Patriot federal income tax filings and FRP generally will be responsible for all other such taxes;

• with respect to U.S. state or local income taxes, Patriot generally will be responsible for such taxes to the extent attributable to the transportation business and all Patriot income and franchise tax filings and FRP generally will be responsible for all other such taxes;

• with respect to any U.S. state or local property taxes, Patriot generally will be responsible for such taxes to the extent attributable to property owned by Patriot or one of its subsidiaries, and FRP generally will be responsible for all other such taxes; and

In addition, the Tax Matters Agreement imposes certain restrictions on Patriot and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the distribution and certain related transactions. The Tax Matters Agreement provides special rules allocating tax liabilities in the event the distribution, together with certain related transactions, is not tax-free. In general, under the Tax Matters Agreement, Patriot is responsible for any taxes imposed on FRP that arise from the failure of the distribution and certain related transactions to qualify as a tax-free transaction for federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code to the extent that the failure to qualify is attributable to actions, events, or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants made by Patriot in the Tax Matters Agreement.

The Tax Matters Agreement also sets forth the parties’ obligations as to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters.

Employee Matters Agreement.

The Employee Matters Agreement governs the parties’ compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. The Employee Matters Agreement provides for the treatment of outstanding FRP equity awards and certain other outstanding annual and long-term incentive awards. The Employee Matters Agreement will provide that, after the effective date, employees of the transportation business will continue to participate in Patriot’s existing employee benefit program. With respect to stock option plans, FRP has assumed Patriot’s existing stock option plans, and Patriot has adopted a new equity incentive plan.

The Employee Matters Agreement will also provide that (i) the distribution does not constitute a change in control under existing plans, programs, agreements or arrangements and (ii) the distribution and the assignment, transfer or continuation of the employment of employees with another entity will not constitute a severance event under the applicable plans, programs, agreements or arrangements.

Transition Services Agreement.

The Transition Services Agreement sets forth the terms on which Patriot will provide to FRP, on a temporary basis, certain services or functions that the companies historically have shared. Transition services will include various corporate services. The Transition Services Agreement has a 12 month term with renewal options. FRP will compensate Patriot at an agreed rate for the transition services, including an allocable share of their total compensation and benefit costs.

The foregoing descriptions of these agreements are summaries of the material terms of these agreements; for the complete text of these agreements, please see the agreements filed with this Current Report on Form 8-K as Exhibits 2.1, 10.1, 10.2 and 10.3, each of which is incorporated herein by reference.

The summary is qualified in its entirety by reference to the complete terms and conditions of the Separation and Distribution Agreement, Tax Matters Agreement, Employee Matters Agreement and Transition Services Agreement attached hereto as Exhibits 2.1, 10.1, 10.2 and 10.3, respectively.

Debt Arrangements.

In connection with the spin-off, on January 30, 2015, we entered into a new five year credit agreement with Wells Fargo Bank N.A., that replaces FRP’s existing line of credit with Wells Fargo. The new credit agreement provides a $20 million revolving line of credit with a $10 million sublimit for stand-by letters of credit. The amounts outstanding under the credit agreement bear interest at a rate of 1.4% over LIBOR, which rate may change quarterly based on the Company’s ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.15% per annum is payable quarterly on the unused portion of the commitment, which fee may change quarterly based on the ratio described above. The credit agreement contains certain conditions and financial covenants, including limitations on the payment of cash dividends that are based on the Company’s consolidated retained earnings. In connection with the new credit facilities, Patriot assumed and refinanced approximately $5.1 million of indebtedness of the Company that was attributable to the transportation group.

Item 2.01 Completion of Acquisition or Disposition of Assets

On January 30, 2015, FRP completed the previously announced distribution of 100% of the outstanding common stock of Patriot to FRP’s shareholders (the “Distribution”). Patriot was formed to hold FRP’s transportation business and, as a result of the Distribution, is now an independent public company whose common stock is listed and trading under the symbol “PATI” on the Nasdaq Global Select Market. The Distribution was made to FRP’s shareholders of record as of the close of business on January 9, 2015 (the “Record Date”), and such shareholders received one share of Patriot common stock for every three FRP common shares held as of close of business on the Record Date.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under the preceding “Debt Arrangements” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Resignation and Appointment of Officers

In connection with the Distribution, Robert E. Sandlin resigned as Vice President of FRP, effective as of immediately prior to the Distribution. Mr. Sandlin will continue to serve as Vice President of Patriot and President of its subsidiary Florida Rock & Tank Lines, Inc.

Resignation and Appointment of Directors

As described in the current Report on Form 8-K filed by FRP on August 22, 2014, in connection with the Distribution, John E. Anderson, Edward L. Baker, Luke E. Fichthorn III and Robert H. Paul III resigned as directors of FRP, effective as of immediately prior to the Distribution. The board of directors will reconstitute its board committees following the annual meeting of shareholders to be held on February 4, 2015.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Exhibit
2.1	Separation and Distribution Agreement, dated as of January 30, 2015, by and between FRP Holdings, Inc. and Patriot Transportation Holding, Inc.
10.1	Tax Matters Agreement, dated as of January 30, 2015, by and among FRP Holdings, Inc. and Patriot Transportation Holding, Inc.
10.2	Employee Matters Agreement, dated as of January 30, 2015, by and between FRP Holdings, Inc. and Patriot Transportation Holding, Inc.
10.3	Transition Services Agreement, dated as of January 30, 2015, by and between FRP Holdings, Inc. and Patriot Transportation Holding, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FRP Holdings, Inc.
Date: February 2, 2015	By:	/s/ John D. Milton, Jr.
		John D. Milton, Jr.
		Executive Vice President and Chief Financial Officer

EX-2.1

FRP Holdings, Inc. 8-K

EXHIBIT 2.1

SEPARATION AND DISTRIBUTION 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		2
Section 1.1.	Definitions	2
ARTICLE 2. THE SEPARATION		8
Section 2.1.	Internal Transactions	8
Section 2.2.	Transfers of Assets.	8
Section 2.3.	Agreement Relating To Consents Necessary To Transfer Assets and Liabilities	8
Section 2.4.	Intercompany Accounts	9
Section 2.5.	Intercompany Agreements	9
Section 2.6.	Bank Accounts; Cash Balances	9
Section 2.7.	Novation of Liabilities	10
Section 2.8.	Further Assurances and Consents	11
Section 2.9.	Ancillary Agreements	11
Section 2.10.	Disclaimer of Representations and Warranties	11
Section 2.11.	Financial Information Certifications	12
ARTICLE 3. THE DISTRIBUTION		12
Section 3.1.	Sole and Absolute Discretion; Cooperation	12
Section 3.2.	Actions Prior to the Distribution	12
Section 3.3.	Conditions Precedent to Distribution	13
Section 3.4.	The Distribution	14
Section 3.5.	Fractional Shares	15
ARTICLE 4. INSURANCE MATTERS		15
Section 4.1.	Insurance Matters	15
Section 4.2.	Treatment of Payments for Tax Purposes	17
Section 4.3.	Post-Effective Time Conduct	17
ARTICLE 5. ACCESS TO INFORMATION		17
Section 5.1.	Access to Information	17
Section 5.2.	Litigation Cooperation	18
Section 5.3.	Reimbursement	19
Section 5.4.	Ownership of Information	19
Section 5.5.	Retention of Records	19
Section 5.6.	Confidentiality	20
Section 5.7.	Privileged Information	21
ARTICLE 6. RELEASE; INDEMNIFICATION		21
Section 6.1.	Release of Pre-Distribution Claims	21
Section 6.2.	Patriot Indemnification of the Real Estate Group	23
Section 6.3.	FRP Indemnification of Transportation Group	23
Section 6.4.	Procedures	23
Section 6.5.	Calculation of Indemnification Amount	25
Section 6.6.	Contribution	25
Section 6.7.	Non-Exclusivity of Remedies	25
Section 6.8.	Survival of Indemnities	25

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ARTICLE 7. DISPUTE RESOLUTION		25
Section 7.1.	Disputes	25
Section 7.2.	Escalation; Mediation	26
ARTICLE 8. MISCELLANEOUS		26
Section 8.1.	Counterparts; Entire Agreement; Corporate Power	26
Section 8.2.	Notices	27
Section 8.3.	Amendments; No Waivers	28
Section 8.4.	Expenses	28
Section 8.5.	Successors and Assigns	28
Section 8.6.	Governing Law	28
Section 8.7.	Third-Party Beneficiaries	29
Section 8.8.	Entire Agreement	29
Section 8.9.	Tax Matters	29
Section 8.10.	Jurisdiction	29
Section 8.11.	WAIVER OF JURY TRIAL	29
Section 8.12.	Termination	29
Section 8.13.	Severability	30
Section 8.14.	Survival	30
Section 8.15.	Captions	30
Section 8.16.	Interpretation	30
Section 8.17.	Specific Performance	30
Section 8.18.	Performance	30

SCHEDULES
Schedule 1	Internal Transactions
Schedule 2	Real Estate Subsidiaries
Schedule 3.2(c)	Resigning Directors and Officers
EXHIBITS
Exhibit A	Employee Matters Agreement
Exhibit B	Tax Matters Agreement
Exhibit C	Transition Services Agreement

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SEPARATION AND DISTRIBUTION AGREEMENT

THIS SEPARATION AND DISTRIBUTION AGREEMENT (the “Agreement”) is made the 30^th day of January, 2015, between FRP HOLDINGS, INC., a Florida corporation ("FRP"), and PATRIOT TRANSPORTATION HOLDING, INC., a Florida corporation formerly known as New Patriot Transportation Holding, Inc. (“Patriot”). Capitalized terms used in this Agreement have the meaning ascribed to such terms in Article 1 hereof.

RECITALS

WHEREAS, FRP, acting through its direct and indirect subsidiaries, currently owns and conducts the Real Estate Businesses and the Transportation Business; and

WHEREAS, the board of directors of FRP has determined that it is advisable and in the best interest of FRP and its shareholders to separate FRP into two independent publicly traded companies: (a) FRP which, following consummation of the transactions contemplated in this Agreement, will own and conduct the Real Estate Businesses; and (b) Patriot which, following consummation of the transactions contemplated by this Agreement, will own and conduct the Transportation Business; and

WHEREAS, in order to facilitate the separation of the Transportation Business from the Real Estate Businesses, FRP, Patriot and Patriot Merger Sub entered into the Merger Agreement; and

WHEREAS, on January 30, 2015, FRTL, Inc., a Florida corporation, was merged into Patriot; and

WHEREAS, on December 3, 2014, Patriot Merger Sub merged with and into Patriot Transportation, Inc., formerly known as Patriot Transportation Holding, Inc. ("Existing Patriot"), pursuant to the Merger Agreement and, as a result of such merger, (i) all of the issued and outstanding shares of Existing Patriot common stock were converted into shares of FRP Common Stock, and (ii) Existing Patriot became a direct, wholly-owned subsidiary of FRP (the “Holding Company Merger”); and

WHEREAS, on January 30, 2015, Existing Patriot distributed to FRP all of the outstanding capital stock of FRP Development Corp., a Maryland corporation, FRP Development Corp., a Florida corporation, Florida Rock Properties, Inc., a Florida corporation, and FRP Maryland, Inc., a Maryland corporation; and

WHEREAS, on January 30, 2015, FRP contributed all outstanding capital stock of Existing Patriot to Patriot; and

WHEREAS, as a result of the transaction described above, Patriot now owns only the assets and subsidiaries used or engaged in the Transportation Business; and

WHEREAS, pursuant to the terms of this Agreement, the Parties intend to effect: (a) the Separation, whereby the Real Estate Businesses and the Transportation Business will be separated; and (b) the Distribution, whereby FRP will distribute to the holders of outstanding shares of FRP Common Stock, $.10 par value, on a pro rata basis, all of the outstanding shares of Patriot Common Stock, $.10 par value, owned by FRP as of the Distribution Date (which shall represent 100% of the issued and outstanding shares of Patriot Common Stock) (the "Distribution").

WHEREAS, FRP has received an opinion of counsel to the effect that the Separation and Distribution will qualify as a transaction that is a "reorganization" for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code");

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE 1.
DEFINITIONS

Section 1.1.Definitions. The following terms, as used herein, have the following meanings:

“Action” means any demand, claim, suit, action, arbitration, inquiry, investigation or other proceeding by or before any Governmental Authority or any arbitration or mediation tribunal.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such other Person. For the purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Notwithstanding any provision of this Agreement to the contrary (except where the relevant provision states explicitly to the contrary), no member of the Real Estate Group, on the one hand, and no member of the Transportation Group, on the other hand, shall be deemed to be an Affiliate of the other.

“Agreement” has the meaning set forth in the preamble.

“Ancillary Agreements” means each of the Merger Agreement, Tax Matters Agreement, the Transition Services Agreement, and the Employee Matters Agreement.

“Applicable Law” means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental Authority that is binding upon or applicable to such Person, its properties or assets or its Business or operations, as amended unless expressly specified otherwise.

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“Business” means, with respect to FRP, the Real Estate Businesses and, with respect to Patriot, the Transportation Business.

“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

“Claim” has the meaning set forth in Section 6.4(a).

“Code” has the meaning set forth in the recitals to this Agreement.

“Commission” means the United States Securities and Exchange Commission.

“Confidential Information” means, with respect to a Group, (i) any proprietary information that is competitively sensitive, material or otherwise of value to the members of such Group and not generally known to the public; (ii) any proprietary or technical information, design, invention, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords any member of such Group a competitive advantage over its competitors; and (iii) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, information, and trade secrets; in each case, related primarily to such Group’s Business.

“Disposing Party” has the meaning set forth in Section 5.5.

“Distribution” has the meaning set forth in the recitals to this Agreement.

“Distribution Agent” means American Stock Transfer, Inc.

“Distribution Date” means January 30, 2015, the date on which the Distribution shall be effected.

“Distribution Documents” means this Agreement and the Ancillary Agreements.

“Effective Time” means the time at which the Distribution is effective on the Distribution Date, which shall be deemed to be 11:59 p.m., Eastern Daylight Time, on the Distribution Date.

“Employee Matters Agreement” means the Employee Matters Agreement between FRP and Patriot, dated as of the date hereof, substantially in the form of Exhibit A.

“Environmental Law” means any Applicable Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, or the effect on the environment of the use, handling, transportation, treatment, storage, disposal, release or discharge of, or any human exposure to, any toxic or hazardous materials.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

3

“Form 10” means the registration statement on Form 10 filed by Patriot with the Commission to effect the registration of Patriot Common Stock pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time.

“Former Business” means any corporation, partnership, entity, division, Business unit, Business or set of Business operations that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested, in whole or in part, or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated, in whole or in part, in each case, by either Group prior to the Effective Time.

“FRP” has the meaning set forth in the preamble.

“FRP Common Stock” means the common stock of FRP, par value $.10 per share.

“FRP Indemnitees” has the meaning set forth in Section 6.2.

“Governmental Authority” means any multinational, foreign, federal, state, local or other governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral authority which has any jurisdiction or control over either Party (or any of their Affiliates).

“Group” means, as the context requires, the Real Estate Group or the Transportation Group.

“Holding Company Merger” has the meaning set forth in the recitals to this Agreement.

“Indemnified Party” has the meaning set forth in Section 6.4(a).

“Indemnifying Party” has the meaning set forth in Section 6.4(a).

“Indemnitees” means, as the context requires, the FRP Indemnitees or the Patriot Indemnitees.

“Information Statement” means the Information Statement to be sent to each holder of FRP Common Stock in connection with the Distribution.

“Intercompany Accounts” has the meaning set forth in Section 2.4.

“Internal Transactions” means the transactions to be completed before the Effective Time, as described in Schedule 1.

“Liabilities” means any and all claims, debts, liabilities, losses and obligations, absolute or contingent, matured or not matured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under this Agreement, any Applicable Law, any Action or threatened Action, any order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any agreement, commitment or undertaking.

4

“Losses” means, with respect to any Person, any and all damages, losses, liabilities and expenses incurred or suffered by such Person (including, without limitation, reasonable expenses of investigation and reasonable attorneys’, accountants’, consultants’ and other professionals’ fees and expenses in connection with any and all Actions or threatened Actions and reasonable expenses in connection with the enforcement of the rights hereunder).

“Merger Agreement” means the Agreement and Plan of Merger dated [*], 2014, by and among FRP, Patriot and Patriot Merger Sub.

“Nasdaq” means The Nasdaq Stock Market, Inc.

“Party” or "Parties" means either FRP or Patriot, or both of them, as applicable.

“Patriot” has the meaning set forth in the preamble.

“Patriot Common Stock” means the common stock of Patriot, par value $.10 per share.

“Patriot Indemnitees” has the meaning set forth in Section 6.3(a).

“Patriot Merger Sub” means Patriot Merger Sub, Inc., a Florida corporation.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

“Privilege” has the meaning set forth in Section 5.7(a).

“Privileged Information” has the meaning set forth in Section 5.7(a).

“Real Estate Accounts” has the meaning set forth in Section 2.6.

“Real Estate Businesses” means (i) the Business conducted by the Real Estate Group from time to time, whether before, on or after the Distribution (but excluding the Transportation Business and any Transportation Former Business) and (ii) the Real Estate Former Businesses.

“Real Estate Former Businesses” means the Former Businesses previously owned, in whole or in part, or previously operated, in whole or in part, primarily by any member of the Real Estate Group.

“Real Estate Group” means Patriot and the Real Estate Subsidiaries, including all predecessors to such Persons.

“Real Estate Group Assumed Actions” has the meaning set forth in Section 5.2(b).

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“Real Estate Group Liabilities” means (i) all Liabilities expressly delegated or allocated to, or assumed by, Patriot or any member of the Real Estate Group under this Agreement or any Ancillary Agreement, including all Liabilities arising in connection with the Real Estate Group Assumed Actions and (ii) except as otherwise specifically provided in this Agreement or any Ancillary Agreement, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or to the extent relating to, or arising from or in connection with, the Real Estate Businesses or the Real Estate Group. No Liability shall be both a Real Estate Group Liability and a Transportation Group Liability, and in the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Transportation Group Liabilities”, for the purpose of determining what is and is not a Real Estate Group Liability, the explicit delegation or allocation to, or assumption by, FRP or any member of the Real Estate Group under this Agreement or any Ancillary Agreement shall take priority over any more general textual provision of this Agreement that would otherwise operate to cause such Liability to be a Transportation Group Liability. For the avoidance of doubt, except as otherwise specifically provided in this Agreement or any Ancillary Agreement, the designation in this Agreement of Liabilities as “Real Estate Group Liabilities” or “Transportation Group Liabilities” is only for purposes of allocating such Liabilities as between the Parties and their respective Subsidiaries and shall not affect any obligations to, or give rise to any rights of, any Third Parties.

“Real Estate Subsidiaries” means Florida Rock Properties, Inc., a Florida corporation, FRP Development Corp, a Maryland corporation, and the other Subsidiaries identified in Schedule 2.

“Receiving Party” has the meaning set forth in Section 5.5.

“Record Date” means the close of business on January 9, 2015, the date determined by the board of directors of Patriot as the record date for the Distribution.

“Record Holders” means the holders of FRP Common Stock as of the Record Date.

“Representatives” has the meaning set forth in Section 5.6.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Separation” means the transactions contemplated by Article 2.

“Subsidiary” means, with respect to any Person, any other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

“Tax Matters Agreement” means the Tax Matters Agreement between FRP and Patriot, dated as of the date hereof, substantially in the form of Exhibit B.

“Third Party” means a Person that is not an Affiliate of the Transportation Group or the Real Estate Group.

“Third-Party Claim” has the meaning set forth in Section 6.4(b).

6

“Transition Services Agreement” means the Transition Services Agreement between FRP and Patriot, dated as of the date hereof, substantially in the form of Exhibit C.

“Transportation Business” means (i) the Business conducted by the Transportation Group from time to time, whether before, on or after the Distribution (but excluding the Real Estate Businesses and any Real Estate Former Businesses) and (ii) the Transportation Former Business.

“Transportation Former Business” means the Former Businesses previously owned, in whole or in part, or previously operated, in whole or in part, primarily by any member of the Transportation Group.

“Transportation Group” means Patriot and the Transportation Subsidiaries, including all predecessors to such Persons.

“Transportation Group Accounts” has the meaning set forth in Section 2.6.

“Transportation Group Assumed Actions” has the meaning set forth in Section 5.2(a).

“Transportation Liabilities” means, (i) all Liabilities expressly delegated or allocated to, or assumed by, Patriot or any member of the Transportation Group under this Agreement or any Ancillary Agreement, and (ii) except as otherwise specifically provided in this Agreement or any Ancillary Agreement, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or to the extent relating to, or arising from or in connection with, the Transportation Business or the Transportation Group. No Liability shall be both a Transportation Group Liability and a Real Estate Group Liability, and in the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Real Estate Group Liabilities”, for the purpose of determining what is and is not a Transportation Group Liability, the explicit delegation or allocation to, or assumption by, Patriot or any member of the Transportation Group under this Agreement or any Ancillary Agreement shall take priority over any more general textual provision of this Agreement that would otherwise operate to cause such Liability to be a Real Estate Group Liability. For the avoidance of doubt, except as otherwise specifically provided in this Agreement or any Ancillary Agreement, the designation in this Agreement of Liabilities as “Transportation Group Liabilities” or “Real Estate Group Liabilities” is only for purposes of allocating such Liabilities as between the Parties and their respective Subsidiaries and shall not affect any obligations to, or give rise to any rights of, any Third Parties.

“Transportation Subsidiaries” means Florida Rock & Tank Lines, Inc., a Florida corporation, and STI Holding, Inc., a Florida corporation.

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ARTICLE 2.
THE SEPARATION

On or prior to the Distribution Date:

Section 2.1.Internal Transactions. Each of FRP and Patriot shall take, and shall cause each of its respective Subsidiaries to take, all actions necessary to consummate the Internal Transactions prior to the Distribution Time.

Section 2.2.Transfers of Assets. Unless otherwise provided in this Agreement or in any Ancillary Agreement, prior to the Effective Time:

(a)FRP shall cause the Real Estate Group to assign, contribute, convey, transfer and deliver to Patriot or its designee all of the right, title and interest of the Real Estate Group in and to all assets, if any, held by any member of the Real Estate Group that relate solely to the Transportation Business (and not to the Real Estate Businesses);

(b)Patriot shall cause the Transportation Group to assign, contribute, convey, transfer and deliver to FRP or its designee all of the right, title and interest of the Transportation Group in and to all assets, if any, held by any member of the Transportation Group that relate solely to the Real Estate Businesses (and not to the Transportation Business);

(c)Patriot shall accept and assume all of the Transportation Group Liabilities; and

(d)FRP shall accept and assume all of the Real Estate Group Liabilities.

To the extent any assignment, contribution, conveyance, transfer, delivery or assumption of any asset or Liability of either Group as of the Effective Time is not effected in accordance with this Section 2.2 prior to the Effective Time for any reason it shall be effected as promptly thereafter as practicable.

Section 2.3.Agreement Relating To Consents Necessary To Transfer Assets and Liabilities.

(a)Notwithstanding any provision of this Agreement to the contrary, this Agreement shall not constitute an agreement to transfer or assign any asset or any Claim or right or any benefit arising thereunder or resulting therefrom, or to assume any Liability associated therewith, if such transfer, assignment, or assumption without the necessary consent of a Third Party, would result in a breach, or constitute a default (or an event which, with the giving of notice or lapse of time, or both, would become a default), under any contract, agreement or other material instrument or would otherwise adversely affect the rights of a member of the Real Estate Group or Transportation Group thereunder.

(b)FRP and Patriot will use their reasonable efforts to obtain the consent of any Third Party or any Governmental Authority, if any, required in connection with the transfer or assignment pursuant to Section 2.2 of any such asset or any such Claim or right or benefit arising thereunder and the assumption of any Liability associated therewith. If and when such consent is obtained, such transfer, assignment and/or assumption shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement;

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(c)If such required consent is not obtained, or if a transfer or assignment of such asset or such Claim or right or benefit arising thereunder or an assumption of such Liability associated therewith would be ineffective or would adversely affect the rights of the transferor thereunder so that, for example, the intended transferee would not in fact receive all such rights, FRP and Patriot will cooperate in a mutually agreeable arrangement under which the intended transferee would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including by sub-contract, sub-license or sub-lease to such transferee, or under which the transferor would enforce for the benefit and at the cost of the transferee, with the transferee assuming the transferor’s obligations, any and all rights of the transferor against any Third Party.

Section 2.4.Intercompany Accounts. The Parties shall use reasonable efforts to settle on or prior to the Distribution Date, or as soon as practicable thereafter, all intercompany receivables, payables and other balances, in each case, that arise prior to the Effective Time between members of the Real Estate Group, on the one hand, and members of the Transportation Group, on the other hand (“Intercompany Accounts”), by one or more cash payments in satisfaction of such amounts. From and after the Effective Time, the Parties shall settle as promptly as practicable and in the manner set forth in the first sentence of this Section 2.4 any Intercompany Accounts that are not settled as of the Distribution Time.

Section 2.5.Intercompany Agreements.

(a)Except as set forth in Section 2.5(b), all agreements, arrangements, commitments or understandings, whether or not in writing, between members of the Real Estate Group, on the one hand, and members of the Transportation Group, on the other hand, in effect immediately prior to the Distribution shall be terminated, cancelled and of no further force and effect from and after the Effective Time (including any provision thereof that purports to survive termination).

(b)The provisions of Section 2.5(a) shall not apply to any of the following agreements, arrangements, commitments or understandings: (i) this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement); (ii) any agreements, arrangements, commitments or understandings to which any Person other than the Parties hereto and the members of their respective Groups is a Party; (iii) any Intercompany Accounts to the extent such Intercompany Accounts were not satisfied and/or settled in accordance with the first sentence of Section 2.4.

Section 2.6.Bank Accounts; Cash Balances.

(a)FRP and Patriot each agrees to take, or cause the respective members of their respective Groups to take, at the Distribution Date (or such earlier date as FRP and Patriot may agree), all actions necessary to amend all contracts or agreements governing each bank account owned by Patriot or any other member of the Transportation Group (collectively, the “Transportation Group Accounts”) so that such Transportation Group Accounts, if currently Linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “Linked”) to any bank account owned by FRP or any other member of the Real Estate Group (collectively, the “Real Estate Accounts”), are de-Linked from the Real Estate Accounts.

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(b)FRP and Patriot each agrees to take, or cause the respective members of their respective Groups to take, at the Distribution Date (or such earlier date as FRP and Patriot may agree), all actions necessary to amend all contracts or agreements governing the Real Estate Accounts so that such Real Estate Accounts, if currently Linked to a Transportation Group Account, are de-Linked from the Transportation Group Accounts.

(c)It is intended that, following consummation of the actions contemplated by Sections 2.6(a) and 2.6(b), there will be in place a centralized cash management process pursuant to which (i) the Transportation Group Accounts will be managed centrally and funds collected will be transferred into one or more centralized accounts maintained by Patriot , and (ii) the Real Estate Accounts will be managed centrally and funds collected will be transferred into one or more centralized accounts maintained by FRP.

(d)With respect to any outstanding payments initiated by FRP, Patriot or any of their respective Subsidiaries prior to the Distribution Time, such outstanding payments shall be honored following the Distribution by the Person or Group owning the account from which the payment was initiated.

(e)As between FRP and Patriot (and the members of their respective Groups) all payments received after the Distribution Date by either Party (or member of its Group) that relate to a Business, asset or Liability of the other Party (or member of its Group), shall be held by such Party for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto). Each Party shall maintain an accounting of any such payments, and the Parties shall have a monthly reconciliation, whereby all such payments received by each Party are calculated and the net amount owed to FRP or Patriot shall be paid over with right of set-off. Notwithstanding the foregoing, neither FRP nor Patriot shall act as collection agent for the other Party, nor shall either Party act as surety or endorser with respect to non-sufficient funds checks or funds to be returned in a bankruptcy or fraudulent conveyance Action.

Section 2.7.Novation of Liabilities.

(a)Each of FRP and Patriot, at the request of the other, shall endeavor, if reasonably practicable, to obtain, or to cause to be obtained, if reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all obligations under agreements, leases, licenses and other Liabilities of any nature whatsoever that constitute Liabilities of the other Party’s Group; provided, however, that neither FRP nor Patriot shall be obligated to contribute any capital or pay any consideration in any form (other than a substitute letter of credit, or substitute guaranty to any third Person from whom any such consent, substitution, approval, amendment or release is requested).

(b)If FRP or Patriot is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release and the applicable member of the other Party’s Group continues to be bound by such agreement, lease, license or other Liability (each, an “Unreleased Liability”), FRP or Patriot, as appropriate, shall, to the extent not prohibited by Applicable Law, as indemnitor, guarantor, agent or subcontractor for such member of the Real Estate Group or the Transportation Group, as the case may be, (i) on a timely basis pay, perform and discharge fully all the Liabilities of their Group that constitute Unreleased Liabilities and (ii) use its commercially reasonable efforts to effect such payment, performance, or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the other Party’s Group.

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Section 2.8.Further Assurances and Consents. In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto shall use its reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under Applicable Laws and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including but not limited to using its reasonable efforts to obtain any consents and approvals and to make any filings and applications necessary or desirable in order to consummate the transactions contemplated by this Agreement.

Section 2.9.Ancillary Agreements. Effective on or prior to the Effective Time, each of FRP and Patriot will, or will cause the applicable members of their Groups to, execute and deliver all Ancillary Agreements to which it is a party.

Section 2.10.Disclaimer of Representations and Warranties. EACH OF FRP (ON BEHALF OF ITSELF AND EACH MEMBER OF THE REAL ESTATE GROUP) AND PATRIOT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE TRANSPORTATION GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

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Section 2.11.Financial Information Certifications. FRP's disclosure controls and procedures and internal control over financial reporting (as each is contemplated by the Exchange Act) are currently applicable to Patriot as its Subsidiary. In order to enable the principal executive officer and principal financial officer of Patriot to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002, FRP, within thirty-five (35) days of the end of any fiscal quarter during which Patriot remains FRP's Subsidiary, shall provide Patriot with one or more certifications with respect to such disclosure controls and procedures, its internal control over financial reporting and the effectiveness thereof. Such certification(s) shall be provided by FRP (and not by any officer or employee in their individual capacity).

ARTICLE 3.
THE DISTRIBUTION

Section 3.1.Sole and Absolute Discretion; Cooperation.

(a)FRP shall, in its sole and absolute discretion, determine the terms of the Distribution, including the form, structure and terms of any transaction(s) to effect the Distribution and the timing and conditions to the consummation of the Distribution. In addition, FRP may, at any time and from time to time until the consummation of the Distribution, modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Nothing shall in any way limit FRP's right to terminate this Agreement or the Distribution as set forth in Section 8.12 hereof or alter the consequences of any such termination from those specified in Section 8.12 hereof.

(b)Patriot shall cooperate with FRP to accomplish the Distribution and shall, at FRP's direction, promptly take any and all actions necessary or desirable to effect the Distribution, including in respect of the registration under the Exchange Act of Patriot Common Stock on the Form 10.

Section 3.2.Actions Prior to the Distribution. Prior to the Effective Time and subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:

(a)FRP shall, to the extent possible, give the Nasdaq not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

(b)On or prior to the Distribution Date, FRP and Patriot shall take all necessary actions to cause the Internal Transactions to occur.

(c)On or prior to the Distribution Date, FRP and Patriot shall take all necessary actions so that as of the Effective Time: (i) the directors and executive officers of Patriot shall be those set forth in the Information Statement mailed to the Record Holders prior to the Distribution Date; and (ii) each individual referred to in Schedule 3.2(c) shall have resigned from his or her position, if any, as a member of the board of directors or employee of FRP or Patriot, as applicable, except as otherwise set forth in Schedule 3.2(c) to this Agreement.

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(d)Patriot shall prepare and file, and shall use its reasonable best efforts to have approved, an application for the listing of the Patriot Common Stock to be distributed in the Distribution on the Nasdaq Global Select Market, subject to official notice of distribution.

(e)Patriot shall file any amendments or supplements to the Form 10 as may be necessary or advisable in order to cause the Form 10 to become and remain effective as required by the SEC or federal, state or other applicable securities Laws. FRP and Patriot shall cooperate in preparing, filing with the SEC and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. FRP and Patriot will prepare, and Patriot will, to the extent required under applicable Law, file with the SEC any such documentation which FRP determines are necessary or desirable to effectuate the Distribution, and FRP and Patriot shall each use its reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable. FRP and Patriot shall take all such action as may be necessary or appropriate under the securities or blue sky laws of the United States (and any comparable Laws under any foreign jurisdiction) in connection with the Distribution.

(f)FRP shall, as soon as is reasonably practicable after the Form 10 is declared effective under the Exchange Act and the board of directors of Patriot has approved the Distribution, cause the Information Statement to be mailed to the Record Holders.

(g)FRP and Patriot shall take all actions as may be necessary to approve the grants of adjusted equity awards by FRP (in respect of FRP Common Stock) and Patriot (in respect of Patriot Common Stock) in connection with the Distribution in order to satisfy the requirements of Rule 16b-3 under the Exchange Act.

Section 3.3.Conditions Precedent to Distribution. In no event shall the Distribution occur unless each of the following conditions shall have been satisfied (or waived by FRP in its sole discretion):

(a)the board of directors of FRP shall have approved the Distribution and shall not have abandoned the Distribution or terminated this Agreement at any time prior to the Distribution;

(b)the board of directors of FRP shall have received from its financial advisor a solvency opinion in form and substance satisfactory to the board of directors of FRP confirming that the Distribution will not render Patriot insolvent;

(c)the Internal Transactions shall have been completed;

(d)the Form 10 shall have been filed with the Commission and declared effective by the Commission, no stop order suspending the effectiveness of the Form 10 shall be in effect, no proceedings for such purpose shall be pending before or threatened by the Commission, and the Information Statement shall have been mailed to holders of the FRP Common Stock as of the Record Date;

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(e)all actions and filings necessary or appropriate under applicable federal, state or foreign securities or “blue sky” laws and the rules and regulations thereunder shall have been taken and, where applicable, become effective or been accepted;

(f)the Patriot Common Stock to be delivered and the Distribution shall have been approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance;

(g)each of the Ancillary Agreements shall have been duly executed and delivered by the Parties thereto;

(h)FRP shall have received an opinion of Nelson Mullins Riley & Scarborough LLP (which shall not have been revoked or modified in any material respect), reasonably satisfactory to FRP, confirming that the Distribution will be tax free to the shareholders of FRP for United States federal income tax purposes;

(i)no Applicable Law shall have been adopted, promulgated or issued that prohibits the consummation of the Distribution or any of the other transactions contemplated hereby;

(j)any material governmental approvals and consents and any material permits, registrations and consents from Third Parties, in each case, necessary to effect the Distribution and to permit the operation of the Transportation Business after the Distribution Date substantially as it is conducted at the date hereof shall have been obtained;

(k)credit facilities shall have been made available to FRP and Patriot by its lenders on terms and in an amount satisfactory to FRP;

(l)no event or development shall have occurred or exist that, in the judgment of the board of directors of FRP, in its sole discretion, makes it inadvisable to effect the Distribution or the other transactions contemplated hereby.

Each of the foregoing conditions is for the sole benefit of FRP and shall not give rise to or create any duty on the part of FRP or its board of directors to waive or not to waive any such condition or to effect the Distribution, or in any way limit FRP's rights of termination as set forth in Section 8.12 or alter the consequences of any termination from those specified in Section 8.12. Any determination made by FRP on or prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.3 shall be conclusive and binding on the Parties.

Section 3.4.The Distribution. Subject to the terms and conditions set forth in this Agreement:

(a)On or prior to the Distribution Date, FRP shall take such steps as are reasonably necessary or appropriate to permit the Distribution by the Distribution Agent of validly issued, fully paid and nonassessable shares of Patriot Common Stock, registered in book-entry form through the registration system;

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(b)the Distribution shall be effective at the Distribution Time; and

(c)FRP shall instruct the Distribution Agent to distribute, on or as soon as practicable after the Distribution Date, to each holder of record of FRP Common Stock as of the Record Date, by means of a pro rata dividend, one share of Patriot Common Stock for every three shares of FRP Common Stock so held. Following the Distribution Date, Patriot agrees to provide all book-entry transfer authorizations for shares of Patriot Common Stock that FRP or the Distribution Agent shall require (after giving effect to Sections 3.5) in order to effect the Distribution.

Section 3.5.Fractional Shares. No fractional shares of Patriot Common Stock will be distributed in the Distribution. The Distribution Agent will be directed to determine (based on the aggregate number of shares held by each holder) the number of whole shares and the fractional share of Patriot Common Stock allocable to each holder of FRP Common Stock as of the Record Date. Upon the determination by the Distribution Agent of such numbers of whole shares and fractional shares, as soon as practicable on or after the Distribution Date, the Distribution Agent, acting on behalf of the holders thereof, shall aggregate the fractional shares into whole shares and shall sell the whole shares obtained thereby for cash on the open market (with the Distribution Agent, in its sole discretion, determining when, how and through which broker-dealer(s) and at which price(s) to make such sales) and shall thereafter promptly distribute to each such holder entitled thereto (pro rata based on the fractional share such holder would have been entitled to receive in the Distribution) the resulting aggregate cash proceeds, after making appropriate deductions of the amounts required to be withheld for United States federal income tax purposes, if any, and after deducting an amount equal to all brokerage fees and commissions, transfer taxes and other costs attributed to the sale of shares pursuant to this Section 3.5. Neither FRP nor Patriot will be required to guarantee any minimum sale price for the fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payments made in lieu of fractional shares.

ARTICLE 4.
INSURANCE MATTERS

Section 4.1.Insurance Matters.

(a)FRP and Patriot agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Effective Time. In no event shall either Party or any member of their Group have Liability or obligation whatsoever to any member of the other Group in the event that any insurance policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the other Group for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

(b)From and after the Effective Time, with respect to any Losses or Liabilities incurred by any member of the Real Estate Group prior to the Effective Time, Patriot will provide FRP with access to, and FRP may, upon prior written notice to Patriot, make claims under, Patriot's third-party insurance policies in place immediately prior to the Effective Time and Patriot's historical policies of insurance, but solely to the extent that such policies provided coverage for members of the Real Estate Group prior to the Effective Time; provided that such access to, and the right to make claims under, such insurance policies, shall be subject to the terms and conditions of such insurance policies, including any limits on coverage or scope, any deductibles and other fees and expenses, and shall be subject to the following additional conditions:

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(i)FRP shall report any Claim to Patriot, as promptly as practicable, and in any event in sufficient time so that such Claim may be made in accordance with Patriot's Claim reporting procedures;

(ii)FRP and the members of the Real Estate Group shall indemnify, hold harmless and reimburse Patriot and the members of the Transportation Group for any deductibles, self-insured retention, fees and expenses incurred by Patriot or any members of the Transportation Group to the extent resulting from any access to, any Claims made by FRP or any other members of the Real Estate Group under, any insurance provided pursuant to this Section 4.1(b), including any indemnity payments, settlements, judgments, legal fees and allocated Claims expenses and Claim handling fees, whether such Claims are made by FRP, its employees or third Persons; and

(iii)FRP shall exclusively bear (and the Transportation Group shall have no obligation to repay or reimburse FRP or any member of the Real Estate Group for) and shall be liable for all uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by FRP or any member of the Real Estate Group under the policies as provided for in this Section 4.1(b).

In the event that any member of the Transportation Group incurs any Losses or Liabilities prior to or in respect of the period prior to the Effective Time for which such member of the Transportation Group is entitled to coverage under FRP’s third-party insurance policies, the same process pursuant to this Section 4.1(b) shall apply, substituting “FRP” for “Patriot” and “Patriot” for “FRP.”

(c)Except as provided in Section 4.1(b), from and after the Effective Time, the Real Estate Group shall have no rights to or under any of the insurance policies of Patriot or any other member of the Transportation Group. At the Effective Time, FRP shall have in effect all insurance programs required to comply with FRP’s contractual obligations and Applicable Law.

(d)Patriot shall retain the exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any Real Estate Group Liabilities and/or claims FRP has made or could make in the future, and no member of the Real Estate Group shall erode, exhaust, settle, release, commute, buyback or otherwise resolve disputes with Patriot's insurers with respect to any of Patriot’s insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. FRP shall cooperate with Patriot and share such information as is reasonably necessary in order to permit Patriot to manage and conduct its insurance matters as it deems appropriate. Neither Patriot nor any of the members of the Transportation Group shall have any obligation to secure extended reporting for any claims under any Liability policies of Patriot or any member of the Transportation Group for any acts or omissions by any member of the Real Estate Group incurred prior to the Effective Time.

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(e)This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the Transportation Group in respect of any insurance policy or any other contract or policy of insurance.

(f)FRP does hereby, for itself and each other member of the Real Estate Group, agree that no member of the Transportation Group shall have any Liability whatsoever as a result of the insurance policies and practices of Patriot and the members of the Transportation Group as in effect at any time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any Claim or potential Claim or otherwise.

Section 4.2.Treatment of Payments for Tax Purposes. For all tax purposes, the Parties agree to treat (i) any payment required by this Agreement (other than payments with respect to interest accruing after the Effective Time) as either a contribution by FRP to Patriot or a distribution by Patriot to FRP, as the case may be, occurring immediately prior to the Effective Time or as a payment of an assumed or retained Liability; and (ii) any payment of interest as taxable or deductible, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise required by applicable Law.

Section 4.3.Post-Effective Time Conduct. The Parties acknowledge that, after the Effective Time, each Party shall be independent of the other Party, with responsibility for its own actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its Business, operations and activities following the Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Section 4) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.

ARTICLE 5.
ACCESS TO INFORMATION

Section 5.1.Access to Information.

(a)For a period of six years after the Distribution Date, each Group shall afford promptly the other Group and its agents and, to the extent required by Applicable Law, authorized representatives of any Governmental Authority of competent jurisdiction, reasonable access (which shall include the right to make copies) during normal business hours to its books of account, financial and other records (including accountant’s work papers, to the extent any required consents have been obtained), information, employees and auditors to the extent necessary or useful for such other Group in connection with any audit, investigation, dispute or litigation, complying with their obligations under this Agreement or any Ancillary Agreement, any regulatory proceeding, any regulatory filings, complying with reporting disclosure requirements or any other requirements imposed by any Governmental Authority or any other reasonable business purpose of the Group requesting such access; provided that any such access shall not unreasonably interfere with the conduct of the Business of the Group providing such access; provided further that in the event any Party reasonably determines that affording any such access to the other Party would be commercially detrimental in any material respect or violate any Applicable Law or agreement to which such Party or member of its Group is a party, or waive any attorney-client privilege applicable to such Party or any member of its Group, the Parties shall use reasonable efforts to permit the compliance with such request in a manner that avoids any such harm or consequence.

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(b)Without limiting the generality of the foregoing, until the end of the first full Patriot fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each Party shall use reasonable efforts to cooperate with the other Party’s information requests to enable (i) the other Party to meet its timetable for dissemination of its earnings releases and financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act, and (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor's audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other Applicable Laws.

Section 5.2.Litigation Cooperation.

(a)Effective as of the Effective Time, the applicable member of the Transportation Group shall assume and thereafter be responsible for all Liabilities of either Group that may result from the Transportation Group Assumed Actions and, subject to Section 6.4(c), all fees and costs relating to the defense of the Transportation Group Assumed Actions, including attorneys’, accountants’, consultants’ and other professionals’ fees and expenses that have been incurred prior to the Effective Time and are unpaid as of the Effective Time, or, that are incurred on or after the Effective Time. “Transportation Group Assumed Actions” means those Actions primarily relating to the Transportation Group Business.

(b)Effective as of the Effective Time, the applicable member of the Real Estate Group shall assume and thereafter be responsible for all Liabilities of either Group that may result from the Real Estate Group Assumed Actions and, subject to Section 6.4(c), all fees and costs relating to the defense of the Real Estate Group Assumed Actions, including attorneys’, accountants’, consultants’ and other professionals’ fees and expenses that have been incurred prior to the Effective Time and are unpaid as of or after the Effective Time, or, that are incurred on or after the Effective Time. “Real Estate Group Assumed Actions” means those Actions primarily related to the Real Estate Businesses.

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(c)Each Party agrees that at all times from and after the Effective Time if an Action relating primarily to its Business is commenced by a Third Party naming a member of each Group as defendants thereto, then such Action shall be deemed to be a Transportation Group Assumed Action (in the case of an Action primarily related to the Transportation Business) or a Real Estate Group Assumed Action (in the case of an Action primarily related to the Real Estate Businesses) and the Party as to which the Action primarily relates shall use its reasonable efforts to cause the other Party or member of its Group to be removed from such Action.

(d)The Parties agree that at all times from and after the Effective Time, if an Action which does not relate primarily to either Party’s Business is commenced by a Third Party naming a member of each Group as a defendant thereto, then the Parties shall cooperate and consult to the extent necessary or advisable with respect to such Action.

(e)Each Group shall use reasonable efforts to make available to the other Group and its attorneys, accountants, consultants and other designated representatives, upon written request, its directors, officers, employees and representatives as witnesses, and shall otherwise cooperate with the other Group, to the extent reasonably requested in connection with any Action arising out of either Group’s Business prior to the Effective Time in which the requesting Group may from time to time be involved.

Section 5.3.Reimbursement. Each Group providing information or witnesses to the other Group or otherwise incurring any out-of-pocket expense in connection with cooperating under Section 5.1 or Section 5.2 shall be entitled to receive from the recipient thereof, upon the presentation of invoices therefor, payment for all out-of-pocket costs and expenses (including attorney’s fees but excluding reimbursement for general overhead, salary and employee benefits) actually incurred in providing such access, information, witnesses or cooperation.

Section 5.4.Ownership of Information. All information owned by one Party (or a member of its Group) that is provided to the other Party (or a member of its Group) under Section 5.1 or Section 5.2 shall be deemed to remain the property of the providing Party. Unless specifically set forth herein or in any Ancillary Agreement, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise in any such information.

Section 5.5.Retention of Records. Except as otherwise required by Applicable Law or agreed to in writing, each Party shall, and shall cause the members of its Group to, retain, in accordance with the practice of such Party applicable to the retention of its own information as in effect from time to time, any and all information in its possession or control relating to the other Group’s Business. Neither Party shall destroy, or permit the destruction, or otherwise dispose, or permit the disposal, of any such information, subject to such retention practice, unless, prior to such destruction or disposal, the Party proposing (or whose Group member is proposing) such destruction or disposal (the “Disposing Party”) provides not less than 30 days’ prior written notice to the other Party (the “Receiving Party”), specifying the information proposed to be destroyed or disposed of and the scheduled date for such destruction or disposal. If the Receiving Party shall request in writing prior to the scheduled date for such destruction or disposal that any of the information proposed to be destroyed or disposed of be delivered to the Receiving Party, the Disposing Party shall promptly arrange for the delivery of such of the information as was requested at the expense of the Receiving Party; provided that in the event that the Disposing Party reasonably determines that any such provision of information would violate any Applicable Law or agreement to which such Party or member of its Group is a party, or waive any attorney-client privilege applicable to such Party or any member of its Group, the Parties shall use reasonable efforts to permit the prompt compliance with such request in a manner that avoids any such harm or consequence. Any records or documents that were subject to a litigation hold prior to the Distribution Date must be retained by the applicable Party until such Party or member of its Group is notified by the other Party that the litigation hold is no longer in effect.

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Section 5.6.Confidentiality. Each Party acknowledges that it or a member of its Group may have in its possession, and, in connection with this Agreement and the Ancillary Agreements, may receive, Confidential Information of the other Party or any member of its Group (including information in the possession of such other Party relating to its clients or customers). Each Party shall hold and shall cause its directors, officers, employees, agents, consultants and advisors (“Representatives”) and the members of its Group and their Representatives to hold in strict confidence and not to use except as permitted by this Agreement or any Ancillary Agreement all such Confidential Information concerning the other Group unless (a) such Party or any of the members of its Group or its or their Representatives is compelled to disclose such Confidential Information by judicial or administrative process or by other requirements of Applicable Law or (b) such Confidential Information can be shown to have been (i) in the public domain through no fault of such Party or any of the members of its Group or its or their Representatives, (ii) lawfully acquired after the Distribution Date on a non-confidential basis from other sources not known by such Party to be under any legal obligation to keep such information confidential or (iii) developed by such Party or any of the members of its Group or its or their Representatives without the use of any Confidential Information of the other Group. Notwithstanding the foregoing, such Party or member of its Group or its or their Representatives may disclose such Confidential Information to the members of its Group and its or their Representatives so long as such Persons are informed by such Party of the confidential nature of such Confidential Information and are directed by such Party to treat such information confidentially. The obligation of each Party and the members of its Group and its and their Representatives to hold any such Confidential Information in confidence shall be satisfied if they exercise the same level of care with respect to such Confidential Information as they would with respect to their own proprietary information. If such Party or any of a member of its Group or any of its or their Representatives becomes legally compelled to disclose any documents or information subject to this Section 5.6, such Party will promptly notify the other Party and, upon request, use reasonable efforts to cooperate with the other Party’s efforts to seek a protective order or other remedy. If no such protective order or other remedy is obtained or if the other Party waives in writing such Party’s compliance with this Section 5.6, such Party or the member of its Group or its or their Representatives may furnish only that portion of the information which it concludes, after consultation with counsel, is legally required to be disclosed and will exercise its reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information. Each Party agrees to be responsible for any breach of this Section 5.6 by it, the members of its Group and its and their Representatives.

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Section 5.7.Privileged Information.

(a)The Parties acknowledge that members of the Real Estate Group, on the one hand, and members of the Transportation Group, on the other hand, may possess documents or other information regarding the other Group that is or may be subject to the attorney-client privilege, the work product doctrine or common interest privilege (collectively, “Privileges”; and such documents and other information collectively, the “Privileged Information”). Each Party agrees to use reasonable efforts to protect and maintain, and to cause their respective Affiliates to protect and maintain, any applicable Claim to Privilege in order to prevent any of the other Group’s Privileged Information from being disclosed or used in a manner inconsistent with such Privilege without the other Party’s consent. Without limiting the generality of the foregoing, a Party and its Affiliates shall not, without the other Party’s prior written consent, (i) waive any Privilege with respect to any of the other Party’s or any member of its Group’s Privileged Information, (ii) fail to defend any Privilege with respect to any such Privileged Information, or (iii) fail to take any other actions reasonably necessary to preserve any Privilege with respect to any such Privileged Information.

(b)Upon receipt by a Party or any member of such Party’s Group of any subpoena, discovery or other request that calls for the production or disclosure of Privileged Information of the other Party or a member of its Group, such Party shall promptly notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it or a member of its Group may have under this Section 5.7 or otherwise to prevent the production or disclosure of such Privileged Information. Each Party agrees that neither it nor any member of its Group will produce or disclose any information that may be covered by a Privilege of the Party or a member of its Group under this Section 5.7 unless (i) the other Party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has entered an order finding that the information is not entitled to protection under any applicable Privilege or otherwise requires disclosure of such information.

ARTICLE 6.
RELEASE; INDEMNIFICATION

Section 6.1.Release of Pre-Distribution Claims.

(a)Except (i) as provided in Section 6.1(b) and (ii) as otherwise expressly provided in this Agreement or any Ancillary Agreement, each Party hereto does hereby, on behalf of itself and each member of its Group, and each of their successors and assigns, release and forever discharge the other Party and the other members of such Party’s Group, and their respective successors and assigns, and all Persons who at any time prior to the Effective Time have been directors, officers or employees of such other Party or any member of its Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the “Released Parties”), from any and all demands, Actions and Liabilities whatsoever, whether at law or in equity (including any right of contribution or any right pursuant to any Environmental Law whether now or hereinafter in effect), whether arising under any contract or agreement, by operation of law or otherwise (and including for the avoidance of doubt, those arising as a result of the negligence, strict liability or any other liability under any theory of law or equity of, or any violation of law by any Released Party), existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Distribution. FRP shall cause each of the other members of the Real Estate Group to, effective as of the Effective Time, release and forever discharge each of the Patriot Indemnitees (as defined in Section 6.3(a) of this Agreement) as and to the same extent as the release and discharge provided by FRP pursuant to the foregoing provisions of this Section 6.1(a). Patriot shall cause each of the other members of the FRP Indemnitees (as defined in Section 6.2(a) of this Agreement) as and to the same extent as the release and discharge provided by Patriot pursuant to the foregoing provisions of this Section 6.1(a).

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(b)Nothing contained in Section 6.1(a) shall impair any right of any Person identified in Section 6.1(a) to enforce this Agreement or any Ancillary Agreement. Nothing contained in Section 6.1(a) shall release or discharge any Person from:

(i)any Liability assumed, transferred, assigned, retained or allocated to that Person in accordance with, or any other Liability of that Person under, this Agreement or any of the Ancillary Agreements;

(ii)any Liability that is expressly specified in this Agreement or any Ancillary Agreement to continue after the Effective Time, but subject to any limitation set forth in this Agreement or any Ancillary Agreement relating specifically to such Liability; or

(iii)any Liability the release of which would result in the release of any Person other than a member of the Real Estate Group or the Transportation Group or any related Released Party; provided, however, that the Parties hereto agree not to bring or allow their respective Subsidiaries to bring suit against the other Party or any related Released Party with respect to any such Liability.

In addition, nothing contained in Section 6.1(a) shall release any Party or any member of its Group from honoring its existing obligations to indemnify, or advance expenses to, any Person who was a director, officer or employee of such Party or any member of its Group, at or prior to the Effective Time, to the extent such Person was entitled to such indemnification or advancement of expenses pursuant to then-existing obligations; provided, however, that to the extent applicable, Sections 6.2 and 6.3 hereof shall determine whether any Party shall be required to indemnify the other or a member of its Group in respect of such Liability.

(c)It is the intent of each of the Parties hereto by virtue of the provisions of this Section 6.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date between members of the Real Estate Group, on the one hand, and members of the Transportation Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the Distribution Date), except as expressly set forth in Section 6.1(b) or as expressly provided in this Agreement or any Ancillary Agreement.

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Section 6.2.Patriot Indemnification of the Real Estate Group.

(a)Effective as of and after the Effective Time, Patriot shall indemnify, defend and hold harmless the Real Estate Group and the respective directors, officers, employees and Affiliates of each Person in the Real Estate Group (the “FRP Indemnitees”) from and against any and all Losses incurred or suffered by any of the FRP Indemnitees arising out of or in connection with (i) any of the Transportation Liabilities, or the failure of any member of the Transportation Group to pay, perform or otherwise discharge any of the Transportation Liabilities and (ii) any breach by Patriot or any member of the Transportation Group of this Agreement or any Ancillary Agreement.

(b)Except to the extent set forth in Section 6.3(b), effective as of and after the Effective Time, Patriot shall indemnify, defend and hold harmless each of the FRP Indemnitees and each Person, if any, who controls any FRP Indemnitee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by any untrue statement or alleged untrue statement of a material fact contained in the Form 10 or any amendment thereof or the Information Statement (as amended or supplemented if Patriot shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 6.3.FRP Indemnification of Transportation Group.

(a)Effective as of and after the Effective Time, FRP shall indemnify, defend and hold harmless the Transportation Group and the respective directors, officers, employees and Affiliates of each Person in the Transportation Group (the “Patriot Indemnitees”) from and against any and all Losses incurred or suffered by any of the Patriot Indemnitees and arising out of or in connection with (i) any of the FRP Liabilities, or the failure of any member of the Real Estate Group to pay, perform or otherwise discharge any of the FRP Liabilities and (ii) any breach by FRP or any member of the Real Estate Group of this Agreement or any Ancillary Agreement.

(b)Effective as of and after the Effective Time, FRP shall indemnify, defend and hold harmless each of the Patriot Indemnitees and each Person, if any, who controls any Patriot Indemnitee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by any untrue statement or alleged untrue statement of a material fact contained in the Form 10 or any amendment thereof or the Information Statement (as amended or supplemented if Patriot shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such Losses are caused by any such untrue statement or omission or alleged untrue statement or omission arising out of information provided by any member of the Real Estate Group for inclusion in the Information Statement.

Section 6.4.Procedures.

(a)The Party seeking indemnification under Section 6.2 or Section 6.3 (the “Indemnified Party”) agrees to give prompt notice to the Party against whom indemnity is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, action or proceeding (each, a “Claim”) in respect of which indemnity may be sought hereunder and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have prejudiced the Indemnifying Party.

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(b)The Indemnifying Party shall be entitled to participate in the defense of any Claim asserted by any Third Party (“Third-Party Claim”) and, subject to the limitations set forth in this Section 6.4, if it so notifies the Indemnified Party no later than 30 days after receipt of the notice described in Section 6.4(a), shall be entitled to control and appoint lead counsel for such defense, in each case at its expense. If the Indemnifying Party does not, the Indemnified Party shall have the right to defend or contest such Third-Party Claim through counsel chosen by the Indemnified Party reasonably acceptable to the Indemnifying Party, subject to the provisions of this Section 6.4. The Indemnified Party shall provide the Indemnifying Party and such counsel with such information regarding such Third-Party Claim as either of them may reasonably request.

(c)If the Indemnifying Party shall assume the control of the defense of any Third-Party Claim in accordance with the provisions of this Section 6.4, (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third-Party Claim, if the settlement does not release the Indemnified Party from all Liabilities with respect to such Third-Party Claim or the settlement imposes injunctive or other equitable relief against the Indemnified Party or any of its related Indemnitees or is otherwise materially prejudicial to any such Person and (ii) the Indemnified Party shall be entitled to participate in (but not control) the defense of such Third-Party Claim and, at its own expense, to employ separate counsel of its choice for such purpose; provided that in the event of a conflict of interest between the Indemnifying Party and the applicable Indemnified Party, the reasonable fees and expenses of such separate counsel shall be at the Indemnifying Party’s expense.

(d)Each Party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third-Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.

(e)Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Losses payable under Section 6.2 or Section 6.3 and the reasonable expenses incurred in connection therewith will be treated as Losses subject to indemnification hereunder.

(f)If any Third-Party Claim shall be brought against a member of each Group, then such Action shall be deemed to be a Transportation Group Assumed Action or a Real Estate Group Assumed Action in accordance with Sections 5.2(a) and 5.2(b), to the extent applicable, and the related Party shall be deemed to be the Indemnifying Party for the purposes of this Article 6. In the event of any Action in which the Indemnifying Party is not also named defendant, at the request of either the Indemnified Party or the Indemnifying Party, the Parties will use reasonable efforts to substitute the Indemnifying Party or its applicable Affiliate for the named defendant in the Action.

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Section 6.5.Calculation of Indemnification Amount. Any indemnification amount pursuant to Section 6.2 or Section 6.3 shall be paid (i) net of any amounts recovered by the Indemnified Party under applicable Third Party insurance policies or from any other Third Party alleged to be responsible therefor, and (ii) taking into account any tax benefit actually realized and any tax cost incurred by the Indemnified Party arising from the incurrence or payment of the relevant Losses. If the Indemnified Party receives any amounts under applicable Third Party insurance policies, or from any other Third Party alleged to be responsible for any Losses, subsequent to an indemnification payment by the Indemnifying Party in respect thereof, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made by such Indemnifying Party in respect thereof up to the amount received by the Indemnified Party from such Third Party insurance policy or Third Party, as applicable. The Indemnifying Party shall not be liable for any Losses under Section 6.2 or Section 6.3 to the extent such Losses are special, indirect, incidental, consequential or punitive damages or lost profits (other than such Losses paid to Third Parties).

Section 6.6.Contribution. If for any reason the indemnification provided for in Section 6.2 or Section 6.3 is unavailable to any Indemnified Party, or insufficient to hold it harmless, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Real Estate Group, on the one hand, and the Transportation Group, on the other hand, in connection with the conduct, statement or omission that resulted in such Losses. In case of any Losses arising out of or related to information contained in the Form 10 or any amendment thereof or the Information Statement (as amended or supplemented), the relative fault of the Real Estate Group, on the one hand, and the Transportation Group, on the other hand, shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by FRP or Patriot.

Section 6.7.Non-Exclusivity of Remedies. Subject to Section 6.1, the remedies provided for in this Article 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Party at law or in equity; provided that the procedures set forth in Sections 6.4 and 6.5 shall be the exclusive procedures governing any indemnity action brought under this Agreement.

Section 6.8.Survival of Indemnities. The rights and obligations of any Indemnified Party or Indemnifying Party under this Article 6 shall survive the sale or other transfer of any Party of any of its assets, Business or Liabilities.

ARTICLE 7.
DISPUTE RESOLUTION

Section 7.1.Disputes. Except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and mediation set forth in this Article 7 shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby (including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the date hereof), or the commercial or economic relationship of the Parties relating hereto or thereto, between or among any members of the Real Estate Group, on the one hand, and any members of the Transportation Group, on the other hand.

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Section 7.2.Escalation; Mediation.

(a)It is the intent of the Parties to use reasonable best efforts to resolve expeditiously any dispute, controversy or Claim between or among them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, a Party involved in a dispute, controversy or Claim may deliver a notice (an "Escalation Notice") demanding an in-person meeting involving representatives of the Parties at a senior level of management. Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided, however, that the Parties shall use reasonable best efforts to meet within 30 days of the Escalation Notice.

(b)If the Parties are not able to resolve the dispute, controversy or Claim, then the matter shall be referred to mediation. The Parties shall retain a mediator to aid the Parties in their discussions and negotiations by informally providing advice to the Parties. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the Parties or be admissible in any other proceeding. The mediator may be chosen from a list of mediators previously selected by the Parties or by other agreement of the Parties. Costs of the mediation shall be borne equally by the Parties involved in the matter, except that each Party shall be responsible for its own expenses. Mediation shall be a prerequisite to the commencement of any Action by either Party against the other Party.

(c)In the event that any resolution of any dispute, controversy or Claim pursuant to the procedures set forth in Section 7.2(a) or (b) in any way affects an agreement or arrangement between either of the Parties and a Third Party insurance carrier, the consent of such Third Party insurance carrier to such resolution, to the extent such consent is required, shall be obtained before such resolution can take effect.

ARTICLE 8.
MISCELLANEOUS

Section 8.1.Counterparts; Entire Agreement; Corporate Power.

(a)This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b)This Agreement, the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

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(c)FRP represents on behalf of itself and each other member of the Real Estate Group, and Patriot represents on behalf of itself and each other member of the Transportation Group, as follows:

(i)each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii)this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d)Each Party acknowledges that it and each other Party is executing certain of the Ancillary Agreements by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause each such Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 8.2.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:                      Daniel B. Nunn, Jr.

Nelson Mullins Riley & Scarborough LLP

50 N. Laura Street, Suite 2850

Jacksonville, Florida 32202

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

with a copy to:                      Daniel B. Nunn, Jr.

Nelson Mullins Riley & Scarborough LLP

50 N. Laura Street, Suite 2850

Jacksonville, Florida 32202

Facsimile: 904.665.3621

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or such other address or facsimile number as such Party may hereafter specify for the purpose by notice to the other Party hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

Section 8.3.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 is 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.

(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 Applicable Law.

Section 8.4.Expenses. Except as specifically provided otherwise in this Agreement or any Ancillary Agreement, all costs and expenses incurred by the Real Estate Group in connection with the Distribution and related transactions shall be paid by FRP , and all costs and expenses incurred by the Transportation Group in connection with the Distribution and related transactions shall be paid by Patriot.

Section 8.5.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 permitted 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 Party hereto. If any Party or any of its successors or permitted assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of such Party shall assume all of the obligations of such Party under the Distribution Documents.

Section 8.6.Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Florida, without regard to the conflicts of law rules of such state.

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Section 8.7.Third-Party Beneficiaries. Except for the indemnification rights under this Agreement of any FRP Indemnitee or Patriot Indemnitee in their respective capacities as such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder, and (b) there are no Third-Party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any third person with any remedy, Claim, Liability, reimbursement, Claim of Action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

Section 8.8.Entire Agreement. This Agreement and the other Distribution Documents constitute the entire understanding of the Parties with respect to the subject matter hereof and thereof and supersede 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 or in the other Distribution Documents has been made or relied upon by any Party hereto or any member of their Group with respect to the transactions contemplated by the Distribution Documents. To the extent that the provisions of this Agreement are inconsistent with the provisions of any other Distribution Document, the provisions of such other Distribution Document shall prevail.

Section 8.9.Tax Matters. Except as otherwise expressly provided herein, this Agreement shall not govern tax matters, which shall be exclusively governed by the Tax Matters Agreement and the Employee Matters Agreement.

Section 8.10.Jurisdiction. The Parties hereto agree that Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Middle District of Florida, or any Florida state court sitting in Duval County, Florida, so long as one of such courts shall have subject matter jurisdiction over such Action, and that any cause of action arising out of this Agreement shall be deemed to have arisen from the transaction of business in the State of Florida, and each of the Parties hereby irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Action and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any Action brought in any such court has been brought in an inconvenient forum. Process in any Action may be served on any Party anywhere in the world, whether within or outside of the jurisdiction of any such court.

Section 8.11.WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 8.12.Termination. Notwithstanding any provision of this Agreement to the contrary, the board of directors of FRP may, in its sole discretion and without the approval of Patriot or any other Person, at any time prior to the Distribution terminate this Agreement and/or abandon the Distribution, whether or not it has theretofore approved this Agreement and/or the Distribution. In the event this Agreement is terminated pursuant to the preceding sentence, this Agreement shall forthwith become void and neither Party nor any of its directors or officers shall have any liability or further obligation to the other Party or any other Person by reason of this Agreement.

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Section 8.13.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 8.14.Survival. All covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein.

Section 8.15.Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

Section 8.16.Interpretation. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of its authorship of any of the provisions of this Agreement.

Section 8.17.Specific Performance. Each Party to this Agreement acknowledges and agrees that damages for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and irreparable harm would occur. In recognition of this fact, each Party agrees that, if there is a breach or threatened breach, in addition to any damages, the other nonbreaching Party to this Agreement, without posting any bond, shall be entitled to seek and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction, attachment, or any other equitable remedy which may then be available to obligate the breaching Party (i) to perform its obligations under this Agreement or (ii) if the breaching Party is unable, for whatever reason, to perform those obligations, to take any other actions as are necessary, advisable or appropriate to give the other Party to this Agreement the economic effect which comes as close as possible to the performance of those obligations (including, but not limited to, transferring, or granting liens on, the assets of the breaching Party to secure the performance by the breaching Party of those obligations).

Section 8.18.Performance. Each Party shall cause to be performed all actions, agreements and obligations set forth herein to be performed by any member of such Party’s Group.

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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 Separation and Distribution Agreement]

31

SCHEDULE 1

INTERNAL TRANSACTIONS

On or prior to the Distribution Date, the Parties shall cause the following corporate actions to be taken:

1.Amended and Restated Articles of Incorporation. Prior to the Form 10 being declared effective, FRP shall cause the Amended and Restated Articles of Incorporation of FRP, in the form to be set forth as exhibit to the Form 10, to be approved and filed with the Florida Secretary of State.

2.Amended and Restated Bylaws. Prior to the Form 10 being declared effective, FRP shall cause the Amended and Restated Bylaws of FRP, in the form to be set forth as an exhibit to the Form 10, to be adopted and approved and in full force and effect.

3.Antecedent Transactions. Prior to the Holding Company Merger, FRTL, Inc., a Florida corporation, shall merge into Existing Patriot. After the Holding Company Merger, (i) Existing Patriot shall distribute to FRP all of the outstanding capital stock of FRP Development Corp., a Maryland corporation, FRP Development Corp., a Florida corporation, Florida Rock Properties, Inc., a Florida corporation, and FRP Maryland, Inc., a Maryland corporation, and (ii) FRP shall distribute all shares of Existing Patriot to Patriot.

4.Merger Agreement. The Merger Agreement in the form filed as an exhibit to the Form 10 shall have been executed and the Holding Company Merger shall have been consummated.

5.Other Ancillary Agreements. The parties shall have executed the Tax Matters Agreement, the Employee Matters Agreements, and the Transition Services Agreement in the forms filed as exhibits to the Form 10.

6.Share Issuance. Prior to the Distribution Date, Patriot shall take all actions necessary to issue to FRP, by stock dividend or by recapitalization, such number of shares of Patriot Common Stock such that, immediately prior to the Distribution Date, Patriot will have an aggregate number of outstanding shares of Patriot Common Stock equal to the number of shares of Patriot Common Stock to be distributed to the holders of FRP Common Stock in the Distribution.

7.Stock Incentive Plan. As of the Effective Time, Patriot shall (i) adopt an equity incentive plan in a form to be set forth as an exhibit to the Form 10 and (ii) issue stock options as described in the Form 10 pursuant to the equity incentive plan.

8.Directors and Officers of Transportation Group. As of the Effective Time, Patriot shall cause the appropriate persons listed in the Form 10 as directors and executive officers of Patriot to be elected and/or appointed as directors or officers of Patriot and shall cause all persons not so named to resign or to be removed.

Schedule 1

SCHEDULE 2

REAL ESTATE SUBSIDIARIES

34 Loveton LLC, a Maryland Limited Liability Company

1502 Quarry LLC, a Maryland Limited Liability Company

Brooksville Quarry LLC, a Florida Limited Liability Company (50% ownership interest)

Florida Rock Properties, Inc., a Florida Corporation

FRP Azalea LLC, a Maryland Limited Liability Company

FRP Bird River LLC, a Maryland Limited Liability Company

FRP Development Corp., a Florida Corporation

FRP Development Corp., a Maryland Corporation

FRP Dorsey LLC, a Maryland Limited Liability Company

FRP Hampstead LLC, a Maryland Limited Liability Company

FRP Hillside LLC, a Maryland Limited Liability Company

FRP Hillside LLC #2, a Maryland Limited Liability Company

FRP Hillside LLC #3, a Maryland Limited Liability Company

FRP Hillside LLC #4, a Maryland Limited Liability Company

FRP Interchange LLC, a Maryland Limited Liability Company

FRP Lakeside LLC #1, a Maryland Limited Liability Company

FRP Lakeside LLC #2, a Maryland Limited Liability Company

FRP Lakeside LLC #3, a Maryland Limited Liability Company

FRP Lakeside LLC #4, a Maryland Limited Liability Company

FRP Lakeside LLC #5, a Maryland Limited Liability Company

FRP Manassas LLC, a Maryland Limited Liability Company

FRP Maryland, Inc., a Maryland Corporation

FRP Transit Business Park, LLC, a Maryland Limited Liability Company

FRP Windsor LLC, a Maryland Limited Liability Company

FRP Hollander 95 LLC, a Maryland Limited Liability Company

Hillside Business Park Property Owners Association, Inc., a Maryland Corporation

Lake Louisa, LLC, a Florida Limited Liability Company

Lakeside Business Park Property Owners Association, Inc., a Maryland Corporation

Riverfront Investment Partners I LLC, a Delaware Limited Liability Company (77% ownership interest)

OZ LLC, a Maryland Limited Liability Company

Schedule 2

SCHEDULE 3.2(c)

RESIGNING DIRECTORS AND OFFICERS

Directors resigning from Patriot	Officers Resigning from Patriot
John D. Baker II
Charles E. Commander III	David H. deVilliers
H.W. Shad III
Martin E. Stein, Jr.
James H. Winston

Directors resigning from FRP	Officers Resigning from FRP
John E. Anderson
Edward L. Baker	Robert E. Sandlin
Luke E. Fichthorn III
Robert H. Paul III

Schedule 3.2(c)

EX-10.1

FRP Holdings, Inc. 8-K

EXHIBIT 10.1

TAX MATTERS AGREEMENT

by and between

FRP HOLDINGS, INC.

 and

PATRIOT TRANSPORTATION HOLDING, INC.

Dated as of January 30, 2014

TABLE OF CONTENTS

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

TAX MATTERS AGREEMENT

THIS TAX MATTERS AGREEMENT is entered into as of the 30^th 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.

“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.

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 “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:

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(i) to liquidate Patriot or to merge or consolidate Patriot, or any member of the Patriot Group, with any other Person subsequent to the Distribution;

(ii) to sell or otherwise dispose of any material asset of Patriot or any member of the Patriot Group subsequent to the Distribution, except in the ordinary course of business;

 (iii) to take any action inconsistent with the written information and representations furnished to counsel in connection with any opinion being delivered by counsel with respect to the Distribution, regardless of whether such information and representations were included in the opinion of counsel;

 (iv) to repurchase stock of Patriot other than in a manner that satisfies the requirements of IRS Revenue Procedure 96-30, as modified by IRS Revenue Procedure 2003-48;

 (v) to take any action that management of Patriot knows, or should have known, is reasonably likely to contravene any agreement with a Taxing Authority entered into prior to the Distribution Date to which any member of the Patriot Group or the FRP Group is a party; or

 (vi) to enter into any negotiations, agreements, or arrangements with respect to transactions or events (including stock issuances, pursuant to the exercise of options or otherwise, option grants, the adoption of, or authorization of shares under, a stock option plan, capital contributions, or acquisitions, but not including the Distribution) that could reasonably be expected to cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly Patriot stock representing a “50-percent or greater interest” within the meaning of Section 355(d)(4) of the Code. 

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

(i) during the two-year period following the Distribution Date, (A) neither Patriot, nor any member of the Patriot Group conducting an Active Business, will, or will agree to, discontinue such business or dissolve, liquidate or engage in any transaction involving a merger, consolidation or other reorganization, and (B) none of Patriot or any other member of the Patriot Group will, or will agree to, sell, exchange, distribute or otherwise dispose of any asset of any member of the Patriot Group, except in the ordinary course of business or as set forth on Schedule 9(b)(i);

(ii) Patriot will not, nor will it permit any member of the Patriot Group to, take any action inconsistent with the information and representations furnished to counsel in connection with any opinion being delivered by counsel with respect to the Distribution, regardless of whether such information and representations were included in the opinion of counsel;

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(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). 

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(c) Patriot Covenants Exceptions. Notwithstanding the foregoing, Patriot and the members of Patriot Group may take actions inconsistent with the covenants contained in Section 9(b) above, if:

(i) In the case of any disposition of assets that could otherwise be subject to Section 9(b)(i) or (ii), the aggregate book value of such assets does not exceed 5 percent of total assets; or

(ii) In the case of any other action: (A) Patriot notifies FRP of its proposal to take such action and Patriot and FRP obtain a ruling from the IRS to the effect that such actions will not result in the Distribution being taxable to FRP or its shareholders, provided that Patriot agrees in writing to bear any expenses associated with obtaining such a ruling and, provided further, that Patriot shall not be relieved of any liability under Section 10(a) of this Agreement by reason of seeking or having obtained such a ruling; or (B) Patriot notifies FRP of its proposal to take such action and obtains an opinion of counsel recognized as an expert in federal income tax matters and acceptable to FRP to the same effect as in Section 9(c)(ii)(A) , provided that such opinion is acceptable to FRP in its sole discretion; provided further, that Patriot shall not be relieved of any liability under Section 10(a) of this Agreement by reason of having obtained such an opinion.

Section 10.     Indemnities.

 (a) Patriot Indemnity. Patriot and each member of the Patriot Group will jointly and severally indemnify FRP and the members of the FRP Group against, and hold them harmless from: 

(i) any Tax liability of the Patriot Group as determined in accordance with this Agreement;

(ii) any liability or damage resulting from a breach by Patriot or any member of the Patriot Group of any representation or covenant made by Patriot herein;

(iii) any Tax liability of FRP that is attributable to any action of Patriot or any member of the Patriot Group, other than any action required by the Separation Agreement without regard to whether FRP has consented to such action; and

(iv) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax liability or damage described in (i), (ii), or (iii), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage.

(b) FRP Indemnity. FRP and each member of the FRP Group will jointly and severally indemnify Patriot and the members of the Patriot Group against, and hold them harmless from:

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

(ii) any Taxes imposed on Patriot or any member of the Patriot Group under Treasury Regulation 1.1502-6 (or similar provision of state, local or foreign law) solely as a result of Patriot or any such member being or having been a member of a Consolidated Group; and

(iii) all liabilities, costs, expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any income Tax liability or damage described in (i) or (ii) including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such income Tax, liability or damage.

(c) Discharge of Indemnity. Patriot, FRP and the members of the Patriot Group and FRP Group, respectively, shall discharge their obligations under Sections 10(a) and 10(b) hereof, respectively, by paying the relevant amount within 30 days of demand therefor. Any such demand shall include a statement showing the amount due under Section 10(a) or 10(b), as the case may be. Items described in Sections 10(a)(i) and 10(b)(i) shall be calculated as set forth in Sections 3, 4 and 5. Notwithstanding the foregoing, if either Patriot, FRP or any member of the Patriot Group or FRP Group disputes in good faith the fact or the amount of its obligation under Section 10(a) or Section 10(b), then no payment of the amount in dispute shall be required until any such good faith dispute is resolved in accordance with Section 21 hereof; provided, however, that any amount not paid within 30 days of demand therefor shall bear interest as provided in Section 14.

(d) Tax Benefits. If an indemnification obligation of any member of the FRP Group or any member of the Patriot Group, as the case may be, under this Section 10 with respect to a Consolidated Group arises in respect of an adjustment that makes allowable to a member of the Patriot Group or a member of the FRP Group, respectively, any Tax benefit which would not, but for such adjustment, be allowable, then any payment by any member of the FRP Group or any member of the Patriot Group, respectively, pursuant to this Section 10 shall be an amount equal to (x) the amount otherwise due but for this subsection (d), minus (y) the present value of the product of the Tax benefit multiplied (i) by the maximum applicable federal, foreign, state or local, as the case may be, corporate Tax rate in effect at the time such Tax benefit becomes allowable to a member of the Patriot Group or a member of the FRP Group (as the case may be) or (ii) in the case of a credit, by 100 percent. The present value of such product shall be determined by discounting such product from the time the Tax benefit becomes allowable at the rate equal to the “prime” rate as published in the Wall Street Journal, Eastern Edition on the date of such determination.

Section 11.     Guarantees.

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

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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, 7^th Floor

Jacksonville, Florida 32202

If to Patriot or the Patriot Group, to:

Patriot Transportation Holding, Inc. 

Attn: President 

200 W. Forsyth Street, 7^th 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.

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Section 17.      Effectiveness; Termination and Survival.

 This Agreement shall become effective upon the consummation of the Distribution. All rights and obligations arising hereunder shall survive until they are fully effectuated or performed; provided, further, that notwithstanding anything in this Agreement to the contrary, this Agreement shall remain in effect and its provisions shall survive for one year after the full period of all applicable statutes of limitation (giving effect to any extension, waiver or mitigation thereof) and, with respect to any claim hereunder initiated prior to the end of such period, until such claim has been satisfied or otherwise resolved.

Section 18.     Section Headings. 

The headings contained in this Agreement are inserted for convenience only and shall not constitute a part hereof or in any way affect the meaning or interpretation of this Agreement. 

Section 19.     Entire Agreement; Amendments and Waivers.

 (a) Entire Agreement. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein. No alteration, amendment, modification, or waiver of any of the terms of this Agreement shall be valid unless made by an instrument signed by an authorized officer of each of FRP and Patriot, or in the case of a waiver, by the party against whom the waiver is to be effective. 

(b) Amendments and Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver hereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege. This Agreement shall not be waived, amended or otherwise modified except in writing, duly executed by all of the parties hereto.

Section 20.     Governing Law and Interpretation. 

This Agreement shall be construed and enforced in accordance with the laws of the State of Florida without giving, effect to laws and principles relating to conflicts of law.

Section 21.     Dispute Resolution. 

In the event of any dispute relating to this Agreement, including but not limited to whether a Tax liability is a liability of the FRP Group or the Patriot Group, the parties shall work together in good faith to resolve such dispute within 30 days. If the parties are unable to resolve such dispute within 30 days, such dispute shall be resolved by an accounting firm whose selection shall be reasonably satisfactory to both parties and whose fees and costs shall be shared equally by FRP and Patriot. 

Section 22.     Counterparts. 

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. 

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Section 23.     Assignments; Third Party Beneficiaries. 

Except as provided below, this Agreement shall be binding upon and shall inure only to the benefit of the parties hereto and their respective successors and assigns, by merger, acquisition of assets or otherwise (including but not limited to any successor of a party hereto succeeding to the Tax attributes of such party under applicable law). This Agreement is not intended to benefit any person other than the parties hereto and such successors and assigns, and no such other person shall be a third party beneficiary hereof. 

Section 24.     Authorization, Etc. 

Each of the parties hereto hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this Agreement constitutes a legal, valid and binding obligation of each such party, and that the execution, delivery and performance of this Agreement by such party does not contravene or conflict with any provision or law or of its charter or bylaws or any agreement, instrument or order binding on such party. 

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

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

By: ___________________________________________

Name: _________________________________________

Title: __________________________________________

PATRIOT TRANSPORTATION HOLDING, INC., a Florida corporation, on its behalf and on behalf of the members of the Patriot Group

By: ___________________________________________

Name: _________________________________________

Title: __________________________________________

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EX-10.2

FRP Holdings, Inc. 8-K

EXHIBIT 10.2

EMPLOYEE MATTERS AGREEMENT

by and between

FRP HOLDINGS, INC.

and

PATRIOT TRANSPORTATION HOLDING, INC.

Dated as of January 30, 2015

TABLE OF CONTENTS

Page

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

i

EMPLOYEE MATTERS AGREEMENT

THIS EMPLOYEE MATTERS AGREEMENT (the “Agreement”) is made as of January 30, 2015, between FRP Holdings, Inc., a Florida corporation (“FRP”) and Patriot Transportation Holding, Inc., a Florida corporation (“Patriot”).

RECITALS

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

WHEREAS, in furtherance of the foregoing, FRP and Patriot have entered into the Separation Agreement (as defined below) and certain other agreements that will govern certain matters relating to the Distribution and the relationship of FRP and Patriot and their respective Subsidiaries following the Distribution; and

WHEREAS, pursuant to the Separation Agreement, FRP and Patriot have agreed to enter into this Agreement for the purpose of allocating between them assets, liabilities, and responsibilities with respect to certain employee compensation and benefit plans and programs;

WHEREAS, FRP and Patriot have agreed that, except as otherwise specifically provided herein, the general approach and philosophy underlying this Agreement is to allocate assets, liabilities and responsibilities between FRP and Patriot on the basis of the employment relationships in effect at the time of the Distribution;

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

ARTICLE 1
DEFINITIONS

Section 1.1     Definitions.

(a) The following terms, as used herein, shall have the meanings set forth below, provided, however, that capitalized terms used and not defined herein shall have the meanings set forth in the Separation Agreement:

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

“Close of the Distribution Date” means 11:59:59 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the Distribution Date.

“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code § 4980B and ERISA §§ 601 through 608.

“Code” shall have the meaning set forth in the Separation Agreement.

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“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.

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 “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:

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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

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(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.

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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.

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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”).

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(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.

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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.

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(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.

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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.

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(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.

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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.

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(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]

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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]

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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)

EX-10.3

FRP Holdings, Inc. 8-K

EXHIBIT 10.3 

TRANSITION SERVICES AGREEMENT

by and between

FRP HOLDINGS, INC.

and

PATRIOT TRANSPORTATION HOLDING, INC.

Dated as of January 30, 2015

TABLE OF CONTENTS

Page

ARTICLE 1. TRANSITION SERVICES		1
Section 1.1	Patriot Obligations	1
Section 1.2	Term.	1
Section 1.3	Modification/Termination of Transition Services.	2
Section 1.4	Employee Cooperation.	2
Section 1.5	Scope of Services.	2
Section 1.6	Standard of Performance; Standard of Care.	2
Section 1.7	Confidentiality.	2
ARTICLE 2. CONSIDERATION		3
Section 2.1	Service Fees.	3
Section 2.2	Out-of-Pocket Expenses.	3
Section 2.3	Payment	3
ARTICLE 3. TERMINATION		3
Section 3.1	Term and Termination.	3
ARTICLE 4. MISCELLANEOUS		3
Section 4.1	Warranty Disclaimer.	3
Section 4.2	Indemnification	3
Section 4.3	Relationship of Parties.	3
Section 4.4	Interpretation.	4
Section 4.5	Amendment.	4
Section 4.6	Waiver of Compliance.	4
Section 4.7	Notices.	4
Section 4.8	Third Party Beneficiaries.	5
Section 4.9	Successors and Assigns.	5
Section 4.10	Severability.	5
Section 4.11	Governing Law.	5
Section 4.12	Submission to Jurisdiction; Waivers.	5
Section 4.13	Force Majeure.	6
Section 4.14	Counterparts.	6
Section 4.15	Entire Agreement.	6

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of January 30, 2015, is hereby entered into by and between FRP HOLDINGS, INC., a Florida corporation (“FRP”) and PATRIOT TRANSPORTATION HOLDING, INC., a Florida corporation (“Patriot”) All capitalized terms used but not defined herein shall have their respective meanings as set forth in the Separation Agreement (as defined herein).

RECITALS

A. Patriot and FRP have entered into a Separation and Distribution Agreement, dated as of January 30, 2015 (the “Separation Agreement”), pursuant to which FRP will distribute all of the outstanding shares of capital stock of Patriot to FRP’s shareholders (the “Distribution”).

B. In order to facilitate the separation of Patriot from FRP and its Subsidiaries (as defined below) pursuant to the Separation Agreement, FRP desires, and Patriot is willing to provide or cause its Subsidiaries to provide, certain transition services upon the terms and conditions set forth in this Agreement. For purposes of this Agreement, a “Subsidiary” of FRP or Patriot means any Person in which FRP or Patriot has a fifty percent (50%) or greater ownership interest in such Person.

Accordingly, the parties agree as follows:

ARTICLE 1.
TRANSITION SERVICES

Section 1.1     Patriot Obligations.

Subject to the terms and conditions of this Agreement, during the Transition Period (as defined below), Patriot will, or will cause one of its Subsidiaries to, provide to FRP and/or a designated Subsidiary of FRP the transitional services and assistance (each service, a “Transition Service,” and together, the “Transition Services”) at the cost set forth on Schedule A hereto.

Section 1.2     Term.

The obligations of Patriot to provide each respective Transition Service or cause such Transition Service to be provided hereunder will begin on February 1, 2015 (the ”Effective Date”), and will remain in effect for one (1) year after the Effective Date (the ”Initial Termination Date”); provided, however, that with respect to any Transition Service, FRP may, upon written notice to Patriot not less than 30 days prior to the Initial Termination Date, extend the term of such Transition Services for a subsequent transition period; provided, however, that such extension shall not be for a period of more than six (6) months unless the other party consents, in writing, to a period beyond six (6) months (the “Subsequent Transition Period”). For the purposes of this Agreement, the (a) term “Initial Transition Period” for each Transition Service means the period beginning on the date on which the Distribution occurs (the ”Closing Date”) and ending on the Initial Termination Date, and (b) the terms Initial Transition Period and Subsequent Transition Period are collectively referred to herein as the “Transition Period.”

Section 1.3     Modification/Termination of Transition Services.

During the Transition Period, any or all of the Transition Services (i) may be modified in any respect upon mutual written agreement of Patriot and FRP, and (ii) may be terminated by FRP upon ninety (90) days’ written notice to Patriot. Any such written modification or termination of the Transition Services shall be deemed to supplement and amend this Agreement.

Section 1.4     Employee Cooperation.

Patriot will cause its or its Subsidiaries’ employees providing the Transition Services (together, the “Patriot Employees”) to cooperate with the employees of FRP and/or its Subsidiaries (the “FRP Employees”) during the Transition Period, but neither Patriot nor its Subsidiaries will have any other duty or obligation with respect to such FRP Employees.

Section 1.5     Scope of Services.

Patriot will not be obligated to perform, or to cause to be performed, any Transition Services in a volume or quantity that unreasonably interferes with the operation of its business in the ordinary course provided, however, that Patriot will be required to provide Transition Services consistent with historical volume or quantity during the two years preceding the Distribution and such level of services will not be deemed to unreasonably interfere with the operation of the business of the party supplying such Transition Service.

Section 1.6     Standard of Performance; Standard of Care.

Patriot will perform, or will cause to be performed, the Transition Services (a) in such manner as is substantially similar in nature, quality and timeliness to the services provided by Patriot or its Subsidiaries, as applicable, prior to the date hereof and (b) in accordance with all Applicable Laws.

Section 1.7     Confidentiality.

The parties hereto shall keep strictly confidential any and all proprietary, technical, business, marketing, sales and other information disclosed to another party hereto in connection with the performance of this Agreement (the “Confidential Information”), and shall not disclose the same or any part thereof to any third party, or use the same for their own benefit or for the benefit of any third party. The obligations of secrecy and nonuse as set forth herein shall survive the termination of this Agreement for a period of five years. Excluded from this provision is any information available in the public domain and any information disclosed to any of the parties by a third party who is not in breach of confidential obligations owed to another person or entity. Notwithstanding the foregoing, each party hereto may disclose Confidential Information (a) to its bankers, attorneys, accountants and other advisors subject to the same confidentiality obligations imposed herein and (b) as may be required by Law from time to time provided that the party required to disclose provide the other party, to the extent permitted, reasonable notice in order for such party an opportunity to oppose such disclosure.

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ARTICLE 2.
CONSIDERATION

Section 2.1     Service Fees.

In consideration for the Transition Services provided by or on behalf of Patriot under this Agreement during the Transition Period, FRP agrees to pay Patriot or a specified Subsidiary the monthly fees set forth in Schedule A attached hereto or such other amount as may be agreed by the parties in writing (the “FRP Fees”). Neither FRP nor any of its Subsidiaries will be responsible for any fees or expenses incurred by Patriot or any of its Subsidiaries in connection with its or their provision of the Transition Services hereunder.

Section 2.2     Out-of-Pocket Expenses.

All (a) reasonable, documented out-of-pocket expenses (including travel expenses) that arise directly out of the provision of Transition Services pursuant to this Agreement and are incurred by Patriot or its Subsidiaries (the “Out-of-Pocket Expenses”) and (b) sales or similar non-income taxes incurred by Patriot or its Subsidiaries in connection with the provision of Transition Services pursuant to this Agreement (together with the Out-of-Pocket Expenses, “Expenses”) will be reimbursed by FRP; provided, however, that for any Expense described in clause (a) in excess of $10,000 per occurrence or event, Patriot will be required to obtain prior approval thereof from the party receiving the services, which approval will not be unreasonably withheld; provided, further, that such consent will not be required for any Expense in excess of $10,000 if such Expense does not exceed the historical cost of such Expense by more than 5%.

Section 2.3     Payment.

FRP will pay or cause to be paid to Patriot (i) the estimated monthly FRP Fees for the current month of the Transition Period, plus or minus the difference between the prior month’s estimated and actual fees and (ii) Expenses by ACH payment within ten (10) days following receipt of an invoice therefor, which invoice shall contain customary and reasonable substantiation of the entitlement to payment of such FRP Fees and reimbursement of Expenses, as well as a reconciliation of the prior month’s difference in estimated and actual fees. If FRP fails to pay the invoiced amount when due, interest will accrue on the amount payable at a rate equal to the rate of interest publicly announced by Citibank, N.A., from time to time, in The City of New York, as such bank’s base rate (the “Citibank Base Rate”) plus 2.50% per month, compounded monthly; provided, however, that if any such failure to pay is due to a good faith dispute, any amounts ultimately determined to be payable by the disputing party will instead include interest compounded at a rate equal to the Citibank Base Rate plus 2.00% per month.

ARTICLE 3.
TERMINATION

Section 3.1     Term and Termination.

(a) This Agreement will remain in effect with respect to each Transition Service from the Closing Date until the expiration of the Transition Period for such Transition Service unless earlier modified or terminated in accordance with Section 1.3 or this Section 4.1.

(b) An authorized officer of either Patriot or FRP may terminate this Agreement upon written notice to the other party if:

(i) the other party has violated any material provision of this Agreement and such violation has not been remedied within 30 days after written notice thereof; or

(ii) the other party has filed, or has had filed against it, a petition seeking relief under any bankruptcy, insolvency, reorganization, moratorium or similar Law affecting creditors’ rights.

(c) Authorized officers of Patriot and FRP may terminate this Agreement or the Transition Period with respect to any Transition Service by mutual written agreement.

(d) The parties’ obligations pursuant to Sections 1.7, 2.3 and 4.2 will survive the expiration or any termination of this Agreement in accordance with its terms.

ARTICLE 4.
MISCELLANEOUS

Section 4.1     Warranty Disclaimer.

EXCEPT AS PROVIDED IN SECTION 1.6, NONE OF THE PARTIES MAKES ANY WARRANTY CONCERNING THE TRANSITION SERVICES AND THE WARRANTY IN SUCH SECTION 1.6 IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY THAT THE SERVICES PROVIDED UNDER THIS AGREEMENT WILL BE SUFFICIENT TO ALLOW FRP OR PATRIOT TO SUCCESSFULLY TRANSITION, MANAGE OR OPERATE ITS BUSINESS.

Section 4.2     Indemnification.

With respect to indemnification, the parties agree as set forth in the Separation Agreement.

Section 4.3     Relationship of Parties.

Each of FRP, Patriot and their respective Subsidiaries will for all purposes be deemed to be an independent contractor with respect to the provision of Transition Services hereunder, will not be considered (nor will any of their directors, officers, employees, contractors or agents be considered) an agent, employee, commercial representative, partner, franchisee or joint venturer of any other party and will have no duties or obligations beyond those expressly provided in this Agreement and the Separation Agreement with respect to the provision of Transition Services. No party will have any authority, absent express written permission from the other party, to enter into any agreement, assume or create any obligations or liabilities, or make representations on behalf of any other party. The provision of the Transition Services shall not alter the classification of, or the compensation and employee benefits provided to the Patriot Employees or the FRP Employees. The Patriot Employees shall be employed solely by Patriot or its Subsidiaries, and the FRP Employees shall be employed solely by FRP or its Subsidiaries. Neither the Patriot Employees nor the FRP Employees shall be entitled to any additional compensation for the provision of the Transition Services.

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Section 4.4     Interpretation.

(a) When a reference is made in this Agreement to Sections or Schedules, such reference will be to a Section of or Schedule to this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” Unless the context otherwise requires, (i) “or” is disjunctive but not necessarily exclusive, (ii) words in the singular include the plural and vice versa, (iii) the use in this Agreement of a pronoun in reference to a party hereto includes the masculine, feminine or neuter, as the context may require, and (iv) terms used herein which are defined in GAAP have the meanings ascribed to them therein. All Schedules hereto will be deemed part of this Agreement and included in any reference to this Agreement. This Agreement will not be interpreted or construed to require any party to take any action, or fail to take any action, if to do so would violate any Applicable Law.

(b) All parties have participated in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by all parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

Section 4.5     Amendment.

This Agreement may be amended, modified or supplemented only by the written agreement of the parties hereto.

Section 4.6     Waiver of Compliance.

Except as otherwise provided in this Agreement, the failure by any party to comply with any obligation, covenant, agreement or condition under this Agreement may be waived by the party entitled to the benefit thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any party to enforce at any time any of the provisions of this Agreement will in no way be construed to be a waiver of any such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any party hereafter to enforce each and every such provision. No waiver of any breach of such provisions will be held to be a waiver of any other or subsequent breach.

Section 4.7     Notices.

All notices required or permitted pursuant to this Agreement must be given as set forth in the Separation Agreement.

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Section 4.8     Third Party Beneficiaries.

Except as otherwise provided in this Agreement, nothing in this Agreement, expressed or implied, is intended to confer on any person or entity other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

Section 4.9     Successors and Assigns.

This Agreement will be binding upon and will inure to the benefit of the signatories hereto and their respective successors and permitted assigns. No party may assign this Agreement, or any of its rights or liabilities hereunder, without the prior written consent of the other party hereto, and any attempt to make any such assignment without such consent will be null and void. Any such assignment will not relieve the party making the assignment from any liability under this Agreement.

Section 4.10     Severability.

The illegality or partial illegality of any or all of this Agreement, or any provision hereof, will not affect the validity of the remainder of this Agreement, or any provision hereof, and the illegality or partial illegality of this Agreement will not affect the validity of this Agreement in any jurisdiction in which such determination of illegality or partial illegality has not been made, except in either case to the extent such illegality or partial illegality causes this Agreement to no longer contain all of the material provisions reasonably expected by the parties to be contained herein.

Section 4.11     Governing Law.

This Agreement will be governed by and construed in accordance with the Applicable Laws of the State of Florida applicable to contracts made and wholly performed within such state, without regard to any applicable conflict of Applicable Laws principles.

Section 4.12     Submission to Jurisdiction; Waivers.

Each party irrevocably agrees that any legal action or proceeding with respect to this Agreement, the transactions contemplated hereby, any provision hereof, the breach, performance, validity or invalidity hereof or for recognition and enforcement of any judgment in respect hereof brought by another party hereto or its successors or permitted assigns may be brought and determined in any federal or state court located in the State of Florida, and each party hereby irrevocably submits with regard to any such action or proceeding for itself and in respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each party hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, the transactions contemplated hereby, any provision hereof or the breach, performance, enforcement, validity or invalidity hereof, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to lawfully serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and (c) to the fullest extent permitted by Applicable Laws, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

5

Section 4.13     Force Majeure.

None of the parties will be liable to any other party for failure to perform or delays in performing any part of the Transition Services if such failure or delay results from an act of God, war, terrorism, revolt, revolution, sabotage, actions of a Governmental Authority, Applicable Laws, regulations, embargo, fire, strike, other labor trouble or any other cause or circumstance beyond the control of such party other than financial difficulties of the other party. Upon the occurrence of any such event which results in, or will result in, delay or failure to perform according to the terms of this Agreement, each party will promptly give notice to the other parties of such occurrence and the effect and/or anticipated effect of such occurrence. All parties will use their reasonable efforts to minimize disruptions in their performance, to resume performance of their obligations under this Agreement as soon as practicable and to assist the other parties in obtaining, at their sole expense, an alternative source for the affected Transition Services and the receiving party will be released from any payment obligation to the performing party with respect to the affected Transition Services during the period of such force majeure; provided, however, the resolution of any strike or labor trouble will be within the sole discretion of the performing party.

Section 4.14     Counterparts.

This Agreement may be executed in two or more counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart.

Section 4.15     E ntire Agreement.

This Agreement (including the documents and the instruments referred to in this Agreement) and the Separation Agreement, constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement.

[Signature Page Follows]

6

IN WITNESS WHEREOF, each of the signatories hereto has caused this Agreement to be signed by its duly authorized officer as of the date first above written.

PATRIOT TRANSPORTATION HOLDING, INC., a Florida corporation

By

Name:

Title:

FRP HOLDINGS, INC.,a Florida corporation

By

Name:

Title:

7

Schedule A

Transition Services	FRP Fees	Transition Service Termination Date
Executive Employment – Thompson S. Baker II	50% of base salary, benefits and related occupancy and other costs of personnel
Executive Employment – John D. Milton, Jr.	50% of base salary, benefits and related occupancy and other costs of personnel
Executive Employment – John Klopfenstein	50% of base salary, benefits and related occupancy and other costs of personnel
Executive Employment – Matt McNulty	50% of base salary, benefits and related occupancy and other costs of personnel
Executive Employment – Betty Strickland	50% of base salary, benefits and related occupancy and other costs of personnel
Executive Employment – John D. Baker II	50% of base salary, benefits and related occupancy and other costs of personnel
Administrative Assistants	50% of base salary, benefits and related occupancy and other costs of personnel
IT Services	Minimum fee of $84,000/year. Additional basic services over 1,200 hours, direct FRP related T&E and extraordinary projects to be billed at a flat rate of $80/hour. (Minimum fee of $84,000 is calculated as $80/hour * 1200 hours -$12,000 credit for office space and equipment storage at 34 Loveton)
Payroll	2% of total Payroll costs
Accounting Services	1/3 of Financial Reporting Manager costs
HR Services	2% of total HR Department costs

Schedule A