PROPOSAL NO. 1: THE ASSET SALE PROPOSAL
Background of the Sale Transaction
Our Board and senior management team regularly
evaluates long-term strategy and opportunities to increase shareholder value. As such, because of what we considered to be the
low return on capital generated by the Asset Management Segment (primarily industrial real estate in the Baltimore-Washington D.C.
market), of which the Properties form a part, management engaged Eastdil Secured, L.L.C. (“
Eastdil
”) in 2013
to value these assets.
The combination of the current yield of
the assets comprising the Asset Management Segment, Eastdil’s opinion of value, and what seemed like a low cap rate environment
made a sale of these industrial assets a viable option and one that should be explored sooner than later. However, after careful
consideration, management felt that because of the low tax basis of the properties, the taxes incurred by an asset sale were so
confiscatory as to offset the value generated by taking advantage of the low cap rate environment. Management considered the possibility
of reinvesting the sale proceeds into its other business segments in like-kind exchange transactions but determined that it would
be difficult to locate sufficient reinvestment properties within the six-month period required by the tax laws.
In search of alternative ways to dispose
of these assets, management strongly considered both a REIT conversion and an UPREIT transaction. In 2017, the Company took preliminary
steps that would permit it to make a REIT election, including changing the Company’s fiscal year to a calendar year. These
structures had the advantage of passing the Company’s real estate income to shareholders without having to pay corporate
income tax. However, management felt that an UPREIT transaction resulted in too great a loss of control over the direction of the
Company, and the dividend upon converting to a REIT of upwards of $130 million might over-lever the Company and hamper its ability
to grow. Furthermore, both alternatives put a five-year hold on any tax-free asset sale. Because of this, management feared that
even a marginal rise in cap rates would offset any tax savings. All these reasons and the fact that both alternatives were unable
to shelter most of the aggregate royalty income from double taxation made the REIT conversion and UPREIT transaction as problematic
as an asset sale. As discussions regarding a reduction in the corporate tax rate became more and more serious, management elected
to postpone any decision regarding REIT conversion.
Blackstone has a third-party consulting
arrangement with Talos Capital (“
Talos
”) pursuant to which Talos provides advice and assistance to Blackstone
on potential transactions.
On June 15, 2017, Mr. Mike Mullen of Talos
initiated communication with the Company regarding a sale of a significant portfolio of assets, which Mr. Mullen had ascertained
would be of interest to Blackstone.
On August 8, 2017, in the course of conversations
between Mr. Mullen of Talos and Mr. John D. Baker II, the Chief Executive Officer of the Company, Mr. Baker clarified that the
Company would not be interested in transacting unless and until then-proposed corporate income tax cuts were adopted. The Company
was willing to facilitate a preliminary due diligence review of the Company’s industrial assets in the meantime, however,
and on August 8, 2017, the Company entered into a confidentiality agreement and thereafter opened a virtual due diligence data
room.
On September 12, 2017, the Company received
a letter of intent (the “
September LOI
”) that outlined proposed terms and conditions of an acquisition by Blackstone
of all of the Company’s industrial assets for a purchase price of $302 million in cash. The September LOI contemplated
a 4% earnest money escrow and a 30 business-day due diligence period, provided that counsel for the purchaser would prepare the
initial
draft of the purchase agreement and requested that the Company exclusively negotiate with Blackstone until the consummation
of the contemplated transactions.
On September 21, 2017, based on prior guidance
from the FRP Board, Mr. John D. Baker II communicated that the offer presented in the September LOI was too low, and that the Company
planned to wait until there was further clarity regarding the chance of the corporate income tax cuts being adopted and their likely
impact.
On December 6, 2017, the FRP Board had
its next regularly scheduled meeting. During an executive session held at this meeting, Mr. John D. Baker II advised the FRP Board
of the receipt of the September LOI and his response that the Company would not have an interest in a transaction unless the corporate
income tax cuts were adopted. After discussion, the FRP Board authorized management to engage an advisor to advise on strategic
options if it appeared likely that the tax bill would pass, including a REIT election or selling the Company’s industrial
assets.
On December 11, 2017, when the tax cuts
seemed likely to be adopted by the US Congress, Blackstone and Talos delivered a revised letter of intent (the “
December
LOI
”) that increased the cash purchase price to $330 million. Mr. John D. Baker II contacted the directors individually
to advise them of the receipt of the December LOI and to confirm that, pursuant to the authorization given at the December 6 Board
meeting, management planned to engage an advisor.
On December 22, 2017, Congress passed the
Jobs and Tax Cuts Act of 2017, which reduced the federal income tax from thirty-five percent (35%) to twenty-one percent (21%).
On December 29, 2017, after consultation
with the FRP Board, the Company formally engaged Eastdil as its broker to assist with the sale of the Company’s industrial
assets.
On January 22, 2018, representatives of
Eastdil provided analysis to FRP management regarding (i) the state of the market, (ii) a preliminary valuation analysis of the
Company’s industrial assets and (iii) an analysis of the offer presented in the December LOI. The analysis indicated that
the high range of the value of the industrial assets was $360.5 million. Later that day, the Company communicated it would consider
selling the portfolio of industrial assets to Blackstone for $360.5 million, but otherwise would conduct an auction.
Between January 24 and 29, 2018, Blackstone
continued its preliminary due diligence on the Properties and the leases with respect thereto.
On January 29, 2018, Blackstone presented
a draft of a third letter of intent (the “
Final LOI
”) to the Company that proposed a revised, increased purchase
price of $360.5 million in cash, subject to the parties engaging in good faith negotiations regarding a reasonable reduction of
such purchase price to give effect to the economic impact of certain outstanding purchase price options with respect to certain
of the Properties. The draft Final LOI stated that certain undeveloped land parcels owned by the Company would not be included
among the target assets and described a 30 business-day due diligence period during which Blackstone would perform customary investigations
and on-site inspections of the Properties and a customary review of certain documents related to the Properties, including site
plans, zoning approvals, leases and other agreements.
On January 30, 2018, the FRP Board held
a special meeting to consider the terms presented in the draft Final LOI. Members of management, representatives of Eastdil and
Nelson Mullins Riley & Scarborough LLP (“
Nelson Mullins
”) briefed the directors on the history of the negotiations,
the analysis by Eastdil that was provided to management on January 22 and the terms of the draft Final LOI. A representative of
Nelson
Mullins also briefed the directors on their fiduciary duties under Florida law. The FRP Board authorized management to execute
the Final LOI and to proceed in negotiating a definitive agreement, subject to approval of the FRP Board and FRP shareholders.
On February 1, 2018, the Company executed
the Final LOI and delivered it to Blackstone.
On February 6, 2018, representatives of Simpson Thacher &
Bartlett LLP (“
Simpson Thacher
”), representing Purchaser, and Nelson Mullins, representing FRP, had an introductory
call to discuss the need to obtain shareholder approval and other related matters, including the process for commencing confirmatory
due diligence with respect to the Properties as contemplated by the Final LOI.
On February 7, 2018, Nelson Mullins representatives
forwarded a draft access agreement to Simpson Thacher agreement. Nelson Mullins and Simpson Thacher proceeded to negotiate the
terms of the access agreement, which was executed on February 8, 2018.
On February 7, 2018, the FRP Board held
a special meeting to obtain an update on the status of the transaction and to consider proposed severance arrangements for employees
that would be terminated as a result of the sale of the Properties. Under the proposed severance agreements, provided that they
remained in the Company’s employ through the closing of any transaction, (i) each terminated employee participating in the
Company’s management incentive compensation would receive a prorated portion of their eligible bonus for 2018 (or full bonus
if such employee is employed through December 31, 2018), (ii) each terminated employee would receive one month’s salary for
every year of service with the Company (up to a maximum of one year’s salary) and (iii) two employees would receive $50,000
bonuses and David H. deVilliers III, one of the Company’s named executive officers, would receive a $150,000 bonus and each
such employee has the right to purchase his Company vehicle at an agreed price. After consideration, the FRP Board approved the
severance arrangements.
On February 15, 2018, representatives of
Simpson Thacher and Nelson Mullins spoke to discuss the rights of first offer and rights of first refusal held by certain tenants
at the Properties.
On February 17, 2018, Simpson Thacher representatives
forwarded an initial draft of the purchase and sale agreement to Nelson Mullins representatives.
On March 5, 2018, Nelson Mullins representatives
provided preliminary comments to Simpson Thacher representatives regarding the draft purchase and sale agreement.
On March 7, 2018, the FRP Board held a
regularly scheduled meeting. Prior to the meeting, the directors were provided with, among other things, a summary of the material
terms of the transaction, a copy of the then current draft of the agreement of purchase and sale and draft resolutions approving
the Sale Transaction and certain related matters. At the meeting, the directors received a briefing from a representative of Nelson
Mullins on the draft purchase and sale agreement and the open issues relating to the draft purchase and sale agreement. The FRP
Board also received a report from management regarding (i) the valuation range previously prepared by Eastdil, (ii) the
operations of the Retained Business if the Sale Transaction were completed, and (iii) potential reinvestment opportunities for
the proceeds from the Sale Transaction. In addition, the FRP Board approved the engagement of Houlihan Lokey solely to render an
opinion to the FRP Board (in its capacity as such) regarding the fairness, from a financial point of view, to FRP of the aggregate
consideration to be received for the Properties in the Sale Transaction pursuant to the Sale Agreement. The FRP Board also reviewed
pro forma financial statements reflecting the anticipated impact of the Sale Transaction on the Company’s financial statements.
On March 13, 2018, Simpson Thacher representatives
provided a revised draft of the purchase and sale agreement to Nelson Mullins representatives.
On March 14, 2018, representatives of Eastdil
and Blackstone spoke over the phone regarding the findings of Blackstone’s confirmatory due diligence, including the outcomes
of various assumptions with respect to lease negotiations which had been embedded in Blackstone’s valuation of the Properties.
Blackstone informed Eastdil that, following such diligence, its valuation of the Properties was $4 million less than had previously
been expressed in the Final LOI.
Later on March 14, 2018, Eastdil informed
Mr. John D. Baker II of the outcome of Blackstone’s confirmatory due diligence and Blackstone’s revised valuation.
Also on March 14, 2018, Simpson Thacher
representatives provided a further revised draft of the purchase and sale agreement to Nelson Mullins representatives addressing
certain of the points identified during Blackstone’s confirmatory due diligence.
On March 15, 2018, Blackstone and the Company
negotiated, regarding the proposed reduction of the purchase price, to give effect to the economic impact of certain outstanding
purchase price options with respect to certain of the Properties. Such negotiations resulted in an agreement between the Company
and Blackstone to a purchase price for the Properties of $358.9 million.
Between March 19 and March 22, 2018, representatives
of Nelson Mullins, on behalf of the Company, and Simpson Thacher, on behalf of Blackstone, negotiated regarding the inclusion of
an outparcel and a proposed parking lot expansion. Representatives of Nelson Mullins and Simpson Thacher exchanged revised drafts
of the purchase and sale agreement reflecting such terms.
On March 20, 2018, the FRP Board held a
meeting with members of senior management and representatives of Houlihan Lokey and Nelson Mullins to discuss the proposed transaction.
Prior to the meeting, the directors were provided with, among other things, a summary of the material terms of the transaction,
a copy of the then current draft of the agreement of purchase and sale reflecting the $358.9 million purchase price and draft resolutions
approving the Sale Transaction and certain related matters. A representative of Nelson Mullins summarized the material terms of
the draft agreement for purchase and sale of assets. The terms discussed included, but were not limited to, the no-shop provision
and fiduciary out and the termination provisions of the draft agreement, including the circumstances under which FRP would be required
to pay a termination fee and reimburse Purchaser for its expenses. At the FRP Board’s request, Houlihan Lokey then reviewed
and discussed its financial analysis of the $358.9 million aggregate cash consideration with the FRP Board. Thereafter, at the
FRP Board’s request, Houlihan Lokey verbally rendered its opinion to the FRP Board (which was subsequently confirmed in writing
by delivery of Houlihan Lokey’s written opinion addressed to the FRP Board, dated March 20, 2018) to the effect that, as
of such date and based on and subject to various procedures followed, assumptions made, qualifications and limitations on the review
undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of the opinion, the $358.9 million
aggregate cash consideration to be received for the Properties in the Sale Transaction pursuant to the Sale Agreement was fair
to FRP from a financial point of view. Following deliberation, the FRP Board (i) approved the Sale Agreement and the Sale Transaction,
(ii) voted to recommend that the shareholders of FRP approve the Sale Agreement and (iii) authorized the executive committee of
the FRP Board to approve the final changes that were still being negotiated.
On March 22, 2018, following approval by
the FRP Board’s executive committee, FRP, Seller and Purchaser executed and delivered the Sale Agreement, and the Baker Shareholders
and Purchaser executed and delivered the Support Agreement.
Recommendation of the FRP Board and
its Reasons for the Sale Transaction
The FRP Board, with the assistance of outside
legal counsel, evaluated the terms of the Sale Agreement and the Sale Transaction. After careful consideration, the FRP Board,
in a meeting held on March 20, 2018, (i) determined that the transactions contemplated by the Sale Agreement, including the Sale
Transaction, are advisable, fair to and in the best interests of FRP and our shareholders, (ii) authorized and approved the Sale
Agreement and the Sale Transaction, and (iii) determined to recommend that you vote “
FOR
” the Sale Proposal.
One member of the FRP Board, William H.
Walton III, abstained from voting on the Sale Transaction due to a potential conflict of interest.
The FRP Board considered a number of factors
that it believed supported its decision to take the foregoing actions, including, but not limited to, the following:
Sale Consideration
. The FRP
Board considered the $358.9 million in cash to be paid to FRP by Purchaser as consideration for the Properties in relation to (i)
the historical earnings and financial performance of the Properties and (ii) the FRP Board’s estimate of the current and
future prospects of the Properties. The FRP Board further considered the fact that the form of consideration payable to FRP will
be all cash, which will provide us with certainty of value and immediate liquidity.
Prospects for the Properties and
the Retained Business.
The FRP Board considered the current and historical financial condition, results of operations,
competitive position, business strategy, strategic options and future prospects of the Properties and the Asset Management Segment
as operated by FRP. In addition, the FRP Board considered the prospects for the Retained Business, including its good faith belief
that the Retained Business presents better opportunities for higher margins when compared to the Properties as currently operated
by FRP. The FRP Board also considered the potential cost savings associated with downsizing the Company’s Baltimore operations
following the Sale Transaction. Finally, the FRP Board considered that the proceeds from the Sale Transaction would provide FRP
with capital to support growth of the Retained Business.
Negotiations.
In addition,
the FRP Board considered its belief that, after extensive negotiations with representatives of Purchaser, FRP obtained the highest
price that Purchaser was willing to pay for the Properties. The FRP Board also considered the changes favorable to FRP in the terms
and conditions of the Sale Agreement from those initially proposed by Purchaser, specifically consisting of favorable adjustments
to the indemnity threshold and cap and the addition of materiality qualifiers to certain of the Purchaser’s closing conditions.
Potential Strategic Alternatives
.
The FRP Board considered possible alternatives to the sale of the Properties to Purchaser, including the sale of the Properties
to another acquirer, the sale of the Properties in an UPREIT transaction and continuing to operate the Properties.
|
●
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The FRP Board considered the range of potential benefits to our shareholders of these alternatives
and the timing and the likelihood, taking into account execution risks, as well as business, competitive, industry and market risks,
of such alternatives and the fact that, after consultation with Eastdil, there were likely no other potential purchasers that would
be reasonably likely to engage in a transaction in the near term or that would be reasonably likely to make an offer at a price
greater than the price being offered by Purchaser.
|
|
●
|
The FRP Board also considered the risk that prolonging the sale process further could have resulted
in the loss of an opportunity to consummate a transaction with Purchaser and distracted senior management from implementing the
Company’s business plan.
|
Given the foregoing, the FRP Board determined
that the Sale Transaction was more favorable to our shareholders than any other strategic alternative reasonably available to us
with respect to the Properties.
Opinion of Houlihan Lokey
.
The FRP Board considered the opinion of Houlihan Lokey verbally rendered to the FRP Board on March 20, 2018 (which was subsequently
confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the FRP Board, dated March 20, 2018)
as to, as of such date, the fairness, from a financial point of view, to FRP of the $358.9 million aggregate cash consideration
to be received for the Properties in the Sale Transaction pursuant to the Sale Agreement, which opinion was based on and subject
to the various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters
considered by Houlihan Lokey in connection with the preparation of its opinion as more fully described in the section below entitled
“Opinion of Houlihan Lokey Capital Inc.”
Terms and Conditions of the Sale
Agreement.
The FRP Board considered its view of the following terms and conditions of the Sale Agreement as favorable to
FRP:
|
●
|
If, at any time following the date of the Sale Agreement and prior to obtaining Shareholder Approval,
FRP receives an unsolicited written acquisition proposal that was not the result of a violation of FRP’s non-solicitation
obligations in the Sale Agreement and that the FRP Board determines in good faith to be bona fide and (after consultation with
outside legal counsel and its financial advisor) constitutes or would reasonably be expected to lead to a superior proposal, FRP
may (i) furnish non-public information with respect to FRP and its subsidiaries to any person making such acquisition proposal
pursuant to an acceptable confidentiality agreement, provided that any non-public information provided to any person given such
access was previously provided to Purchaser or will be provided to Purchaser as soon as reasonably practicable (and in any event
within 24 hours of the time it is provided to such person) and (ii) participate in negotiations with the person making such acquisition
proposal regarding such acquisition proposal;
|
|
●
|
The FRP Board may, any time prior to obtaining the Shareholder Approval, make an adverse recommendation
change: (i) in response to an intervening event if the FRP Board determines in good faith, after consultation with outside legal
counsel, that the failure to do so in response to an intervening event would violate the FRP Board’s duties’ under
applicable law and (ii) in response to an unsolicited written bona fide acquisition proposal (and FRP is not in breach of its non-solicitation
obligations in the Sale Agreement) that, in the good faith determination of the FRP Board, after consultation with its outside
legal counsel and financial advisors, constitutes a superior proposal if the FRP Board determines in good faith, after consultation
with its outside legal counsel, that the failure to do so in response to such intervening event would violate the FRP Board’s
duties under applicable law;
|
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●
|
the requirement that the Sale Transaction be approved by our shareholders; and
|
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●
|
FRP’s right to receive the Earnest Money of $14.4 million in the event that the Sale Agreement
is terminated after a default by Purchaser.
|
High Likelihood of Completion
.
The FRP Board considered its view that the Sale Transaction has a high likelihood of being completed in a timely manner in light
of the Sale Agreement providing for no contingencies relating to Purchaser’s financing of the transaction and Blackstone’s
experience and reputation consummating similar transactions.
The FRP Board also considered a variety
of risks and other potentially negative factors concerning the Sale Agreement and the transactions contemplated thereby, including,
among others, the following:
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that FRP shareholders will have no ongoing indirect equity interest in the Properties following
the Sale Transaction, and that such shareholders will therefore cease to participate in Properties’ future earnings, if any,
or to benefit from increases, if any, in the value of the Properties following or resulting from the Sale Transaction;
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●
|
the possibility that the Sale Transaction may not be completed for reasons that are beyond the
control of FRP and the adverse effects that a failure to complete the Sale Transaction could have on FRP’s business, the
market price for FRP common stock and FRP’s relationships with employees, including the fact that (i) FRP’s directors,
senior management and other employees will have expended extensive time and effort, and will have experienced significant distractions
from their work during the pendency of the Sale Transaction, (ii) FRP will have incurred significant transaction costs, (iii) FRP’s
prospects could be adversely affected, or may be perceived by the market as having been adversely affected, and (iv) FRP’s
continuing business relationships may be disrupted;
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the risk that various provisions of the Sale Agreement, including the requirement that FRP reimburse
Purchaser for its actual and reasonable out of pocket costs and expenses incurred by Purchaser and its affiliates in connection
with the Sale Transaction and pay to Purchaser a termination fee of $22,500,000 if the Sale Agreement is terminated in connection
with a superior proposal, may discourage other parties potentially interested in an acquisition of the Properties from pursuing
that opportunity or pursuing an acquisition of FRP (see the section below entitled “Proposal No. 1: The Asset Sale Proposal—Overview
of the Sale Transaction—Termination of the Sale Agreement”);
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the fact that the provisions of the Sale Agreement that restrict FRP’s ability to solicit
or participate in discussions or negotiations regarding acquisition proposals, subject to certain exceptions, and that restrict
FRP from terminating the Sale Agreement to enter into alternative acquisition agreements;
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|
the restrictions on FRP’s operation of the Properties between the date of the Sale Agreement
and the completion of the Sale Transaction (see the section below entitled “Proposal No. 1: The Asset Sale Proposal—Overview
of the Sale Transaction—Covenants Relating to the Conduct of the Properties Prior to Closing”); and
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the other factors described under “Risk Factors” beginning on page
23
.
|
In addition to considering the factors
described above, the FRP Board considered the fact that its executive officers have interests in the Sale Transaction that are
different from, or in addition to, the interests of FRP’s shareholders generally, as discussed in the section below entitled
“Interests of Certain Persons in the Sale Transaction.”
The above discussion of the factors considered
by the FRP Board is not intended to be exhaustive, but does set forth certain material factors considered by the FRP Board. In
view of the wide variety of factors considered in connection with its evaluation of the Sale Transaction and the complexity of
these matters, the FRP Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative
or specific weight or values to any of these factors, and individual directors may have held varied views of the relative importance
of the factors considered. The FRP Board viewed its position and recommendation as being based on an overall review of the totality
of the information available to it.
The FRP Board recommends that our shareholder
vote “
FOR
” the Sale Proposal.
Recommendation of the FRP Board; Required
Vote
After careful consideration, the FRP Board,
in a meeting held on March 20, 2018, (i) determined that the transactions contemplated by the Sale Agreement, including the Sale
Transaction, are advisable, fair to and in the best interests of FRP and its shareholders, (ii) authorized and approved the Sale
Agreement and the Sale Transaction, and (iii) determined to recommend that you vote “
FOR
” the Asset Sale Proposal.
One member of the FRP Board, William H.
Walton III, abstained from voting on the Sale Transaction due to a potential conflict of interest.
The Sale Transaction may constitute the
sale of substantially all of the property and assets of FRP under Section 607.1202 of the FBCA and we are therefore seeking the
approval of the Sale Transaction by FRP’s shareholders.
Approval of the Asset Sale Proposal requires
the affirmative vote of the holders of a majority of FRP common stock outstanding and entitled to vote on the matter at the annual
meeting. For purposes of the vote on the Asset Sale Proposal, an abstention, a “broker non-vote,” or a failure to submit
a proxy card or vote by telephone, over the Internet or in person at the annual meeting will have the same effect as voting “
AGAINST
”
the Asset Sale Proposal.
Overview of the Sale Transaction
On March 22, 2018, FRP and Seller entered
into the Sale Agreement with Purchaser, pursuant to which FRP and Seller agreed to sell the Properties to Purchaser for a purchase
price, subject to adjustment, of $358.9 million, subject to the terms and conditions of the Sale Agreement. The closing of the
sale and purchase of the Properties shall take place on the later of (i) sixty (60) days after entering into the Sale Agreement
and (ii) three (3) business days after the date on which the Shareholder Approval is obtained, subject to the terms and conditions
of the Sale Agreement.
A full list of the Properties is set out
below in “—Purchase and Sale of Assets” and a copy of the Sale Agreement is attached as
Annex A
to this
proxy statement. FRP encourages you to carefully read the Sale Agreement in its entirety because it is the principal document governing
the Sale Transaction.
Following the completion of the Sale Transaction,
FRP will continue to own the Retained Business. FRP will maintain the same corporate functions, the same board of directors and
a majority of the same senior executives as it had prior to the completion of the Sale Transaction. For additional information,
see the section entitled “Proposal No. 1: The Asset Sale Proposal—Overview of the Sale Transaction” beginning
on page
38
.
Parties to the Sale Agreement
FRP
Holdings, Inc.
FRP is a holding company engaged in various
real estate businesses. The segments of the Company include: (i) the Asset Management Segment, (ii) the Mining Royalty Lands Segment,
(iii) the Land Development and Construction Segment, and (iv) Riverfront on the Anacostia Segment.
FRP was incorporated on April 22, 2014
in connection with a corporate reorganization that preceded the spin-off of the Company’s prior transportation business.
The Company’s predecessor issuer was formed on July 20, 1988. The business of the Company is conducted through our wholly-owned
subsidiaries FRP Maryland, Inc., a Maryland corporation, FRP Development Corp., a Maryland corporation and Florida Rock Properties,
Inc., a Florida corporation, and their various subsidiaries.
Purchaser
Purchaser is a Delaware limited liability
company and an affiliate of Blackstone Real Estate Partners VIII L.P. Purchaser was formed solely for the purpose of acquiring
the Properties and has not carried on any activities to date, except for activities incidental to its formation and activities
undertaken in connection
with the transactions contemplated by the Sale Agreement. Blackstone Real Estate Partners VIII L.P. is
an affiliate of The Blackstone Group L.P.
Blackstone
is a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has approximately
$115 billion in investor capital under management. Blackstone’s real estate portfolio includes hotel, office, retail, industrial
and residential properties in the US, Europe, Asia and Latin America. Major holdings include Hilton Worldwide, Invitation Homes
(single family homes), Logicor (pan-European logistics) and prime office buildings in the world’s major cities. Blackstone
real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone
Mortgage Trust.
The Sale Agreement
The following discussion sets forth
the material terms of the Sale Agreement and is qualified in its entirety by reference to the complete text of the Sale Agreement,
a copy of which is attached as Annex A to this proxy statement and is incorporated by reference into this proxy statement. This
summary may not contain all of the information about the Sale Agreement that is important to you. You should refer to the full
text of the Sale Agreement for details of the transaction and the terms and conditions of the Sale Agreement.
Additionally, the representations,
warranties and covenants described in this summary and contained in the Sale Agreement have been made only for the purpose of the
Sale Agreement and, as such, are intended solely for the benefit of FRP Seller and Purchaser. In many cases, these representations,
warranties and covenants are subject to limitations agreed upon by the parties and are qualified by certain disclosures exchanged
by the parties in connection with the execution of the Sale Agreement. Furthermore, many of the representations and warranties
contained in the Sale Agreement are the result of a negotiated allocation of contractual risk among the parties and, taken in isolation,
do not necessarily reflect facts about FRP, Seller and Purchaser, their respective subsidiaries and affiliates or any other party.
Likewise, any references to materiality contained in the representations and warranties may not correspond to concepts of materiality
applicable to investors or shareholders. Finally, information concerning the subject matter of the representations and warranties
may have changed since the date of the Sale Agreement or may change in the future, and these changes may not be fully reflected
in the public disclosures made by FRP, Seller and Purchaser. As a result of the foregoing, you are strongly encouraged not to rely
on the representations, warranties and covenants contained in the Sale Agreement, or any descriptions thereof, as accurate characterizations
of the state of facts or condition of FRP, Seller, Purchaser or any other party. You are likewise cautioned that you are not a
third-party beneficiary under the Sale Agreement and do not have any direct rights or remedies pursuant to the Sale Agreement.
Purchase and Sale of Assets
Subject to the terms and conditions of
the Sale Agreement, Purchaser will purchase the Properties. The Properties are listed below and consist of substantially all of
the assets of the Company’s Asset Management Segment.
#
|
Asset
|
City
|
State
|
SF
|
1
|
2201 Lakeside
Blvd
|
Edgewood
|
MD
|
148,425
|
2
|
2202 Lakeside
Blvd
|
Edgewood
|
MD
|
129,891
|
3
|
1502 Quarry
Drive
|
Edgewood
|
MD
|
110,875
|
4
|
1504 Quarry
Drive
|
Edgewood
|
MD
|
96,800
|
5
|
2203 Lakeside
Blvd
|
Edgewood
|
MD
|
99,100
|
6
|
2208 Lakeside
Blvd
|
Edgewood
|
MD
|
72,615
|
7
|
1506 Quarry
Drive
|
Edgewood
|
MD
|
94,832
|
8
|
2206 Lakeside
Blvd
|
Edgewood
|
MD
|
67,128
|
9
|
2204 Lakeside
Blvd
|
Edgewood
|
MD
|
74,056
|
10
|
7021 Dorsey
Road
|
Hanover
|
MD
|
200,200
|
11
|
7001 Dorsey
Road
|
Hanover
|
MD
|
145,180
|
12
|
7010 Dorsey
Road
|
Hanover
|
MD
|
74,600
|
13
|
7020 Dorsey
Road
|
Hanover
|
MD
|
84,760
|
14
|
9104 Yellow
Brick Road
|
Rosedale
|
MD
|
93,755
|
15
|
9108 Yellow
Brick Road
|
Rosedale
|
MD
|
96,762
|
16
|
810 Oregon
Avenue
|
Linthicum
|
MD
|
113,280
|
17
|
812 Oregon
Avenue
|
Linthicum
|
MD
|
82,335
|
18
|
3051 Washington
Blvd
|
Baltimore
|
MD
|
71,200
|
19
|
3121 Washington
Blvd
|
Baltimore
|
MD
|
70,790
|
20
|
3101 Washington
Blvd
|
Baltimore
|
MD
|
40,328
|
21
|
3031 Washington
Blvd
|
Baltimore
|
MD
|
22,000
|
22
|
3131 Washington
Blvd
|
Baltimore
|
MD
|
28,000
|
23
|
1921 62nd
Street
|
Rosedale
|
MD
|
79,550
|
24
|
1901 62nd
Street
|
Rosedale
|
MD
|
82,800
|
25
|
8240 Preston
Court
|
Jessup
|
MD
|
90,405
|
26
|
8230 Preston
Court
|
Jessup
|
MD
|
72,391
|
27
|
10820 Gilroy
Road
|
Hunt Valley
|
MD
|
107,438
|
28
|
8515 Kelso
Drive
|
Essex
|
MD
|
33,990
|
29
|
8525 Kelso
Drive
|
Essex
|
MD
|
35,690
|
30
|
7700 Port
Capital Drive
|
Elkridge
|
MD
|
91,218
|
31
|
8620 Dorsey
Run Road
|
Hanover
|
MD
|
85,100
|
32
|
11500 Crossroads
Circle
|
Middle River
|
MD
|
69,474
|
33
|
6920 Tudsbury
Road
|
Windsor Mill
|
MD
|
86,100
|
34
|
7600 Doane
Drive
|
Manassas
|
VA
|
129,850
|
35
|
11800 Brewer’s
Spring Road
|
Manassas
|
VA
|
125,550
|
36
|
11801 Brewer’s
Spring Road
|
Manassas
|
VA
|
117,600
|
37
|
7780 Doane
Drive
|
Manassas
|
VA
|
103,448
|
38
|
7760 Doane
Drive
|
Manassas
|
VA
|
96,710
|
39
|
100 Interchange
Blvd.
|
Newark
|
DE
|
151,006
|
40
|
200 Interchange
Blvd.
|
Newark
|
DE
|
152,000
|
41
|
1187 Azalea
Garden Road
|
Norfolk
|
VA
|
188,093
|
|
Total Portfolio
|
|
|
3,915,325
|
|
|
|
|
|
Additional Land
Parcels
|
City
|
State
|
Acres
|
1
|
2203 Lakeside
Blvd
|
Edgewood
|
MD
|
15
|
2
|
Parcel C-1 Interchange Business
Park
|
Newark
|
DE
|
9
|
3
|
3041 Washington
Blvd
|
Baltimore
|
MD
|
1
|
The assets to be sold do not include (i)
the Company’s Brooksville and Windlass joint ventures, (ii) any assets of the Mining Royalty Lands Segment (iii) the Company’s
Riverfront on the Anacostia Segment, or the Company’s other properties in Washington, D.C., (iv) any of the assets of the
Land Development and Construction Segment, or (v) the Company’s three office buildings.
Purchase Price
The purchase price to be received by Seller
for the Properties is $358,900,000. The purchase price will be adjusted to reflect customary prorations, and is subject to further
adjustment if certain of the Properties are excluded from the Sale Transaction (as further described in the section entitled “Proposal
No. 1: The Asset Sale Proposal—Overview of the Sale Transaction—Termination of the Sale Agreement” beginning
on page
54
).
Closing Costs and Encumbrances
Under the Sale Agreement, Seller is obligated
to pay (i) one-half of all transfer and recording taxes, (ii) one-half of all escrow charges, (iii) all costs in connection with
discharging any mortgages and encumbrances on the Properties, (iv) the costs of any endorsements issued to insure over any non-permitted
exceptions and (v) any other transaction costs borne by Seller in accordance with local custom. Seller is also obligated to pay
the fees of its own attorneys, accountants and other professionals.
As of February 28, 2018, the Properties
were encumbered by mortgages having an outstanding balance of approximately $29 million.
Escrow Deposit
Purchaser has deposited the Earnest Money
with an escrow agent. The Earnest Money is to be applied at closing against payment of the purchase price and is non-refundable
to Purchaser except as expressly provided in the Sale Agreement.
The Sale Agreement provides that the Earnest
Money shall be returned to Purchaser if: (i) Purchaser terminates the Sale Agreement due to failure to obtain the Shareholder Approval
before August 19, 2018, (ii) Purchaser terminates the Sale Agreement due to Seller’s failure to cure (or election not to
cure) any Title Defect or the Seller’s inability otherwise to convey fee title to the Properties to Purchaser at closing
subject only to permitted exceptions, (iii) Purchaser terminates the Sale Agreement due to (a) any of the conditions precedent
to Purchaser’s obligations not being satisfied or waived by Purchaser or (b) a material breach or default by Seller in the
performance of its obligations under the Sale Agreement or (iv) Seller terminates the Sale Agreement because any of the conditions
precedent to Seller’s obligations have not been satisfied or waived by Seller on or prior to the closing. Additionally, the
Sale Agreement provides that the applicable portion of the Earnest Money allocated to any individual Property shall be returned
to Purchaser if Purchaser terminates the Sale Agreement solely with respect to an individual Property due to (i) certain tenants
alleging default on their tenant estoppel, (ii) any individual Property or any portion thereof being damaged or destroyed by a
Material Casualty or subject to a Material Condemnation, (iii) any counterparty to an Option exercising its right to purchase any
individual Property or (iv) with respect to the individual Property located at 1901 62nd Street, Baltimore, Maryland 21237, if
the applicable Seller does not enter into the contemplated lease amendment with Architectural Ceramics, Inc.
The Sale Agreement provides that the Earnest
Money shall be disbursed to Seller if Seller terminates the Sale Agreement due a material breach or default by Purchaser to pay
the purchase price and purchase the Properties under the Sale Agreement on the closing date.
Indemnification by Purchaser
From and after the closing of the Sale
Transaction for a period of twelve (12) months, subject to the terms and conditions of the Sale Agreement, Purchaser is obligated
to indemnify and hold harmless Seller and its affiliates, members, partners, shareholders, officers, directors, employees, representatives
and agents of each of the foregoing from and against losses incurred or suffered by any such person arising out of, or in any way
resulting from, (i) any breach of any representation or warranty by Purchaser contained in the Sale Agreement or in any related
closing documents, (ii) any breach of any covenant of Purchaser contained in the Sale Agreement or in any related closing documents
that expressly survives the closing and (iii) claims asserted by third parties relating to the Properties, but only if and to the
extent such losses first arise or accrue after the closing.
Indemnification by Seller and
FRP
Subject to the terms and conditions of
the Sale Agreement (including the “Limitations on Seller’s and FRP’s Indemnity Obligations” set forth below,
as applicable), Seller is each obligated to indemnify and hold harmless Purchaser and its affiliates, members, partners, shareholders,
officers, directors, employees, representatives and agents of each of the foregoing from and after the closing of the Sale Transaction
(i) for a period of twelve (12) months, from and against any losses which may be incurred or suffered by any of them arising out
of, or resulting from: (a) any breach of any representation or warranty of Seller or FRP contained in the Sale Agreement or in
any related closing documents; (b) any breach of any covenant of Seller or FRP contained in the Sale Agreement or in any related
closing documents that expressly survives the closing; and (c) third party claims arising prior to closing relating to the Properties
(even if such claim is asserted on or after the closing) and (ii) with respect to all liabilities and obligations relating to any
employee (and such employee’s employment and termination thereof), employee benefit plan, or employment practice.
FRP has agreed, if the closing occurs,
to fulfill the post-closing payment obligations of Seller in accordance with the terms of the Sale Agreement and to the extent
such obligations are not timely fulfilled by Seller, in each case subject to the same limitations on survival and liability set
forth in the Sale Agreement.
Limitations on Seller’s
and FRP’s Indemnity Obligations
Seller and FRP are not required to indemnify
Purchaser unless the aggregate of all amounts for which an indemnity would otherwise be payable exceeds $175,000 (the “
Basket
”)
and, in such event, Seller and FRP are responsible for the entire amount. The maximum aggregate liability of Seller and FRP for
the aforementioned indemnity claims shall not exceed 3% of the purchase price (the “
Cap
”). Notwithstanding the
foregoing, the following are not subject to the Basket or Cap: (i) Seller’s obligations with respect to prorations and adjustments,
(ii) Seller’s obligations with respect to taxes, fees and other transaction costs, (iii) Seller’s obligations for the
breach of any of the representations and warranties with respect to taxes, (iv) Seller’s obligations with respect to liabilities
and obligations relating to any employee (and any such employee’s employment and termination thereof), employee benefit plan
or employment practice and (v) Seller’s obligations with respect to brokers.
Purchaser is not entitled to seek or obtain
consequential, speculative, special, punitive or exemplary damages against Seller or FRP, except with respect to any claims asserted
by third parties.
From and after the closing of the Sale
Transaction, the sole and exclusive remedy available to a party in the event of a breach by the other party to the Sale Agreement
of any representation, warranty, covenant or other provision of the Sale Agreement or any related closing documents which expressly
survives the closing shall be the aforementioned indemnifications, except as it relates to (i) Seller’s obligations with
respect to prorations and adjustments, (ii) Seller’s obligations with respect to taxes, fees and other transaction costs,
(iii) Seller’s obligations with respect to liabilities and obligations relating to any employee (and any such employee’s
employment and termination thereof), employee benefit plan or employment practice and (iv) Seller’s obligations with respect
to brokers.
Representations and Warranties
The Sale Agreement contains customary representations
and warranties made by Seller to Purchaser. Specifically, the representations and warranties of Seller in the Sale Agreement (many
of which are qualified by concepts of knowledge, materiality and/or are further modified and limited by confidential disclosure
schedules delivered by Seller to Purchaser) relate to the following subject matters, among other things:
|
●
|
formation and good standing;
|
|
●
|
corporate power and authority to enter into the Sale Agreement and perform its obligations thereunder,
due authorization and execution of the Sale Agreement and the enforceability of the Sale Agreement;
|
|
●
|
consents required in connection with the execution, delivery and performance of the Sale Agreement;
|
|
●
|
the absence of conflicts between (i) Seller’s organizational documents, other contracts and
applicable law and (ii) the execution, delivery, compliance with, and performance of the Sale Agreement by Seller;
|
|
●
|
not being a debtor under any bankruptcy or insolvency proceedings;
|
|
●
|
compliance with anti-bribery, anti-money laundering and anti-terrorism laws;
|
|
●
|
not being a foreign person;
|
|
●
|
Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder;
|
|
●
|
the approval of the Sale Agreement and the transactions contemplated thereby by the FRP Board;
|
|
●
|
the shareholder vote required to approve the Sale Agreement;
|
|
●
|
the opinion of Houlihan Lokey;
|
|
●
|
material contracts and space leases;
|
|
●
|
casualty; condemnation;
|
|
●
|
ownership of the Properties;
|
|
●
|
reciprocal easement agreements, operating easement agreements, and covenants, conditions and restrictions;
|
|
●
|
associations and association documents;
|
|
●
|
employees and employee arrangements;
|
|
●
|
brokers with respect to the Sale Transaction.
|
The Sale Agreement contains customary representations
and warranties made by FRP to Purchaser. Specifically, the representations and warranties of FRP in the Sale Agreement (some of
which are qualified by concepts of knowledge) relate to the following subject matters, among other things:
|
●
|
formation and good standing;
|
|
●
|
corporate power and authority to enter into the Sale Agreement and perform its obligations thereunder,
due authorization and execution of the Sale Agreement and the enforceability of the Sale Agreement;
|
|
●
|
consents required in connection with the execution, delivery and performance of the Sale Agreement;
|
|
●
|
the absence of conflicts between (i) FRP’s organizational documents, other contracts and
applicable law and (ii) the execution, delivery, compliance with, and performance of the Sale Agreement by FRP;
|
|
●
|
not being a debtor under any bankruptcy or insolvency proceedings; and
|
|
●
|
compliance with anti-bribery, anti-money laundering and anti-terrorism laws.
|
The Sale Agreement contains customary representations
and warranties made by Purchaser to Seller. Specifically, the representations and warranties of the Purchaser in the Sale Agreement
(some of which are qualified by concepts of knowledge) relate to the following subject matters, among other things:
|
●
|
formation and good standing;
|
|
●
|
corporate power and authority to enter into the Sale Agreement and perform its obligations thereunder,
due authorization and execution of the Sale Agreement and the enforceability of the Sale Agreement;
|
|
●
|
consents required in connection with the execution, delivery and performance of the Sale Agreement;
|
|
●
|
the absence of conflicts between (i) Purchaser’s organizational documents, other contracts
and applicable law and (ii) the execution, delivery, compliance with, and performance of the Sale Agreement by Purchaser;
|
|
●
|
not being a debtor under any bankruptcy or insolvency proceedings; and
|
|
●
|
compliance with anti-bribery, anti-money laundering and anti-terrorism laws.
|
Covenants Relating to the Conduct
of the Properties Prior to Closing
Seller has undertaken customary covenants
in the Sale Agreement relating to the operation of the Properties prior to the completion of the Sale Transaction. In general,
Seller has agreed to, among other things:
|
●
|
operate the Properties in accordance with the Sale Agreement and past practices, including performing
all capital improvements, capital expenditures and landlord work in the ordinary course of business;
|
|
●
|
not make any material changes or alterations to the Properties without Purchaser’s prior
written consent;
|
|
●
|
not remove any personal property from the Properties unless replaced by an item of similar condition,
utility and value;
|
|
●
|
not record, cause or permit any encumbrances to be recorded against the Properties without Purchaser’s
consent;
|
|
●
|
diligently and in a commercially reasonable manner work to cure, remove and/or close out any violations;
|
|
●
|
advise Purchaser promptly of any litigation, arbitration, or condemnation, keep Purchaser reasonably
informed of the status of such matters, and not settle such matters without Purchaser’s consent;
|
|
●
|
advise Purchaser promptly of any notices of violation affecting the Properties;
|
|
●
|
advise Purchaser promptly of any notices of default delivered or received under any space lease,
contract, association document or reciprocal easement agreements;
|
|
●
|
keep the Properties insured consistent with existing insurance programs and name Purchaser as an
additional insured on any business interruption policies affecting the Properties;
|
|
●
|
perform Seller’s obligations under all space leases, contracts and association documents;
|
|
●
|
pay all taxes, water and sewer charges affecting the Properties as they become due;
|
|
●
|
upon Purchaser’s request, furnish each tenant with a form of subordination, non-disturbance
and attornment agreement;
|
|
●
|
use commercially reasonable efforts to have all roof warranties related to the Properties re-issued
to Purchaser at Seller’s sole cost and expenses;
|
|
●
|
subject to limited exceptions, not enter into, modify or terminate any contracts or space leases
for the Properties;
|
|
●
|
terminate any existing management agreements and agreements with affiliates relating to the Properties
at or prior to closing;
|
|
●
|
deliver a notice of termination with respect to any contracts that Purchaser will not assume;
|
|
●
|
not amend any association documents or reciprocal easement agreements;
|
|
●
|
comply with FRP’s obligations under association documents and reciprocal easement agreements;
|
|
●
|
prepare and deliver estoppel certificates to tenants, associations and counterparties to reciprocal
easement agreements;
|
|
●
|
use commercially reasonable efforts to perform certain capital expenditures work and landlord work
prior to closing; provided, to the extent it is not completed prior to closing, (i) Seller will assign the corresponding contracts
to Purchaser and (ii) Purchaser will receive a credit at closing for 110% of the estimated costs to complete such capital expenditures
work and landlord work;
|
|
●
|
continue to provide the municipal letters of credit related to certain capital expenditures work
until the corresponding work has been completed and the obligation to post such letters of credit has been released; and
|
|
●
|
use commercially reasonable efforts to enter into the contemplated lease amendment with Architectural
Ceramics, Inc.
|
Projects Involving Letters
of Credit
With respect to certain Properties located
in Virginia, the local municipality has required Seller to post letters of credit to guarantee the completion of certain capital
expenditures work. To the extent this work is not completed prior to closing, Seller will continue to perform such work post-closing;
provided, however, if Seller fails to complete the work by an agreed upon outside date, Purchaser may elect to take over completion
of such work. In connection with such work, Purchaser and Seller agree that an amount equal to 125% of the estimated costs to complete
such work shall be held back from the closing proceeds and deposited into an escrow to be released either (i) to Seller upon completion
of the work and satisfaction of the applicable conditions or (ii) to the extent Seller does not complete the work by the applicable
outside date and Purchaser takes over completion of the work, to Purchaser upon its completion of the work. Seller shall continue
to provide the municipal letters of credit related to such work until the corresponding work has been completed and the obligation
to post such letters of credit has been released.
9104 Yellow Brick Road Property
To the extent Seller does not enter into
a lease with York International Corporation including the agreed upon terms prior to closing, Purchaser and Seller agree that $2,000,000
of the purchase price shall be held back from the closing proceeds and deposited into an escrow (the “
YBR Holdback
”).
In the event Purchaser does not enter into such lease between the closing and June 30, 2018, the escrow agent shall automatically
release the YBR Holdback to Purchaser on July 1, 2018. In the event Purchaser enters into a lease with York International Corporation
between the closing and June 30, 2018, the escrow agent shall
(i) release the YBR Holdback to Seller, less any leasing costs with
respect to such lease, and (ii) release the balance of the YBR Holdback to Purchaser.
Crossroads Outparcel
Seller
shall take all necessary actions to subdivide a certain parcel adjacent to the Property located at 11500 Crossroads Circle, Middle
River, Maryland 21220 (the “
Crossroads Outparcel
”)
in order to enable Seller to transfer ownership of a separate legal parcel comprised solely of a specified area to be used for
the contemplated construction of a parking lot (the “
Crossroads Parking Parcel
”).
Following the subdivision of the Crossroads Outparcel, if applicable, and subject to customary diligence, Purchaser (or an affiliate
thereof) shall acquire the Crossroads Parking Parcel at a separate closing. Following Purchaser’s acquisition of the Crossroads
Parking Parcel, if applicable, and subject to Purchaser’s diligence, receipt of requisite approvals and satisfactory cost
arrangements, Purchaser shall work in good faith to construct a parking lot on the Crossroads Parking Parcel. In the event Purchaser
does not construct a parking lot on the Crossroads Parking Parcel, Purchaser may not transfer or convey such parcel unless (i)
such transaction also includes the conveyance of the Property located at 11500 Crossroads Circle, Middle River, Maryland 21220
(the “
Crossroads Parcel
”), or (ii) the Crossroads Parcel has previously been
transferred in connection with a foreclosure or deed in lieu of foreclosure.
Purchase Options
Several of the Properties are subject to
certain rights of first refusal, rights of first offer, purchase options or similar rights relating to such Property in favor of
the tenants (each, an “
Option
”). Should any counterparty to an Option exercise its right to purchase the applicable
Property (an “
Excluded Option Property
”), Seller must notify Purchaser of the same, in which event the Sale
Agreement will terminate as to only such Excluded Option Property. Notwithstanding the foregoing, at any time after entering into
the Sale Agreement and prior to the date twelve (12) months after the closing date, if such tenant subsequently defaults on its
obligation to purchase such Excluded Option Property or such Excluded Option Property otherwise becomes available for sale, Purchaser
will have the right to cause the Seller to sell such Excluded Option Property to Purchaser).
Title and Survey Matters
On or prior to the execution of the Sale
Agreement, Purchaser has received a preliminary title commitment and initial survey with respect to each of the Properties. Seller
shall be obligated to cure, remove or cause to be insured over at its expense all non-permitted exceptions in such preliminary
title commitments and initial surveys in accordance with the agreed upon “resolution” actions. With respect to any
updates to the preliminary title commitments and initial surveys received after the date of the Sale Agreement and prior to the
closing the Sale Transaction, Purchaser may notify Seller in writing of any matters reflected in such updated reports that were
not reflected on the preliminary title commitments or initial surveys and which do not constitute permitted exceptions under the
Sale Agreement (“
Title Defect
”). If Seller fails to cure or elects not to cure any such Title Defect set forth
in a notice of Title Defect and otherwise is unable to convey fee title to the Properties to Purchaser at closing subject only
to permitted exceptions, Purchaser may elect, either to (i) terminate the Sale Agreement or (ii) waive such Title Defect. Notwithstanding
the foregoing, Seller is obligated at closing to cause the release or discharge of (i) any voluntary encumbrance created by Seller
after the date of the Sale Agreement, (ii) the existing financings encumbering the Properties, and (iii) other monetary liens encumbering
the Properties (subject to a maximum of $2,000,000 in the aggregate).
Condemnation and Casualty
If, prior to the closing date of the Sale
Transaction, all or any portion of the Properties are (i) destroyed or damaged by fire or other casualty or (ii) taken, or threatened
to be taken, as a result of any condemnation, eminent domain or similar proceedings, Seller shall promptly notify Purchaser and,
at closing, Seller will credit against the purchase price payable by Purchaser at the closing an amount equal to the net proceeds,
if any, actually received by Seller as a result of such casualty or condemnation, together with a credit for any deductible under
insurance coverage maintained by Seller or its affiliates. If as of the closing, Seller has not received all or any portion of
such insurance or condemnation proceeds, then the parties shall nevertheless consummate the Sale Transaction (with a credit for
(i) any deductible under such insurance and (ii) any uninsured loss) and Seller will at closing assign to Purchaser all rights
of Seller, if any, to the insurance or condemnation proceeds and to all other related rights.
Notwithstanding the foregoing, (a) if any
individual Property or any portion thereof shall be (i) damaged or destroyed by a Material Casualty (as defined below) or (ii)
subject to a Material Condemnation (as defined below), Purchaser shall have the right, exercised by written notice to Seller, to
terminate the Sale Agreement as to only such affected Property and (b) if any Property or any portion thereof shall be (i) damaged
or destroyed by one or more casualties and/or (ii) taken, or threatened to be taken, as a result of one or more condemnation, eminent
domain or similar proceedings, and the cost of repair (with respect to any such casualties) and the value of the applicable portion
of the Properties (with respect to any such condemnations, eminent domain or similar proceedings) exceeds, in the aggregate, seven
and one-half percent (7.5%) of the purchase price, Purchaser shall have the right, exercised by written notice to Seller, to terminate
the Sale Agreement.
“
Material Casualty
”
shall mean, with respect to any individual Property, any damage to all or a portion of any individual Property by fire or other
casualty that, (i) in the reasonable judgment of an independent third party selected by Purchaser and reasonably acceptable to
Seller is expected to cost in excess of five percent (5%) of the allocated purchase price of such individual Property to repair
or (ii) permits any major tenant to terminate its space lease or abate rent pursuant to the terms of its space lease.
“
Material Condemnation
”
shall mean, with respect to any individual Property, a taking or threatened taking that (i) results in a loss of more than seven
and one-half percent (7.5%) of the aggregate square footage of such individual Property, (ii) permits any major tenant to terminate
its space lease, (iii) in Purchaser’s reasonable judgment, materially and adversely affects the operations at or access to
such Property or parking on any such Property or (iv) otherwise adversely impacts the value of such Property by more than seven
and one-half percent (7.5%) of the allocated purchase price for such Property.
Public Announcements
During the pre-closing period, FRP and
Purchaser have agreed not to issue any public release or announcement concerning the Sale Agreement and the Sale Transaction without
the prior written consent of the other parties, other than releases or announcements as may be required by law or as may be reasonably
necessary in light of FRP’s public company status.
Third Party Consents
FRP and Purchaser have further agreed to
use commercially reasonable efforts to give all notices to, and obtain all consents from, certain third parties, except that they
shall not be obligated to pay any consideration to any third party in respect of any such consent or approval.
Preparation of Proxy Statement;
FRP Shareholder Meeting
As promptly as reasonably practicable following
the date of the Sale Agreement (and, in any event, no more than two (2) business days following to the date of Sale Agreement),
FRP was required to prepare this proxy statement and, after consultation with and consideration in good faith of any comments on
this proxy statement reasonably proposed by Purchaser, cause this proxy statement to be filed with the SEC in preliminary form;
provided, however, that FRP could not file this proxy statement with the SEC without obtaining the prior written consent of Purchaser,
which consent could not be unreasonably withheld, conditioned, or delayed.
FRP is required, as promptly as practicable
following the date of the Sale Agreement, to duly call, give notice of, convene and hold a meeting of FRP shareholders for the
purpose of seeking shareholder approval of the Asset Sale Proposal. FRP is required to (1) through the FRP Board, make the FRP
Board recommendation; (2) include the FRP Board recommendation in this proxy statement; and (3) solicit and use its reasonable
best efforts to obtain the FRP shareholders’ approval of the Asset Sale Proposal, except to the extent that the FRP Board
has effected an adverse recommendation change, as permitted by and determined in accordance with the provisions described below
under “—No Solicitation of Transactions”. Until the Sale Agreement is terminated in accordance with its terms,
FRP shall not submit to the vote of its shareholders any acquisition proposal.
FRP may adjourn or postpone the annual
meeting after consultation with Purchaser (i) to the extent necessary to ensure that any necessary supplement or amendment to this
proxy statement is provided to the shareholders of FRP sufficiently in advance of the annual meeting to ensure that the vote occurs
on the basis of full and complete information as required by applicable law or regulation or (ii) if, in the reasonable discretion
of FRP, additional time is required to solicit proxies in favor of the approval of the Asset Sale Proposal; provided that, in the
case of clause (ii) without the consent of Purchaser (which shall not be unreasonably withheld, conditioned or delayed), in no
event shall the annual meeting (as so postponed or adjourned) be held on a date that is more than thirty (30) days after the date
for which the annual meeting was originally scheduled; provided, further, that such consent of Purchaser may be withheld in its
sole discretion if following the date of the Sale Agreement, an acquisition proposal shall have been received by FRP or its representatives
or any person shall have publicly announced an intention to make an acquisition proposal, unless such acquisition proposal has
been withdrawn at least thirty (30) days prior to the date for which the shareholder meeting was originally scheduled. FRP must
call, give notice of, convene and hold the annual meeting, mail this proxy statement and solicit proxies in favor of shareholder
approval of the Asset Sale Proposal without regard to an adverse recommendation change, unless the Sale Agreement has been terminated
in accordance with its terms.
For purposes of the Sale Agreement, “acquisition
proposal” means any proposal, offer or inquiry from any person or “group” (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) regarding any of the following involving the Company, any Seller or any of their respective
subsidiaries (other than the transactions contemplated by the Sale Agreement):
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any direct or indirect acquisition or purchase, in one transaction or a series of transactions,
including any merger, reorganization, recapitalization, restructuring, share exchange, consolidation, tender offer, exchange offer,
stock acquisition, asset acquisition, business combination, liquidation, dissolution, joint venture, sale, lease, exchange, license,
transfer or disposition or otherwise, of the assets representing 20% or more of the consolidated net income, consolidated net revenue
or consolidated total assets (including equity securities of its subsidiaries) of FRP and its subsidiaries;
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any issue, sale or other disposition (including by way of merger, consolidation, sale of equity
interests, share exchange, joint venture, business combination or otherwise) of securities (or options, rights or warrants to purchase,
or securities convertible into, such securities) representing 20% or more of any class of capital stock;
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any tender offer or exchange offer for 20% or more of any class of capital stock, other equity
security or voting power of the Company or the operating partnership or the filing of a registration statement under the Securities
Act of 1933, as amended (which we refer to in this proxy statement as the “
Securities Act
”) in connection therewith;
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any other transaction or series of transactions pursuant to which any person or “group”
(as such term is defined in Rule 13d-3 promulgated under the Exchange Act) proposes to acquire control of any Property; or
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any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement
to engage in any of the foregoing.
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No Solicitation
FRP has agreed that, from the date of the
Sale Agreement until the earlier of closing date or the termination of the Sale Agreement, and subject to the provisions below,
it will not, and will not cause its subsidiaries and its and their respective officers and directors not to, and it will authorize
and will use reasonable efforts to cause the representatives of FRP and its subsidiaries not, directly or indirectly:
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solicit, initiate or knowingly encourage, knowingly induce or knowingly facilitate or take any
other action which would reasonably be expected to lead to, the making, submission or announcement of, any acquisition proposal
(which is referred to in this proxy statement as an “inquiry”);
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enter into, continue or otherwise participate or engage in any negotiations or discussions regarding,
or furnish to any person other than Purchaser or its representatives any non-public information or data in furtherance of any acquisition
proposal or inquiry;
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approve, recommend, declare advisable or enter into any letter of intent, memorandum of understanding,
agreement in principle, acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement,
joint venture agreement, partnership agreement or other agreement, in each case related to an acquisition proposal (other than
an acceptable confidentiality agreement, as described below) or requiring or having the effect of requiring the Company to abandon,
terminate, or breach its obligations under the Sale Agreement (which we refer to in this proxy statement as an “alternative
acquisition agreement”); or
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agree to or propose publicly to do any of the foregoing.
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FRP will notify Purchaser promptly (but
in no event later than 24 hours) after receipt of any acquisition proposal or any request for non-public information relating to
FRP or any of its subsidiaries by any third party that informs FRP that it is making, or has made, an acquisition proposal, or
any inquiry from any person seeking to have discussions or negotiations with FRP relating to a possible acquisition proposal. Such
notice shall be made orally and confirmed in writing, and shall identify the person making such acquisition proposal or inquiry
and shall indicate the material terms and conditions of any acquisition proposals or inquiries to the extent known (including,
if applicable, providing copies of any written inquiries
or requests and any proposed agreements related thereto, which may be
redacted to the extent necessary to protect confidential information of the business or operations of the person making such acquisition
proposals or inquiries). FRP will also promptly, and in any event within 48 hours, notify Purchaser, orally and in writing, if
FRP determines to engage in discussions or negotiations concerning any acquisition proposal or to begin providing non-public information
to any person (and FRP shall not begin engaging in such discussions or negotiations or begin providing such non-public information
prior to providing such notice), and notify Purchaser of any change to the financial and other material terms and conditions of
any acquisition proposal and otherwise keep Purchaser reasonably informed of the status and terms of any such proposals, offers,
discussions or negotiations on a current basis, including by providing a copy of all proposals, offers, drafts of proposed agreements
or correspondence relating thereto. FRP has agreed that neither it nor any of its subsidiaries, after the date of the Sale Agreement,
will enter into any confidentiality or similar agreement that would prohibit it from providing such information to Purchaser as
described above.
The Sale Agreement defines “superior
proposal” as any bona fide written acquisition proposal made after the date of the Sale Agreement on terms that the FRP Board
determines in good faith, after consultation with FRP’s outside legal counsel and financial advisors (taking into account
all legal, financial, regulatory and other aspects of the proposal and the person making the proposal and any changes to the terms
of the Sale Agreement proposed by Purchaser and any other information provided by Purchaser) that (1) would, if consummated, be
more favorable to FRP shareholders (solely in their capacity as such) from a financial point of view than the transactions contemplated
by the Sale Agreement and (2) if accepted, is reasonably likely to be completed on the terms proposed on a timely basis.
Obligations of the FRP Board
with Respect to the FRP Board Recommendation and Termination for a Superior Proposal
Except in the circumstances and pursuant
to the procedures described below, neither the FRP Board nor any committee thereof will:
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fail to make or withdraw (or modify or qualify or publicly propose to withdraw, modify or qualify
in any manner adverse to Purchaser) the FRP Board recommendation;
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adopt, approve, recommend, endorse or otherwise declare advisable the adoption of any acquisition
proposal (or propose to do any of the foregoing);
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fail to include the FRP Board recommendation in this proxy statement;
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take any action or make any recommendation or public statement in connection with a tender offer
or exchange offer other than an unequivocal recommendation against such offer or a temporary “stop, look and listen”
communication by the FRP Board of the type contemplated by Rule 14d-9(f) under the Exchange Act in which the FRP Board indicates
that it has not changed the FRP Board recommendation;
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fail to reaffirm the FRP Board recommendation within the earlier of three (3) business days prior
to the annual meeting and five (5) business days after receiving a written request to do so from Purchaser; or
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authorize, cause or permit FRP or any of its subsidiaries to enter into any alternative acquisition
agreement relating to any acquisition proposal (other than an acceptable confidentiality agreement as permitted by the Sale Agreement).
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FRP refers to any action in the five three
bullets above as an “adverse recommendation change”.
Prior to the shareholder approval of the
Asset Sale Proposal the FRP Board is permitted to affect an adverse recommendation change:
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FRP provides prior written notice to Purchaser of its intention to effect an adverse recommendation
change, identifying the person making the superior proposal and describing in reasonable detail the material terms and conditions
of the superior proposal or intervening event, as applicable, that is the basis for effecting an adverse recommendation change,
including (if applicable) copies of any written proposals or offers and any proposed agreements related to a superior proposal;
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FRP and its representatives negotiate with Purchaser in good faith for a period of five (5) business
days following Purchaser’s receipt of the notice of adverse recommendation change described in the bullet above to make such
adjustments in the terms and conditions of the Sale Agreement, so that, in the case of a superior proposal, such superior proposal
ceases to constitute a superior proposal, or in the case of an intervening event, in order to obviate the need to make such adverse
recommendation change; and
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following the end of such five (5) business day period, the FRP Board has determined in good faith,
taking into account any changes to the Sale Agreement proposed in writing by Purchaser, that (i) after consultation with outside
legal counsel and financial advisors, the superior proposal giving rise to the notice of adverse recommendation change continues
to constitute a superior proposal and the failure of the FRP Board to effect an adverse recommendation change would violate FRP’s
director’s duties under applicable law or (ii) after consultation with outside legal counsel, in the case of an intervening
event, the failure of the FRP Board to effect an adverse recommendation change would violate FRP’s directors’ duties
under applicable law.
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For purposes of the Sale Agreement, “intervening
event” means a material positive event, fact, development or occurrence (other than any event, fact, development or occurrence
resulting from a breach of the Sale Agreement by FRP or its subsidiaries) with respect to FRP and its subsidiaries (in the case
of FRP and its subsidiaries, taken as a whole), which was unknown to, nor reasonably foreseeable by, the FRP Board as of or prior
to the date of the Sale Agreement, and becomes known to or by the FRP Board prior to the FRP shareholders’ approval of the
Asset Sale Proposal. Notwithstanding the foregoing, none of the following will constitute, or be considered in determining whether
there has been, an intervening event:
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any event, fact, development or occurrence that involves or relates to an acquisition proposal
or a superior proposal or any inquiry or communications or matters relating thereto;
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any event, fact, development or occurrence that results from the announcement, pendency and consummation
of this Agreement or the transactions contemplated hereby or any actions required to be taken or to be refrained from being taken
pursuant to the Sale Agreement;
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the fact that FRP meets or exceeds internal or analysts’ expectations or projections; or
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any changes or lack thereof after the date hereof in the market price or trading volume of the
FRP shares, individually or in the aggregate, will not be deemed to constitute an intervening event.
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Any amendment to the financial terms or
any other material amendment of such a superior proposal will require a new notice of change of recommendation, and FRP will be
required to comply again with the
requirements described above, except that references to the five (5) business day period above
will be deemed to be references to a four (4) business day period following receipt by Purchaser of any such new notice of change
of recommendation.
Nothing contained in the Sale Agreement
will prohibit FRP or the FRP Board from taking and disclosing to FRP shareholders a position contemplated by Rule 14e-2(a) or Rule
14d-9 promulgated under the Exchange Act or from making any disclosure to the shareholders of FRP if, in the good faith judgment
of the FRP Board, after consultation with outside legal counsel, the failure to make such disclosure would be inconsistent with
the directors’ duties under applicable law or is required by applicable law; provided, however, that neither FRP nor the
FRP will be permitted to recommend that FRP shareholders tender any securities in connection with any tender offer or exchange
offer that is an acquisition proposal or effect an adverse recommendation change with respect thereto, except as permitted by the
provisions described above.
Conditions to the Completion
of the Sale Transaction
Conditions to Purchasers’ Obligations.
The obligation of Purchaser to complete
the Sale Transaction is subject to the satisfaction of the following conditions:
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each of the representations and warranties made by Seller and FRP in the Sale Agreement being true
and correct in all material respects (without giving effect to any qualification as to materiality, or any correlative terms in
such representations and warranties) when made and on and as of the closing date as though such representations and warranties
were made on and as of the closing date;
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Seller shall have performed or complied in all material respects with each obligation and covenant
required by the Sale Agreement to be performed or complied with by Seller on or before the closing date;
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no order or injunction of any court or administrative agency of competent jurisdiction nor any
statute, rule, regulation or executive order promulgated by any Governmental Authority (as such term is defined in the Sale Agreement)
of competent jurisdiction shall be in effect as of the closing date which restrains or prohibits the transfer of the Properties;
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no action, suit or other proceeding shall be pending which shall have been brought to restrain
or prohibit the transfer of the Properties;
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Purchaser shall have timely received certain estoppel letters with respect to both (i) at least
eight (8) of the ten (10) major leases (including all five (5) of the largest major leases, in each case, based upon tenant leased
square footage; and (ii) tenants leasing at least seventy-five percent (75%) of the tenant leased square footage of the Properties;
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Purchaser shall have received all of the documents required to be delivered by Seller under the
Sale Agreement;
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fee simple title to the properties being vested in Seller, subject only to certain permitted exceptions
and the title company being irrevocably and unconditionally committed to issue title insurance policies to Purchaser at the closing,
subject only to such permitted exceptions, in an amount equal to the applicable allocated purchase price of each individual Property;
and
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the Shareholder Approval shall have been obtained.
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Conditions to FRP’s Obligations.
The obligation of FRP to complete the Sale
Transaction is subject to the following conditions:
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each of the representations and warranties made by Purchaser in the Sale Agreement being true and
correct in all material respects (without giving effect to any qualification as to materiality, or any correlative terms in such
representations and warranties) when made and on and as of the closing date as though such representations and warranties were
made on and as of the closing date;
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each Purchaser’s performance and compliance in all material respects with all agreements,
covenants and conditions required by the Sale Agreement and to be performed or complied with by it prior to or on the closing date;
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no order or injunction of any court or administrative agency of competent jurisdiction nor any
statute, rule, regulation or executive order promulgated by any Governmental Authority (as such term is defined in the Sale Agreement)
of competent jurisdiction shall be in effect as of the closing which restrains or prohibits the transfer of the Properties;
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no action, suit or other proceeding shall be pending which shall have been brought to restrain
or prohibit the transfer of the Properties.
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Seller or escrow agent shall have received all of the documents required to be delivered by Purchaser
under the Sale Agreement;
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Seller or escrow agent shall have received the purchase price and all other amounts due to Seller;
and
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the Shareholder Approval shall have been obtained.
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Termination of the Sale Agreement
The Sale Agreement may be terminated prior
to closing of the Sale Transaction:
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by the mutual written consent of FRP, Seller and Purchaser;
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any of the conditions precedent to Purchaser’s obligations to close (including obtaining
the Shareholder Approval) have not been satisfied or waived by Purchaser on or prior to the closing date;
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there is a material breach or default by Seller in the performance of their obligations under the
Sale Agreement;
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the Shareholder Approval is not obtained before the Outside Closing Date;
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Seller fails to cure or elects not to cure any Title Defect and otherwise is unable to convey fee
title to the Properties to Purchaser at closing subject only to permitted exceptions (as further
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described in the section entitled
“Proposal No. 1: The Sale Proposal—Overview of the Sale Transaction—Title and Survey Matters” beginning
on page
47
);
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if the aggregate effect of any casualties and/or condemnation proceedings surpass the specified
thresholds (as further described in the section entitled “Proposal No. 1: The Asset Sale Proposal—Overview of the Sale
Transaction—Condemnation and Casualty” beginning on page
48
); or
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upon written notice to FRP if prior to FRP obtaining the Shareholder Approval, (i) the FRP Board
effects an adverse change recommendation, (ii) the FRP Board approves, adopts, publicly endorses or recommends, or enters into,
any alternative acquisition agreement (other than an acceptable confidentiality agreement), (iii) FRP or any of its subsidiaries
commits a willful and material breach of their non-solicitation obligations, or (iv) the FRP Board fails to publically recommend
against any tender offer or exchange offer subject to Regulation 14D under the Exchange Act that constitutes an acquisition proposal
(including by taking no position with respect to the acceptance of such tender offer or exchange offer by FRP’s shareholders)
within five (5) business days after the commencement of such tender offer or exchange offer) (each, a “
Triggering Event
”).
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any of the conditions precedent to Seller’s obligations to close (including obtaining the
Shareholder Approval) have not been satisfied or waived by Seller on or prior to the closing date;
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there is a material breach or default by Purchaser to pay the purchase price and purchase the Properties
on the closing date; or
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if the FRP Board determines to enter into a definitive agreement with respect to a superior proposal
that includes the Properties and concurrently with such termination, FRP enters into a definitive acquisition agreement with respect
to such proposal and pays the Purchaser a termination fee of $22,500,000.
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The Sale Agreement may be terminated solely
with respect to an individual Property prior to closing of the Sale Transaction by Purchaser if:
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certain tenants allege a specified default by the Seller on their tenant estoppel with respect
to an individual Property;
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any individual Property or any portion is damaged or destroyed by a Material Casualty or subject
to a Material Condemnation; or
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any counterparty to an Option exercises its right to purchase any individual Property.
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The Sale Agreement may be terminated solely
with respect to the individual Property located at 1901 62nd Street, Baltimore, Maryland 21237 prior to closing of the Sale Transaction
by Purchaser if the applicable Seller does not enter into the contemplated lease amendment with Architectural Ceramics, Inc.
Reimbursement of Out-Of-Pocket
Costs
Seller must pay to Purchaser an amount
equal to all out-of-pocket costs and expenses incurred by Purchaser and its affiliates in connection with the transactions contemplated
by the Sale Agreement (i) in the event that the Shareholder Approval is not obtained before the Outside Closing Date, (ii) if Purchaser
elects to terminate the Sale Agreement due to a failure to obtain Shareholder Approval, (iii) if Purchaser elects to terminate
the Sale Agreement due to a material breach or default by Seller in the performance of its obligations under the Sale Agreement
or (iv) if the Sale Agreement is terminated and the termination fee is payable as described below.
Termination Fee Payable by
FRP
In addition to the Reimbursement Amount,
FRP will be required to pay Purchaser a termination fee of $22,500,000 if:
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Purchaser terminates the Sale Agreement pursuant to a Triggering Event; or
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the following requirements are satisfied:
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(i) FRP or Purchaser terminates the Sale Agreement because Shareholder Approval has not been obtained,
(ii) Purchaser terminates the Sale Agreement because the conditions precedent to Purchaser’s obligations to close (including
obtaining the Shareholder Approval) have not been satisfied or waived by Purchaser on or prior to the closing date, or (iii) Purchaser
terminates the Sale Agreement due to a material breach or default by Seller in the performance of their obligations under the Sale
Agreement;
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before receipt of the Shareholder Approval, (a) an acquisition proposal was made known to the FRP
Board, FRP or any of its subsidiaries, (b) an acquisition proposal was publically made or disclosed or (c) any person publically
announces an intention to make an acquisition proposal with respect to FRP or its subsidiaries; and
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within twelve (12) months after the date of such termination, FRP or any of its subsidiaries enters
into any alternative acquisition agreement with respect to, or consummates, approves or recommends to FRP shareholders or otherwise
does not oppose any alternative acquisition proposal (with all references to “20%” in the definition of acquisition
proposal replaced with “50%”).
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Amendment and Waiver
The Sale Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each party thereto. No waiver by any party of any of the provisions
thereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.
Specific Performance
Upon material breach or default by Seller
in the performance of its obligations under the Sale Agreement, Purchaser, at its option, may specifically enforce the terms and
conditions of the Sale Agreement (without the necessity of proving the inadequacy of money damages as a remedy); provided that
such specific enforcement action must be initiated no later than sixty (60) days following such default.
Governing Law
The Sale Agreement is governed by and construed
in accordance with the laws of the State of Florida.
Activities of FRP Following the
Sale Transaction
Among its reasons for approving the Sale
Transaction, the FRP Board believes that divesting the Properties will result in a significant overhead reduction and allow the
sale proceeds to be reinvested in its other business segments to generate higher returns. The FRP Board will continue to review
FRP’s ongoing strategy, business plan and long-term forecasts for the Retained Business, as well as FRP’s strategic
alternatives prior to and following the completion of the Sale Transaction. Following the Sale Transaction, FRP will continue to
be a public company operating under the name FRP Holdings, Inc., and immediately after the completion of the Sale Transaction,
all of FRP’s revenues and income will be generated by the Retained Business, aside from the payments related to the Sale
Transaction.
Material U.S. Federal Income Tax Consequences
of the Sale Transaction
The following is a discussion of the anticipated
material U.S. federal income tax consequences of the Sale Transaction. This summary is based upon the Code, existing, proposed
and temporary U.S. Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, in each
case as in effect and available on the date hereof. All the foregoing is subject to change, which change could apply retroactively
and could affect the tax consequences described below. No ruling has been sought from the Internal Revenue Service (the “
IRS
”)
with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court
will not take a contrary position. In addition, this summary does not discuss any non-U.S., alternative minimum tax, state, or
local tax considerations.
The Sale Transaction will be treated as
a taxable sale of the Properties in exchange for cash. FRP generally will recognize gain or loss based on the difference between
the consideration received (including the assumption of liabilities) and its adjusted tax bases in each of the Properties sold.
This tax liability would be reported on FRP’s consolidated income tax return for the taxable period that includes the Sale
Transaction. Shareholders of FRP will not realize any gain or loss for U.S. federal income tax purposes as a result of the Sale
Transaction.
This summary is not a complete description
of all of the tax consequences of the Sale Transaction that may be relevant to you. Shareholders should consult their own tax advisers
for advice regarding the U.S. federal, state, local and other tax consequences if proceeds from the Sale Transaction are distributed
or paid to shareholders, such as in a dividend or share repurchase.
Accounting Treatment of the Sale Transaction
The Sale Transaction will be accounted
for as a “sale of a business” by FRP, as that term is used under generally accepted accounting principles, for accounting
and financial reporting purposes.
Regulatory Matters
Other than in connection with the filing
of this proxy statement with the SEC and any requirements under Florida law, FRP is not aware of any regulatory or governmental
requirements that must be complied with or regulatory or governmental approvals that must be obtained in connection with the Sale
Transaction.
No Dissenters’ Rights
Under the FBCA, dissenters’ rights
are not available to any shareholder in connection with the Sale Transaction, regardless of whether such shareholder votes for
or against the approval of the Asset Sale Proposal, because FRP’s common stock is listed on a national securities exchange.
Opinion of Houlihan Lokey Capital, Inc.
On March 20, 2018, Houlihan Lokey verbally
rendered its opinion to the FRP Board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written
opinion addressed to the FRP Board dated March 20, 2018), as to, as of such date, the fairness, from a financial point of view,
to FRP of the $358.9 million aggregate cash consideration to be received for the Properties in the Sale Transaction pursuant to
the Sale Agreement.
Houlihan Lokey’s opinion was directed
to the FRP Board (in its capacity as such) and only addressed the fairness, from a financial point of view, to FRP of the $358.9
million aggregate cash consideration to be received for the Properties in the Sale Transaction pursuant to the Sale Agreement and
did not address any other aspect or implication of the Sale Transaction or any other agreement, arrangement or understanding. The
summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of
its written opinion, which is attached as
Annex C
to this proxy statement and describes the procedures followed, assumptions
made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with
the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related
analysis set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the FRP Board,
any security holder of FRP or any other person as to how to act or vote with respect to any matter relating to the Sale Transaction.
In arriving at its
opinion, Houlihan Lokey, among other things:
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reviewed a draft dated March 18, 2018 of the Sale Agreement;
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reviewed certain information relating to the Properties made available to Houlihan Lokey by FRP,
including financial projections (and adjustments thereto) prepared by or discussed with FRP’s management relating to the
Properties;
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3.
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spoke with certain members of FRP’s management and certain representatives and advisors of
FRP regarding the Properties, the Sale Transaction and related matters;
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4.
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considered the publicly available financial terms of certain real estate transactions that Houlihan
Lokey deemed to be relevant in evaluating the land holdings of certain of the Properties; and
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conducted such other financial studies, analyses and inquiries and considered such other information
and factors as Houlihan Lokey deemed appropriate.
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Houlihan Lokey relied upon and assumed,
without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise
made available, to it, discussed with or reviewed by it, or publicly available, and did not assume any responsibility with respect
to such data, material and other information. In addition, FRP’s management advised Houlihan Lokey, and Houlihan Lokey assumed,
that the financial projections (and adjustments thereto) reviewed by Houlihan Lokey were
reasonably prepared in good faith on bases
reflecting the best currently available estimates and judgments of such management as to the future financial results and condition
of the Properties, and Houlihan Lokey expressed no opinion with respect to the such projections or the assumptions on which they
were based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in any of the
Properties or the financial condition, results of operations, cash flows or prospects of the Properties since the respective dates
of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would have
been material to its analysis or opinion, that the financial projections reviewed by Houlihan Lokey reflect all assets to be sold
in the Sale Transaction and that there was no information or any facts that would have made any of the information reviewed by
Houlihan Lokey incomplete or misleading. Houlihan Lokey’s opinion was based on analysis of the Properties in their entirety
as a portfolio.
Houlihan Lokey relied upon and assumed,
without independent verification, that (a) the representations and warranties of all parties to the asset purchase agreement and
all other related documents and instruments that are referred to therein were true and correct, (b) each party to the asset purchase
agreement and such other related documents and instruments would fully and timely perform all of the covenants and agreements required
to be performed by such party, (c) all conditions to the consummation of the Sale Transaction would be satisfied without waiver
thereof, and (d) the Sale Transaction would be consummated in a timely manner in accordance with the terms described in the asset
purchase agreement and such other related documents and instruments, without any amendments or modifications thereto. Houlihan
Lokey relied upon and assumed, without independent verification, that (i) the Sale Transaction would be consummated in a manner
that complies in all respects with all applicable federal and state statutes, rules and regulations, and (ii) all governmental,
regulatory, and other consents and approvals necessary for the consummation of the Sale Transaction would be obtained and that
no delay, limitations, restrictions or conditions would be imposed or amendments, modifications or waivers made that would have
an effect on the Sale Transaction, FRP, Seller or the Properties that would be material to Houlihan Lokey’s analysis or opinion.
Houlihan Lokey also relied upon and assumed, without independent verification, at FRP’s direction, that any adjustments to
the aggregate consideration pursuant to the Sale Agreement (including, without limitation, adjustments for prorations or the elimination
(if any) of certain Properties from the Sale Transaction) would not be material to Houlihan Lokey’s analysis or opinion.
In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the Sale Agreement
will not differ in any respect from the draft of the Sale Agreement identified above.
Furthermore, in connection with its opinion,
Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal of any of the Properties
or the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of FRP, Seller (with respect
to the Properties or otherwise) or any other party, nor was Houlihan Lokey provided with any such appraisal. Houlihan Lokey expressed
no opinion as to the price at which any of the Properties might be separately transferable at any time. Houlihan Lokey did not
estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey undertook no independent
analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities,
to which FRP, Seller or any of the Properties was or may have been a party or was or may have been subject, or of any governmental
investigation of any possible unasserted claims or other contingent liabilities to which FRP, Seller or any of the Properties was
or may have been a party or was or may have been subject.
Houlihan Lokey was not requested to, and
did not, (a) initiate or participate in any discussions or negotiations with, or solicit any indications of interest from, third
parties with respect to the Sale Transaction, the Properties, the securities, assets, businesses or operations of FRP, Seller
or any other party, or any alternatives to the Sale Transaction, (b) negotiate the terms of the Sale Transaction, or (c) advise
the FRP Board, FRP, Seller or any other party with respect to alternatives to the Sale Transaction. Houlihan Lokey expressed no
view or opinion as to any such matters, including the terms that could have been
obtained if any of the foregoing had been undertaken.
Houlihan Lokey’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the
information made available to Houlihan Lokey as of, the date of the opinion. Houlihan Lokey did not undertake, and is under no
obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming
to Houlihan Lokey’s attention after the date of the opinion.
Houlihan Lokey’s opinion was furnished
for the use of the FRP Board (in its capacity as such) in connection with its evaluation of the Sale Transaction and may not be
used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion should not be construed
as creating any fiduciary duty on Houlihan Lokey’s part to any party. Houlihan Lokey’s opinion is not intended to be,
and does not constitute, a recommendation to the FRP Board, FRP, any security holder or any other party as to how to act or vote
with respect to any matter relating to the Sale Transaction or otherwise.
At FRP’s direction, Houlihan Lokey
evaluated the fairness, from a financial point of view, to FRP of the $358.9 million aggregate cash consideration to be received
for the Properties in the Sale Transaction pursuant to the Sale Agreement as if the $358.9 million aggregate cash consideration
would be directly received by FRP in the Sale Transaction. Houlihan Lokey was not requested to opine as to, and its opinion did
not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the FRP Board, FRP,
its security holders or any other party to proceed with or effect the Sale Transaction, (ii) the terms of any arrangements, understandings,
agreements or documents related to, or the form, structure or any other portion or aspect of, the Sale Transaction (other than
the $358.9 million aggregate cash consideration to be received for the Properties in the Sale Transaction to the extent expressly
specified in the opinion) or otherwise, including, without limitation, the allocation of the aggregate cash consideration among
the Properties to be sold in the Sale Transaction or the terms or any aspect of any indemnification, escrow or other agreements
or arrangements to be entered into in connection with the Sale Transaction, (iii) the fairness of any portion or aspect of the
Sale Transaction to the holders of any class of securities, creditors or other constituencies of FRP, or to any other party, except
to FRP if and only to the extent expressly set forth in the last sentence of Houlihan Lokey’s opinion, (iv) the relative
merits of the Sale Transaction as compared to any alternative business strategies or transactions that might have been available
for FRP or any other party, (v) the fairness of any portion or aspect of the Sale Transaction to any one class or group of FRP’s
or any other party’s security holders or other constituents vis-à-vis any other class or group of FRP’s or such
other party’s security holders or other constituents (including, without limitation, the allocation of any consideration
amongst or within such classes or groups of security holders or other constituents), (vi) whether or not FRP, its security holders,
Seller, Purchaser or any other party is receiving or paying reasonably equivalent value in the Sale Transaction, (vii) the solvency,
creditworthiness or fair value of FRP, Seller, Purchaser or any other participant in the Sale Transaction, or any of their respective
assets (including, without limitation, any of the Properties), under any applicable laws relating to bankruptcy, insolvency, fraudulent
conveyance or similar matters, (viii) the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation
to or consideration payable to or received by any officers, directors or employees of any party to the Sale Transaction, any class
of such persons or any other party, relative to the aggregate cash consideration to be received for the Properties in the Sale
Transaction or otherwise, or (ix) the tax consequences and financial or other implications and effects of the Sale Transaction
on FRP, any security holders, creditors or other constituencies of FRP, or any other party, or the use or distribution of proceeds
from the Sale Transaction. Furthermore, no opinion, counsel or interpretation was intended in matters that require legal, regulatory,
accounting, insurance, tax or other similar professional advice. Houlihan Lokey assumed that such opinions, counsel or interpretations
had been or would be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of
the FRP Board, on the assessments by FRP and its advisors as to all legal, regulatory, accounting, insurance, tax and other similar
matters with respect to the Properties, FRP, Seller and the Sale Transaction or otherwise.
In performing its analysis, Houlihan Lokey
considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed
on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in Houlihan Lokey’s analysis
for comparative purposes is identical to the Properties or the proposed Sale Transaction and an evaluation of the results of the
analysis is not entirely mathematical. The estimates contained in the financial forecasts prepared by the management of FRP and
the implied reference range values indicated by Houlihan Lokey’s analysis are not necessarily indicative of actual values
or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analysis.
In addition, any analysis relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect
the prices at which assets, businesses or securities actually may be sold, which may depend on a variety of factors, many of which
are beyond the control of FRP. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analysis
are inherently subject to substantial uncertainty.
Houlihan Lokey’s opinion was only
one of many factors considered by the FRP Board in evaluating the proposed Sale Transaction. Neither Houlihan Lokey’s opinion
nor its analysis were determinative of the $358.9 million aggregate cash consideration or of the views of the FRP Board or FRP’s
management with respect to the Sale Transaction or the $358.9 million aggregate cash consideration. The type and amount of consideration
payable in the Sale Transaction were determined through negotiation between FRP and Purchaser, and the decision to enter into the
Sale Agreement was solely that of the FRP Board.
Financial Analysis
In preparing its opinion to the FRP Board,
Houlihan Lokey performed the analysis described below. The summary of Houlihan Lokey’s analysis is not a complete description
of the analysis underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various
quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods
employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence,
neither Houlihan Lokey’s opinion nor its underlying analysis is readily susceptible to summary description. Houlihan Lokey
arrived at its opinion based on the results of the analysis undertaken by it assessed as a whole and did not draw, in isolation,
conclusions from or with regard to any individual methodology or factor. Accordingly, Houlihan Lokey believes that its analysis
and the following summary must be considered as a whole and that selecting portions of its methodologies and factors, without considering
all methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s
analysis and opinion.
The following is a summary of the material
financial analysis performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the FRP Board
on March 20, 2018.
For purposes of its
analysis, Houlihan Lokey reviewed a number of financial metrics, including:
|
●
|
NOI or Net Operating Income — net operating income, which is calculated generally as
revenue, less
property operating
expenses.
|
|
●
|
Net Cash Flows — generally calculated as NOI, less
total leasing costs and total capital expenditures.
|
Estimated financial data for the Properties
were based on estimates prepared by or discussed with FRP’s management.
Net Asset Value Analysis
Houlihan Lokey performed a net asset value
analysis of the Properties by performing a separate analysis of each group of the Properties located in the same commercial park
(each, a “
Property Group
”). For each Property Group, Houlihan Lokey calculated the estimated net present value
of the projected net cash flows of the Property Group for either the ten-, eleven- or twelve-fiscal year period ending either March
2028, March 2029 or March 2030 using financial projections prepared by or discussed with FRP’s management. Houlihan Lokey
also calculated the estimated present value of the implied terminal values for each Property Group derived by applying a range
of selected capitalization rates to the applicable Property Group’s one fiscal year forward period ending either March 2029,
March 2030 or March 2031 estimated NOI. In the case of a Property Group which included excess land holdings, Houlihan Lokey applied
selected ranges of price per square foot of land to the respective square footage of the excess land holdings.
In order to calculate implied terminal
values, Houlihan Lokey applied the following selected capitalization rate ranges:
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●
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6.00% to 6.50% in the case of the following five Property Groups:
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●
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Rossville Business Center (Yellow Brick Rd., Rosedale, MD);
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●
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Hillside Business Park (7001-7030 Dorsey Run Rd., Hanover, MD);
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●
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Gilroy Center (Gilroy Rd., Hunt Valley, MD);
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●
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Hollander 95 (62nd St., Baltimore, MD); and
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●
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Patriot Business Center (Doane Dr. & Brewer’s Spring Rd., Manassas, VA);
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●
|
6.25% to 6.75% in the case of the following two Property Groups:
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●
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Arundel Business Center (Preston Ct., Jessup, MD); and
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●
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Windlass Run Business Park (Crossroads, Baltimore, MD);
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●
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6.75% to 7.25% in the case of the following five Property Groups:
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Oregon Business Center (Oregon Ave., Linthicum, MD);
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●
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Lakeside Business Park (Lakeside Blvd. & Quarry Dr., Edgewood, MD);
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●
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Dorsey Run Business Park (8620 Dorsey Run Rd., Jessup, MD);
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●
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Windsor Corporate Park (Tudsbury Rd., Windsor Mill, MD); and
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●
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Kelso Business Park (Kelso Dr., Baltimore, MD);
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7.25% to 7.75% in the case of the following two Property Groups:
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●
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Interchange Business Park (Interchange Blvd., New Castle County, DE); and
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Port Capital Business Center (Port Capital Dr., Elkridge, MD);
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7.75% to 8.25% in the case of the following two Property Groups:
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●
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Transit Business Park (Washington Blvd., Baltimore, MD); and
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●
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Norfolk Business Park (Azalea Garden Blvd., Norfolk, VA).
|
In order to calculate estimated present
values of Net Cash Flows and implied terminal values, Houlihan Lokey applied the following discount rate ranges:
|
●
|
6.75% to 7.25% in the case of Rossville Business Center (Yellow Brick Rd., Rosedale, MD);
|
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●
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7.00% to 7.50% in the case of the following three Property Groups:
|
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●
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Hillside Business Park (7001-7030 Dorsey Run Rd., Hanover, MD);
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●
|
Gilroy Center (Gilroy Rd., Hunt Valley, MD); and
|
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●
|
Hollander 95 (62nd St., Baltimore, MD);
|
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●
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7.25% to 7.75% in the case of the following two Property Groups:
|
|
●
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Arundel Business Center (Preston Ct., Jessup, MD); and
|
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●
|
Windlass Run Business Park (Crossroads, Baltimore, MD;
|
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●
|
7.50% to 8.00% in the case of Dorsey Run Business Park (8620 Dorsey Run Rd., Jessup, MD);
|
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●
|
7.75% to 8.25% in the case of Patriot Business Center (Doane Dr. & Brewer’s Spring Rd.,
Manassas, VA);
|
|
●
|
8.00% to 8.50% in the case of the following three Property Groups:
|
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●
|
Oregon Business Center (Oregon Ave., Linthicum, MD);
|
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●
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Lakeside Business Park (Lakeside Blvd. & Quarry Dr., Edgewood, MD); and
|
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●
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Kelso Business Park (Kelso Dr., Baltimore, MD);
|
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●
|
8.25% to 8.75% in the case of the following two Property Groups:
|
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●
|
Interchange Business Park (Interchange Blvd., New Castle County, DE); and
|
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●
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Port Capital Business Center (Port Capital Dr., Elkridge, MD);
|
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●
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8.50% to 9.00% in the case of Norfolk Business Park (Azalea Garden Blvd., Norfolk, VA);
|
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●
|
8.75% to 9.25% in the case of Windsor Corporate Park (Tudsbury Rd., Windsor Mill, MD); and
|
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●
|
9.00% to 9.50% in the case of Transit Business Park (Washington Blvd., Baltimore, MD).
|
The net asset value analysis described
above indicated an implied aggregate value reference range of approximately $343.5 million to $373.9 million as compared to the
$358.9 million aggregate cash consideration.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be
included in the Company’s proxy statement and form of proxy relating to the annual meeting of shareholders to be held in
2019 must be delivered in writing to the principal executive offices of the Company no later than November 28, 2018. The inclusion
of any proposal will be subject to the applicable rules of the SEC.
Except for shareholder proposals to be
included in the Company’s proxy materials, the deadline for nominations for directors submitted by a shareholder is forty
days before the next annual meeting, and for other shareholder proposals is February 1, 2019. Proposals must be sent to the Secretary
of the Company at our principal executive offices. Any notice from a shareholder nominating a person as director must include certain
additional information as specified in our Articles of Incorporation.
The Company may solicit proxies in connection
with next year’s annual meeting which confer discretionary authority to vote on any shareholder proposals of which the Company
does not receive notice by February 1, 2019.
DELIVERY OF DOCUMENTS TO SHAREHOLDER
SHARING AN ADDRESS
A number of brokers with account
holders who are FRP shareholder will be “householding” FRP’s proxy materials. A single proxy statement will be
delivered to multiple FRP shareholder sharing an address unless contrary instructions have been received from the affected shareholder.
Once you have received notice from your broker that they will be “householding” communications to your address, “householding”
will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate
in “householding” and would prefer to receive a separate proxy statement, please notify your broker, direct your written
request to FRP’s principal offices, Attention: Secretary, or contact FRP’s Secretary by telephone at (904) 858-9100
and we will promptly deliver such separate copy. FRP’s principal offices are located at 200 W. Forsyth Street, 7th Floor,
Jacksonville, FL 32202. FRP shareholders who currently receive multiple copies of the proxy materials at their address and would
like to request “householding” of their communications should contact their broker. In addition, upon written or oral
request to the address or telephone number set forth above, we will promptly deliver a separate copy of the proxy materials to
any FRP shareholder at a shared address to which a single copy of the documents was delivered.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
FRP files annual, quarterly and current
reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy any of this information
at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or
(202) 942-8088 for further information regarding the public reference room. The SEC also maintains a website at
www.sec.gov
that contains reports, proxy statements and other information regarding issuers, including FRP, who file electronically with the
SEC. The reports and other information filed by us with the SEC are also available at our website. The address of the site is
www.frpholdings.com
.
The web addresses of the SEC and FRP have been included as inactive textual references only. The information contained on those
websites is specifically not incorporated by reference into this proxy statement.
In addition, the SEC allows us to disclose
important information to you by referring you to other documents filed separately with the SEC. This information is considered
to be a part of this proxy statement, except for any information that is superseded by information included directly in this proxy
statement or incorporated by reference subsequent to the date of this proxy statement as described below.
This proxy statement incorporates by reference
the documents listed below that we have previously filed with the SEC (other than, in each case, documents or information deemed
to have been furnished and not filed in accordance with SEC rules). They contain important information about FRP and its financial
condition.
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●
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Our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March
16, 2018.
|
To the extent that any information contained
in any report on Form 8-K, or any exhibit thereto, was furnished to, rather than filed with, the SEC by FRP, such information or
exhibit is specifically not incorporated by reference.
In addition, FRP incorporates by reference
any future filings it may make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
proxy statement and before the date of the annual meeting (excluding any current reports on Form 8-K to the extent disclosure is
furnished and not filed). Those documents are considered to be a part of this proxy statement, effective as of the date they are
filed. In the event of conflicting information in these documents, the information in the latest filed document should be considered
correct.
You can obtain any of the other documents
of FRP listed above from the SEC, through the SEC’s website at the address described above, or from us directly by requesting
them in writing or by telephone at the following addresses and telephone number:
FRP Holdings, Inc.
200 W. Forsyth Street, 7th Floor,
Jacksonville, Florida 32202
Attn: Corporate Secretary
(904) 858-9100
If you are an FRP shareholder and would
like to request documents, please do so by 5:00 p.m. Eastern Time on [●], 2018 to receive them before the annual meeting.
These documents are available from FRP,
without charge, excluding any exhibits to them, unless the exhibit is specifically listed as an exhibit to the registration statement
of which this proxy statement forms a part. You can also find information about FRP at its website at www.FRPHoldings.com. Information
contained on this website is specifically not incorporated by reference into this proxy statement.
This document is a proxy statement of FRP
for the annual meeting. We have not authorized anyone to give any information or make any representation about the Sale Transaction,
or FRP that is different from, or in addition to, the information or representations contained in this proxy statement or in any
of the materials that we have incorporated by reference into this proxy statement. Therefore, if anyone does give you information
or representations of this sort, you should not rely on it or them. This proxy statement is dated April [●], 2018. You should
not assume that the information contained in this proxy statement is accurate as of any date other than that date, unless the information
specifically indicates that another date applies, and the mailing of this proxy statement to our shareholders does not create any
implication to the contrary.
TRANSACTION OF OTHER BUSINESS
The FRP Board knows of no other business
to be presented for FRP shareholder action at the annual meeting. However, if other matters do properly come before the annual
meeting or any adjournment or postponements thereof, the FRP Board intends that the persons named in the proxies will vote upon
such matters in accordance with their best judgement.
By Order of the Board of Directors,
John D. Milton, Jr.
Executive Vice President, Chief Financial
Officer and Secretary
Jacksonville, Florida
April [●], 2018
WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU
MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. THANK YOU FOR YOUR ATTENTION IN THIS MATTER. YOUR PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
ANNEX A
EXECUTION
VERSION
AGREEMENT
OF PURCHASE AND SALE
by
and between
FRP
HOLDINGS, INC., as PARENT
THE
SELLERS NAMED HEREIN, as SELLERS
and
BRE
FOXTROT PARENT LLC, as BUYER
Dated
as of March 22, 2018
TABLE
OF CONTENTS
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Page
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ARTICLE
I DEFINITIONS
|
1
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SECTION
1.1.
|
Defined Terms
|
1
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ARTICLE
II SALE, PURCHASE PRICE AND CLOSING
|
12
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SECTION
2.1.
|
Sale of Assets
|
12
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SECTION
2.2.
|
Purchase Price
|
14
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SECTION
2.3.
|
The Closing
|
15
|
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|
SECTION
2.4.
|
Withholding
|
16
|
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ARTICLE
III REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PARENT
|
16
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SECTION
3.1.
|
General Seller and Parent Representations and
Warranties
|
16
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SECTION
3.2.
|
Representations and Warranties of Seller as
to the Assets
|
18
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SECTION
3.3.
|
Covenants of Seller Prior to Closing
|
21
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SECTION
3.4.
|
Tenant Estoppels
|
26
|
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|
SECTION
3.5.
|
Projects Involving Letters of Credit
|
28
|
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|
SECTION
3.6.
|
AC Lease
|
29
|
|
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|
ARTICLE
IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
|
29
|
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|
|
SECTION
4.1.
|
Representations and Warranties of Buyer
|
29
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SECTION
4.2.
|
Covenants of Buyer
|
31
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|
ARTICLE
V CONDITIONS PRECEDENT TO CLOSING
|
31
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|
|
SECTION
5.1.
|
Conditions Precedent to Seller’s Obligations
|
31
|
|
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|
SECTION
5.2.
|
Conditions Precedent to Buyer’s Obligations
|
31
|
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|
SECTION
5.3.
|
Waiver of Conditions Precedent
|
32
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|
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|
ARTICLE
VI CLOSING DELIVERIES
|
32
|
|
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|
SECTION
6.1.
|
Buyer Closing Deliveries
|
32
|
SECTION
6.2.
|
Seller Closing Deliveries
|
33
|
|
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|
SECTION
6.3.
|
Cooperation
|
35
|
|
|
|
ARTICLE
VII INSPECTIONS; RELEASE
|
35
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|
SECTION
7.1.
|
Right of Inspection
|
35
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|
SECTION
7.2.
|
GENERAL DISCLAIMER
|
35
|
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|
SECTION
7.3.
|
RELEASE
|
36
|
|
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ARTICLE
VIII TITLE AND PERMITTED EXCEPTIONS
|
36
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SECTION
8.1.
|
Title Insurance and Survey
|
36
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SECTION
8.2.
|
Title Commitment; Survey
|
37
|
|
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|
SECTION
8.3.
|
Certain Exceptions to Title; Inability to Convey
|
37
|
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SECTION
8.4.
|
Buyer’s Right to Accept Title
|
38
|
|
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|
SECTION
8.5.
|
Cooperation
|
38
|
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|
ARTICLE
IX TRANSACTION COSTS; RISK OF LOSS; OPTIONS
|
38
|
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|
SECTION
9.1.
|
Transaction Costs
|
38
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SECTION
9.2.
|
Risk of Loss
|
39
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SECTION
9.3.
|
Options
|
40
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SECTION
9.4.
|
Crossroads Outparcel
|
41
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ARTICLE
X ADJUSTMENTS
|
42
|
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|
SECTION
10.1.
|
Fixed Rents and Additional Rents
|
42
|
|
|
|
SECTION
10.2.
|
Taxes and Assessments
|
44
|
|
|
|
SECTION
10.3.
|
Water and Sewer Charges
|
45
|
|
|
|
SECTION
10.4.
|
Utility Charges
|
45
|
|
|
|
SECTION
10.5.
|
Leasing Costs
|
45
|
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|
SECTION
10.6.
|
Assumed Contracts
|
46
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|
|
SECTION
10.7.
|
REAs
|
46
|
SECTION
10.8.
|
Associations
|
46
|
|
|
|
SECTION
10.9.
|
YBR Property
|
46
|
|
|
|
SECTION
10.10.
|
Other Adjustments
|
46
|
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|
SECTION
10.11.
|
Re-Adjustment
|
47
|
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|
ARTICLE
XI INDEMNIFICATION
|
47
|
|
|
|
SECTION
11.1.
|
Indemnification by Seller
|
47
|
|
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SECTION
11.2.
|
Indemnification by Buyer
|
47
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|
|
|
SECTION
11.3.
|
Limitations on Indemnification
|
47
|
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|
|
SECTION
11.4.
|
Survival
|
48
|
|
|
|
SECTION
11.5.
|
Notification
|
48
|
|
|
|
SECTION
11.6.
|
Indemnification as Sole Remedy
|
48
|
|
|
|
SECTION
11.7.
|
Tax Treatment of Indemnity
|
48
|
|
|
|
SECTION
11.8.
|
Damages
|
48
|
|
|
|
ARTICLE
XII TAX CERTIORARI PROCEEDINGS
|
49
|
|
|
|
SECTION
12.1.
|
Prosecution and Settlement of Proceedings
|
49
|
|
|
|
SECTION
12.2.
|
Application of Refunds or Savings
|
49
|
|
|
|
SECTION
12.3.
|
Survival
|
49
|
|
|
|
ARTICLE
XIII DEFAULT
|
49
|
|
|
|
SECTION
13.1.
|
Buyer’s Default; Failure of Conditions
|
49
|
|
|
|
SECTION
13.2.
|
Seller’s Default; Failure of Conditions
|
50
|
|
|
|
ARTICLE
XIV PUBLIC COMPANY
|
51
|
|
|
|
SECTION
14.1.
|
Preparation of the Proxy Statement; Shareholders
Meeting
|
51
|
|
|
|
SECTION
14.2.
|
No Solicitation; Acquisition Proposals
|
52
|
|
|
|
SECTION
14.3.
|
Termination
|
57
|
|
|
|
SECTION
14.4.
|
Parent Termination Fee
|
57
|
ARTICLE XV EMPLOYEES
|
58
|
|
|
|
SECTION
15.1.
|
Employees
|
58
|
|
|
|
ARTICLE XVI MISCELLANEOUS
|
59
|
|
|
|
SECTION
16.1.
|
Exculpation
|
59
|
|
|
|
SECTION
16.2.
|
Brokers
|
59
|
|
|
|
SECTION
16.3.
|
Confidentiality; Press Release; IRS Reporting
Requirements
|
60
|
|
|
|
SECTION
16.4.
|
Escrow Provisions
|
60
|
|
|
|
SECTION
16.5.
|
Earnest Money Escrow Account; Escrowed Funds
|
61
|
|
|
|
SECTION
16.6.
|
Successors and Assigns; No Third-Party Beneficiaries
|
62
|
|
|
|
SECTION
16.7.
|
Assignment
|
62
|
|
|
|
SECTION
16.8.
|
Further Assurances
|
62
|
|
|
|
SECTION
16.9.
|
Notices
|
62
|
|
|
|
SECTION
16.10.
|
Entire Agreement
|
64
|
|
|
|
SECTION
16.11.
|
Amendments
|
64
|
|
|
|
SECTION
16.12.
|
No Waiver
|
64
|
|
|
|
SECTION
16.13.
|
Governing Law
|
64
|
|
|
|
SECTION
16.14.
|
Intentionally Omitted
|
64
|
|
|
|
SECTION
16.15.
|
Severability
|
64
|
|
|
|
SECTION
16.16.
|
Section Headings
|
64
|
|
|
|
SECTION
16.17.
|
Counterparts
|
65
|
|
|
|
SECTION
16.18.
|
Construction
|
65
|
|
|
|
SECTION
16.19.
|
Recordation
|
65
|
|
|
|
SECTION
16.20.
|
Time is of the Essence
|
65
|
|
|
|
SECTION
16.21.
|
Schedules
|
65
|
|
|
|
SECTION
16.22.
|
Waiver of Jury Trial
|
65
|
SECTION
16.23.
|
Joint and Several Liability
|
65
|
|
|
|
SECTION
16.24.
|
State Specific Provisions
|
65
|
|
|
|
SECTION
16.25.
|
1031 Exchange
|
66
|
SCHEDULES
|
Schedule
A-1 and A-2
|
|
Property
|
Schedule
1.1(a)
|
|
Existing
Mortgages
|
Schedule
1.1(b)
|
|
Major
Leases
|
Schedule
1.1(c)
|
|
Surveys
|
Schedule
1.1(d)
|
|
Title
Commitments
|
Schedule
1.1(e)
|
|
Incentive
Compensation Agreements
|
Schedule
1.1(f)
|
|
Existing
Violations
|
Schedule
1.1(g)
|
|
Crossroads
Outparcel
|
Schedule
2.1(c)(iii)
|
|
Additional
Excluded Assets
|
Schedule
2.2(a)
|
|
Allocated
Asset Value and Earnest Money
|
Schedule
3.1(c)
|
|
Consents
Required
|
Schedule
3.2(a)
|
|
Material
Contracts
|
Schedule
3.2(b-1)
|
|
Space
Leases
|
Schedule
3.2(b-2)
|
|
Offsets,
Counterclaims, Deductions and Prepaid Rents
|
Schedule
3.2(b-3)
|
|
Leasing
Costs
|
Schedule
3.2(b-4)
|
|
Security
Deposits
|
Schedule
3.2(b-5)
|
|
Space
Lease Defaults
|
Schedule
3.2(c)
|
|
Brokerage
Commissions
|
Schedule
3.2(d)
|
|
Casualty;
Condemnation
|
Schedule
3.2(e)
|
|
Litigation
|
Schedule
3.2(h)
|
|
Options
|
Schedule
3.2(i)
|
|
Permits
|
Schedule
3.2(j)
|
|
Insurance
|
Schedule
3.2(l)
|
|
Environmental
Reports
|
Schedule
3.2(m)
|
|
REAs
|
Schedule
3.2(n)
|
|
Association
Documents
|
Schedule
3.2(p)
|
|
Affiliate
Agreements
|
Schedule
3.2(r)
|
|
Neighboring
Land
|
Schedule
3.2(s)
|
|
Municipal
Letters of Credit
|
Schedule
3.3(c)(ii)
|
|
YBR
Letter of Intent
|
Schedule
3.3(f)
|
|
Capital
Expenditures Work
|
Schedule
3.3(g)
|
|
Landlord
Work
|
Schedule
3.4(a)
|
|
Tenant
Estoppel Requirements
|
Schedule
3.4(d)
|
|
Tenant
Estoppel Termination Rights
|
Schedule
3.5
|
|
LOC
Work Projects
|
Schedule
4.2
|
|
Assumed
Contracts
|
Schedule
8.2
|
|
Non-Permitted
Exceptions
|
EXHIBITS
|
Exhibit
A-1 – A-3
|
|
Form
of Tenant Estoppel Certificates
|
Exhibit
B-1
|
|
Form
of Association Estoppel Certificate
|
Exhibit
B-2
|
|
Form
of REA Estoppel Certificate
|
Exhibit
C
|
|
Form
of Assignment of Leases
|
Exhibit
D
|
|
Form
of Assignment of Contracts
|
Exhibit
E
|
|
Form
of Tenant Notices
|
Exhibit
F
|
|
Form
of Assignment of Licenses, Permits, Warranties and General Intangibles
|
Exhibit
G-1 – G-3
|
|
Forms
of Deed (State-Specific)
|
Exhibit
H
|
|
Form
of Bill of Sale
|
Exhibit
I-1 – I-2
|
|
Form
of FIRPTA Certificate
|
Exhibit
J
|
|
Form
of Title Affidavit
|
Exhibit
K
|
|
Voting
Agreement
|
Exhibit
L
|
|
LOC
Work Access Agreement
|
AGREEMENT
OF PURCHASE AND SALE
AGREEMENT
OF PURCHASE AND SALE, made as of the 22nd day of March, 2018 by and between FRP Holdings, Inc., a Florida corporation (“
Parent
”),
each of the entities listed in the column entitled “Sellers” on
Schedule A-1
attached hereto and made a part
hereof (collectively, “
Seller
”) and BRE FOXTROT PARENT LLC, a Delaware limited liability company (“
Buyer
”).
BACKGROUND
A. Seller
is the owner of the land as more particularly described on
Schedule A-2
and the buildings and other improvements thereon
which are identified by the street addresses listed in the column entitled “Property” opposite their names on
Schedule
A-1
attached hereto and made a part hereof (collectively, the “
Property
”).
B. The
Property, together with the Asset-Related Property (as defined below) shall be referred to herein, collectively, as the “
Assets
”.
C. Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, Seller’s right, title and interest in the Assets on
the terms and conditions hereinafter set forth.
D. Concurrently
with the execution and delivery of this Agreement, certain shareholders of Parent have entered into a voting and support agreement,
dated as of the date hereof, in substantially the form set forth in
Exhibit K
, pursuant to which, among other things, such
shareholders have agreed to vote their shares of Parent Common Stock in favor of adoption of this Agreement and the approval of
the transactions contemplated hereby as set forth therein (the “
Voting Agreement
”).
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
Article
I
DEFINITIONS
Section
1.1.
Defined Terms
. The capitalized
terms used herein will have the following meanings.
“
11500
Crossroads Property
” shall mean the individual Property located at 11500 Crossroads Circle, Middle River, Maryland 21220.
“
AC
Lease
” shall mean that certain Lease Agreement, by and between FRP Hollander 95, LLC and Architectural Ceramics, Inc.,
dated March 18, 2013, as amended by First Amendment to Lease dated June 7, 2013, as amended by Commencement Agreement dated August
5, 2013, and as amended by Second Amendment to Lease dated August 5, 2013.
“
AC
Property
” shall mean 1901 62nd Street, Baltimore, Maryland 21237.
“
Acceptable
Confidentiality Agreement
” shall mean a confidentiality and standstill agreement that contains confidentiality provisions
that are no less favorable in any material respect to Parent than those contained in that certain Confidentiality Agreement dated
August 8, 2017.
“
Access
Agreement
” shall have the meaning assigned thereto in Section 7.1.
“
Acquisition
Proposal
” shall have the meaning assigned thereto in Section 14.2(g).
“
Additional
Rent
” shall have the meaning assigned thereto in Section 10.1(a).
“
Adverse
Recommendation Change
” shall have the meaning assigned thereto in Section 14.2(c).
“
Affiliate
”
shall mean any Person, from time to time, that directly or indirectly through one or more intermediaries, controls, is controlled
by or is under common control with another Person. The term “control” shall mean the possession, direct or indirect,
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 shall in any event include the ownership or power to vote fifty percent (50%) or more
of the outstanding equity or voting interests, respectively, of such other Person.
“
Affiliate
Agreement
” shall mean any agreement, license or contract, whether written or oral, relating to the operation, maintenance
or management of the Asset or any portion thereof by and among Seller and/or any other Affiliate of Seller.
“
Agreement
”
shall mean this Agreement of Purchase and Sale, together with the Exhibits and Schedules attached hereto, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.
“
Allocated
Asset Value
” shall mean the value allocated among the Assets as set forth on
Schedule 2.2(a)
hereto opposite
the name of such Property.
“
Allocated
Earnest Money
” shall mean the portion of the Earnest Money allocated among the Assets as set forth on
Schedule 2.2(a)
hereto opposite the name of such Property.
“
Alternative
Acquisition Agreement
” shall have the meaning assigned thereto in Section 14.2(a).
“
Anti-Bribery,
Anti-Money Laundering and Anti-Terrorism Laws
” shall have the meaning assigned thereto in Section 3.1(f)(i).
“
Applicable
Law
” shall mean all statutes, laws, common law, rules, regulations, ordinances, codes or other legal requirements of
any Governmental Authority, board of fire
underwriters
and similar quasi-governmental agencies or entities, and any judgment, injunction, order, directive, decree or other judicial
or regulatory requirement of any Governmental Authority of competent jurisdiction affecting or relating to the Person or property
in question.
“
Asset-Related
Property
” shall have the meaning assigned thereto in Section 2.1(b).
“
Assets
”
shall have the meaning assigned thereto in “Background” paragraph B.
“
Assignment
of Contracts
” shall have the meaning assigned thereto in Section 6.1(a)(ii).
“
Assignment
of Leases
” shall have the meaning assigned thereto in Section 6.1(a)(i).
“
Assignment
of Licenses, Permits, Warranties and General Intangibles
” shall have the meaning assigned thereto in Section 6.1(a)(iv).
“
Association
”
shall have the meaning assigned thereto in Section 3.2(n).
“
Association
Documents
” shall have the meaning assigned thereto in Section 3.2(n).
“
Association
Estoppel
” shall have the meaning assigned thereto in
Section 3.3(h)
.
“
Assumed
Contracts
” shall have the meaning assigned thereto in Section 4.2.
“
Basket
Limitation
” shall mean an amount equal to $175,000.
“
Broker
”
shall mean Eastdil Secured, L.L.C.
“
Business
Day
” shall mean any day other than a Saturday, Sunday or other day on which banks are authorized or required by Applicable
Law to be closed in the city of New York, New York.
“
Buyer
”
shall have the meaning assigned thereto in the Preamble to this Agreement.
“
Buyer-Related
Entities
” shall have the meaning assigned thereto in Section 11.1.
“
Buyer’s
Knowledge
” shall mean the actual knowledge of Buyer based upon the actual knowledge of David Levine. The named individual
shall have no personal liability by virtue of inclusion in this definition.
“
Buyer’s
Leasing Costs
” shall have the meaning assigned thereto in Section 10.5.
“
Cap
Limitation
” shall mean an amount equal to $10,767,000.
“
Capital
Expenditures Work
” shall have the meaning assigned thereto in Section 3.3(f).
“
Claim
Notice
” shall have the meaning assigned thereto in Section 11.5.
“
Claims
”
shall have the meaning assigned thereto in Section 7.3.
“
Closing
”
shall have the meaning assigned thereto in Section 2.3(a).
“
Closing
Date
” shall have the meaning assigned thereto in Section 2.3(a).
“
Closing
Documents
” shall mean any certificate, assignment, instrument or other document delivered pursuant to this Agreement,
including, without limitation, each of the documents to be delivered by Seller pursuant to Section 6.2 and by Buyer pursuant to
Section 6.1.
“
Closing
Statement
” shall have the meaning assigned thereto in Section 6.1(b)(ii).
“
Code
”
shall mean the United States Internal Revenue Code of 1986, as amended.
“
Contractor
”
shall have the meaning assigned thereto in Section 3.5(a).
“
Contracts
”
shall mean, collectively, all agreements or contracts
of Seller, or entered into on behalf of Seller, relating to the ownership or operation of the Property, but excluding the Space
Leases, the New Leases, any Affiliate Agreement and any written agreement or contract relating to any existing financing encumbering
any of the Property
.
“
Crossroads
Outparcel
” shall mean
Parcel A as shown
on Plat One of Two entitled “Windlass Run Business Park” dated November 16, 2007 prepared by George William Stephens,
Jr. and Associates, Inc. recorded April 8, 2008 in SM 78 Page 344, Land Records of Baltimore County, Maryland.
“
Crossroads
Parking Parcel
” shall mean
that certain
portion of the Crossroads Outparcel marked in red on the survey depicted on
Schedule 1.1(g)
hereto.
“
Deed
”
shall have the meaning assigned thereto in
Section
6.2(a)(i)
.
“
Earnest
Money
” shall have the meaning assigned thereto in Section 2.2(b).
“
Earnest
Money Escrow Account
” shall have the meaning assigned thereto in Section 16.5(a).
“
Effective
Date
” shall mean the date of this Agreement.
“
Employee
”
means any individual currently or previously employed by any Person to provide services at or with respect to the Property.
“
Employee
Benefit Plans
” means all employee benefit plans, as that term is defined in Section 3(3) of ERISA, and all other employment,
severance pay, salary continuation,
bonus,
incentive, stock option, stock purchase, retirement, pension, welfare, training, vacation, fringe benefit, profit sharing, deferred
compensation and other employee benefit plans, policies, programs, agreements or arrangements of any kind, in each case, for the
benefit of any Employee.
“
Environmental
Claims
” means any claim for reimbursement or remediation expense, contribution, personal injury, property damage or
damage to natural resources made by any Governmental Authority or other Person arising from or in connection with the presence
or release of any Hazardous Materials over, on, in or under any Property, or the violation of any Environmental Laws with respect
to any Property.
“
Environmental
Laws
” shall mean any Applicable Laws which regulate or control (i) Hazardous Materials, pollution, contamination, noise,
radiation, water, soil, sediment, air or other environmental media, or (ii) an actual or potential spill, leak, emission, discharge,
release or disposal of any Hazardous Materials or other materials, substances or waste into water, soil, sediment, air or any
other environmental media, including, without limitation, (A) the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. § 9601 et seq., (B) the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., (C) the Federal
Water Pollution Control Act, 33 U.S.C. § 2601 et seq., (D) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.,
(E) the Clean Water Act, 33 U.S.C. § 1251 et seq., (F) the Clean Air Act, 42 U.S.C. § 7401 et seq., (G) the Hazardous
Materials Transportation Act, 49 U.S.C. § 1801 et seq., and (H) the Occupational Safety and Health Act, 29 U.S.C. §
651 et seq. and similar state and local Applicable Law, as amended from time to time, and all regulations, rules and guidance
issued pursuant thereto.
“
Environmental
Liabilities
” means any liabilities or obligations of any kind or nature imposed on the Person in question pursuant to
any Environmental Laws, including, without limitation, any (i) obligations to manage, control, contain, remove, remedy, respond
to, clean up or abate any actual or potential release of Hazardous Materials or other pollution or contamination of any water,
soil, sediment, air or other environmental media, whether or not located on any Property and whether or not arising from the operations
or activities with respect to any Property, and (ii) liabilities or obligations with respect to the manufacture, generation, formulation,
processing, use, treatment, handling, storage, disposal, distribution or transportation of any Hazardous Materials.
“
Environmental
Reports
” shall have the meaning assigned thereto in Section 3.2(l).
“
ERISA
”
hall have the meaning assigned thereto in Section 3.1(h).
“
Escrow
Agent
” shall have the meaning assigned thereto in Section 2.2(b).
“
Escrowed
Funds
” shall have the meaning assigned thereto in Section 16.5(c).
“
Exchange
Act
” shall mean means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“
Excluded
Assets
” shall have the meaning assigned thereto in Section 2.1(c).
“
Excluded
Option Property
” shall have the meaning assigned thereto in Section 9.3(a).
“
Executive
Order
” shall have the meaning assigned thereto in Section 3.1(f)(i).
“
Existing
Casualty / Condemnation
” shall have the meaning assigned thereto in Section 3.2(d).
“
Existing
Lease
” shall mean a Space Lease in existence as of the Effective Date.
“
Existing
Mortgage
” shall mean, collectively, those certain mortgages, deeds of trust and similar documents listed on
Schedule
1.1(a)
hereto.
“
Fixed
Rents
” shall have the meaning assigned thereto in Section 10.1(a).
“
Government
List
” shall mean any of (i) the Denied Persons List and the Entities List maintained by the United States Department
of Commerce, (ii) the Specially Designated Nationals and Blocked Persons List, the Sectoral Sanctions Identifications List, and
the Foreign Sanctions Evaders List maintained by OFAC, and (iii) the Foreign Terrorist Organizations List and Debarred Parties
List maintained by the United States Department of State.
“
Governmental
Authority
” shall mean any federal, state or local government or other political subdivision thereof, including, without
limitation, any agency or entity exercising executive, legislative, judicial, regulatory or administrative governmental powers
or functions, in each case to the extent the same has jurisdiction over the Person or property in question.
“
Hazardous
Materials
” shall mean means any hazardous or toxic substances, materials or waste, whether solid, semisolid, liquid
or gaseous, including, without limitation, asbestos, polychlorinated biphenyls, petroleum or petroleum by-products, radioactive
materials, radon gas and any other material or substance which is defined as or included in the definition of a “hazardous
substance”, “hazardous waste”, “toxic waste”, “hazardous material”, “toxic pollutant”,
“contaminant”, “pollutant” or “toxic substance” or words of similar import, under any Environmental
Law or that could result in the imposition of liability under any Environmental Laws.
“
Incentive
Compensation Agreements
” shall mean those certain FRP Holdings, Inc. Executive Incentive Compensation Agreements and
FRP Holdings, Inc. Employee Incentive Compensation Agreements, each as set forth on
Schedule 1.1(e)
.
“
Indemnification
Claim
” shall have the meaning assigned thereto in Section 11.5.
“
Indemnified
Party
” shall have the meaning assigned thereto in Section 11.5.
“
Indemnifying Party
” shall have the meaning assigned thereto in Section 11.5.
“
Initial
Closing Date
” shall have the meaning assigned thereto in Section 2.3(a).
“
Inquiry
”
shall have the meaning assigned thereto in Section 14.2(a).
“
Intervening
Event
” shall have the meaning assigned thereto in Section 14.2(g).
“
IRS
”
shall mean the Internal Revenue Service.
“
IRS
Reporting Requirements
” shall have the meaning assigned thereto in Section 16.3(c).
“
Landlord
Work
” shall have the meaning assigned thereto in Section 3.3(g).
“
Leasing
Costs
” shall mean, with respect to a particular Space Lease, all capital costs and expenses incurred for capital improvements,
equipment, painting, decorating, partitioning and other items to satisfy the obligations of the landlord under such Space Lease
(including any expenses incurred for architectural or engineering services in respect of the foregoing); “tenant allowances”
in lieu of or as reimbursements for the foregoing items, payments made for purposes of satisfying or terminating the obligations
of the tenant under such Space Lease to the landlord under another lease (i.e., lease buyout costs), relocation costs; leasing
commissions and brokerage commissions; legal, design and other professional fees and costs; and free rent, rent abatements or
other tenant inducements.
“
Licenses
and Permits
” shall have the meaning assigned thereto in Section 3.2(i).
“
LOC
Completion Conditions
” shall have the meaning assigned thereto in Section 3.5(a).
“
LOC
Work Access Agreement
”
shall mean that
certain Access Agreement in the form of
Exhibit L
to be entered into at Closing
.
“
LOC
Work Holdback
” shall have the meaning assigned thereto in Section 3.5(a).
“
LOC
Work Projects
” shall have the meaning assigned thereto in Section 3.5(a).
“
Losses
”
shall have the meaning assigned thereto in Section 11.1.
“
Major
Leases
” shall mean those certain Space Leases set forth on
Schedule 1.1(b)
.
“
Major
Tenant
” shall mean the Tenants under those certain Space Leases set forth on
Schedule 1.1(b)
.
“
Material
Casualty
” shall mean, with respect to any individual Property, any damage to all or a portion of any individual Property
by fire or other casualty that, (i) in the reasonable judgment of an independent third party selected by Buyer and reasonably
acceptable to Seller is expected to cost in excess of five percent (5%) of the Allocated Asset Value of such individual Property
to repair or (ii) permits any Major Tenant to terminate its Space Lease or abate rent pursuant to the terms of its Space Lease.
“
Material
Condemnation
” shall mean, with respect to any individual Property, a taking or threatened taking that (i) results in
a loss of more than seven and one-half percent
(7.5%)
of the aggregate square footage of such individual Property, (ii) permits any Major Tenant to terminate its Space Lease, (iii)
in Buyer’s reasonable judgment, materially and adversely affects the operations at or access to such Property or parking
on any such Property or (iv) otherwise adversely impacts the value of such Property by more than seven and one-half percent (7.5%)
of the Allocated Asset Value for such Property.
“
Material
Contracts
” shall mean all Contracts that are (i) not terminable as of right and without cause on thirty (30) days’
or less notice without cost or penalty and (ii) require the payment by, or on behalf of, Seller of more than $50,000 with respect
to the Property in any calendar year.
“
Monetary
Encumbrance
” shall have the meaning assigned thereto in Section 8.3(a).
“
Municipal
Letter of Credit
” shall have the meaning assigned thereto in Section 3.2(s).
“
New
Contracts
” shall have the meaning assigned thereto in Section 3.3(b).
“
New
Lease
” shall have the meaning assigned thereto in Section 10.5.
“
Non-Permitted
Exceptions
” shall have the meaning assigned thereto in Section 8.2.
“
Notice
of Change of Recommendation
” shall have the meaning assigned thereto in Section 14.2(d).
“
OFAC
”
shall mean the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“
Option
Inclusion Event
” shall have the meaning assigned thereto in Section 9.3(b).
“
Options
”
shall have the meaning assigned thereto in Section
3.2(h).
“
Outside
Closing Date
”
shall have the meaning
assigned thereto in Section 2.3(b).
“
Parent
”
shall have the meaning assigned thereto in the Preamble to this Agreement.
“
Parent
Board
” shall mean the Board of Directors of Parent.
“
Parent
Board Recommendation
” shall have the meaning assigned thereto in Section 3.1(i).
“
Parent
Bylaws
” shall mean the Amended and Restated Bylaws of Parent, as amended and restated on February 3, 2016 and in effect
on the date hereof.
“
Parent
Charter
” shall mean the Second Amended and Restated Articles of Incorporation of Parent, as amended, supplemented, corrected
and in effect on the date hereof.
“
Parent
Common Stock
” shall mean the outstanding shares of common stock, $0.10 par value per share, of Parent.
“
Parent
Termination Fee
” shall mean $22,500,000.
“
Permitted
Exceptions
” shall mean all of the following: (i) the matters set forth in the Title Commitment or the Survey, (ii) liens
for current real estate taxes and special assessments which are not yet due and payable, (iii) standard pre-printed provisions
contained in the ALTA form of title insurance policies which the Title Company is unwilling to remove, (iv) rights of Tenants,
as tenants only without any right of first refusal, right of first offer or purchase option, under the Space Leases and any New
Lease entered into after the Effective Date in accordance with the terms of this Agreement, (v) any exceptions caused by Buyer
or its Affiliate or any of their agents, representatives or employees and (vi) such other exceptions as the Title Company shall
commit to insure over without any additional cost or liability to Buyer, but subject to Buyer’s approval, whether such insurance
is made available in consideration of payment, bonding, indemnity of Seller. For the avoidance of doubt, in no event shall Permitted
Exceptions include any Non-Permitted Exceptions.
“
Person
”
shall mean a natural person, partnership, limited partnership, limited liability company, corporation, trust, estate, association,
unincorporated association or other entity.
“
Personal
Property
” shall have the meaning assigned there in Section 2.1(b)(ii).
“
Post-Closing
Escrow Accounts
” shall have the meaning assigned thereto in Section 16.5(c).
“
Post-Effective
Date Voluntary Encumbrance
” shall have the meaning assigned thereto in Section 8.3(a).
“
Property
”
shall have the meaning assigned thereto in “Background” paragraph A.
“
Proxy
Statement
” shall mean a proxy statement in preliminary and definitive form (as applicable) relating to the Shareholder
Meeting, together with any amendments or supplements thereto.
“
Purchase
Price
” shall have the meaning assigned thereto in Section 2.2(a).
“
REAs
”
shall have the meaning assigned thereto in Section 3.2(m).
“
REA
Estoppel
” shall have the meaning assigned thereto in
Section 3.3(i)
.
“
Reimbursement
Amount
” shall have the meaning assigned thereto in Section 2.3(b).
“
Releasees
”
shall have the meaning assigned thereto in Section 7.3.
“
Rents
”
shall have the meaning assigned thereto in
Section 10.1(a)
.
“
Reporting
Person
” shall have the meaning assigned thereto in Section 16.3(c).
“
Representative
”
means, with respect to any Person, such Person’s directors, officers, employees, advisors (including attorneys, accountants,
consultants, investment bankers and financial advisors), agents and other representatives.
“
Representative
Seller
” shall have the meaning assigned thereto in Section 16.9.
“
Required
Association Estoppel
” shall have the meaning assigned thereto in
Section 3.3(h)
.
“
Required
Tenant Estoppels
” shall have the meaning assigned thereto in Section 3.4(c).
“
Sanctioned
Country
” shall have the meaning assigned thereto in Section 3.1(f)(iii).
“
Sanctions
”
shall have the meaning assigned thereto in Section 4.1(f)(iii).
“
SD
Letters of Credit
” shall have the meaning assigned thereto in Section 10.1(a).
“
SEC
”
shall mean the U.S. Securities and Exchange Commission (including the staff thereof).
“
Securities
Act
” shall mean the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Security
Deposits
”
shall have the meaning assigned
there in Section 2.1(b)(vii).
“
Seller
”
shall have the meaning assigned thereto in the Preamble to this Agreement.
“
Seller-Related
Entities
” shall have the meaning assigned thereto in Section 11.2.
“
Seller’s
Actual Reimbursable Tenant Expenses
” shall have the meaning assigned thereto in Section 10.1(b).
“
Seller’s
Actual Tenant Reimbursements
” shall have the meaning assigned thereto in Section 10.1(b).
“
Seller’s
Knowledge
” shall mean the actual knowledge of Seller based upon the actual knowledge of David deVilliers Jr, David deVilliers,
III and John Baker III. The named individuals shall have no personal liability by virtue of inclusion in this definition.
“
Seller’s
Leasing Costs
” shall have the meaning assigned thereto in Section 10.5.
“
Seller’s
Reconciliation Statement
” shall have the meaning assigned thereto in Section 10.1(b).
“
Shareholder
Approval
” shall have the meaning assigned thereto in Section 3.1(j).
“
Shareholder
Meeting
” shall mean the meeting of the holders of shares of Parent Common Stock for the purpose of seeking the Shareholder
Approval, including any postponement or adjournment thereof.
“
SNDA
”
shall have the meaning assigned thereto in Section 3.3(a)(x).
“
Space
Leases
” shall have the meaning assigned thereto in Section 3.2(b).
“
Superior
Proposal
” shall have the meaning assigned thereto in Section 14.2(g).
“
Survey
”
shall mean, collectively, those certain surveys of the Property listed on Schedule 1.1(c) hereto.
“
Survival
Period
” shall have the meaning assigned thereto in Section 11.4.
“
Tax
Return
” shall mean any return, declaration, report, claim for refund or information return or statement relating to
Taxes filed or required to be filed with any Governmental Authority, including any schedule or attachment thereto, and including
any amendment thereof.
“
Taxes
”
shall mean all U.S. federal, state, or local or non-U.S. taxes, charges, fees, levies or other assessments, including income,
gross income, gross receipts, production, excise, employment, sales, use, transfer, ad valorem, value added, goods and services,
profits, license, capital stock, capital gains, environmental, franchise, severance, occupation, stamp, withholding, Social Security,
employment, unemployment, disability, worker’s compensation, payroll, utility, windfall profit, custom duties, personal
property, real property, escheat, taxes required to be collected from customers on the sale of services, registration, alternative
or add-on minimum, estimated, and other taxes, customs, duties, governmental fees or like assessments or charges of any kind whatsoever,
including any interest, penalties, related liabilities or additions thereto.
“
Tenant
”
shall mean a tenant under a Space Lease.
“
Tenant
Estoppel
” shall have the meaning assigned thereto in Section 3.4(a).
“
Tenant
Leased Square Footage
” shall mean the total square footage of the Property leased by Tenants.
“
Tenant
Notices
” shall have the meaning assigned thereto in Section 6.1(a)(iii).
“
Title
Affidavit
”
shall have the meaning assigned thereto in Section 8.5.
“
Title
Commitment
” shall mean those certain owner’s title commitments issued by the Title Company, as listed on Schedule
1.1(d) hereto.
“
Title
Company
” shall mean (i) Old Republic National Title Insurance Company and (ii) Stewart Title Insurance Company, through
their agent Lexington National Land Services L.L.C., Attention: Harry Hayes, Esq.
“
Title
Defect
” shall have the meaning assigned thereto in Section 8.3(a).
“
Title
Defect Notice
” shall have the meaning assigned thereto in Section 8.3(a).
“
Title
Policy
” shall mean, with respect to each individual Property, an ALTA owner’s title insurance policy issued by
the Title Company insuring Buyer’s title to the Property subject only to the Permitted Exceptions in an amount equal to
the applicable
Allocated Asset Value
.
“
Transfer
Tax Forms
” shall have the meaning assigned thereto in Section 6.1(b)(i).
“
Violations
”
shall mean all violations of Applicable Law relating to the Property now or hereafter issued or noted, including but not limited
to (i) any open or expired building permits, (ii) building, zoning or fire code violations, (iii) insufficient or missing parking
or parking striping necessary to comply with parking requirements under Applicable Law, and any fines or penalties associated
with each of the foregoing. For the avoidance of doubt, existing Violations shall include, but not be limited to, those listed
on
Schedule 1.1(f)
hereto.
“
Voluntary
Encumbrance
” shall mean any title exception affecting the Property that is voluntarily granted or created by, through
or under Seller; provided, however, that the term “Voluntary Encumbrances” as used in this Agreement shall not include
any Permitted Exceptions.
“
Withholding
Form
”
shall have the meaning assigned thereto in Section 16.24(a).
“
Voting
Agreement
” shall have the meaning assigned thereto in the “Background” paragraph D.
“
YBR
Lease
” shall have the meaning assigned thereto in Section 3.3(c)(ii).
“
YBR
Property
” shall have the meaning assigned thereto in Section 3.3(c)(ii).
“
YBR
Holdback
” shall have the meaning assigned thereto in Section 10.9(b).
Article
II
SALE, PURCHASE PRICE AND CLOSING
Section
2.1 .
Sale of Assets
.
(a)
On
the Closing Date and pursuant to the terms and subject to the conditions set forth in this Agreement, Seller shall sell to Buyer,
and Buyer shall purchase from Seller, Seller’s right, title and interest in the Assets. It is understood and agreed that
the Closing of the purchase of the Assets shall occur contemporaneously and, except as explicitly set forth in this Agreement,
none of the purchases of the Assets shall close unless the purchases of all of the Assets close contemporaneously.
(b)
The
transfer of the Assets to Buyer shall include the transfer of all Asset-Related Property. For purposes of this Agreement, “
Asset-Related
Property
” shall mean, with respect to the Property, all of Seller’s right, title and interest in and to the following:
(i)
all
easements, covenants, development rights, mineral rights and other rights appurtenant to the Property and all right, title and
interest of Seller, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, in front
of or adjoining the Property and to the center line thereof;
(ii)
all
furniture, fixtures, equipment and other personal property which are now, or may hereafter prior to the Closing Date be, placed
in or attached to the Property or used solely in connection with the operation, use or maintenance of the Property (but not including
items owned or leased by Tenants, or which are leased by Seller) (the “
Personal Property
”)
;
(iii)
to
the extent they may be transferred under Applicable Law, all licenses, permits and authorizations presently or hereafter issued
in connection with the operation or development of all or any part of the Property as it is presently being operated;
(iv)
to
the extent assignable, (A) all warranties, if any, issued to Seller or any Affiliate of Seller from any manufacturer, contractor,
engineer or architect in connection with construction of any improvements or installation of equipment or any component of the
improvements included as part of the Property and (B) all warranties assigned to Seller when it acquired the Asset;
(v)
to
the extent assignable, all other intangibles associated with the Properties, including, without limitation, all logos, designs,
trade names, building names related to the Property (but not including the names FRP Holdings, FRP Development or Florida Rock
Properties) and other general intangibles relating to the Property, and all telephone exchange numbers specifically dedicated
and identified with the Properties;
(vi)
the
plans and specifications, engineering drawings and prints with respect to the improvements, all operating manuals, and all books,
data and records regarding the physical components systems of the improvements at the Properties, each to the extent in Seller’s
possession (or reasonably obtainable by Seller);
(vii)
all
Space Leases and Assumed Contracts and all security and escrow deposits and letters of credit held by Seller in connection with
any such Space Lease (including accrued interest thereon) whether in the form of cash, letter of credit or otherwise (the, “
Security
Deposits
”); and
(viii)
all
books and records, tenant files, tenant lists and marketing information relating to the Property.
(c)
Notwithstanding
anything to the contrary contained in this Agreement, it is expressly agreed by the parties hereto that the following items are
expressly excluded from the Assets to be sold to Buyer (collectively, the “
Excluded Assets
”):
(i)
Cash
.
All cash on hand or on deposit in any operating account or other account maintained in connection with the ownership, operation
or management of the Property or the Assets;
(ii)
Third
Party Property
. Any fixtures, personal property, equipment, artwork, trademarks or other intellectual property or other assets
which are (A) owned or leased by (x) the supplier or vendor under any Contract or (y) Tenants or (B) leased by Seller; and
(iii)
Other
.
The rights and entitlements set forth in
Schedule 2.1(c)(iii)
.
Section
2.2.
Purchase
Price
.
(a)
Subject
to the adjustments, prorations, credits and exclusions provided for in this Agreement, the consideration to be paid by Buyer to
Seller for the purchase of the Assets shall be an amount equal to Three Hundred Fifty Eight Million Nine Hundred Thousand Dollars
($358,900,000.00), as such amount may be reduced by the Allocated Asset Value of any Property excluded from the transactions hereunder
pursuant to the express terms of this Agreement (the “
Purchase Price
”), and shall be paid by Buyer to Seller
on the Closing Date.
(b)
Within
two (2) Business Days after the execution of this Agreement by Seller and Buyer, Buyer shall deliver cash in an amount equal to
Fourteen Million Three Hundred Fifty Six Thousand Dollars ($14,356,000.00) (together with all accrued interest thereon, the “
Earnest
Money
”) in immediately available funds by wire transfer to Old Republic National Title Insurance Company, as escrow
agent (in such capacity, “
Escrow Agent
”). The Earnest Money shall be non-refundable to Buyer except as expressly
provided in this Agreement.
(c)
Upon
delivery by Buyer to Escrow Agent, the Earnest Money will be deposited by Escrow Agent in the Earnest Money Escrow Account, and
shall be held in escrow in accordance with the provisions of Section 16.5. All interest earned on the Earnest Money while held
by Escrow Agent shall be paid to the party to whom the Earnest Money is paid, except that if the Closing occurs, Buyer shall receive
a credit against the Purchase Price for such interest in accordance with the terms of this Agreement. At the Closing, Buyer shall
deposit with Escrow Agent, by wire transfer of immediately available funds, an amount equal to (A) the Purchase Price subject
to the adjustments as specifically provided hereunder
minus
(B) the Earnest Money.
(d)
No
adjustment shall be made to the Purchase Price except as explicitly set forth in this Agreement. Seller and Buyer hereby agree
that any adjustments to the Purchase Price pursuant to this Agreement shall be treated as an adjustment to the Purchase Price
for tax purposes, unless otherwise required by Applicable Law.
(e)
Seller
and Buyer hereby agree that the Purchase Price shall be allocated among the Property in accordance with the Allocated Asset Values
for federal, state and local tax purposes in accordance with applicable U.S. federal tax law and analogous provisions of state
or local Applicable Law. Seller and Buyer shall file all Tax Returns and related tax documents in accordance with such Allocated
Asset Values. No portion of the Purchase Price is to be allocated to Personal Property.
(f)
This
Agreement is intended to be a single unitary agreement, Seller is required to sell all of the Property to Buyer pursuant to the
terms and provisions of this Agreement, and Buyer is required to purchase all of the Property from Seller pursuant to the terms
and provisions of this Agreement, unless otherwise required by Applicable Law and except to the extent a Property is excluded
from the transaction contemplated hereby pursuant to the express terms of this Agreement.
Section
2.3.
The Closing
.
(a)
The
closing of the sale and purchase of the Assets (the “
Closing
”) shall take place on the later of (i) sixty (60)
days after the Effective Date and (ii) three (3) Business Days after the date on which the Shareholder Approval is obtained (the
“
Initial Closing Date
”);
provided
,
however
, Seller shall have the right to adjourn the Initial
Closing Date as provided in Section 8.3(a) hereto (the Initial Closing Date, as the same may be extended pursuant to this Section
2.3(a) and/or Section 8.3(a), being hereinafter referred to as the “
Closing Date
”).
TIME SHALL BE OF THE
ESSENCE WITH RESPECT TO BUYER’S AND SELLER’S OBLIGATIONS UNDER THIS AGREEMENT
(subject to such adjournments of
the Closing Date as are expressly permitted by this Agreement).
(b)
Notwithstanding
the foregoing, in the event that Shareholder Approval is not obtained before August 19, 2018 (the “
Outside Closing Date
”),
Buyer shall have the right to terminate this Agreement upon written notice to Seller and upon such termination (i) the Earnest
Money shall be immediately returned to Buyer, (ii) Seller shall pay to Buyer within five (5) Business Days of the Outside Closing
Date an amount equal to all out-of-pocket costs and expenses incurred by Buyer and its Affiliates in connection with the transactions
contemplated hereunder (the “
Reimbursement Amount
”) and (iii) the parties shall not have any further rights
or obligations hereunder except such rights and obligations that expressly survive termination of this Agreement.
(c)
The
Closing shall be held on the Closing Date at 3:00 P.M. (New York Time) by mutually acceptable escrow arrangements. There shall
be no requirement that Seller and Buyer physically attend the Closing, and all funds and documents to be delivered at the Closing
shall be delivered to the Escrow Agent unless the parties hereto mutually agree otherwise. Buyer and Seller hereby authorize their
respective attorneys to execute and deliver to the Escrow Agent any additional or supplementary instructions as may be necessary
or convenient to implement the terms of this Agreement and facilitate the closing of the transactions contemplated hereby,
provided
,
however
, that such instructions are consistent with and merely supplement this Agreement and shall not in any way modify,
amend or supersede this Agreement.
Section
2.4.
Withholding
. Buyer shall be entitled
to deduct and withhold any amounts from the consideration payable to Seller pursuant to this Agreement that are required to be
withheld with respect to the making of any such payment under the Code, or any provision of state, local or foreign Applicable
Law. To the extent that such amounts are so withheld and paid over to the proper Governmental Authority by Buyer, such withheld
and deducted amounts will be treated for all purposes of this Agreement as having been paid to the Person in respect of which
such deduction and withholding was made.
Article
III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
AND PARENT
Section
3.1.
General Seller and Parent Representations
and Warranties
. Parent is making only those representations and warranties that apply specifically to Parent and Parent Board
(but not the Assets). Seller and Parent hereby represent and warrant to Buyer as of the Effective Date and as of the Closing Date
as follows:
(a)
Formation;
Existence
. Each entity comprising Seller is a limited liability company duly formed, validly existing and in good standing
under the laws of Maryland and is qualified to do business in the state in which it owns any Property. Parent is a corporation
duly formed, validly existing and in good standing under the laws of the state of Florida.
(b)
Power
and Authority
. Each of Seller and Parent has all requisite power and authority to enter into this Agreement and, subject to
receipt of the Shareholder Approval, to perform its obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Seller and Parent, and subject to the receipt of the Shareholder Approval, the
performance and consummation of the transactions provided for in this Agreement has been duly authorized by all necessary action
on the part of Seller and Parent. This Agreement has been duly executed and delivered by Seller and Parent and constitutes Seller’s
and Parent’s legal, valid and binding obligation, enforceable against Seller and Parent in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’
rights and by general principles of equity (whether applied in a proceeding at law or in equity).
(c)
No
Consents
. Except (i) with respect to the Shareholder Approval and the filing with the SEC of the Proxy Statement and (ii)
as set forth on
Schedule 3.1(c)
, no consent, license, approval, order, permit or authorization of, or registration, filing
or declaration with, any court, administrative agency or commission or other Governmental Authority or instrumentality, domestic
or foreign, or any third party, is required to be obtained or made in connection with the execution, delivery and performance
of this Agreement by Seller or Parent or any of Seller’s or Parent’s obligations in connection with the transactions
required or contemplated hereby.
(d)
No
Conflicts
. Seller’s and Parent’s execution, delivery and compliance with, and performance of the terms and provisions
of this Agreement, and the sale of the Assets, will not, assuming receipt of the Shareholder Approval (i) conflict with or result
in any violation of its organizational documents, (ii) conflict with or result in any violation of any provision of any bond,
note or other instrument of indebtedness, contract, indenture, mortgage, deed of trust,
loan
agreement, lease or other agreement or instrument to which Seller or Parent is a party or which is binding on Seller or Parent
in its individual capacity or the Assets or any portion thereof, or (iii) violate any Applicable Law relating to Seller, Parent
or their assets or properties.
(e)
Bankruptcy
.
Seller (i) is not a debtor under any bankruptcy proceedings, voluntary or involuntary, (ii) has not made an assignment for the
benefit of creditors, (iii) has not suffered the appointment of a receiver to take possession of all, or substantially all, of
Seller’s assets, which remains pending or (iv) suffered the attachment or other judicial seizure of all, or substantially
all of Seller’s assets, which remains pending, and to Seller’s Knowledge, no such action is being threatened against
Seller.
(f)
Anti-Terrorism
Laws
.
(i)
Neither
Seller nor, to Seller’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is in violation of
any Applicable Laws relating to anti-corruption, anti-bribery, terrorism, money laundering or the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56, as amended, and
Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism) (the “
Executive Order
”) (collectively, the “
Anti-Bribery, Anti-Money Laundering and Anti-Terrorism
Laws
”).
(ii)
Neither
Seller nor, to Seller’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is acting, directly
or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those Persons or entities
that appear on the Annex to the Executive Order, or are included on any Government Lists.
(iii)
Neither
Seller, nor to Seller’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is a Person named
on a Government List
,
or is acting for or on behalf of any country or territory subject
to comprehensive economic sanctions (as of the Effective Date and without limitation, Cuba, Iran, North Korea, Syria, and the
Crimea region of Ukraine) (each a “
Sanctioned Country
”)
.
(iv)
Neither
Seller, nor any Person controlling or controlled by Seller, is the target of Sanctions.
(g)
Foreign
Person
. Seller is not a “foreign person” as defined in
Section
1445 of the Code
and the regulations issued thereunder.
(h)
ERISA
.
Seller is not, and no portion of the Property
constitutes the assets of, a “benefit plan investor” within the meaning of Section 3(42) of the Employee Retirement
Income Security Act of 1974, as amended (“
ERISA
”), and the regulations thereunder.
(i)
Parent
Board Recommendation
. The Parent Board has (i) determined that this Agreement and the transactions contemplated hereby is
advisable and in the best interests of Parent and the holders of Parent Common Stock, (ii) approved, adopted and declared advisable
this Agreement and the transactions contemplated hereby, (iii) directed that this Agreement, including the transactions contemplated
hereby, be submitted to a vote of the holders of Parent
Common
Stock, and (iv) resolved to recommend that holders of Parent Common Stock vote in favor of approval and adoption of this Agreement,
including the transactions contemplated hereby (such recommendation, the “
Parent Board Recommendation
”), which
resolutions were duly adopted and which remain in full force and effect and have not been subsequently rescinded, modified or
withdrawn in any way, except as may be permitted after the date hereof by Section 14.2.
(j)
Approval
Required
. The affirmative vote of the majority of all the votes entitled to be cast on the transaction at the Shareholder
Meeting (the “
Shareholder Approval
”) is the only vote of holders of securities of Parent required to approve
this Agreement and the transactions contemplated hereby.
(k)
Fairness
Opinion
. The Parent Board has received the opinion of Houlihan Lokey Capital, Inc. to the effect that, as of the date of such
opinion and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the
Purchase Price provided for pursuant to this Agreement is fair, from a financial point of view, to the Parent.
Section
3.2.
Representations and Warranties of Seller
as to the Assets
. Seller hereby represents and warrants to Buyer as of the Effective Date and as of the Closing Date
as follows:
(a)
Material
Contracts
. Except as set forth on
Schedule 3.2(a)
, there are no Material Contracts affecting the Property, and the
same have not been amended, supplemented or otherwise modified, except as shown in such
Schedule 3.2(a)
. Seller has delivered
or made available to Buyer true and complete copies of the Material Contracts affecting the Property. Each of the Material Contracts
are in full force and effect, Seller has not given nor received any written notice of breach or default under any such Material
Contracts that has not been cured or rescinded, and to Seller’s Knowledge, there exists no circumstance or event which,
with the giving of notice or passage of time, or both, would constitute a default by either Seller or a counterparty under any
Material Contract.
(b)
Space
Leases
. (i) The documents listed on
Schedule 3.2(b-1)
(the “
Space Leases
”) constitute all the leases,
licenses and occupancy agreements relating to the Property under which Seller is the holder of the landlord’s interest,
(ii) the Space Leases have not been modified or amended except as stated in
Schedule 3.2(b-1)
, (iii) the Space Leases contain
the entire agreement between the relevant landlord and the Tenants named therein and (iv) except as set forth in
Schedule 3.2(b-2)
,
Rents are currently being collected under the Space Leases without offset, counterclaim or deduction, and there are no prepaid
Rents. True and complete copies of the Space Leases have been made available to Buyer.
Schedule 3.2(b-3)
is a true and
complete list of all Leasing Costs with respect to the Space Leases or any renewal thereof.
Schedule 3.2(b-4)
sets forth
a true and complete list of all Security Deposits (specifying (x) whether in the form of cash, letter of credit or otherwise and
(y) both the amount required under the applicable Space Lease and the unapplied amount thereof) held by Seller under the Space
Leases.
Except as set forth on
Schedule 3.2(b-5)
, Seller has not delivered or received
a written notice of a default under any Space Lease which has not been cured or rescinded, and to Seller’s Knowledge, there
exists no circumstance or event which, with the giving of notice or passage of
time,
or both, would constitute a default by either Seller or a Tenant under any Space Lease. To Seller’s Knowledge, no Tenant
has (i) filed for bankruptcy or taken any similar debtor protection measure, (ii) discontinued operations at the Property or (iii)
given Seller notice of its intention to do so.
(c)
Brokerage
Commissions
.
There are no brokerage commissions or finders’ fees payable by Seller
other than those set forth on
Schedule 3.2(c)
and Seller does not have any agreement with any broker except as set forth
in
Schedule 3.2(c)
.
(d)
Casualty;
Condemnation
. Except as set forth on
Schedule 3.2(d)
(each, an “
Existing Casualty / Condemnation
”),
there is no unrepaired casualty damage to any Property and there are no pending condemnations, eminent domain or similar proceedings
affecting the Property, and to Seller’s Knowledge, no such action is threatened against the Property.
(e)
Litigation
.
Except as set forth on
Schedule 3.2(e)
, there are no litigations, actions, suits, arbitrations, claims, government investigations,
or proceedings pending or, to Seller’s Knowledge, threatened against Seller or the Assets. Seller is not a party to or subject
to the provision of any judgment, order, writ, injunction, decree or award of any Governmental Authority which would be reasonably
likely to adversely affect (i) the ability of Seller to perform its obligations hereunder, or (ii) the ownership or operation
of the Assets.
(f)
Compliance
with Law
. Seller has not received any notice of Violation with respect to the Property which has not been cured or dismissed,
and to Seller’s Knowledge, the Property and the use thereof complies in all material respects with Applicable Law.
(g)
Ownership
of the Property
. Seller has good and valid title to the Property, which in each case shall be free and clear of any lien,
pledge, charge, security interest, encumbrance, title retention agreement, adverse claim or restriction as of the Closing Date,
except for the Permitted Exceptions. Seller has not pledged, assigned, hypothecated or transferred any of its right, title or
interest in any of the Property other than in connection with the Existing Mortgages. Seller has not entered into any
unrecorded
or undisclosed documents or other matters which will create any additional exceptions to title to the Property,
a
nd
to Seller’s Knowledge, there are no unrecorded or undisclosed documents or other matters which will affect title to the
Property.
(h)
Options
.
Except as set forth on
Schedule 3.2(h)
, there are no
outstanding
rights of first refusal, rights of first offer, purchase options or similar rights relating
to the Property or any interest therein (“
Options
”). Seller has complied in all respects with any applicable
requirements concerning the Options and, to Seller’s Knowledge, (i) there exists no circumstance or event which, with the
giving of notice or passage of time, or both, would constitute a breach of such requirements and (ii) there exists no circumstance
or event
likely to give rise to a dispute
concerning the Options.
(i)
Licenses
and Permits
.
Schedule 3.2(i)
sets forth a true, correct and complete list of the material licenses and permits for
the Property (the “
Licenses and Permits
”). To Seller’s Knowledge, the Licenses and Permits are all of
the licenses, permits, approvals, qualifications and the like which are necessary for the ownership and operation, maintenance
and
management
of the Property. The Licenses and Permits are in full force and effect and no such Licenses and Permits are conditional or restricted.
(j)
Insurance
.
Schedule 3.2(j)
sets forth a true, correct and complete list of all insurance coverage maintained by Seller or their Affiliates
as of the Effective Date in connection with the Property and the operation thereof. All such insurance coverage is in full force
and effect (with no overdue premiums) in the amounts set forth on
Schedule 3.2(j
).
(k)
Construction
.
There are no ongoing capital expenditure projects at the Property, except those projects described on
Schedule 3.3(f)
and
Schedule 3.3(g)
. To Seller’s Knowledge, there are no disputes pending between Seller and any mechanic or materialman
with respect to work or materials furnished to the Property, including but not limited to the Capital Expenditures Work and Landlord
Work, and to Seller’s Knowledge no work which has been performed or materials which have been supplied is likely to give
rise to such a dispute. At the Closing, there will be no unpaid bills with respect to any work or materials furnished to the Property
under any Contract which, if unpaid, could result in a mechanics’ or materialmen’s lien being filed on the Property.
(l)
Environmental
Matters
.
Schedule 3.2(l)
sets forth a true, correct and complete list of all environmental assessments, reports and
studies in Seller’s possession relating to the Property (the “
Environmental Reports
”), and Seller has
made available to Buyer a true and complete copy of the Environmental Reports. Seller has not received notice from any Governmental
Authority or other Person of any Environmental Claims, Environmental Liabilities or violations of any Environmental Laws with
respect to the Property. To Seller’s Knowledge, there has been no violation of any Environmental Laws at or relating to
the Property.
(m)
REAs
.
There are no reciprocal easement agreements, operating easement agreements, or covenants, conditions and restrictions affecting
the Property, other than those (i) disclosed in the Title Commitments or (ii) set forth on
Schedule 3.2(m)
(the “
REAs
”).
To Seller’s Knowledge, each of the REAs is in full force and effect. Seller has not given or received any written notice
of default under any REA and to Seller’s Knowledge no default under the REAs exists.
(n)
Association
.
The documents listed on
Schedule 3.2(n)
(the “
Association Documents
”) constitute all the association
documents and all related by-laws relating to the Property. Seller has made available to Buyer or caused the Title Company to
make available to Buyer true, correct and complete copies of each Association Document. Seller has not received or delivered any
notice of default with respect to any association or organization created pursuant to any Association Documents (“
Association
”).
Other than as provided in the Association Documents, Seller has no other obligations relating to the Associations.
(o)
Taxes
.
All Taxes due and payable with respect to the Property have been paid, and Seller has timely filed all Tax Returns required to
be filed with respect to the Property. Seller has not filed any Tax certiorari or other appeals with respect to any Property which
remains outstanding. Seller (i) is not a party to any action, suit, proceeding, investigation, audit or claim with respect to
any Taxes nor is aware of any proceeding by any Governmental
Authority
for enforcement of collection of Taxes, (ii) has not granted any waiver of any statute of limitation with respect to, or any extension
of a period for, the assessment of any Taxes, and (iii) has not received any written notice of a special Tax or assessment to
be levied (and does not have any knowledge that a special Tax or assessment is contemplated), in each case with respect to any
Property.
(p)
Affiliate
Agreements
.
Schedule 3.2(p)
sets forth a true, correct and complete list of all Affiliate Agreements.
(q)
Employees
.
(i)
All
individuals currently providing services, and who formerly provided services, at or with respect to the Property are Employees
of Seller or an Affiliate of Seller.
(ii) Neither
Seller nor any Affiliate of Seller (x) is or has ever been party to or has or had any obligations with respect to any collective
bargaining or similar labor union agreement or arrangement with respect to any Employee or (y) sponsors, maintains or contributes
to (or has any obligation to contribute to) any Employee Benefit Plan, in the case of this clause (y), which will be binding upon
Buyer (or any Affiliate of Buyer) or with respect to which Buyer (or any Affiliate of Buyer) will have any liability or obligation
as of or following the Closing, and no such agreement, arrangement or Employee Benefit Plan as described in the foregoing clauses
(x) and (y) is presently being negotiated by Seller or any Affiliate of Seller.
(iii)
Neither
Seller nor any Affiliate of Seller (x) has received any written notice with respect to any litigation, action, suit, arbitration,
claim, government investigation or proceeding or (y) is party to or subject to the provision of any judgment, order, writ, injunction,
decree or award of any Governmental Authority, in each case of (x) and (y), with respect to any Employee, Employee Benefit Plan
or employment practice at or with respect to the Property.
(r)
Neighboring
Land
.
Schedule 3.2(r)
sets forth a true, correct and complete list of all addresses of the real property that are adjacent,
contiguous or within a three mile radius of any Property that will be owned by Seller or any Affiliate of Seller after Closing.
(s)
Municipal
Letters of Credit
.
Schedule 3.2(s)
sets forth a true, correct and complete list of all letters of credit that Seller
or any Affiliate of Seller has posted with respect to all or any portion of the Property (each, a “
Municipal Letter of
Credit
”), and Seller does not have any obligation to post any other letters of credit with respect to all or any portion
of the Property. Seller has not received any written notice of default under any Municipal Letter of Credit and to Seller’s
Knowledge no default under any Municipal Letter of Credit exists.
Section
3.3.
Covenants of Seller Prior to Closing
.
(a)
From
the Effective Date until the Closing or earlier termination of this Agreement, Seller or Seller’s agents shall:
(i)
Operation
.
Operate and maintain the Assets in accordance with this Agreement and substantially in accordance with Seller’s past practices
with respect to the Assets, including performing the capital improvements or replacements to the Property as required in the ordinary
course of business and the Capital Expenditures Work and Landlord Work set forth in Section 3.3(f) and Section 3.3(g). Seller
shall not (x) make any material changes or alterations of the Property without Buyer’s prior written consent, which consent
may be given or withheld in Buyer’s sole and absolute discretion, except for the Capital Expenditures Work and Landlord
Work or (y) remove any Personal Property from the Property, unless such item is replaced by an item of similar condition, utility
and value.
(ii)
Encumbrances
.
Not record or cause or permit to be recorded against any Property the encumbrance of any mortgages, deeds of trust or other encumbrances,
in each case without Buyer’s prior written consent, which consent may be given or withheld in Buyer’s sole and absolute
discretion.
(iii)
Litigation;
Condemnation
. Advise Buyer promptly of any litigation, arbitration proceeding or administrative hearing (including
condemnation) before any Governmental Authority that affects the Assets, which is instituted after the Effective Date. Seller
shall keep Buyer reasonably informed of the status of any litigation, arbitration proceeding or administrative hearing
(including condemnation), whether instituted before or after the Effective Date, and Seller shall not settle any such
proceeding or take any other action with respect thereto without Buyer’s prior written consent.
(iv)
Violations
.
Diligently and in a commercially reasonable manner work to cure, remove and/or close out by the applicable municipal authority
any Violations (which, for the avoidance of doubt, shall include bearing responsibility and paying for any fees, fines or penalties
in connection with such Violations).
(v)
Violation
Notices
. Deliver to Buyer promptly after receipt thereof copies of any written notices of Violations or other material written
notices regarding the Property received by Seller or any Affiliate of Seller.
(vi)
Defaults
.
Advise Buyer promptly of any notices of default delivered or received under any Space Lease, Contract, Association Document
or REA following the Effective Date.
(vii)
Insurance
.
Keep the Property insured in such amounts and under such terms as are substantially consistent with Seller’s existing insurance
programs set forth on
Schedule 3.2(j)
, and promptly after the Effective Date, add Buyer as an additional insured on any
business interruption insurance policies affecting the Property.
(viii)
Performance
Under Agreements
. Perform, or cause its agents to perform, in all material respects, all obligations of (A) landlord or lessor
under the Space Leases and (B) counterparty under the Contracts, Association Documents and REAs.
(ix)
Taxes,
Charges, etc
. Continue to pay or cause to be paid all Taxes, and water and sewer charges in respect of the Property, as they
become due in the ordinary course of business.
(x)
SNDAs
.
Upon the written request of Buyer, Seller agrees to forward to each tenant under any Lease, at no cost to Seller and solely as
an accommodation to Buyer, a subordination, non-disturbance and attornment agreement in the form acceptable to Buyer (a “
SNDA
”).
It is expressly understood and agreed that the receipt of one or more SNDAs in any form executed by Tenants shall not be a condition
to Buyer’s obligation to proceed with the Closing under this Agreement.
(xi)
Warranties
.
Use commercially reasonable efforts, but at no cost to Seller, to have all roof warranties and other warranties related to the
Property assigned or re-issued to Buyer at Closing. In the event Seller is unable to assign such warranties to Buyer as of the
Closing, Seller shall continue to reasonably cooperate with Buyer to get such warranties assigned or re-issued to Buyer, and Seller
shall take all reasonable action, as directed by Buyer and at Buyer’s sole cost and expense, in connection with the enforcement
of such warranties.
(xii)
Exclusivity
.
From the Effective Date until the Closing or sooner termination of this Agreement, neither Seller nor any agent, partner, employee,
director or subsidiary or Affiliate of Seller shall accept or entertain offers, negotiate, solicit interest or otherwise enter
into discussions involving the sale, joint venture, recapitalization, restructuring, disposition or other transaction involving
all or any part of the Property (whether directly or indirectly).
(b)
New
Contracts
. Following the Effective Date until the Closing or earlier termination of this Agreement, without the prior written
consent of Buyer in its sole discretion, Seller shall not enter into any contracts, equipment leases or other agreements affecting
the Property that will not be terminated at or prior to the Closing Date at no expense to Buyer (“
New Contracts
”)
or amend, modify or terminate any Contracts; provided that Seller may enter into New Contracts or amend or modify any Contracts
without Buyer’s consent if such action is necessary as a result of an emergency at the Property. If Seller enters into any
New Contracts or amends or modifies any Contract after the Effective Date, then Seller shall promptly provide written notice and
a copy thereof to Buyer and, unless such contract required Buyer’s approval pursuant to this paragraph and such approval
was not obtained (or unless such contract was entered into without Buyer’s consent as a result of an emergency), Buyer shall
assume such contract at Closing, the schedule of contracts attached to the Assignment of Contracts shall be so modified, such
contract shall be deemed added to
Schedule 4.2
, and
Schedule 4.2
shall be deemed amended at the Closing to include
such contract. If a New Contract or amendment or modification to a Contract requires Buyer’s approval and Buyer does not
object within five (5) Business Days after receipt of a copy of such contract together with a written request for Buyer’s
approval of such contract, then Buyer shall be deemed to have approved such contract.
(c)
Space
Leases
.
(i)
Following
the Effective Date until the Closing or earlier termination of this Agreement, without the prior written consent of Buyer in its
sole discretion, Seller shall not execute any New Lease or amend, terminate or accept the surrender of any existing tenancies
except that Seller is authorized to (A) accept the termination of Space Leases at the end of their existing terms, or amendments
memorializing extensions of any Space Leases as required thereunder, and (B) terminate any Space Lease arising from a default
by the Tenant in the exercise of the landlord’s remedies under such Space Lease, made in good faith by Seller in Seller’s
commercially reasonable judgment. Following the Effective Date until the Closing or earlier termination of this Agreement, without
the prior written consent of Buyer in its sole discretion, Seller shall not apply any Security Deposit under any Space Lease.
If a New Lease or an amendment, renewal or extension of a Space Lease requires Buyer’s consent and Buyer does not object
within five (5) Business Days after receipt of a letter of intent or other documentation evidencing the applicable leasing transaction
from Seller or its Representative to enter into, amend, renew or extend such Space Lease, then Buyer shall be deemed to have approved
such New Lease or amendment
.
(ii)
Notwithstanding
anything to the contrary in Section 3.3(c)(i),
the
applicable
Seller is authorized to enter into a space lease (such lease, the “
YBR
Lease
”)
with respect to the individual Property located at
9104 Yellow
Brick Road, Rosedale, Maryland 21237 (such individual Property, the “
YBR Property
”) with York International
Corporation, provided that such lease (A) is on the standard form lease for the Property as previously provided by Seller to Buyer,
(B) includes the material terms set forth on the letter of intent set forth on
Schedule 3.3(c)(ii)
and such other terms
that are reasonably approved by Buyer and (C) does not include any rights of first refusal, rights of first offer, purchase options
or similar rights relating to the YBR Property or any interest therein. In connection with the foregoing, Seller agrees to provide
Buyer with regular updates on the status of such negotiations
and to
provide copies
of all correspondences sent or received by Seller with respect to the terms thereof.
(iii)
Notwithstanding
anything to the contrary in Section 3.3(c)(i),
the
applicable
Seller is authorized to
amend the AC Lease
,
provided that such amendment shall be limited to the removal of Section 29 of the AC Lease.
(iv)
If
Seller enters into any lease after the Effective Date, then unless such lease required Buyer’s approval pursuant to this
Section 3.3(c) and such approval was not obtained, Buyer shall assume such lease at Closing and the schedule of Space Leases attached
to the Assignment of Leases shall be so modified, such lease shall be deemed added to
Schedule 3.2(b-1)
, and
Schedule
3.2(b-1)
shall be deemed amended at the Closing to include such lease
.
(d)
Affiliate
Agreements, Leasing Agreements and Brokerage Agreements
. Seller shall terminate all Affiliate Agreements and all leasing and
brokerage agreements with respect to the Property, at or prior to Closing. All termination fees and any other costs and expenses
relating to such termination shall be the responsibility solely of Seller, and Buyer shall not have any responsibility or liability
thereunder. Seller’s obligations under this Section 3.3(d) shall survive the Closing.
(e)
Terminated
Contracts
. Seller shall deliver a notice of termination with respect to the Contracts with respect to the Property except
the Assumed Contracts. All termination fees and any other costs and expenses relating to such termination shall be the responsibility
solely of Seller, and Buyer shall not have any responsibility or liability therefor. Seller’s obligations under this Section
3.3(e) shall survive the Closing.
(f)
Capital
Expenditures Work
.
Seller shall use commercially
reasonable efforts to perform the work more particularly described on
Schedule 3.3(f)
(the “
Capital Expenditures
Work
”) on or prior to the Closing, provided that the completion of the Capital Expenditures Work shall not be a condition
precedent to Buyer’s obligations to consummate the Closing. To the extent the Capital Expenditures Work is not completed
by or prior to the Closing, (i) Seller shall provide Buyer at the Closing with reasonable evidence of the remaining work to be
completed, amounts that remain to be paid under any contract for the Capital Expenditures Work and amounts that have been paid
under any such contract(s) or otherwise prior to the Closing, (ii) Seller shall assign the contract(s) to the extent assignable,
if any, for any such Capital Expenditures Work to Buyer at the Closing, (iii) Buyer shall assume at the Closing the obligations
under any such contract(s) to complete such Capital Expenditures Work (and such Contracts, if any, shall be deemed to be added
to
Schedule 4.2
, and
Schedule 4.2
shall be deemed amended at Closing to include such Contracts), and (iv) in such
event, Buyer shall receive a credit to the Purchase Price equal to one hundred ten percent (110%) of
the
“costs remaining” for any Capital Expenditures Work set forth on
Schedule 3.3(f)
, less any amounts previously
paid by or on behalf of Seller after the Effective Date with respect to such Capital Expenditures Work. For the avoidance of doubt,
to the extent Buyer receives a credit for any Capital Expenditures Work under this Section 3.3(f), Buyer shall not receive a credit
for such amounts pursuant to any provision of Article X herein (including, without limitation, Section 10.5) even if such Capital
Expenditures Work constitutes construction or repairs required to be completed by the landlord pursuant to a Space Lease and is
otherwise included in the definition of Leasing Costs hereunder.
(g)
Landlord
Work
.
Seller shall use commercially reasonable
efforts to perform the work required to be completed by the landlord pursuant to a Space Lease as more particularly described
on
Schedule 3.3(g)
(the “
Landlord Work
”) on or prior to the Closing, provided that the completion of
the Landlord Work shall not be a condition precedent to Buyer’s obligations to consummate the Closing. To the extent the
Landlord Work is not completed by or prior to the Closing, (i) Seller shall provide Buyer at the Closing with reasonable evidence
of the remaining work to be completed, amounts that remain to be paid under any contract for the Landlord Work and amounts that
have been paid under any such contract(s) or otherwise prior to the Closing, (ii) Seller shall assign the contract(s) to the extent
assignable, if any, for any such Landlord Work to Buyer at the Closing, (iii) Buyer shall assume at the Closing the obligations
under any such contract(s) to complete such Landlord Work (and such Contracts, if any, shall be deemed to be added to
Schedule
4.2
, and
Schedule 4.2
shall be deemed amended at Closing to include such Contracts), and (iv) in such event, Buyer
shall receive a credit to the Purchase Price equal to one hundred ten percent (110%) of
the
actual third party costs required to be paid for the remaining
construction work or repairs
applicable
to each applicable Landlord Work that has not been completed and for any unpaid amounts with respect to any work that has been
completed but that has not been fully paid for under such contract(s). For the avoidance of doubt, to the extent Buyer receives
a credit for any Landlord Work under this Section 3.3(g), Buyer shall not
receive a credit for such amounts pursuant to any provision
of Article X herein (including, without limitation, Section 10.5) even if such Landlord Work constitutes construction or repairs
required to be completed by the landlord pursuant to a Space Lease and is otherwise included in the definition of Leasing Costs
hereunder.
(h)
Associations
.
Following the Effective Date until the earlier of Closing or a termination of this Agreement, Seller shall (i) not amend, supplement,
terminate or otherwise modify any Association Documents, or cause or permit (to the extent Seller or its Affiliates have the requisite
rights) any Association formed pursuant to any Association Documents to make any material decisions or take any material actions,
without Buyer’s prior written consent in its sole discretion and (ii) comply with all obligations and requirements with
respect to all Association Documents. On or prior to the Closing Date, Seller shall (A) cause each officer or director of any
board appointed by Seller to resign his or her position as officer or director with respect to any such Association at any Property
and (B) facilitate the appointment of Buyer’s replacement officers and directors with respect to any such Association at
any Property. Seller shall use commercially reasonable efforts to obtain an executed estoppel certificate from each Association
in the form of
Exhibit B-1
attached hereto or such other form as Buyer approves in its sole discretion (each, an “
Association
Estoppel
”), but unless Seller or any Affiliate of Seller controls such Association, (i) the receipt of Association Estoppels
shall not be a condition to Buyer’s obligation to consummate the Closing and (ii) the non-receipt of any Association Estoppel
shall not be a condition to Buyer’s obligation to consummate the Closing. Seller’s failure to deliver any Association
Estoppel shall not constitute a default by Seller unless Seller or any Affiliate of Seller controls such Association. It shall
be a condition to Buyer’s obligation to consummate the Closing that, at least two (2) Business Days prior to the Closing
Date, Seller shall deliver to Buyer Association Estoppels with respect to any Association directly or indirectly controlled by
Seller or any Affiliate of Seller (collectively, the “
Required Association Estoppels
”).
(i)
REAs
.
Following the Effective Date until the earlier of Closing or a termination of this Agreement, Seller shall (i) not amend, supplement,
terminate or otherwise modify any of the REAs or cause or permit (to the extent Seller or its Affiliates have the requisite rights)
any REAs to be amended, modified, supplemented terminated or canceled without Buyer’s prior written consent in its sole
discretion and (ii) comply with all obligations and requirements with respect to all REAs. Seller shall use commercially reasonable
efforts to obtain an executed estoppel certificate from each counterparty to an REA in the form of
Exhibit B-2
attached
hereto or such other form as Buyer approves in its sole discretion (each, an “
REA Estoppel
”), but (i) receipt
of REA Estoppels shall not be a condition to Buyer’s obligation to consummate the Closing and (ii) the non-receipt of any
REA Estoppel shall not constitute grounds to refuse to consummate the Closing. Seller’s failure to deliver any REA Estoppel
shall not constitute a default by Seller.
Section
3.4.
Tenant Estoppels
.
(a)
Promptly
following the Effective Date, Seller shall prepare and deliver to all Tenants an estoppel certificate in the form of
Exhibit
A-1
attached hereto (each, a “
Tenant Estoppel
”) and request each such Tenant to execute and deliver the
Tenant Estoppel to Seller;
provided
,
however
, with respect to the Tenants set forth on
Schedule 3.4(a
), Seller
shall prepare and deliver an estoppel certificate in the form of
Exhibit A-2
or
Exhibit A-3
attached hereto, as
applicable. Seller shall use commercially reasonable efforts to obtain the prompt return of the executed Tenant Estoppels in
substantially the same form of
Exhibit A-1, Exhibit A-2
or
Exhibit A-3
attached hereto, as applicable (without
the obligation to make any payments or grant any concessions to Tenants under the Space Leases).
(b)
Other
than as set forth in Section 3.4(c) and Section 5.2(e), (i) the receipt of Tenant Estoppels shall not be a condition to Buyer’s
obligation to consummate the Closing and (ii) the non-receipt of any Tenant Estoppel shall not constitute grounds to refuse to
consummate the Closing. Seller’s failure to deliver the Required Tenant Estoppels shall not constitute a default by Seller.
(c)
It
shall be a condition to Buyer’s obligation to consummate the Closing that, at least two (2) Business Days prior to the Closing
Date, Seller shall deliver to Buyer Tenant Estoppels with respect to both (i) at least eight (8) of the ten (10) Major Leases
(including all five (5) of the largest Major Leases based upon Tenant Leased Square Footage); and (ii) Tenants leasing at least
seventy-five percent (75%) of the Tenant Leased Square Footage of the Property, each of which shall be dated no earlier than forty-five
(45) days prior to Closing (collectively, the “
Required Tenant Estoppels
”). Notwithstanding anything herein
to the contrary, Buyer shall have no right to object (and such Tenant Estoppel shall count towards the Required Tenant Estoppel
requirement hereunder) if Tenant delivers a Tenant Estoppel which is dated no earlier than forty-five (45) days prior to Closing
and (i) in substantially the same form attached hereto as
Exhibit A-1
,
Exhibit A-2
or
Exhibit A-3
attached hereto,
as applicable or (ii) in form or substance provided for in the terms of the applicable Tenant’s Space Lease, in each case,
subject to non-material modification thereof; provided, however, such Tenant Estoppel shall not count towards the Required Tenant
Estoppel requirement to the extent it alleges any default by Seller, accrued and outstanding offsets or defenses under the relevant
Space Lease, or contains any adverse deviations between (x) the information specified in said Tenant Estoppel and (y) (i) the
representations and warranties of Seller set forth in this Agreement or (ii) the applicable Space Lease to which such Tenant Estoppel
relates. Seller shall deliver to Buyer any and all Tenant Estoppels received from tenants (including, without limitation, tenant
marked drafts), whether or not such Tenant Estoppels meet the requirements of this Section 3.4 and whether or not Seller intends
to seek a revised or updated Tenant Estoppel from such Tenant.
(d)
In
the event the Tenants set forth on
Schedule 3.4(d)
deliver a Tenant Estoppel which alleges any default by Seller with respect
to the matters set forth on
Schedule 3.4(d)
, in addition to such Tenant Estoppel not counting towards the Required Tenant
Estoppel requirements pursuant to Section 3.4(c), Buyer shall also have the right to terminate this Agreement as to only such
affected Property by giving written notice to Seller, in which event (i) this Agreement shall be deemed modified to exclude such
affected Property from this Agreement, (ii) the Allocated Earnest Money attributable to such affected Property shall be immediately
returned to Buyer, (iii) the Purchase Price shall be reduced by the Allocated Asset Value of such affected Property, and (iv)
neither party hereto shall have any further rights or obligations with respect to such affected Property hereunder other than
those which expressly survive the termination of this Agreement.
Section
3.5.
Projects Involving Letters of Credit
.
(a)
The
capital projects, construction work or repairs more particularly described on
Schedule 3.5
(the “
LOC Work Projects
”)
are not expected to be completed until after Closing and the completion of the LOC Work Projects shall not be a condition precedent
to Buyer’s obligations to consummate the Closing. To the extent any LOC Work Projects are not completed by or prior to the
Closing, (i) Seller shall continue such LOC Work Projects until completion in accordance with all Applicable Law, as contemplated
by the applicable agreements and plans described on
Schedule 3.5
and otherwise in accordance with the terms of this Agreement
and terms of the LOC Work Access Agreement (the “
LOC Completion Conditions
”), and (ii) Buyer and Seller agree
that an amount equal to one hundred twenty five percent (125%) of the actual third party costs that remain to be paid for each
of the LOC Work Projects (in the reasonable judgment of the general contractor selected by Seller and reasonably acceptable to
Buyer with respect to such LOC Work Project (“
Contractor
”)), shall be held back from the Closing proceeds and
deposited into an escrow with Escrow Agent (the “
LOC Work Holdback
”). Upon final completion of any individual
LOC Work Project in accordance with the LOC Completion Conditions, Seller shall be entitled to submit a written request for disbursement
of the amount of the LOC Work Holdback allocated to such LOC Work Project to Buyer and Escrow Agent together with
(i)
sufficient evidence establishing that the LOC Completion Conditions have been satisfied, (ii)
all
amounts payable to Contractor have been paid for (or will be paid for from the LOC Work Holdback)
and (iii) an unconditional
final lien waiver from the Contractor. If within five (5) Business Days of Buyer’s receipt of such
request
for disbursement
Escrow Agent has not received a written objection from Buyer,
Escrow
Agent shall then disburse to Seller the amount of the LOC Work Holdback allocated to such LOC Work Project. For the avoidance
of doubt, Escrow Agent shall not disburse any amount in dispute until Escrow Agent receives written instructions from both Seller
and Buyer, or such dispute is resolved pursuant to the terms of Section 16.5.
Upon disbursement of the amount of the LOC
Work Holdback
allocated to such
LOC Work Project, Seller shall (i) require the applicable
Contractor to provide an unconditional final lien waiver and affidavit of costs in order to receive the final payment, (ii) instruct
such Contractor to require each supplier or subcontractor who may be entitled to file a lien against the Property to provide an
unconditional lien waiver in order to receive their final payments and (iii) use commercially reasonable efforts to cause to be
issued to or assigned to Buyer all warranties provided or to be provided with respect to such LOC Work Project.
In
the event such warranties are not assignable, Seller shall, at its sole expense, use commercially reasonable efforts to provide
Buyer with the economic benefits of such arrangements by enforcing such warranties (at Buyer’s direction) for the benefit
of Buyer. Notwithstanding anything herein to the contrary, in the event Seller fails to complete any LOC Work Project in advance
of the outside date for such LOC Work Project set forth on
Schedule 3.5
, Buyer shall have the right to (i) take over completion
of such LOC Work Project, (ii) terminate Seller’s access to such Property (or the applicable portion thereof) under the
LOC Work Access Agreement and (iii) upon substantial completion of such LOC Work Project, submit a written request to Seller and
Escrow Agent for disbursement of the amount of the LOC Work Holdback allocated to such LOC Work Project. If within five (5) Business
Days of Seller’s receipt of such request for disbursement Escrow Agent has not received a written objection from Seller,
Escrow Agent shall then disburse to Buyer the amount of the LOC Work Holdback allocated to such LOC Work Project and neither Buyer
nor Seller shall have any further obligations or liabilities as related to such LOC Work Project except as expressly set forth
herein; provided however, Seller
shall only be permitted to object to such disbursement in good faith to the extent Seller reasonably
believes that such LOC Work Project was not substantially completed by Buyer. Escrow Agent shall not disburse any amount in dispute
until Escrow Agent receives written instructions from both Seller and Buyer, or such dispute is resolved pursuant to the terms
of Section 16.5.
(b)
Notwithstanding
anything herein to the contrary, Seller shall continue to provide the Municipal Letters of Credit until the corresponding work
has been completed and the obligation to post such Municipal Letter of Credit with respect thereto has been released.
All
obligations, costs and expenses relating to such
Municipal Letters of Credit
shall
be the responsibility solely of Seller, and Buyer shall not have any responsibility or liability therefor.
(c)
This
Section 3.5 shall survive indefinitely.
Section
3.6.
AC Lease
. Following the Effective
Date until the earlier of Closing or a termination of this Agreement, Seller shall use commercially reasonable efforts to enter
into an amendment to the AC Lease to remove Section 29 thereof in its entirety. Such amendment shall not be a condition to Buyer’s
obligation to consummate the Closing and the non-receipt of such amendment shall not constitute grounds to refuse to consummate
the Closing, but absent receipt of such amendment, Buyer shall have the right, exercised by written notice to Seller, to terminate
this Agreement as to only the AC Property by delivering written notice to Seller, in which event (a) this Agreement shall be deemed
modified to exclude the AC Property from this Agreement, (b) the Allocated Earnest Money attributable to the AC Property shall
be immediately returned to Buyer, (c) the Purchase Price shall be reduced by the Allocated Asset Value of the AC Property, and
(d) neither party hereto shall have any further rights or obligations with respect to the AC Property hereunder other than those
which expressly survive the termination of this Agreement.
Article
IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Section
4.1.
Representations and Warranties of Buyer
.
Buyer hereby represents and warrants to Seller as follows:
(a)
Formation;
Existence
. Buyer is a limited liability company duly formed, validly existing and in good standing under the laws of the State
of Delaware.
(b)
Power;
Authority
. Buyer has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, the purchase
of the Assets and the consummation of the transactions provided for herein have been duly authorized by all necessary action on
the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid and binding obligation
of Buyer enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights and by general principles of equity (whether applied
in a proceeding at law or in equity).
(c)
No
Consents
. No consent, license, approval, order, permit or authorization of, or registration, filing or declaration with, any
court, administrative agency or commission or other Governmental Authority or instrumentality, domestic or foreign, is required
to be obtained or made in connection with the execution, delivery and performance of this Agreement by Buyer or any of Buyer’s
obligations in connection with the transactions required or contemplated hereby.
(d)
No
Conflicts
. Buyer’s execution, delivery and compliance with, and performance of the terms and provisions of, this Agreement,
and the purchase of the Assets, will not (i) conflict with or result in any violation of its organizational documents, (ii) conflict
with or result in any violation of any provision of any bond, note or other instrument of indebtedness, contract, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which Buyer is a party in its individual capacity, or
(iii) violate any Applicable Law relating to Buyer or its assets or properties.
(e)
Bankruptcy
.
Buyer (i) is not a debtor under any bankruptcy proceedings, voluntary or involuntary, (ii) has not made an assignment for the
benefit of creditors, (iii) has not suffered the appointment of a receiver to take possession of all, or substantially all, of
Buyer’s assets, which remains pending or (iv) suffered the attachment or other judicial seizure of all, or substantially
all of Buyer’s assets, which remains pending and to Buyer’s Knowledge, no such action is being threatened against
Buyer.
(f)
Anti-Terrorism
Laws
.
(i)
Neither
Buyer nor, to Buyer’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is in violation of the
Anti-Bribery, Anti-Money Laundering and Anti-Terrorism Laws.
(ii)
Neither
Buyer nor, to Buyer’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is acting, directly
or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those Persons or entities
that appear on the Annex to the Executive Order, or are included on any Government Lists.
(iii)
Neither
Buyer, nor to Buyer’s Knowledge, any of its subsidiaries, officers, directors, employees or agents, is a Person named on
a Government List, or is acting for or on behalf of any Sanctioned Country and the monies used in connection with this Agreement
and amounts committed with respect thereto, were not and are not derived from any activities with the governments of, or any individuals
or entities located in, any Sanctioned Country or from activities that otherwise contravene any economic sanctions administered
by OFAC, the U.S. Department of State, or any other applicable economic sanctions authority (collectively, “
Sanctions
”),
or from any activities that contravene any Anti-Bribery, Anti-Money Laundering and Anti-Terrorism Laws (including funds being
derived from any Person, entity, country or territory on a Government List or engaged in any unlawful activity defined under Title
18 of the United States Code, Section 1956(c)(7))
.
(iv)
Neither
Buyer, nor any Person controlling or controlled by Buyer, is the target of Sanctions.
Section
4.2.
Covenants
of Buyer
. Buyer shall assume as of the Closing certain Contracts pertaining to the operation of the Property (the “
Assumed
Contracts
”). For the purposes hereof, the Assumed Contracts shall only include those Contracts listed or deemed to be
included on
Schedule 4.2
attached hereto.
Article
V
CONDITIONS PRECEDENT TO CLOSING
Section
5.1.
Conditions Precedent to Seller’s
Obligations
. The obligation of Seller to consummate the transfer of the Assets to Buyer on the Closing Date is subject
to the satisfaction (or waiver by Seller) as of the Closing Date of the following conditions:
(a)
Each
of the representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects (without
giving effect to any qualification as to materiality, or any correlative terms in Section 4.1) when made and on and as of the
Closing Date as though such representations and warranties were made on and as of the Closing Date.
(b)
Buyer
shall have performed or complied in all material respects with each obligation and covenant required by this Agreement to be performed
or complied with by Buyer on or before the Closing.
(c)
No
order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive
order promulgated by any Governmental Authority of competent jurisdiction shall be in effect as of the Closing which restrains
or prohibits the transfer of the Assets.
(d)
No
action, suit or other proceeding shall be pending which shall have been brought to restrain or prohibit the transfer of the Assets.
(e)
Seller
or Escrow Agent shall have received all of the documents required to be delivered by Buyer under Section 6.1.
(f)
Seller
or Escrow Agent shall have received the Purchase Price in accordance with Section 2.2 and all other amounts due to Seller hereunder.
(g)
The
Shareholder Approval shall have been obtained.
Section
5.2.
Conditions Precedent to Buyer’s
Obligations
. The obligation of Buyer to purchase and pay for the Assets on the Closing Date is subject to the satisfaction
(or waiver by Buyer) as of the Closing Date of the following conditions:
(a)
Each
of the representations and warranties made by Seller and Parent in this Agreement shall be true and correct
in
all material respects
(
without giving effect to any
qualification as to materiality,
or any correlative terms in Section 3.1 or Section 3.2)
when made and on and as of the Closing
Date as though such representations and warranties were made on and as of the Closing Date.
(b)
Seller
and Parent shall have performed or complied in all material respects with each obligation and covenant required by this Agreement
to be performed or complied with by Seller and Parent on or before the Closing Date.
(c)
No
order or injunction of any court or administrative agency of competent jurisdiction nor any statute, rule, regulation or executive
order promulgated by any Governmental Authority of competent jurisdiction shall be in effect as of the Closing Date which restrains
or prohibits the transfer of the Assets.
(d)
No
action, suit or other proceeding shall be pending which shall have been brought to restrain or prohibit the transfer of the Assets.
(e)
Buyer
shall have timely received the Required Tenant Estoppels pursuant to Section 3.4(c) and the Required Association Estoppels pursuant
to Section 3.3(h).
(f)
Buyer
shall have received all of the documents required to be delivered by Seller under Section 6.2.
(g)
Fee
simple title to the Property shall be vested in Seller (and at the Closing shall be conveyed to Buyer) subject only to the Permitted
Exceptions. Title Company shall be irrevocably and unconditionally committed to issue the Title Policies to Buyer.
(h)
The
Shareholder Approval shall have been obtained.
Section
5.3.
Waiver of Conditions Precedent
.
The occurrence of the Closing shall constitute conclusive evidence that Seller and Buyer have respectively waived any conditions
which are not satisfied as of the Closing.
Article
VI
CLOSING DELIVERIES
Section
6.1.
Buyer Closing Deliveries
. Buyer
shall deliver the following documents to the Escrow Agent on or before the Closing Date:
(a)
With
respect to the Assets:
(i)
an
assignment and assumption of Seller’s interest in the Space Leases for the Property (the “
Assignment of Leases
”)
duly executed by Buyer in substantially the form of
Exhibit C
attached hereto;
(ii)
an
assignment and assumption of the Assumed Contracts for the Property (the “
Assignment of Contracts
”) duly executed
by Buyer in substantially the form of
Exhibit D
attached hereto;
(iii)
notice
letters to the Tenants at the Property (the “
Tenant Notices
”) duly executed by Buyer, in substantially the
form of
Exhibit E
attached hereto;
(iv)
the
assignment of all licenses, permits, warranties and intangibles with respect to the Property to the extent assignable (but excluding
any Excluded Assets) (the “
Assignment of Licenses, Permits, Warranties and General Intangibles
”) duly executed
by Buyer in substantially the form of
Exhibit F
attached hereto
;
(v)
certificate
duly executed by Buyer certifying that all of the representations and warranties of Buyer set forth in this Agreement are true
and correct and remade on and as of the Closing Date; and
(vi)
LOC
Work Access Agreement duly executed by Buyer.
(b)
With
respect to the transactions contemplated hereunder:
(i)
all
transfer tax returns and forms to the extent required by Applicable Law in connection with the payment of all state or local real
property transfer taxes that are payable or arise as a result of the consummation of the transactions contemplated by this Agreement,
in each case, as prepared by Seller and Buyer and duly executed by Buyer, as applicable (the “
Transfer Tax Forms
”);
and
(ii)
a
closing statement prepared and reasonably approved by Seller and Buyer, consistent with the terms of this Agreement (the “
Closing
Statement
”) duly executed by Buyer.
Section
6.2.
Seller Closing Deliveries
.
Seller shall deliver (x) possession of the Assets subject only to the Permitted Exceptions and the Space Leases at Closing and
(y) the following documents to the Escrow Agent on or before the Closing Date:
(a)
With
respect to the Assets:
(i)
with
respect to each Property, a deed (the “
Deed
”) in substantially the form of
Exhibit G-1
through
G-3
attached hereto with respect to each applicable state, duly executed and acknowledged by the applicable Seller and in a form
that complies with the local recording requirements for the jurisdiction in which such Property is located;
(ii)
the
Assignment of Leases for Property duly executed by Seller;
(iii)
a
bill of sale duly executed by Seller in substantially the form of
Exhibit H
attached hereto, relating to all fixtures,
chattels, equipment and articles of Personal Property owned by Seller which are currently located upon or attached to the Property
or used solely in connection with the operation of the Property (but not including any Excluded Assets);
(iv)
the
Assignment of Contracts for the Property duly executed by Seller;
(v)
the
Tenant Notices for the Property duly executed by Seller;
(vi)
an
affidavit that Seller is not a “foreign person” within the meaning of Section 1445 of the Code, in substantially the
form of
Exhibit I-1
or
Exhibit I-2
attached hereto, as applicable, and any corresponding affidavits or forms required
to comply with any similar withholding requirements under state or local Applicable Law;
(vii)
the
Assignment of Licenses, Permits, Warranties and General Intangibles for the Property duly executed by Seller;
(viii)
notice
to any REA counterparties or Association counterparties who are entitled to receive notice pursuant to any REA or Association
Documents of the sale of the applicable individual Property;
(ix)
a
recordable assignment of Seller’s interest in any REA or Association Document (including but not limited to any applicable
developer or declarant rights);
(x)
evidence
of the termination of any management agreement, Affiliate Agreements and all leasing and brokerage agreements with respect to
the Property to which Seller is a party or which would be binding on Buyer or the Property;
(xi)
subject
to the terms of Section 9.3, evidence that all Options triggered by
the transactions contemplated
hereby
have been waived by the applicable counterparty thereto;
(xii)
copies
of the Space Leases referred to in the Assignment of Leases and the Security Deposits and lease files with respect thereto (including
originals of all guaranties and letters of credit, endorsed or assigned to Buyer, as applicable, and corresponding completed transfer
forms) and the Assumed Contracts and other property files, which delivery may be satisfied by delivery outside of escrow, at the
Property;
(xiii)
certificate
duly executed by Seller certifying that all of the representations and warranties of Seller set forth in this Agreement are true
and correct and remade on and as of the Closing Date;
(xiv)
the
Title Affidavit; and
(xv)
LOC
Work Access Agreement duly executed by Seller
.
(b)
With
respect to the transactions contemplated hereunder,
(i)
all
Transfer Tax Forms duly executed by Seller, as applicable;
(ii)
an
instrument or instruments, duly executed by the appropriate Persons, effectuating the resignation of all officers, directors and/or
managers appointed by Seller with respect to all Associations formed pursuant to the Association Documents; and
(iii)
the
Closing Statement duly executed by Seller.
Section
6.3.
Cooperation
. In the event any
Asset-Related Property is not assignable (such as a letter of credit that is not transferable), Seller shall use commercially
reasonable efforts after the Closing to provide Buyer with the economic benefits of such property by enforcing such property (at
Buyer’s direction) for the benefit of Buyer or causing a replacement to be issued in favor of Buyer. The provisions of this
Section 6.3 shall survive the Closing for a period of six (6) months.
Article
VII
INSPECTIONS; RELEASE
Section
7.1.
Right of
Inspection
. From and after the Effective Date and through the earlier of Closing or the earlier termination of this
Agreement in accordance with the terms hereof, Buyer and its representatives shall have the right to inspect the Property pursuant
to the terms of that certain Access Agreement entered into as of February 8, 2018, by and among Parent, on behalf of Seller, and
Blackstone Real Estate Advisors L.P., on behalf of Buyer (“
Access Agreement
”); provided, however, the termination
provisions set forth in Section 16 of the Access Agreement shall be deemed deleted in their entirety, and the term set forth in
this Section 7.1 shall apply.
Section
7.2.
GENERAL DISCLAIMER
.
IN ENTERING INTO THIS AGREEMENT, BUYER HAS NOT BEEN INDUCED BY AND HAS NOT RELIED UPON ANY WRITTEN OR ORAL REPRESENTATIONS,
WARRANTIES OR STATEMENTS, WHETHER EXPRESS OR IMPLIED, MADE BY SELLER, OR ANY PARTNER OR MEMBER OF SELLER, OR ANY AFFILIATE, AGENT,
EMPLOYEE, OR OTHER REPRESENTATIVE OF ANY OF THE FOREGOING OR BY ANY BROKER OR ANY OTHER PERSON REPRESENTING OR PURPORTING TO REPRESENT
SELLER WITH RESPECT TO THE ASSETS OR ANY OTHER MATTER AFFECTING OR RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN
THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND ANY CLOSING DOCUMENTS. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY
SET FORTH HEREIN OR ANY CLOSING DOCUMENTS, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED
OR ARISING BY OPERATION OF LAW, WITH RESPECT TO THE ASSETS, INCLUDING, BUT NOT LIMITED TO ANY REPRESENTATIONS, STATEMENTS OR WARRANTIES
AS TO THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE ASSETS, THE FITNESS OF THE ASSETS FOR A PARTICULAR USE, THE FINANCIAL PERFORMANCE
OR POTENTIAL OF THE ASSETS, THE COMPLIANCE OF THE PROPERTY WITH APPLICABLE BUILDING, ZONING, SUBDIVISION, ENVIRONMENTAL, LIFE
SAFETY OR LAND USE LAWS, CODES, ORDINANCES, RULES, ORDERS, OR REGULATIONS, OR THE STATE OF REPAIR OF THE PROPERTY, AND, EXCEPT
AS EXPRESSLY SET FORTH HEREIN OR ANY CLOSING DOCUMENTS, BUYER WAIVES ANY RIGHT TO ASSERT ANY CLAIM OR DEMAND AGAINST SELLER AT
LAW OR IN EQUITY RELATING TO ANY SUCH MATTER, WHETHER LATENT OR PATENT, DISCLOSED OR UNDISCLOSED, KNOWN OR UNKNOWN, NOW EXISTING
OR HEREAFTER ARISING. BUYER AGREES THAT, EXCEPT AS
EXPRESSLY
SET FORTH HEREIN OR ANY CLOSING DOCUMENTS, IT SHALL HAVE NO RECOURSE WHATSOEVER AGAINST SELLER, AT LAW OR IN EQUITY, SHOULD THE
SURVEY OR THE TITLE COMMITMENT OR THE TITLE POLICY FAIL TO DISCLOSE ANY MATTER AFFECTING THE PROPERTY OR REVEAL ANY SUCH MATTER
IN AN INACCURATE, MISLEADING OR INCOMPLETE FASHION OR OTHERWISE BE IN ERROR. BUYER AGREES THAT THE ASSETS WILL BE SOLD AND CONVEYED
TO (AND ACCEPTED BY) BUYER AT THE CLOSING IN THE THEN EXISTING CONDITION OF THE ASSETS, AS IS, WHERE IS, WITH ALL FAULTS, AND
WITHOUT ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR ARISING BY OPERATION OF
LAW, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY CLOSING DOCUMENTS. BUYER ACKNOWLEDGES THAT BUYER HAS KNOWLEDGE
AND EXPERTISE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BUYER TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.
Section
7.3.
RELEASE
. FROM AND
AFTER CLOSING, BUYER HEREBY AGREES THAT SELLER, AND EACH OF SELLER’S PARTNERS, MEMBERS, TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, PROPERTY MANAGERS, ASSET MANAGERS, AGENTS, ATTORNEYS, AFFILIATES AND RELATED ENTITIES, HEIRS, SUCCESSORS, AND
ASSIGNS (COLLECTIVELY, THE “
RELEASEES
”) SHALL BE, AND ARE HEREBY, FULLY AND FOREVER RELEASED AND DISCHARGED FROM ANY
AND ALL LIABILITIES, LOSSES, CLAIMS, DEMANDS, DAMAGES (OF ANY NATURE WHATSOEVER), CAUSES OF ACTION, COSTS, PENALTIES, FINES, JUDGMENTS,
REASONABLE ATTORNEYS’ FEES, CONSULTANTS’ FEES AND COSTS AND EXPERTS’ FEES (COLLECTIVELY, THE “
CLAIMS
”)
WITH RESPECT TO ANY AND ALL CLAIMS BY BUYER, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE
ON ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE ASSETS OR THE PROPERTY;
PROVIDED
,
HOWEVER
, THAT IN NO EVENT SHALL RELEASEES
BE RELEASED FROM (I) ANY CLAIMS ARISING PURSUANT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT OR SELLER’S OBLIGATIONS, IF
ANY, UNDER THE CLOSING DOCUMENTS, (II) ANY ACTS OF FRAUD BY SELLER OR (III) CLAIMS ASSERTED BY THIRD PARTIES RELATING TO THE ASSETS,
BUT ONLY IF AND TO THE EXTENT THE BASIS FOR SUCH CLAIMS OCCURS, ARISES OR ACCRUES PRIOR TO THE CLOSING DATE, EVEN IF SUCH CLAIM
IS ASSERTED ON OR AFTER THE CLOSING DATE.
Article
VIII
TITLE AND PERMITTED EXCEPTIONS
Section
8.1.
Title Insurance and Survey
.
On the Closing Date and subject to the terms and conditions of this Agreement, Seller’s fee simple interest in the Property
shall be
sold and is to be conveyed, and Buyer agrees to purchase Seller’s fee simple interest in the Property subject only
to the Permitted Exceptions and the provisions of this Article VIII.
Section
8.2.
Title Commitment;
Survey
. Except as expressly set forth on
Schedule 8.2
(“
Non-Permitted Exceptions
”), all title
exceptions and matters set forth in the Title Commitment and on the Survey shall be deemed Permitted Exceptions and are hereby
approved by Buyer. Seller shall be obligated to cure, remove or cause to be insured over at its expense all Non-Permitted Exceptions
in accordance with the “resolution” actions set forth on
Schedule 8.2
. Buyer is solely responsible for obtaining
any updated title commitments, surveys, or any other title related matters Buyer desires with respect to the Property.
Section
8.3.
Certain Exceptions to Title; Inability
to Convey
.
(a)
If
any updates to the Title Commitment or Survey reflect any matters which are not Permitted Exceptions (each such matter, a “
Title
Defect
”), then Buyer shall have the right to raise such Title Defect with Seller by delivering written notice describing
such Title Defect (each a “
Title Defect Notice
”) no later than five (5) Business Days from the date Buyer receives
any update to the Title Commitment or Survey (and in any event prior to the Closing). If Buyer fails to timely deliver a Title
Defect Notice, Buyer shall be deemed to have waived such Title Defect and such Title Defect shall be deemed to be a Permitted
Exception. Seller may elect (but shall not be obligated) to remove or cause to be removed, or insured over at its expense any
title matters which are not Permitted Exceptions as set forth in a Title Defect Notice, and shall be entitled to a reasonable
adjournment of the Closing (not to exceed thirty (30) days) for the purpose of such removal or cure, which removal or cure will
be deemed effected by the issuance of title insurance eliminating or insuring against the effect of such title matter in a manner
reasonably acceptable to Buyer. Seller shall notify Buyer of their election within five (5) days of receipt of a Title Defect
Notice (and in any event no later than two (2) Business Days prior to the Closing) and if Seller provides no such notice, Seller
shall be deemed to have elected not to cure the Title Defect(s) set forth therein. If Seller fails to cure or elects (or is deemed
to have elected) not to cure (or otherwise remove or have insured over by the Title Company) any Title Defect set forth in a Title
Defect Notice and otherwise is unable to convey fee title to the Property to Buyer at Closing subject only to Permitted Exceptions,
Buyer may elect, as its sole and exclusive remedy therefore, either to (x) terminate this Agreement by giving written notice to
Seller and Escrow Agent, in which event, the Earnest Money shall be returned to Buyer and, thereafter, the parties shall have
no further rights or obligations hereunder except for those obligations which expressly survive the termination of this Agreement,
or (y) waive such Title Defects, in which event such Title Defects shall be deemed additional “Permitted Exceptions”
and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price. Notwithstanding
anything in this Agreement to the contrary, Seller shall be obligated at Closing to cause the release or discharge of (i) any
Voluntary Encumbrance created by Seller on or after the Effective Date (each, a “
Post-Effective Date Voluntary Encumbrance
”),
(ii) the Existing Mortgage and any documents recorded in connection therewith, including, without limitation, any assignment of
leases and rents and UCC financing statement, and (iii) any lien encumbering the Property that is not a Permitted Exception that
may be removed by the payment of a sum of money (each item in this clause (iii), a “
Monetary Encumbrance
”)
provided, Seller shall not be obligated to spend more than $2,000,000 in the aggregate with respect to any Monetary Encumbrances.
The parties acknowledge and agree that Seller shall have the right to apply or
cause Escrow Agent to apply all or any portion
of the Purchase Price to cause the release of any Post-Effective Date Voluntary Encumbrance, the Existing Mortgage or any Monetary
Encumbrance, as applicable.
(b)
Except
as expressly set forth in this Section 8.3, nothing contained in this Agreement shall be deemed to require Seller to take or bring
any action or proceeding or any other steps to remove any title exception or to expend any moneys therefor, nor shall Buyer have
any right of action against Seller, at law or in equity, for Seller’s inability to convey its interest in the Property subject
only to the Permitted Exceptions.
Section
8.4.
Buyer’s Right to Accept Title
.
(a)
Notwithstanding
the foregoing provisions of this Article VIII, Buyer may, by written notice given to Seller at any time prior to the earlier of
(x) the Closing Date and (y) the termination of this Agreement, elect to accept such title as Seller can convey, notwithstanding
the existence of any Title Defect. In such event, this Agreement shall remain in effect and the parties shall proceed to Closing,
but Buyer shall not be entitled to any abatement of the Purchase Price, any credit or allowance of any kind, or any claim or right
of action against Seller for damages or otherwise by reason of the existence of any Title Defect except as otherwise agreed upon
by the parties.
(b)
Buyer
shall be entitled to request that the Title Company provide such endorsements (or amendments) to the Title Policy as Buyer may
reasonably require at Buyer’s sole cost and expense.
Section
8.5.
Cooperation
.
In connection with obtaining the Title Policy, Buyer and Seller, as applicable, and to the extent requested by the Title Company,
shall deliver to the Title Company (a) evidence sufficient to establish (i) the legal existence of Buyer and Seller and (ii) the
authority of the respective signatories of Seller and Buyer to bind Seller and Buyer, as the case may be, and (b) a certificate
of good standing of Buyer and Seller. In addition, Seller will deliver to the Title Company at Closing, if and to the extent requested
by Title Company, an owner’s title affidavit, gap indemnity and mechanics lien indemnity substantially in the form attached
hereto as
Exhibit J
(“
Title Affidavit
”). With respect to any Capital Expenditures Work and Landlord
Work completed and paid for by Seller prior to Closing, Seller shall also provide copies of lien waivers or such other documents
as the Title Company shall reasonably require in order to insure over liens related thereto on the Title Policy.
Article
IX
TRANSACTION COSTS; RISK OF LOSS; Options
Section
9.1.
Transaction Costs
.
(a)
Buyer
and Seller agree to comply with all real estate transfer and recordation tax laws applicable to the sale of the Assets. At Closing,
Seller shall pay or cause to be paid (i) one-half (1/2) of all transfer and recordation taxes payable, (ii) one-half (1/2) of
all escrow charges, (iii) all costs in connection with discharging any Existing Mortgages, Post-
Effective Date Voluntary Encumbrances
and Monetary Encumbrances that are the obligation of Seller hereunder and (iv) the costs of any endorsements issued to insure
over any Non-Permitted Exceptions or Title Defects. At Closing, Buyer shall pay or cause to be paid (i) one-half (1/2) of all
transfer taxes payable, (ii) all costs for the Title Policy except the amount for which Seller is responsible, as noted above,
(iii) any recording fees except the amount for which Seller is responsible, as noted above, (iv) one-half (1/2) of all escrow
charges, (v) all fees, costs or expenses in connection with Buyer’s due diligence reviews and analyses hereunder, (vi) the
cost of any update or recertification of the Survey, and (vii) all costs associated with Buyer’s financing, including documentary
stamp tax and intangible tax on any mortgage of the Property by Buyer. Any other transaction costs shall be paid by Buyer and
Seller, as applicable, in accordance with local custom for the Property. Seller and Buyer shall pay their respective shares of
prorations as hereinafter provided. Except as otherwise expressly provided in this Agreement, each party shall pay the fees of
its own attorneys, accountants and other professionals.
(b)
Each
party to this Agreement shall indemnify the other party hereto and its respective successors and assigns from and against any
and all Losses which such other party may sustain or incur as a result of the failure of either party to timely pay any of the
aforementioned taxes, fees or other charges for which it has assumed responsibility under this Section 9.1. The provisions of
this Section 9.1 shall survive the Closing or the termination of this Agreement indefinitely.
Section
9.2.
Risk of Loss
.
(a)
If,
on or before the Closing Date, the Property or any portion thereof shall be (i) damaged or destroyed by fire or other casualty
or (ii) taken, or threatened to be taken, as a result of any condemnation, eminent domain or similar proceeding, including the
receipt of any notice letter relating thereto (including, without limitation, any Existing Casualty / Condemnation), Seller shall
promptly notify Buyer prior to the Closing and, at Closing, Seller will credit against the Purchase Price payable by Buyer at
the Closing an amount equal to the net proceeds, if any, actually received by Seller as a result of such casualty or condemnation,
together with a credit for any deductible under such insurance. If as of the Closing Date, Seller has not received all or any
portion of such insurance or condemnation proceeds, then the parties shall nevertheless consummate on the Closing Date the conveyance
of the Assets (without any credit for such insurance or condemnation proceeds except for a credit for (i) any deductible under
such insurance as provided for herein and (ii) any uninsured loss) and Seller will at Closing assign to Buyer all rights of Seller,
if any, to the insurance or condemnation proceeds and to all other rights or claims arising out of or in connection with such
casualty or condemnation.
(b)
Notwithstanding
the provisions of Section 9.2(a), if, on or before the Closing Date, any individual Property or any portion thereof shall be (i)
damaged or destroyed by a Material Casualty or (ii) subject to a Material Condemnation, Buyer shall have the right, exercised
by written notice to Seller, to terminate this Agreement as to only such affected Property by delivering written notice to Seller,
in which event (i) this Agreement shall be deemed modified to exclude such affected Property from this Agreement, (ii) the Allocated
Earnest Money attributable to such affected Property shall be immediately returned to Buyer, (iii) the Purchase Price shall be
reduced by the Allocated Asset Value of such affected Property,
and (iv) neither party hereto shall have any further rights or
obligations with respect to such affected Property hereunder other than those which expressly survive the termination of this
Agreement.
(c)
Notwithstanding
the provisions of Section 9.2(a), if, on or before the Closing Date, the Property or any portion thereof shall be (i) damaged
or destroyed by one or more casualties and/or (ii) taken, or threatened to be taken, as a result of one or more condemnation,
eminent domain or similar proceedings, and the cost of repair (with respect to any such casualties) and the value of the applicable
portion of the Property (with respect to any such condemnations, eminent domain or similar proceedings) exceeds, in the aggregate,
seven and one-half percent (7.5%) of the Purchase Price, Buyer shall have the right, exercised by written notice to Seller, to
terminate this Agreement, in which event the Earnest Money shall be returned to Buyer and neither party hereto shall have any
further rights or obligations hereunder other than those which expressly survive the termination of this Agreement.
(d)
If
Buyer does not (i) terminate this Agreement with respect to such affected Property in accordance with Section 9.2(b) or (ii) terminate
this Agreement in accordance with Section 9.2(c), the provisions of Section 9.2(a) shall apply.
(e)
The
provisions of this Section 9.2 shall survive the Closing.
Section
9.3.
Options
.
(a)
Should
any counterparty to an Option exercise its right
to purchase any individual Property or the applicable portion thereof (an “
Excluded Option Property
”), Seller
shall promptly notify Buyer of the same in writing, in which event (i) this Agreement will terminate as to only such Excluded
Option Property and this Agreement shall be deemed modified to exclude such Excluded Option Property from this Agreement, (ii)
the Allocated Earnest Money attributable to such Excluded Option Property shall be immediately returned to Buyer, (iii) the Purchase
Price shall be reduced by the Allocated Asset Value of such Excluded Option Property, and (iv) neither party hereto shall have
any further rights or obligations with respect to such Excluded Option Property hereunder other than those which expressly survive
the termination of this Agreement. To the extent the Option held by Nutramax Laboratories, Inc. with respect to the individual
Property located at 2208 Lakeside Boulevard, Edgewood, Maryland 21040 is exercised by such tenant, the term “Excluded Option
Property” as used with respect to such Option shall be deemed to include both (i) 2208 Lakeside Boulevard, Edgewood, Maryland
21040 and (ii) 2206 Lakeside Boulevard, Edgewood, Maryland 21040.
(b)
Notwithstanding
the foregoing, if, after the date on which a portion of Property becomes an Excluded Option Property, but prior to the date that
is twelve (12) months after the Closing Date, either (i) such counterparty defaults on its obligation to purchase such Excluded
Option Property, or (ii) such Excluded Option Property otherwise becomes available for sale by the applicable Seller, then Seller
shall promptly notify Buyer. Within a period of ten (10) Business Days from the date of delivery of such notice, Buyer shall have
the right, at its sole option, to elect to cause Seller to sell such Excluded Option Property to Buyer at the Allocated Asset
Value of such Excluded Option Property set forth herein and otherwise in accordance with the terms of this Agreement by delivering
written notice from Buyer to Seller (“
Option Inclusion
Event
”).
If Buyer does not timely exercise its right to acquire such Excluded Option Property, then Buyer shall have no obligation to buy,
and Seller shall have no obligation to sell, such Excluded Option Property. If an Option Inclusion Event occurs in accordance
with the terms of this Agreement, Buyer shall have the right, in its sole discretion, to schedule the Closing with respect to
such Excluded Option Property on the earlier of (i) the Closing Date and (ii) up to sixty (60) days after the date of the Option
Inclusion Event. If an Option Inclusion Event occurs in accordance with the terms of this Agreement, this Agreement shall be deemed
amended to include the Excluded Option Property for all purposes under this Agreement and such Excluded Option Property shall
be subject to the terms and conditions of this Agreement, including the covenants of Seller related thereto. For the avoidance
of doubt, in the event the Closing for the Excluded Option Property occurs on a date other than the Closing Date, all prorations
in this Agreement and the Survival Period for representations, warranties and covenants established in this Agreement (other than
those related solely to such Excluded Option Property) that are based on the Closing Date shall still be calculated based on the
Closing Date (and not the date the Closing relative to such Excluded Option Property occurs), but all prorations for such Excluded
Option Property, and the Survival Period for representations, warranties and covenants related solely to such Excluded Option
Property shall be calculated as of the date the Closing relative to such Excluded Option Property actually occurs.
(c)
The
provisions of this Section 9.3 shall survive Closing.
Section
9.4.
Crossroads Outparcel
.
(a)
Promptly
following the Effective Date and continuing after the Closing Date, Seller shall, at Seller’s sole cost and expense, take
all necessary actions to subdivide the Crossroads Outparcel in order to enable Seller to transfer ownership of a separate legal
parcel comprised solely of the Crossroads Parking Property.
In connection with the foregoing,
Seller agrees to provide Buyer with regular updates on the status of such subdivision and provide copies of all correspondences
sent or received by Seller with respect thereof. Seller shall not encumber the Crossroads Outparcel nor construct any improvements
thereon.
(b)
Following
the subdivision of the Crossroads Outparcel pursuant to Section 9.4(a), if applicable, and subject to customary diligence (including,
but not limited to, title, zoning and survey diligence and environmental diligence), Seller shall convey and Buyer (or an Affiliate
thereof) shall acquire the Crossroads Parking Property (so long as such subdivision is achieved within one (1) year of the Closing)
at a separate closing, for no additional cash consideration, pursuant to a deed in substantially the form of
Exhibit G-2
,
subject only to any Permitted Exceptions and the transfer restriction set forth in the last sentence of Section 9.4(c) below.
The consideration for the Crossroads Parking Property shall be Buyer’s good faith covenants set forth in Section 9.4(c)
below, which shall survive the transfer of the Crossroads Outparcel for a period of one (1) year thereafter. All amounts due and
payable by the owner of the Crossroads Outparcel with respect to the year in which the Closing occurs shall be adjusted and prorated
based on the periods of ownership by Seller and Buyer during such year. For the avoidance of doubt, Seller and Buyer acknowledge
that as of the Effective Date, Buyer has not completed its diligence with respect to the Crossroads Parking Property. In the event
Buyer shall not be satisfied with the results of its diligence of the Crossroads Parking Property for any reason,
in its sole and
absolute discretion, Buyer shall have no obligation to acquire the Crossroads Parking Property.
(c)
Following
Buyer’s acquisition of the Crossroads Parking Property, if applicable, and subject to Buyer (i) agreeing upon
acceptable construction cost arrangements with Advanced Relocation Services, (ii) obtaining any required approvals from any
Governmental Authority and (iii) approving the results of its customary diligence, Buyer shall work in good faith to
construct a parking lot on the Crossroads Parking Property. Notwithstanding any provision herein to the contrary, Seller and
Buyer acknowledge that as of the Effective Date, Buyer has not completed its diligence with respect to the construction of
the parking lot. In the event Buyer shall not be satisfied with the aforementioned diligence and construction cost
arrangements for any reason, in its sole and absolute discretion, Buyer shall have no obligation to construct such parking
lot. In the event Buyer does not construct a parking lot on the Crossroads Parking Property, Buyer covenants that it shall
not transfer or convey the Crossroads Parking Property unless (i) such transaction also includes the conveyance of the 11500
Crossroads Property or (ii) the 11500 Crossroads Property has previously been transferred in connection with any foreclosure
or deed in lieu of foreclosure.
(d)
The
provisions of this Section 9.4 shall survive Closing.
Article
X
ADJUSTMENTS
Unless
otherwise provided below, the following are to be adjusted and prorated between Seller and Buyer as of 11:59 P.M. on the day preceding
the Closing, based upon a 365-day year, with Buyer being deemed to be the owner of the Assets during the entire day of the Closing
Date and being entitled to receive all operating income of the Assets, and being obligated to pay all operating expenses of the
Assets, with respect to the Closing Date and the net amount thereof under this Article X shall be added to (if such net amount
is in Seller’s favor) or deducted from (if such net amount is in Buyer’s favor) the Purchase Price payable at Closing:
Section
10.1.
Fixed Rents and Additional Rents
.
(a)
All
fixed rents (collectively, “
Fixed Rents
”) and Additional Rent (as hereinafter defined; Fixed Rents and Additional
Rent being together referred to herein as “
Rents
”) paid by Tenants in connection with the Tenants’ occupancy
of the Assets, Security Deposits (except as hereinafter provided) and other tenant charges shall be prorated. Seller shall deliver
or provide a credit in an amount equal to all prepaid Rents for periods from and after the Closing Date and all refundable cash
Security Deposits required under the applicable Space Lease, including interest thereon, if any, as set forth on
Schedule 3.2(b-4)
(to the extent the foregoing were not applied in accordance with this Agreement or forfeited prior to the Closing) to Buyer
on the Closing Date. Seller shall also deliver to Buyer at Closing any original security deposits that are held in the form of
letters of credit (the “
SD Letters of Credit
”) and completed transfer forms for the purpose of transferring
such SD Letters of Credit to Buyer if the same are transferable, at Seller’s sole cost (including Seller’s payment
of any third party transfer fees and expenses); if any of the SD Letters of Credit is not transferable, Seller shall request the
Tenants
obligated under such SD Letters of Credit to cause new letters of credit to be issued in favor of Buyer in replacement
thereof and in the event such a new letter of credit is not issued in favor of Buyer by Closing, Buyer shall diligently pursue
such replacement after Closing and Seller shall take all reasonable action, as directed by Buyer in writing, in connection with
the presentment of such SD Letters of Credit for payment as permitted under the terms of the applicable Space Lease. Rents that
are delinquent (or payable but unpaid) as of the Closing Date shall not be prorated on the Closing Date. Buyer shall include such
delinquencies (or unpaid amounts) in its normal billing and shall in good faith use commercially reasonable efforts to pursue
the collection of such past due Rents for a period of one hundred twenty (120) days after the Closing Date (but Buyer shall not
be required to litigate, declare a default
under
any Space Lease
or take any additional actions in connection with the recovery from Tenants
of such delinquencies or other unpaid amounts). To the extent Buyer receives payment of Rents (or income in connection with other
tenant charges) on or after the Closing Date, such payments shall be applied first toward the Rent (or other tenant charge) for
the month in which the Closing occurs, and then to the current Rent (or other tenant charges) owed to Buyer in connection with
the applicable Space Lease or other document for which such payments are received, and then to any delinquent Rents (or other
tenant charges) owed to Seller, with Seller’s share thereof being promptly delivered to Seller; provided, however, that
any year-end or similar reconciliation payment shall be allocated as hereinafter provided.
With respect to delinquent or
other uncollected Rents and any other amounts or other rights of any kind respecting Tenants who are no longer Tenants of the
Property as of the Closing Date, Seller shall retain all of the rights relating thereto. For the purposes of this provision, the
term “
Additional Rent
” shall mean amounts payable under any Space Lease for (i) so-called common area maintenance
or “CAM” charges, and (ii) so-called “escalation rent” or additional rent based upon increases in real
estate taxes or operating expenses or labor costs or cost of living or porter’s wages or insurance or other expenses of
the Assets or otherwise and to the extent that a Space Lease provides for base year amounts for operating expenses or taxes, such
base year amounts shall be prorated in determining Additional Rent with respect to such Space Lease. As to any Additional Rent
in respect of an accounting period that shall have expired prior to the Closing but which is payable after the Closing, (i) if
a Tenant was underbilled and Buyer receives payment in respect thereof, Buyer shall pay the entire amount over to Seller upon
Buyer’s receipt thereof; provided, however, that Buyer may retain such amounts until Seller has paid Buyer any and all amounts
Seller is required to pay Buyer pursuant to the immediately following subsection (ii), and (ii) if a Tenant was overbilled, Seller
shall promptly pay to Buyer the amount of any such overpayment, which Buyer shall then deliver to the applicable Tenant.
(b)
In
order to enable Buyer to make any year-end reconciliations of tenant reimbursements of Additional Rent for the year in which the
Closing takes place after the end thereof, Seller shall determine the amount actually paid or incurred by Seller in connection
with the expenses used to calculate the Additional Rent for the portion of the year of Closing during which Seller owned the Property
(“
Seller’s Actual Reimbursable Tenant Expenses
”) and the Additional Rent for such actually paid to Seller
by Tenants for the portion of the year in which Closing occurs during which Seller owned the Property (“
Seller’s
Actual Tenant Reimbursements
”). On or before the date that is one hundred sixty (160) days after the end of the year
in which the Closing takes place, Seller shall deliver to Buyer a reconciliation statement (“
Seller’s Reconciliation
Statement
”) setting forth (i) Seller’s Actual Reimbursable Tenant Expenses, (ii) Seller’s Actual Tenant
Reimbursements, and (iii) a calculation of the difference, if
any, between the two (
i.e.
, establishing that Seller’s
Actual Reimbursable Tenant Expenses were either more or less than or equal to Seller’s Actual Tenant Reimbursements). Any
amount due Seller pursuant to the foregoing calculation (in the event Seller’s Actual Tenant Reimbursements are less than
Seller’s Actual Reimbursable Tenant Expenses) or Buyer (in the event Seller’s Actual Tenant Reimbursements are more
than Seller’s Actual Reimbursable Tenant Expenses), as the case may be, shall be paid by Buyer to Seller or by Seller to
Buyer, as the case may be, within thirty (30) days after delivery of Seller’s Reconciliation Statement to Buyer. If Buyer
is paid any such amount by Seller, Buyer thereafter shall be obligated to promptly remit the applicable portion to the particular
Tenants entitled thereto, and Buyer shall hold harmless and indemnify Seller for any claims against Seller, including reasonable
attorneys’ fees and costs actually incurred, related to any such amounts. If Buyer has directly or indirectly transferred
its interest in any part of the Assets to a successor-in-interest or assignee prior to such date, then, on or before the transfer
of such interest, Buyer shall (i) in writing expressly obligate such successor-in-interest or assignee to be bound by the provisions
of this Section 10.1, and (ii) deliver written notice of such transfer to Seller, and thereafter Seller shall make the deliveries
specified above with respect to the Property to Buyer’s successor-in-interest or assignee. Seller’s Reconciliation
Statement shall be final and binding for purposes of this Agreement
.
(c)
Seller
shall be responsible for the reconciliation with Tenants of Additional Rent and Tenant reimbursements thereof for any calendar
year prior to the year in which the Closing takes place. If the amount of Tenant reimbursements collected by Seller for such prior
years is less than the amount of costs paid by Seller for such period in connection with the expenses used to calculate the Additional
Rent (or less than the amount that Seller is entitled to recover under the terms of the Space Leases), then Seller shall be entitled
to bill such Tenants directly and retain any such amounts due from Tenants. If the amount of Tenant reimbursements collected by
Seller for such prior calendar year exceeds the amount of costs paid by Seller with respect to such period (or the amount that
Seller is entitled to recover under the terms of the Space Leases), then, to the extent required under the terms of the Space
Leases, Seller shall remit such excess amounts to the applicable Tenants. In connection with the foregoing, Seller shall be permitted
to make and retain copies of all Space Leases and all billings concerning Tenant reimbursements for such prior years, and Buyer
covenants and agrees to provide Seller with reasonable access to the books and records pertaining to such Tenant reimbursements,
and to otherwise cooperate with Seller (at no material out-of-pocket cost to Buyer) for the purpose of enabling Seller to adequately
respond to any claim by Tenants for reimbursement of Tenant reimbursements previously paid by such Tenants. Seller agrees to deliver
to Buyer copies of such reconciliations with necessary calculations and supporting documentation and information at such time
as Seller delivers same to tenants. The provisions of this Section shall survive the Closing
.
(d)
Until
such time as all amounts required to be paid to Seller by Buyer pursuant to this Section 10.1 shall have been paid in full, Buyer
shall furnish to Seller, upon Seller’s request, a reporting of Rents which have been collected by Buyer after the Closing
with respect to Space Leases with delinquent Rents as of the Closing.
Section
10.2.
Taxes and Assessments
. All
real estate and personal property taxes and assessments with respect to the Assets for the current fiscal year shall be prorated
between Seller and Buyer as of the Closing Date (on the basis of the actual number of days
elapsed over the applicable period).
Seller shall be responsible for the payment of any such Taxes that are delinquent as of Closing. If any assessments on the Assets
or Property are payable in installments, then the installment allocable to the period in which the Closing occurs shall be prorated
(with Buyer being allocated the obligation to pay any installments due on or after the Closing Date).
Section
10.3.
Water and Sewer Charges
. Water
rates, water meter charges, sewer rents and vault charges, if any (other than any such charges, rates or rents which are payable
by Tenants pursuant to such Tenants’ Space Leases, for which no adjustment shall be made), shall be adjusted and prorated
on the basis of the fiscal period for which assessed. If there is a water meter, or meters, on the Assets, Seller agrees that
it shall at the Closing furnish a reading of same to a date not more than thirty (30) days prior to the Closing and the unfixed
meter charges and the unfixed sewer rent thereon for the time intervening from the date of the last reading shall be apportioned
on the basis of such last reading, and shall be appropriately readjusted after the Closing on the basis of the next subsequent
bills. Unmetered water charges shall be apportioned on the basis of the charges therefor for the same period of the preceding
calendar year, but applying the current rate thereto.
Section
10.4.
Utility Charges
. Buyer shall
transfer all utilities at the Property to its name as of the Closing Date, and where necessary, post deposits with the utility
companies. Seller shall use commercially reasonable efforts to cause all utility meters to be read as of the Closing Date. Seller
shall be entitled to recover any and all deposits held by any utility company as of the Closing Date; provided that if any such
deposit is transferred to Buyer at Closing, Seller shall receive a credit at Closing in the amount of the deposit so transferred.
All charges for utilities shall be prorated outside of the escrow contemplated herein within sixty (60) days after the Closing
Date.
Section
10.5.
Leasing
Costs
. If the Closing occurs, except as otherwise set forth herein (including but not limited to Section 10.9), Buyer
shall be responsible for the payment (or, in the case of any amounts payable prior to Closing, the reimbursement to Seller) of
(A) all Leasing Costs that become due and payable (whether before or after Closing) as a result of (1) any Space Lease entered
into by Seller with respect to the Property on or after the Effective Date in accordance with the terms of this Agreement (a “
New
Lease
”), (2) amendments entered into during the period from (and including) the Effective Date until the earlier of
the Closing or termination of this Agreement, in accordance with this Agreement to renew, extend, expand or otherwise amend Existing
Leases or New Leases, and (3) any renewals, extensions or expansions of, or the exercise of any other option under, Existing Leases
or New Leases exercised by Tenants during the period from (and including) the Effective Date and the Closing Date; and (B) all
Leasing Costs as a result of renewals, extensions, expansions, or the exercise of any other option, occurring on or after the
Closing Date of Existing Leases or New Leases (collectively, “
Buyer’s Leasing Costs
”). Seller shall be
responsible for all other Leasing Costs, including all Leasing Costs that are payable by reason of (i) the execution of an Existing
Lease, (ii) the renewal, extension, expansion of, or the exercise of any other option under, an Existing Lease, prior to the Effective
Date, and (iii) amendments of an Existing Lease entered into prior to the Effective Date (collectively, “
Seller’s
Leasing Costs
”). If, as of the Closing Date, Seller shall have paid any Leasing Costs which are Buyer’s Leasing
Costs, Buyer shall reimburse Seller therefor at Closing. Seller shall pay (or cause to be paid) prior to Closing or credit Buyer
at
Closing
(to the extent unpaid), all Leasing Costs that remain unpaid or outstanding as of the Closing Date which are Seller’s Leasing
Costs and, subject to the reimbursement obligations set forth above, Seller shall pay (or cause to be paid) when due all Leasing
Costs payable after the Effective Date and prior to Closing.
Section
10.6.
Assumed Contracts
. Amounts
due under the Assumed Contracts with Buyer to receive a credit at Closing for any amounts unpaid and attributable for the period
prior to the Closing Date and Seller to receive a credit at Closing for any amounts previously paid and attributable to the period
on and following the Closing Date.
Section
10.7.
REAs
. If applicable, all amounts
due and payable by the owner of the Property under any REA with respect to the Property with respect to the year in which the
Closing occurs shall be adjusted and prorated based on the periods of ownership by Seller and Buyer during such year.
Section
10.8.
Associations
. If applicable,
all association fees or similar fees and assessments due and payable with respect to the Property with respect to the year in
which the Closing occurs shall be adjusted and prorated based on the periods of ownership by Seller and Buyer during such year.
Section
10.9.
YBR
Property
.
(a)
To
the extent Seller enters into the YBR Lease
prior to the Closing Date for the entire YBR
Property pursuant to the terms of Section 3.3(c)(ii),
the Closing shall occur as herein provided without any reduction
of or credit against the Purchase Price; provided however, notwithstanding anything to the contrary set forth in Section 10.5,
Seller shall be responsible for all Leasing Costs with respect to the
YBR Lease
.
(b)
To
the extent Seller does not enter into the YBR Lease
prior to the Closing Date for the entire
YBR Property pursuant to the terms of Section 3.3(c)(ii), Buyer and Seller agree that Two Million and No/100 Dollars ($2,000,000.00)
of the Purchase Price shall be held back from the Closing proceeds and deposited into an escrow with Escrow Agent (the “
YBR
Holdback
”).
In the event Buyer does not enter into the YBR Lease
between
the Closing
Date and June 30, 2018,
Escrow Agent shall automatically release the
YBR Holdback to Buyer on July 1, 2018.
In the event Buyer enters into the YBR Lease
between
the Closing
Date and June 30, 2018, upon the delivery of joint written instructions from
Buyer
and Seller
to Escrow Agent,
Escrow Agent shall (i) release the YBR Holdback to Seller,
less any Leasing Costs
with respect to the
YBR Lease, and (ii) release the balance
of the YBR Holdback to Buyer.
(c)
This
Section 10.9 shall survive the Closing.
Section
10.10.
Other Adjustments
. If applicable,
the Purchase Price shall be adjusted at Closing to reflect the adjustment of any other item which, under the explicit terms of
this Agreement, is to be apportioned at Closing. Any other items of operating income or operating expense that are customarily
apportioned between the parties in real estate closings of comparable commercial properties in the metropolitan area where the
Property are located, shall be prorated as applicable.
Section
10.11.
Re-Adjustment
.
In the event any prorations or apportionments made under this Article X shall prove to be incorrect for any reason, then any party
shall be entitled to an adjustment to correct the same. Any item that cannot be finally prorated because of the unavailability
of information shall be tentatively prorated on the basis of the best data then available and reprorated when the information
is available. Notwithstanding anything to the contrary set forth herein, all reprorations contemplated by this Agreement shall
be completed within one (1) year after Closing (subject to extension solely as necessary due to the unavailability of final information
but in no event to exceed two (2) years after Closing). The obligations of Seller and Buyer under this Article X shall survive
the Closing for two (2) years.
Article
XI
INDEMNIFICATION
Section
11.1.
Indemnification
by Seller
. Following the Closing and subject to Section 11.3, Section 11.4, Section 11.5 and Section 11.8, Seller shall
indemnify and hold Buyer and its Affiliates, members, partners, shareholders, officers, directors, employees, representatives
and agents of each of the foregoing (collectively, the “
Buyer-Related Entities
”) harmless from and against
any and all costs, fees, expenses, damages, deficiencies, interest and penalties (including, without limitation, reasonable attorneys’
fees and disbursements) suffered or incurred by Buyer and any such Buyer-Related Entities in connection with any and all losses,
liabilities, claims, damages and expenses (“
Losses
”), arising out of, or resulting from, (a) any breach of
any representation or warranty of Seller or Parent contained in this Agreement or in any Closing Document, (b) any breach of any
covenant of Seller or Parent contained in this Agreement or in any Closing Document that expressly survives the Closing and (c)
claims asserted by third parties relating to the Assets, but only if and to the extent such Losses first arise or accrue prior
to the Closing Date, even if such claim is asserted on or after the Closing Date.
Section
11.2.
Indemnification
by Buyer
. From and after the Closing and subject to Section 11.4 and Section 11.5, Buyer shall indemnify and hold Seller
and its Affiliates, members, partners, shareholders, officers, directors, employees, representatives and agents of each of the
foregoing (collectively, the “
Seller-Related Entities
”) harmless from any and all Losses suffered or incurred
by Seller and any Seller-Related Entities in connection with any Losses arising out of, or in any way resulting from, (a) any
breach of any representation or warranty by Buyer contained in this Agreement or in any Closing Document, (b) any breach of any
covenant of Buyer contained in this Agreement or in any Closing Document that expressly survives the Closing and (c) claims asserted
by third parties relating to the Assets, but only if and to the extent such Losses first arise or accrue after the Closing.
Section
11.3.
Limitations on Indemnification
.
Notwithstanding the foregoing provisions of Section 11.1, (a) Seller shall not be required to indemnify Buyer or any Buyer-Related
Entities under Section 11.1 unless the aggregate of all amounts for which an indemnity would otherwise be payable by Seller under
Section 11.1 exceeds the Basket Limitation and, in such event, Seller shall be responsible for the entire amount and (b) in no
event shall the liability of Seller with respect to the indemnification provided for in Section 11.1 exceed in the aggregate the
Cap Limitation (provided that (i) Seller’s obligations under Article X with respect to prorations and adjustments, (ii)
Seller’s obligations under Section 9.1 with respect to transaction
costs, (iii) Seller’s obligations for the breach
of any of the representations and warranties set forth in Section 3.2(o) with respect to Taxes, (iv) Seller’s obligations
under Section 15.1 with respect to Employees, and (v) Seller’s obligations under Section 16.2 with respect to brokers shall
not be subject to the Basket Limitation or the Cap Limitation).
Section
11.4.
Survival
. The representations,
warranties and covenants contained in this Agreement and the Closing Documents shall survive for a period of twelve (12) months
after the Closing unless a longer or shorter survival period is expressly provided for in this Agreement (such period, the “Survival
Period”). No action or proceeding thereon shall be valid or enforceable, whether at law or in equity, if a legal proceeding
is not commenced on or before the expiration of the Survival Period.
Section
11.5.
Notification
.
In the event that any indemnified party (the “
Indemnified Party
”) becomes aware of any claim or demand for
which an indemnifying party (an “
Indemnifying Party
”) may have liability to such Indemnified Party hereunder
(an “
Indemnification Claim
”), such Indemnified Party shall promptly, but in no event more than thirty (30)
days following such Indemnified Party’s having become aware of such Indemnification Claim, notify the Indemnifying Party
in writing of such Indemnification Claim, the amount or the estimated amount of damages sought thereunder to the extent then ascertainable
(which estimate shall not be conclusive of the final amount of such Indemnification Claim), any other remedy sought thereunder,
any relevant time constraints relating thereto and, to the extent practicable, any other material details pertaining thereto,
in each case to the extent actually known to such party (a “
Claim Notice
”); provided, that no delay on the
part of the Indemnified Party in giving such Claim Notice shall relieve the Indemnifying Party of any indemnification obligations
hereunder except to the extent that the Indemnifying Party is prejudiced by such delay.
Section
11.6.
Indemnification as Sole Remedy
.
If the Closing has occurred, the sole and exclusive remedy available to a party in the event of a breach by the other party to
this Agreement of any representation, warranty, covenant or other provision of this Agreement or any Closing Document which expressly
survives the Closing shall be the indemnifications provided for under this Article XI, except as it relates to prorations obligations
under Article X and the indemnification obligations under Section 9.1, Section 15.1 and Section 16.2.
Section
11.7.
Tax Treatment of Indemnity
.
Seller and Buyer agree that any indemnity payments made under this Agreement shall be treated as adjustments to the Purchase Price
for all tax purposes, unless otherwise required by Applicable Law.
Section
11.8.
Damages
. In no event shall
Buyer or any Buyer-Related Entity be entitled to seek or obtain consequential, speculative, special, punitive or exemplary damages
against Seller, except with respect to any claims asserted by third parties. In no event shall Seller or Seller-Related Entity
be entitled to seek or obtain consequential, speculative, special, punitive or exemplary damages against Buyer.
Article
XII
TAX CERTIORARI PROCEEDINGS
Section
12.1.
Prosecution and Settlement of Proceedings
.
If any tax reduction proceedings (including, but not limited to, administrative and/or judicial proceedings or appeals) in respect
of the Property, relating to any fiscal years ending prior to the fiscal year in which the Closing occurs are pending at the time
of the Closing, (provided that Seller shall not institute any such proceeding between the Effective Date and the Closing), Seller
reserves and shall have the right to continue to prosecute and/or settle the same. If any tax reduction proceedings in respect
of the Property, relating to the fiscal year in which the Closing occurs, are pending at the time of Closing, then Seller reserves
and shall have the right to continue to prosecute and/or settle the same; provided, however, that Seller shall not settle any
such proceeding without Buyer’s prior written consent. Buyer shall reasonably cooperate with Seller in connection with the
prosecution of any such tax reduction proceedings. Seller shall keep Buyer reasonably informed of the status of any reduction
proceedings that Seller is prosecuting.
Section
12.2.
Application
of Refunds or Savings
. Any refunds or savings in the payment of taxes resulting from such tax reduction proceedings
on account of taxes allocable to the period prior to the Closing Date shall belong to and be the property of Seller, and any refunds
or savings in the payment of taxes on account of taxes allocable to the period from and after the Closing Date shall belong to
and be the property of Buyer; provided, however, that if any such refund creates an obligation to reimburse any Tenants for any
Rents or Additional Rent paid or to be paid, that portion of such refund equal to the amount of such required reimbursement (after
deduction of allocable expenses as may be provided in the Space Lease to such Tenant) shall, at Seller’s election, either
(a) be paid to Buyer and Buyer shall disburse the same to such Tenants or (b) be paid by Seller directly to the Tenants entitled
thereto. All attorneys’ fees and other expenses incurred in obtaining such refunds or savings shall be apportioned between
Seller and Buyer in proportion to the gross amount of such refunds or savings payable to Seller and Buyer, respectively (without
regard to any amounts reimbursable to Tenants);
provided
,
however
, that neither Seller nor Buyer shall have any
liability for any such fees or expenses in excess of the refund or savings paid to such party unless such party initiated such
proceeding.
Section
12.3.
Survival
. The provisions of
this Article XII shall survive the Closing.
Article
XIII
DEFAULT
Section
13.1.
Buyer’s Default; Failure of Conditions
.
(a)
This
Agreement may be terminated by Seller prior to the Closing if (i) any of the conditions precedent to Seller’s obligations
set forth in Section 5.1 have not been satisfied or waived by Seller on or prior to the Closing Date or (ii) there is a material
breach or default by Buyer to pay the Purchase Price and purchase the Assets on the Closing Date
.
(b)
In
the event this Agreement is terminated pursuant to Section 13.1(a)(i),
the
Escrow Agent
shall, subject to Section 16.5, disburse the
Earnest Money to Buyer,
and upon such disbursement
this Agreement shall be null and void and of no further force
or effect and neither party shall have any rights or obligations against or to the other except for those provisions hereof which
by their terms expressly survive the termination of this Agreement.
(c)
In
the event Seller terminates this Agreement pursuant to Section 13.1(a)(ii), the Escrow Agent
shall,
subject to Section 16.5, disburse
Earnest Money to Seller, and upon such disbursement Seller and Buyer shall have no further
obligations under this Agreement, except those which expressly survive such termination. Buyer and Seller hereby acknowledge and
agree that it would be impractical and/or extremely difficult to fix or establish the actual damage sustained by Seller as a result
of such default by Buyer, and agree that the Earnest Money is a reasonable approximation thereof. Accordingly, in the event that
Buyer breaches this Agreement by materially defaulting in the purchase of the Assets on the Closing Date, the Earnest Money shall
constitute and be deemed to be the agreed and liquidated damages of Seller, and shall be paid by the Escrow Agent to Seller as
Seller’s sole and exclusive remedy hereunder
.
Section
13.2.
Seller’s
Default; Failure of Conditions
.
(a)
This
Agreement may be terminated by Buyer prior to the Closing if (i) any of the conditions precedent to Buyer’s obligations
set forth in Section 5.2 have not been satisfied or waived by Buyer on or prior to the Closing Date or (ii) there is a material
breach or default by Seller in the performance of its obligations under this Agreement
.
(b)
Upon
termination of this Agreement by Buyer pursuant to Section 13.2(a)(i), the Escrow Agent shall, subject to Section 16.5, disburse
the Earnest Money to Buyer, and upon such disbursement Seller and Buyer shall have no further obligations under this Agreement,
except those which expressly survive such termination.
In
addition to the other rights and remedies available to Buyer hereunder, if Buyer elects to terminate this Agreement due to a
failure
to obtain Shareholder Approval
, Seller shall pay to Buyer within five (5) Business Days following the date of such termination
the Reimbursement Amount.
(c)
Upon
material breach or default by Seller in the performance
of its obligations under this Agreement, Buyer, at its option, may (i) terminate this Agreement, direct the Escrow Agent to deliver
the Earnest Money to Buyer, at which time this Agreement shall be terminated and of no further force and effect except for the
provisions which explicitly survive such termination or (ii) specifically enforce the terms and conditions of this Agreement (without
the necessity of proving the inadequacy of money damages as a remedy); provided that such specific enforcement action must be
initiated no later than sixty (60) days following such default. In addition to the other rights and remedies available to Buyer
hereunder, if Buyer elects to terminate this Agreement due to a material breach or default by Seller in the performance of its
obligations under this Agreement, Seller shall pay to Buyer within five (5) Business Days following the date of such termination
the Reimbursement Amount.
Article
XIV
Public Company
Section
14.1.
Preparation of the Proxy Statement; Shareholders
Meeting
.
(a)
As
promptly as reasonably practicable following the Effective Date (and, in any event, no more than five (5) Business Days following
the Effective Date), Parent shall prepare the Proxy Statement and, after consultation with and consideration in good faith of
any comments on the Proxy Statement reasonably proposed by Buyer, cause to be filed with the SEC the Proxy Statement in preliminary
form; provided, however, that Parent shall not file the Proxy Statement with the SEC without obtaining the prior written consent
of Buyer, which consent shall not be unreasonably withheld, conditioned, or delayed. Parent shall use its reasonable best efforts
to (i) obtain and furnish the information required to be included by the SEC in the Proxy Statement, respond, after consultation
with Buyer, promptly to any comments made by the SEC with respect to the Proxy Statement, (ii) mail or deliver the definitive
Proxy Statement to its shareholders as promptly as practicable after the earlier to occur of (x) receiving notification that the
SEC is not reviewing the preliminary Proxy Statement or (y) the conclusion of any SEC review of the preliminary Proxy Statement
and (iii) if necessary, after the definitive Proxy Statement shall have been so mailed, promptly circulate amended or supplemental
proxy materials and, if required in connection therewith, resolicit proxies; provided, that no such amended or supplemental proxy
materials will be filed with the SEC or mailed by Parent without affording Buyer a reasonable opportunity for consultation and
review, and Parent shall consider in good faith any comments on such materials reasonably proposed by Buyer. Parent will promptly
notify Buyer of the receipt of comments from the SEC and of any request from the SEC for amendments or supplements to the Proxy
Statement or for additional information, and will promptly supply Buyer with copies of all written correspondence between Parent
or its Representatives, on the one hand, and the SEC or members of its staff, on the other hand, with respect to the Proxy Statement,
this Agreement or the transactions contemplated by this Agreement. Prior to responding to any comments of the SEC or members of
its staff, Parent shall provide Buyer with a reasonable opportunity to consult and review such response and Parent shall consider
in good faith any comments on such response reasonably proposed by Buyer. Buyer shall furnish all information concerning itself,
its Affiliates and the holders of its capital stock to Parent as may be required to be disclosed in the Proxy Statement, and provide
such other assistance as may be reasonably requested by Parent in connection with the preparation, filing and distribution of
the Proxy Statement.
(b)
If,
at any time prior to the Shareholder Meeting, any information relating to Parent or Buyer, or any of their respective subsidiaries,
or their respective officers or directors, should be discovered by Parent or Buyer, as the case may be, which, pursuant to the
Exchange Act, should be set forth in an amendment of, or a supplement to, the Proxy Statement, so that the Proxy Statement would
not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, Parent or Buyer, as the case may be, shall promptly notify
the other parties hereto, and Parent and Buyer shall cooperate in the prompt filing with the SEC of any necessary amendment of,
or supplement to, the Proxy Statement describing such information and, to the extent required by Applicable Law, in disseminating
the information contained in
such amendment or supplement to shareholders of Parent. Nothing in this Section 14.1(b) shall limit
the obligations of any party under Section 14.1(a). All documents that Parent is responsible for filing with the SEC in connection
with this Agreement and the transactions contemplated by this Agreement will, at the time of the first mailing thereof, at the
time of the Shareholder Meeting or at the time of any amendment or supplement thereof, as applicable, comply as to form and substance
in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder.
(c)
As
promptly as practicable after the date hereof, Parent shall, in accordance with Applicable Law, the rules of the Parent Charter
and the Parent Bylaws, duly call, give notice of, convene and hold the Shareholder Meeting. Parent shall, through the Parent Board,
recommend to its shareholders that they provide the Shareholder Approval, include such recommendation in the Proxy Statement and
solicit and use its reasonable best efforts to obtain the Shareholder Approval (including by soliciting proxies from its shareholders),
except to the extent that the Parent Board shall have made an Adverse Recommendation Change as permitted by and determined in
accordance with Section 14.2. Parent shall keep Buyer updated with respect to proxy solicitation results as reasonably requested
by Buyer. Unless this Agreement is terminated in accordance with its terms, Parent shall not submit to the vote of its shareholders
any Acquisition Proposal. Notwithstanding the foregoing provisions of this Section 14.1(c), Parent may make or one or more adjournments
or postponements of the Shareholder Meeting after consultation with Buyer (i) to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement is provided to the shareholders of Parent sufficiently in advance of the Shareholder
Meeting to ensure that the vote occurs on the basis of full and complete information as required by Applicable Law or regulation
or (ii) if, in the reasonable discretion of Parent, additional time is required to solicit proxies in favor of the approval of
this Agreement and the transactions contemplated hereby; provided, that in the case of this clause (ii), without the consent of
Buyer (not to be unreasonably withheld, conditioned or delayed), in no event shall the Shareholder Meeting (as so postponed or
adjourned) be held on a date that is more than thirty (30) days after the date for which the Shareholder Meeting was originally
scheduled; provided, further, that such consent of Buyer may be withheld in its sole discretion if following the date hereof an
Acquisition Proposal shall have been received by Parent or its Representatives or any Person (other than Buyer) shall have publicly
announced an intention (whether or not conditional) to make an Acquisition Proposal unless any such Acquisition Proposal shall
have been withdrawn at least thirty (30) days prior to the date for which the Shareholder Meeting was originally scheduled. Unless
this Agreement shall have been terminated in accordance with its terms, the obligation of Parent to duly call, give notice of,
convene and hold the Shareholder Meeting, mail the Proxy Statement (and any amendment or supplement thereto that may be required
by Applicable Law) to Parent’s shareholders and solicit proxies in favor of the Shareholder Approval shall not be affected
by an Adverse Recommendation Change.
Section
14.2.
No Solicitation; Acquisition Proposals
.
(a)
Except
as otherwise provided in this Section 14.2, from the Effective Date until the Closing or earlier termination of this Agreement,
Parent shall not, and shall cause its subsidiaries and its and their officers and directors not to, and shall not authorize and
shall use reasonable best efforts to cause any other Representatives of Parent or any of its subsidiaries not
to, directly or
indirectly, (i) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, proposal or offer that constitutes,
or could reasonably be expected to lead to, an Acquisition Proposal (an “
Inquiry
”), (ii) enter into, continue
or otherwise participate or engage in any negotiations or discussions regarding, or furnish to any Person other than Buyer or
its Representatives any non-public information or data in furtherance of, any Acquisition Proposal or Inquiry, (iii) approve,
recommend, declare advisable or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement, partnership
agreement or other agreement, in each case related to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement),
or requiring or having the effect of requiring Parent to abandon, terminate or breach its obligations hereunder or fail to consummate
the transactions contemplated hereby (each item referred to in this clause (iii), a “
Alternative Acquisition Agreement
”),
or (iv) agree to or propose publicly to do any of the foregoing. Parent shall, and shall cause each of its subsidiaries to, and
shall direct the Representatives of Parent and its subsidiaries to, (A) immediately cease and cause to be terminated all existing
discussions and negotiations with any Person and its Representatives (other than Buyer or any of its Representatives) conducted
heretofore with respect to any Acquisition Proposal, and (B) not terminate, amend, release or modify any provision of any standstill
agreement (including any standstill provisions contained in any confidentiality or other agreement) to which it or any of its
Affiliates or Representatives is a party.
(b)
Notwithstanding
anything herein to the contrary, but subject to Parent’s compliance with this Section 14.2, if, at any time following the
Effective Date and prior to obtaining the Shareholder Approval, (i) Parent receives an unsolicited written Acquisition Proposal
that the Parent Board believes in good faith to be bona fide, (ii) such Acquisition Proposal was not the result of a violation
of Section 14.2(a), and (iii) the Parent Board determines in good faith (after consultation with outside legal counsel and its
financial advisor) that such Acquisition Proposal constitutes, or would reasonably be expected to lead to, a Superior Proposal,
then Parent may (and may authorize its Representatives to) (x) furnish non-public information with respect to Parent and its subsidiaries
to the Person making such Acquisition Proposal (and its Representatives) pursuant to an Acceptable Confidentiality Agreement;
provided, that any non-public information provided to any Person given such access shall have previously been provided to Buyer
or shall be provided to Buyer as soon as reasonably practicable (and in any event within 24 hours of the time it is provided to
such Person), and (y) participate in negotiations with the Person making such Acquisition Proposal (and such Person’s Representatives)
regarding such Acquisition Proposal. Notwithstanding anything to the contrary in this Agreement, Parent and its Representatives
may correspond in writing with any Person submitting an Acquisition Proposal (that was not the result of a violation of Section
14.2(a)) to request clarification of the terms of an Acquisition Proposal so as to determine whether such Acquisition Proposal
constitutes, or would reasonably be expected to lead to, a Superior Proposal.
(c)
Except
as provided in Section 14.2(d), the Parent Board (i)(A) shall not fail to make and shall not withdraw (or modify or qualify in
any manner adverse to Buyer or publicly propose to withdraw, modify or qualify in any manner adverse to Buyer) the Parent Board
Recommendation, (B) shall not adopt, approve, recommend, endorse or otherwise declare advisable any Acquisition Proposal or proposal
reasonably likely to lead to an Acquisition
Proposal (or publicly propose or resolve to do any of the foregoing), (C) shall not
fail to include the Parent Board Recommendation in the Proxy Statement, (D) take any action or make any recommendation or public
statement in connection with a tender offer or exchange offer other than an unequivocal recommendation against such offer or a
temporary “stop, look and listen” communication by the Parent Board of the type contemplated by Rule 14d-9(f) under
the Exchange Act in which the Parent Board or the Parent indicates that the Parent Board has not changed the Parent Board Recommendation
or (E) fail to reaffirm the Parent Board Recommendation within the earlier of three (3) Business Days prior to the Shareholders
Meeting and five (5) Business Days after receiving a written request to do so from Buyer (each such action set forth in this Section
14.2(c)(i) being referred to herein as an “
Adverse Recommendation Change
”), and (ii) shall not authorize, cause
or permit Parent or any of its subsidiaries to enter into any Alternative Acquisition Agreement relating to any Acquisition Proposal
(other than an Acceptable Confidentiality Agreement pursuant to Section 14.2(a)).
(d)
Notwithstanding
anything in this Agreement to the contrary, at any time prior to obtaining the Shareholder Approval, the Parent Board may (i)
make an Adverse Recommendation Change in response to an Intervening Event if the Parent Board determines in good faith, after
consultation with its outside legal counsel, that the failure to do so in response to such Intervening Event would violate its
duties under Applicable Law or (ii) make an Adverse Recommendation Change in response to an unsolicited written bona fide Acquisition
Proposal (and Parent is not in breach of this Section 14.2) that, in the good faith determination of the Parent Board, after consultation
with outside legal counsel and financial advisors, constitutes a Superior Proposal if the Parent Board determines in good faith,
after consultation with its outside legal counsel, that the failure to do so in response to such Intervening Event would violate
its duties under Applicable Law; provided, that the Parent Board shall only be entitled to effect an Adverse Recommendation Change
if (A) Parent has provided a prior written notice (a “
Notice of Change of Recommendation
”) to Buyer that Parent
intends to take such action, identifying the Person or entity making the Superior Proposal and describing in reasonable detail
the material terms and conditions of the Superior Proposal or Intervening Event, as applicable, that is the basis of such action
including, if applicable, copies of any written proposals or offers and any proposed agreements related to a Superior Proposal
(it being agreed that the delivery of the Notice of Change of Recommendation by Parent shall not constitute a Adverse Recommendation
Change), (B) during the five (5) Business Day period following Buyer’s receipt of the Notice of Change of Recommendation,
Parent shall, and shall cause its Representatives to, negotiate with Buyer in good faith (to the extent Buyer desires to negotiate)
to make such adjustments in the terms and conditions of this Agreement, so that, in the case of a Superior Proposal, such Superior
Proposal ceases to constitute a Superior Proposal, or, in the case of an Intervening Event, in order to obviate the need to make
such Adverse Recommendation Change; and (C) following the end of such five (5) Business Day period, the Parent Board shall have
determined in good faith, taking into account any changes to this Agreement proposed in writing by Buyer in response to the Notice
of Change of Recommendation or otherwise, that (I) after consultation with outside legal counsel and financial advisors, the Superior
Proposal giving rise to the Notice of Change of Recommendation continues to constitute a Superior Proposal and the failure of
the Parent Board to effect an Adverse Recommendation Change would violate the directors’ duties under Applicable Law or
(II) after consultation with outside counsel, in the case of an Intervening Event, the failure of the Parent Board to effect an
Adverse Recommendation Change would violate the directors’ duties under Applicable Law. Any amendment to the financial terms
or any
other material amendment of such a Superior Proposal shall require a new Notice of Change of Recommendation, and Parent
shall be required to comply again with the requirements of this Section 14.2(d); provided, however, that references to the five
(5) Business Day period above shall then be deemed to be references to a four (4) Business Day period following receipt by Buyer
of any such new Notice of Change of Recommendation.
(e)
Parent
shall promptly (but in no event later than 24 hours) notify Buyer after receipt of any Acquisition Proposal or any request for
non-public information relating to Parent or any of its subsidiaries by any third party that informs Parent that it is making,
or has made, an Acquisition Proposal, or any Inquiry from any Person seeking to have discussions or negotiations with Parent relating
to a possible Acquisition Proposal. Such notice shall be made orally and confirmed in writing, and shall identify the Person making
such Acquisition Proposal or Inquiry and shall indicate the material terms and conditions of any Acquisition Proposals or Inquiries
to the extent known (including, if applicable, providing copies of any written Inquiries or requests and any proposed agreements
related thereto, which may be redacted to the extent necessary to protect confidential information of the business or operations
of the Person making such Acquisition Proposals or Inquiries). Parent shall also promptly (and in any event within 48 hours),
notify Buyer, orally arid in writing, (i) if Parent determines to begin providing non-public information or to engage in discussions
or negotiations concerning an Acquisition Proposal pursuant to Section 14.2(b) and shall in no event begin providing such information
or engaging in such discussions or negotiations prior to providing such notice and (ii) of any change to the financial and other
material terms and conditions of any Acquisition Proposal and otherwise keep Buyer reasonably informed of the status and terms
of any such proposals, offers, discussions or negotiations on a current basis, including by providing a copy of all proposals,
offers, drafts of proposed agreements or correspondence relating thereto. Neither Buyer nor any of its subsidiaries shall, after
the Effective Date, enter into any confidentiality or similar agreement that would prohibit it from providing such information
to Buyer.
(f)
Nothing
contained in this Section 14.2 or elsewhere in this Agreement shall prohibit Parent or the Parent Board, directly or indirectly
through its Representatives, from (i) disclosing to Parent’s shareholders a position contemplated by Rule 14e-2(a) or Rule
14d-9 promulgated under the Exchange Act or (ii) making any disclosure to the shareholders of Parent if the Parent Board determines
in good faith, after consultation with outside legal counsel, that the failure to make such disclosure would violate the directors’
duties under Applicable Law (for the avoidance of doubt, it being agreed that the issuance by Parent or the Parent Board of a
“stop, look and listen” statement pending disclosure of its position, as contemplated by Rules I 4d-9 and 14e-2(a)
promulgated under the Exchange Act, shall not constitute an Adverse Recommendation Change) or is required by Applicable Law; provided,
however, that neither Parent nor the Parent Board shall be permitted to recommend that the shareholders of Parent tender any securities
in connection with any tender offer or exchange offer that is an Acquisition Proposal or effect an Adverse Recommendation Change
with respect thereto, except as permitted by Section 14.2(d).
(g)
For
purposes of this Agreement:
(i)
“
Acquisition
Proposal
” means any proposal, offer, or inquiry from any Person or “group” (as such term is defined in Rule
13d-3 promulgated under the
Exchange Act) involving any of Parent or Seller or any of their respective subsidiaries regarding
(other than the transactions contemplated by this Agreement): (i) any direct or indirect acquisition or purchase, in one transaction
or a series of transactions, including any merger, reorganization, recapitalization, restructuring, share exchange, consolidation,
tender offer, exchange offer, stock acquisition, asset acquisition, business combination, liquidation, dissolution, joint venture,
sale, lease, exchange, license, transfer or disposition or otherwise, of the assets representing 20% or more of the consolidated
net income, consolidated net revenue or consolidated total assets (including equity securities of its subsidiaries) of Parent
and its subsidiaries; (ii) any issue, sale or other disposition (including by way of merger, consolidation, sale of equity interests,
share exchange, joint venture, business combination or otherwise) of securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 20% or more of any class of capital stock; (iii) any tender offer or
exchange offer for 20% or more of any class of capital stock, other equity security or voting power of Parent or the filing of
a registration statement under the Securities Act in connection therewith; (iv) any other transaction or series of transactions
pursuant to which any Person or “group” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act)
proposes to acquire control of any Property or (v) any public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
(ii)
“
Intervening
Event
” shall mean a material positive event, fact, development or occurrence (other than any event, fact, development
or occurrence resulting from a breach of this Agreement by Parent and its subsidiaries) with respect to the Parent and subsidiaries
or the business of Parent or its subsidiaries, in each case taken as a whole, that (a) is neither known, nor reasonably foreseeable
(with respect to substance or timing), by Parent Board as of or prior to the execution and delivery of this Agreement and (b)
first occurs, arises or becomes known to Parent Board after the execution and delivery of this Agreement and on or prior to the
date of the Shareholder Approvals; provided that (i) any event, fact, development or occurrence that involves or relates to an
Acquisition Proposal or a Superior Proposal or any inquiry or communications or matters relating thereto, (ii) any event, fact,
development or occurrence that results from the announcement, pendency and consummation of this Agreement or the transactions
contemplated hereby or any actions required to be taken or to be refrained from being taken pursuant to this Agreement, (iii)
the fact that Parent meets or exceeds any internal or analysts’ expectations or projections, or (iv) any changes or lack
thereof after the date hereof in the market price or trading volume of the Parent Common Stock, individually or in the aggregate,
will not be deemed to constitute an Intervening Event.
(iii)
“
Superior
Proposal
” means any bona fide written Acquisition Proposal made after the date hereof (with the references to “20%”
replaced with “50%”) on terms that the Parent Board determines in good faith, after consultation with Parent’s
outside legal counsel and financial advisors, taking into account all legal, financial, regulatory and other aspects of the proposal
and the Person making the proposal and any changes to the terms of this Agreement proposed by Buyer and any other information
provided by Buyer (including pursuant to Section 14.2), that (A) if consummated, would be more favorable to Parent’s shareholders
(solely in their capacity as such) from a financial point
of view than the transactions contemplated by this Agreement, and (B)
if accepted, is reasonably likely to be completed on the terms proposed on a timely basis.
(iv)
References
in this Section 14.2 to (a) the Parent Board shall mean the Parent Board or a duly authorized committee thereof, and (b) Parent
outside legal counsel shall mean, as applicable, outside legal counsel to Parent or a duly authorized committee thereof.
Section
14.3.
Termination
.
(a)
Buyer
may terminate this Agreement if, prior to obtaining the Shareholder Approval, Parent or the Parent Board or any committee thereof
(A) shall have effected an Adverse Recommendation Change, (B) approves, adopts, publicly endorses or recommends, or enters into
or allows Parent or any of its subsidiaries to enter into an Alternative Acquisition Agreement (other than an Acceptable Confidentiality
Agreement entered into in compliance with Section 14.2), (C) Parent or any of its subsidiaries shall have committed a willful
and material breach of Section 14.2 or (D) fails to publicly recommend against any tender offer or exchange offer subject to Regulation
14D under the Exchange Act that constitutes an Acquisition Proposal (including, for these purposes, by taking no position with
respect to the acceptance of such tender offer or exchange offer by Parent’s shareholders) within five (5) Business Days
after the commencement of such tender offer or exchange offer).
(b)
Either
Buyer or Parent may terminate this Agreement if the Shareholder Approval shall not have been obtained at the Shareholder Meeting
or at any adjournment, recess or postponement of the Shareholder Meeting taken in accordance with this Agreement.
(c)
In
the event of termination of this Agreement as provided in this Section 14.3, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of Buyer, Parent, or Seller, or their respective Affiliates or Representatives,
relating to, based on or arising under or out of this Agreement, the transactions contemplated hereby or the subject matter hereof
except for the provisions which explicitly survive such termination.
Section
14.4.
Parent
Termination Fee
.
(a)
In
the event that this Agreement is terminated (i) by Buyer pursuant to Section 14.3(a) or (ii) (A) this Agreement is terminated
(I) by either Parent or Buyer pursuant to Section 14.3(b), (II) by Buyer pursuant to Section 2.3(b) or (III) by Buyer pursuant
to Section 13.2(a)(ii) and (B) (I) before receipt of the Shareholder Approval an Acquisition Proposal shall have been made known
to the Parent Board, the Parent or any of its subsidiaries or shall have been publicly made or disclosed or any Person shall have
publicly announced an intention (whether or not conditional) to make an Acquisition Proposal with respect to Parent or any of
its subsidiaries and (II) within twelve months of such termination, (x) Parent or any of its subsidiaries shall have entered into
an Alternative Acquisition Agreement with respect to, or shall have consummated or shall have approved or recommended to the Parent’s
shareholders or otherwise not opposed, an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition
Proposal referred to in clause (ii)(B)(I)) or (y) there shall have been
consummated an Acquisition Proposal (whether or not such
Acquisition Proposal is the same Acquisition Proposal referred to in clause (ii)(B)(I)) (substituting in both instances “50%”
for “20%” in the definition of “Acquisition Proposal”), Parent shall pay to Buyer the Reimbursement Amount
and the Parent Termination Fee. Notwithstanding the foregoing, in no event shall Parent be required to pay the Parent Termination
Fee on more than one occasion. Payment of the Reimbursement Amount and the Parent Termination Fee shall be made by wire transfer
of same day funds to the account or accounts designated by Buyer as promptly as reasonably practicable after termination (and,
in any event, within two (2) Business Days thereof).
(b)
Except
as provided in this Agreement, no termination fee, penalty, charge or damage is payable in connection with a termination of this
Agreement.
(c)
Each
of the Parent, Seller and Buyer acknowledges that the agreements contained in this Section 14.4 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the Parent, Seller and Buyer would not enter into this Agreement
and the damages resulting from termination of this Agreement under circumstances where the amounts payable under this Section
14.4 are payable are uncertain and incapable of accurate calculation and, therefore, the amounts payable pursuant this Section
14.4 are not a penalty but rather constitute amounts akin to liquidated damages in a reasonable amount that will compensate Buyer,
for its efforts and resources expended and opportunities forgone while negotiating this Agreement and in reliance on this Agreement
and on the expectation of the consummation of the transactions contemplated by this Agreement. Accordingly, if Parent fails to
promptly pay the amount due by it pursuant to this Section 14.4 and, in order to obtain such payment Buyer commences a proceeding
that results in a judgment against the Parent for such amount due pursuant to this Section 14.4 or any portion of such amount,
the Parent shall pay to Buyer its costs and expenses (including attorneys’ fees) in connection with such proceeding, together
with interest on the amount of the fee at the prime rate set forth in the
Wall Street Journal, Eastern Edition
, in effect
on the date such payment was required to be made from the date such payment was required to be made through the date of payment.
(d)
The
provisions of this Section 14.4 shall
survive the termination of this Agreement
.
Article
XV
Employees
Section
15.1.
Employees
. Effective as of
no later than the Closing, Seller shall, and shall direct the applicable Affiliate of Seller to, with respect to each Employee,
(a) reassign or transfer such Employee’s services or (b) terminate the employment of such Employee, such that no Employee
provides services at or with respect to the Property as of and following the Closing. Neither Buyer nor any Affiliate of Buyer
shall have any obligation to offer employment or engagement of services to, hire, or engage the services of any Employee, whether
before, as of, or following the Closing. As of and following the Closing, Seller and its Affiliates shall retain, and Seller shall
fully indemnify Buyer and Buyer-Related Entities with respect to, (i) sponsorship of all of the Employee Benefit Plans and (ii)
all liabilities and
obligations relating to any Employee (and any such Employee’s employment and termination thereof), Employee
Benefit Plan (including any Incentive Compensation Agreement) or employment practice at or with respect to the Property, in each
case, whether arising before, as of, or following the Closing, including, for the avoidance of doubt, any severance or other termination
costs with respect to any Employee whose employment is terminated pursuant to clause (b) of the first sentence of this Section
15.1. Seller’s indemnification of Buyer and Buyer-Related Entities under this Section 15.1 shall (x) be in addition to,
and not in lieu or limitation of, Seller’s indemnification of Buyer and Buyer-Related Entities under Section 11.1 and (y)
survive the Closing or any termination of this Agreement indefinitely.
Article
XVI
MISCELLANEOUS
Section
16.1.
Exculpation
.
(a)
Notwithstanding
anything to the contrary contained herein, Seller’s shareholders, partners, members, the partners or members of such partners
or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security
holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf
of Seller and its individual assets shall not be subject to any claims of any Person relating to such obligations. The foregoing
shall govern any direct and indirect obligations of Seller under this Agreement. The provisions of this Section 16.1(a) shall
survive the Closing or any termination of this Agreement.
(b)
Notwithstanding
anything to the contrary contained herein, Buyer’s shareholders, partners, members, the partners or members of such partners
or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security
holders of Buyer and the partners or members of Buyer assume no personal liability for any obligations entered into on behalf
of Buyer and their individual assets shall not be subject to any claims of any Person relating to such obligations. The foregoing
shall govern any direct and indirect obligations of Buyer under this Agreement. The provisions of this Section 16.1(b) shall survive
the Closing or any termination of this Agreement.
Section
16.2.
Brokers
.
(a)
Seller
represents and warrants to Buyer that it has dealt with no broker, salesman, finder or consultant with respect to this Agreement
or the transactions contemplated hereby other than Broker. Seller shall be responsible for the payment of any commission or fee
due to Broker in connection with the subject transaction pursuant to a separate agreement. Seller agrees to indemnify, protect,
defend and hold Buyer and Buyer-Related Entities harmless from and against all Losses resulting from Seller’s breach of
the foregoing representation in this Section 16.2(a). The provisions of this Section 16.2(a) shall survive the Closing or any
termination of this Agreement indefinitely.
(b)
Buyer
represents and warrants to Seller that it has dealt with no broker, salesman, finder or consultant with respect to this Agreement
or the transactions contemplated
hereby other than Broker. Buyer agrees to
indemnify, protect, defend and hold Seller and Seller-Related Entities harmless from and against all Losses resulting from Buyer’s
breach of the foregoing representations in this Section 16.2(b). The provisions of this Section 16.2(b) shall survive the Closing
or any termination of this Agreement indefinitely.
Section
16.3.
Confidentiality; Press Release; IRS Reporting
Requirements
.
(a)
Buyer
and Seller, and each of their respective Affiliates, shall hold as confidential all information disclosed in connection with the
transaction contemplated hereby and concerning each other, the Assets, this Agreement and the transactions contemplated hereby
and shall not release any such information to third parties without the prior written consent of the other parties hereto, except
(i) any information which was previously or is hereafter publicly disclosed (other than in violation of this Agreement or other
confidentiality agreements to which Affiliates of Buyer are parties), (ii) to their partners, advisers, underwriters, analysts,
employees, Affiliates, officers, directors, consultants, lenders, accountants, legal counsel, title companies or other advisors
of any of the foregoing, provided that they are advised as to the confidential nature of such information and are instructed to
maintain such confidentiality or (iii) to comply with any Applicable Law or Nasdaq listing requirements. The foregoing shall supersede
any prior confidentiality agreement that may have been entered into by the parties. The provisions of this Section 16.3(a) shall
survive the Closing or the termination of this Agreement for a period of one (1) year.
(b)
Neither
Seller nor Buyer may issue a press release with respect to this Agreement and the transactions contemplated hereby without the
prior written consent of the other party and provided that the content of any such press release shall be subject to the prior
written consent of the other party hereto and in no event shall any such press release issued by Buyer disclose the identity of
Seller’s direct or indirect beneficial owners by name or the consideration paid to Seller for the Assets.
(c)
For
the purpose of complying with any information reporting requirements or other rules and regulations of the IRS that are or may
become applicable as a result of or in connection with the transaction contemplated by this Agreement, including, but not limited
to, any requirements set forth in Treasury Regulation Section 1.6045-4 and any successor version thereof (collectively, the “
IRS
Reporting Requirements
”), Seller and Buyer hereby designate and appoint the Escrow Agent to act as the “
Reporting
Person
” (as that term is defined in the IRS Reporting Requirements) to be responsible for complying with any IRS Reporting
Requirements. The Escrow Agent hereby acknowledges and accepts such designation and appointment and agrees to fully comply with
any IRS Reporting Requirements that are or may become applicable as a result of or in connection with the transaction contemplated
by this Agreement. Without limiting the responsibility and obligations of the Escrow Agent as the Reporting Person, Seller and
Buyer hereby agree to comply with any provisions of the IRS Reporting Requirements that are not identified therein as the responsibility
of the Reporting Person.
Section
16.4.
Escrow
Provisions
.
(a)
The
parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that the
Escrow Agent shall not be deemed
to be the agent of either of the parties, and the Escrow Agent shall not be liable to either
of the parties for any act or omission on its part, other than for its gross negligence or willful misconduct. Seller and Buyer
shall jointly and severally indemnify and hold the Escrow Agent harmless from and against all costs, claims and expenses, including
attorneys’ fees and disbursements, incurred in connection with the performance of the Escrow Agent’s duties hereunder.
(b)
The
Escrow Agent has acknowledged its agreement to these provisions by signing this Agreement in the place indicated following the
signatures of Seller and Buyer.
Section
16.5.
Earnest Money Escrow Account; Escrowed
Funds
.
(a)
The
Escrow Agent shall hold the Earnest Money in escrow in an interest-bearing bank account reasonably approved by Seller and Buyer
(the “
Earnest Money Escrow Account
”). All investments of the Earnest Money shall be subject to the approval
of Buyer.
(b)
The
Escrow Agent shall hold the Earnest Money in escrow in the Earnest Money Escrow Account until the Closing or sooner termination
of this Agreement and shall hold or apply such proceeds in accordance with the terms of this Section 16.5(b). Seller and Buyer
understand that no interest is earned on the Earnest Money during the time it takes to transfer into and out of the Earnest Money
Escrow Account. At the Closing, the Earnest Money shall be paid by the Escrow Agent to, or at the direction of, Seller. If for
any reason the Closing does not occur and either party makes a written demand upon the Escrow Agent for payment of such amount,
the Escrow Agent shall, within twenty-four (24) hours thereof give written notice to the other party of such demand. If the Escrow
Agent does not receive a written objection within five (5) Business Days after the giving of such notice, the Escrow Agent is
hereby authorized to make such payment. If the Escrow Agent does receive such written objection within such five (5) Business
Day period or if for any other reason the Escrow Agent in good faith shall elect not to make such payment, the Escrow Agent shall
continue to hold such amount until otherwise directed by joint written instructions from the parties to this Agreement or a final
judgment of a court of competent jurisdiction. However, the Escrow Agent shall have the right at any time to deposit the Earnest
Money with the clerk of the court of New York County. The Escrow Agent shall give written notice of such deposit to Seller and
Buyer. Upon such deposit the Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder.
(c)
Following
the Closing, and subject to Section 3.5 and Section 10.9, the Escrow Agent shall hold the LOC Work Holdback
and/or
YBR Holdback
(collectively, the “
Escrowed Funds
”) in escrow in interest-bearing bank accounts reasonably
approved by Seller and Buyer (the “
Post-Closing Escrow Accounts
”). All investments of the Escrowed Funds shall
be subject to the approval of Buyer.
(d)
The
Escrow Agent shall hold the Escrowed Funds in escrow and shall hold or apply such proceeds in accordance with the terms of Section
3.5, Section 10.9 and this Section 16.5(d). Seller and Buyer understand that no interest is earned on the Escrowed Funds during
the time it takes to transfer into and out of the Post-Closing Escrow Accounts. If any dispute arises as to whether the Escrow
Agent is obligated to deliver the Escrowed Funds or as to whom the Escrowed Funds are to be delivered or the amount or timing
thereof, the Escrow Agent shall not
be
required to make any delivery, but in such event the Escrow Agent may hold the Escrowed Funds until receipt by the Escrow Agent
of instructions in writing, signed by all parties which have, or claim to have, an interest in the Escrowed Funds, directing the
disposition of the Escrowed Funds, or in the absence of such authorization, the Escrow Agent may hold the Escrowed Funds until
receipt of a certified copy of a final judgment or order of a court of competent jurisdiction, providing for the disposition of
the Escrowed Funds. However, the Escrow Agent shall have the right at any time to deposit the Escrowed Funds with the clerk of
the court of New York County. The Escrow Agent shall give written notice of such deposit to Seller and Buyer. Upon such deposit
the Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder.
The
provisions of this Section 16.5(d) shall survive the Closing.
Section
16.6.
Successors and Assigns; No Third-Party
Beneficiaries
. The stipulations, terms, covenants and agreements contained in this Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective permitted successors and assigns (including any successor
entity after a public offering of stock, merger, consolidation, purchase or other similar transaction involving a party hereto)
and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.
Section
16.7.
Assignment
.
This Agreement may not be assigned by Buyer without the prior written consent of Seller. Notwithstanding the foregoing, Buyer
may designate one or more Affiliates that is majority owned and controlled by Buyer or under common control with Buyer to which
(i) the Assets will be assigned at the Closing and (ii) the Crossroads Parking Parcel will be assigned at a separate closing.
Section
16.8.
Further Assurances
. From time
to time, as and when requested by any party hereto, the other party shall execute and deliver, or cause to be executed and delivered,
all such documents and instruments and shall take, or cause to be taken, all such further or other actions as such other party
may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement.
Section
16.9.
Notices
.
All notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective
for all purposes if (a) hand delivered, (b) sent by certified or registered United States mail, postage prepaid, return receipt
requested, (c) sent by expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted
delivery, or (d) sent by electronic mail, addressed as follows (or at such other address and Person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for
in this Section 16.9):
(a)
To
Buyer:
c/o
Blackstone Real Estate Advisors L.P.
345
Park Avenue
New
York, New York 10154
Attn:
Head, U.S. Asset Management
Email:
realestatenotices@blackstone.com
and
c/o
Blackstone Real Estate Advisors L.P.
345
Park Avenue
New
York, New York 10154
Attn:
General Counsel
Email:
realestatenotices@blackstone.com
with
copies thereof to:
Simpson
Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attn: Sasan Mehrara
Benjamin
Schaye
Email: smehrara@stblaw.com
ben.schaye@stblaw.com
(b)
To
Seller or Parent:
FRP
Holdings, Inc.
200
W. Forsyth Street, 7
th
Floor
Jacksonville,
Florida 32202
Attn:
John D. Milton, Jr.
Email:
jmilton@patriottrans.com
with
copies thereof to:
Nelson
Mullins Riley & Scarborough LLP
50
N. Laura Street, Suite 4100
Jacksonville,
Florida 32202
Attn:
Daniel B. Nunn, Jr.
Email:
daniel.nunn@nelsonmullins.com
(c)
To
the Title Company/Escrow Agent:
Lexington
National Land Services
39
West 37th Street, Fl. 12A
New
York, NY 10018
Attn:
Fanny Trataros
Email:
FTrataros@lexnls.com
and
Old
Republic National Title Insurance Company
20
S. Clark Street Suite 2900
Chicago,
IL 60603
Attn:
Charles J. Vachout Jr.
Email:
cvachout@oldrepublictitle.com
A
notice shall be deemed to have been given: (i) in the case of hand delivery, when delivered; (ii) in the case of registered or
certified mail, when delivered or upon the first attempted delivery on a Business Day; (iii) in the case of expedited prepaid
delivery service, when delivered or upon the first attempted delivery on a Business Day; and (iv) in the case of email, upon the
sender’s receipt of confirmation (which may be in the form of an automated electronic response) of delivery or upon the
first attempted delivery on a Business Day. Buyer and Seller acknowledge that Parent shall be the representative Seller (the “
Representative
Seller
”) for the purpose of giving notice under this Agreement, and that any notice given by Representative Seller pursuant
to this Section 16.9 shall be deemed to have been given by each Seller hereunder.
Section
16.10.
Entire Agreement
. This Agreement
and the Voting Agreement contain all of the terms agreed upon between the parties hereto with respect to the subject matter of
this Agreement and the Voting Agreement and supersede all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter hereof. This Agreement and the Voting Agreement fully and completely express
the agreement of the parties hereto.
Section
16.11.
Amendments
. This Agreement
may not be amended, modified, supplemented or terminated, nor may any of the obligations of Seller or Buyer hereunder be waived,
except by written agreement executed by Seller and Buyer, or with respect to a termination, except as otherwise specifically provided
in this Agreement. Any waiver or consent given under this Section 16.11 shall be effective only in the specific instance, and
for the purpose, for which given.
Section
16.12.
No Waiver
. No waiver by either
party of any failure or refusal by the other party to comply with its obligations hereunder shall be deemed a waiver of any other
or subsequent failure or refusal to so comply.
Section
16.13.
Governing Law
. This Agreement
shall be governed by, interpreted under, and construed and enforced in accordance with, the laws of the State of Florida.
Section
16.14.
Intentionally Omitted
.
Section
16.15.
Severability
. If any term
or provision of this Agreement or the application thereof to any Person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the application of such term or provision to Persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by Applicable Law.
Section
16.16.
Section Headings
. The headings
of the various Sections of this Agreement have been inserted only for purposes of convenience, are not part of this Agreement
and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement.
Section
16.17.
Counterparts
. This Agreement
may be executed in two or more counterparts and by facsimile signatures, which taken together still constitute collectively one
agreement. In making proof of this Agreement it shall not be necessary to produce or account for more than one such counterpart
with each party’s counterpart or facsimile signature.
Section
16.18.
Construction
. The parties
acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of
this Agreement or any amendments hereto. Singular words shall connote the plural as well as the singular, and plural words shall
connote the singular as well as the plural, and the masculine shall include the feminine and the neuter.
Section
16.19.
Recordation
.
Neither this Agreement nor any memorandum or notice of this Agreement may be recorded by any party hereto without the prior written
consent of the other party hereto, other than in connection with an action for specific performance by Buyer.
Section
16.20.
Time is
of the Essence
. Seller and Buyer agree that time is of the essence with respect to the obligations of Seller and Buyer under
this Agreement.
Section
16.21.
Schedules
. Seller and Buyer
agree that disclosure of any fact or item on any schedule attached to this Agreement shall, should the existence of such fact
or item be relevant to any other schedule, be deemed to be disclosed with respect to that other schedule so long as the relevance
of such disclosure to such other section is reasonably apparent.
Section
16.22.
Waiver of Jury Trial
. Seller
and Buyer hereby irrevocably waive trial by jury in any action, proceeding or counterclaim brought by one party against another
party on any matter arising out of or in any way connected with this Agreement.
Section
16.23.
Joint and Several Liability
.
Notwithstanding anything to the contrary contained in this Agreement, the liabilities and obligations of Seller shall be joint
and several in all respects.
Section
16.24.
State Specific Provisions
.
Seller and Buyer agree that, notwithstanding anything to the contrary contained herein, the provisions of this Section 16.24 shall
apply with respect to the transactions contemplated herein to the extent an individual Property is located in the state as set
forth below and any provision of this Agreement shall be deemed modified by the provisions contained in this Section 16.24 solely
with respect to such Property to the extent required to effect each of the applicable state requirements herein.
(a)
Delaware
.
(i)
Notwithstanding
Section 2.3, the parties will cooperate and effectuate Closing and funding of the transaction to the extent required by Applicable
Law.
(ii)
In
addition to the items set forth in Section 6.2(b) of the Agreement, Seller shall deliver all forms required under 30 Del. C. §
1126(b), 30 Del. C. § 1606(b), or 30 Del. C. § 1909(b), as applicable, including the form commonly known as Delaware
Form
5403 (Real Estate Tax Return Declaration of Estimated Income Tax (“
Withholding Form
”)); and, if withholding
tax is due, Seller shall deliver to the Title Company at Closing the estimated tax reported due on the Withholding Form in the
correct form for payment as provided in the Withholding Form.
Section
16.25.
1031 Exchange
. Subject to
this Section 16.25, Seller may require Buyer, pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, pay the
Purchase Price to a trust or intermediary party designated by Seller, so Seller may participate in a tax-deferred exchange of
like-kind property. Such election will be made, if at all, by notice to Buyer at least ten (10) days before the Closing Date.
Seller and Buyer agree to execute any reasonably necessary agreements and/or other documents to effectuate Seller’s tax-deferred
exchange, provided (a) the consummation or accomplishment of any such like-kind exchange shall not be a condition to Seller’s
obligations under this Agreement; (b) such exchange shall not result in any delay of the Closing; (c) Buyer’s obligations
under the Agreement will not be increased; (d) such documents will not modify Buyer’s or Seller’s representations,
warranties or obligations under this Agreement; (e) the Purchase Price paid by Buyer will not be different from what Buyer would
have otherwise paid hereunder and Buyer shall not be required to take title to any asset other than the Assets in connection with
such like-kind exchange; (f) Buyer will incur no additional cost, expense, Tax or liability as a result of its cooperation in
the exchange; and (g) Seller will indemnify and hold harmless Buyer for additional expenses, including, but not limited to, Taxes,
closing costs, and any cost or expense (including reasonable counsel fees) that Buyer my suffer, sustain or become subject to
as a result of the Purchase Price being paid to a trust or intermediary party, rather than to Seller, and the trust’s or
intermediary’s subsequent use of the Purchase Price. Notwithstanding anything to the contrary, this Section 16.25 shall
survive the Closing.
[
remainder
of page intentionally left blank
]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.
|
PARENT
:
|
|
|
|
|
FRP HOLDINGS, INC.,
|
|
a Florida corporation
|
|
|
|
|
By:
|
/s/
John D. Baker
II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
SELLERS
:
|
|
|
|
|
OZ LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker
II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
1502 QUARRY LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP LAKESIDE LLC #1,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP LAKESIDE LLC #2,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP LAKESIDE LLC #3,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP LAKESIDE LLC #4,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP LAKESIDE LLC #5,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
HOLLANDER 95 LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP TRANSIT BUSINESS PARK LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP BIRD RIVER LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP MANASSAS LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP HILLSIDE LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP HILLSIDE LLC #2,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP HILLSIDE LLC #3,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP OREGON AVENUE LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP PRESTON COURT LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP 10820 GILROY LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP KELSO LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP PORT CAPITAL HOLDINGS LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FRP
DEVELOPMENT CORP.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP AZALEA LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FLORIDA
ROCK PROPERTIES, INC.,
|
|
|
a
Florida corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
|
FRP DORSEY LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FLORIDA
ROCK PROPERTIES, INC.,
|
|
|
a
Florida corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
|
|
|
|
FRP INTERCHANGE LLC,
|
|
a Maryland limited liability company
|
|
|
|
|
|
By:
FLORIDA
ROCK PROPERTIES, INC.,
|
|
|
a
Maryland corporation, its sole member
|
|
By:
|
/s/
John D. Baker II
|
|
Name:
|
John D. Baker
II
|
|
Title:
|
Chief Executive
Officer
|
[signatures
continue onto following page]
[Signature
Page to Agreement]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.
|
BUYER
:
|
|
|
|
|
BRE FOXTROT PARENT LLC,
|
|
a Delaware limited liability company
|
|
|
|
|
By:
|
/s/
Tyler
Henritze
|
|
Name: Tyler
Henritze
|
|
Title: Senior
Managing Director and Vice President
|
[Signature
Page to Agreement]
JOINDER
BY ESCROW AGENT
Old
Republic National Title Insurance Company, referred to in this Agreement as the “Escrow Agent,” hereby acknowledges
that it received this Agreement executed by Seller and Buyer as of March
22
, 2018, and accepts the obligations of the Escrow
Agent as set forth herein.
|
ESCROW AGENT
:
|
|
Old Republic National Title Insurance
Company
|
|
|
|
|
By:
|
/s/
Gregory
J. Chaparro
|
|
Name: Gregory
J. Chaparro
|
|
Title: Senior
Vice President
|
[Signature
Page to Escrow Agent Joinder]
ACKNOWLEDGEMENT
BY ESCROW AGENT OF RECEIPT OF EARNEST MONEY
Old
Republic National Title Insurance Company, referred to in this Agreement as the “Escrow Agent,” hereby acknowledges
that it received the Earnest Money on March ___, 2018. The Escrow Agent hereby agrees to hold and distribute the Earnest Money
in accordance with the terms and provisions of the Agreement.
|
ESCROW AGENT
:
|
|
Old Republic National Title Insurance
Company
|
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
[Signature
Page to Escrow Agent Acknowledgement of Earnest Money]
ACKNOWLEDGEMENT
BY ESCROW AGENT OF RECEIPT OF ESCROWED FUNDS
1
Old
Republic National Title Insurance Company, referred to in this Agreement as the “Escrow Agent,” hereby acknowledges
that it received the Escrowed Funds on _________________ ___, 2018. The Escrow Agent hereby agrees to hold and distribute the
Escrowed Funds in accordance with the terms and provisions of the Agreement.
|
ESCROW AGENT
:
|
|
Old Republic National Title Insurance
Company
|
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
1
Note: To be executed by Escrow Agent at Closing
upon receipt of Escrowed Funds.
[Signature
Page to Escrow Agent Acknowledgement of Escrowed Funds]
JOINDER
1.
In
consideration of Buyer’s execution of that certain Agreement of Purchase and Sale (the “
Agreement
”) to
which this “
Joinder
” is attached (and of which it forms a part), the undersigned (“
Seller Parent
”),
hereby agrees, if the Closing occurs, to fulfill the post-Closing payment obligations of Seller under Section 11.1 of the Agreement
(the “
Obligations
”) in accordance with the terms of the Agreement and to the extent such Obligations are not
timely fulfilled by Seller, in each case subject to the limitations set forth in the Agreement. Capitalized terms used in this
Joinder and not otherwise defined herein shall have the same meanings as set forth in the Agreement.
2.
Seller
Parent acknowledges that Seller Parent is an affiliate of Seller and that Seller Parent will derive substantial benefits from
the execution of the Agreement and the transactions contemplated thereby, and that Seller Parent’s execution of this Joinder
is a material inducement and condition to Buyer’s execution of the Agreement.
3.
Notwithstanding
anything to the contrary contained in this Joinder, the obligations and liabilities of Seller Parent under this Joinder are subject
to all limitations applicable to Seller’s obligations and liabilities under the Agreement, including, without limitation,
the terms set forth in Section 11.3 and Section 11.4 of the Agreement, and all such terms are incorporated herein by this reference
as if set forth in full herein. All obligations and liabilities of Seller Parent under this Joinder (including any cause of action
by reason of a breach thereof) shall survive the Closing but not beyond the expiration of the Survival Period unless a longer
or shorter survival period is expressly provided for in this Agreement; provided, however, that liability for Seller’s obligations
under Section 9.1, Section 15.1 and Section 16.2 shall survive indefinitely; provided, further, that no claim for indemnification
and no action or proceeding with respect to such claims that are subject to the Survival Period or a longer or shorter survival
period as expressly provided for in the Agreement shall be valid or enforceable, at law or in equity, unless a Claim Notice is
delivered prior to the expiration of the Survival Period or the applicable longer or shorter survival period as expressly provided
for in this Agreement.
4.
The
following Sections of the Agreement shall apply to this Joinder as though herein set forth in full,
mutatis mutandis
: Section
11.3, Section 11.4, Section 16.6 through Section 16.19 (with any notice to Seller Parent to be sent to the addresses set forth
for Seller in Section 16.9 of the Agreement) and Section 16.21 through Section 16.24. Additionally, Buyer’s confidentiality
obligations contained in Section 16.3(a) of the Agreement shall apply to any and all information relating to Seller Parent that
may be provided to Buyer.
IN
WITNESS WHEREOF, the undersigned has executed this Joinder as of the date of the Agreement.
|
SELLER PARENT
:
|
|
|
|
FRP HOLDINGS, INC.,
|
|
a Florida corporation
|
|
|
|
|
By:
|
/s/
John
D. Baker II
|
|
Name: John
D. Baker II
|
|
Title: Chief
Executive Officer
|
[Signature
Page to Seller Joinder]
Schedule
A-1
Properties
and Sellers
Property
|
Seller
|
State
of
Organization
|
1502
Quarry Drive, Edgewood, Maryland 21040
|
1502
Quarry LLC
|
Maryland
|
1504
Quarry Drive, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #2
|
Maryland
|
1506
Quarry Drive, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #2
|
Maryland
|
2201
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #5
|
Maryland
|
2202
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #4
|
Maryland
|
2203
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #5
|
Maryland
|
2204
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #4
|
Maryland
|
2206
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #1
|
Maryland
|
2208
Lakeside Boulevard, Edgewood, Maryland 21040
|
FRP
Lakeside LLC #1
|
Maryland
|
7001
Dorsey Road, Hanover, Maryland 21076
|
FRP
Hillside LLC #2
|
Maryland
|
7010
Dorsey Road, Hanover, Maryland 21076
|
FRP
Hillside LLC
|
Maryland
|
7020
Dorsey Road, Hanover, Maryland 21076
|
FRP
Hillside LLC #3
|
Maryland
|
7021
Dorsey Road, Hanover, Maryland 21076
|
FRP
Hillside LLC
|
Maryland
|
9104
Yellow Brick Road, Rosedale, Maryland 21237
|
OZ
LLC
|
Maryland
|
9108
Yellow Brick Road, Rosedale, Maryland 21237
|
OZ
LLC
|
Maryland
|
810
Oregon Avenue, Linthicum, Maryland 21090
|
FRP
Oregon Avenue LLC
|
Maryland
|
812
Oregon Avenue, Linthicum, Maryland 21090
|
FRP
Oregon Avenue LLC
|
Maryland
|
3031
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
3041
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
3051
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
3101
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
3121
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
3131
Washington Boulevard, Baltimore, Maryland 21230
|
FRP
Transit Business Park LLC
|
Maryland
|
1901
62nd Street, Baltimore, Maryland 21237
|
FRP
Hollander 95 LLC
|
Maryland
|
1921
62nd Street, Baltimore, Maryland 21237
|
FRP
Hollander 95 LLC
|
Maryland
|
8230
Preston Court, Jessup, Maryland 20794
|
FRP
Preston Court LLC
|
Maryland
|
8240
Preston Court, Jessup, Maryland 20794
|
FRP
Preston Court LLC
|
Maryland
|
10820
Gilroy Road, Hunt Valley, Maryland 21031
|
FRP
10820 Gilroy LLC
|
Maryland
|
8515
Kelso Drive, Essex, Maryland 21221
|
FRP
Kelso LLC
|
Maryland
|
8525
Kelso Drive, Essex, Maryland 21221
|
FRP
Kelso LLC
|
Maryland
|
7700
Port Capital Drive, Elkridge, Maryland 21075
|
FRP
Port Capital Holdings LLC
|
Maryland
|
8620
Dorsey Run Road, Jessup, Maryland 20794
|
FRP
Dorsey LLC
|
Maryland
|
11500
Crossroads Circle, Middle River, Maryland 21220
|
FRP
Bird River LLC
|
Maryland
|
6920
Tudsbury Road, Windsor Mill, Maryland 21244
|
FRP
Windsor LLC
|
Maryland
|
7600
Doane Drive, Manassas, Virginia 20109
|
FRP
Manassas LLC
|
Maryland
|
7780
Doane Drive, Manassas, Virginia 20109
|
FRP
Manassas LLC
|
Maryland
|
7760
Doane Drive, Manassas, Virginia 20109
|
FRP
Manassas LLC
|
Maryland
|
11800
Brewer’s Spring Road, Manassas, Virginia 20109
|
FRP
Manassas LLC
|
Maryland
|
11801
Brewer’s Spring Road, Manassas, Virginia 20109
|
FRP
Manassas LLC
|
Maryland
|
100
Interchange Boulevard, Newark, Delaware 19711
|
FRP
Interchange, LLC
|
Maryland
|
200
Interchange Boulevard, Newark, Delaware 19711
|
FRP
Interchange, LLC
|
Maryland
|
Parcel
C-1 Interchange Business Park, Newark, Delaware 19711
|
FRP
Interchange, LLC
|
Maryland
|
1187
Azalea Garden Road, Norfolk, Virginia 23502
|
FRP
Azalea LLC
|
Maryland
|
ANNEX B
EXECUTION VERSION
VOTING AND SUPPORT AGREEMENT
This
VOTING AND SUPPORT AGREEMENT
(this
“
Agreement
”), dated as of March 22, 2018, is entered into by and among BRE Foxtrot Parent LLC, a Delaware limited
liability company (“
Buyer
”), and those parties listed on
Schedule A
hereto (each a “
Shareholder
”
and collectively the “
Shareholders
”).
WHEREAS
, as of the date hereof, each
Shareholder is the record and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of the number of shares of common
stock, par value $0.10 per share (“
Common Stock
”), of FRP Holdings, Inc., a Florida corporation (the “
Parent
”)
set forth opposite such Shareholder’s name on
Schedule A
(all such shares set forth on
Schedule A
, together
with any additional shares of Common Stock of the Parent that are hereafter issued to, or otherwise acquired or owned, beneficially
or of record, by, the Shareholders prior to the termination of this Agreement being referred to herein as the “
Subject
Shares
”);
WHEREAS
, concurrently with the execution
hereof, Buyer, Parent and certain seller entities (collectively, the “
Seller
”) are entering into an Agreement
of Purchase and Sale, dated as of the date hereof and as it may be amended, supplemented or waived from time to time in accordance
with its terms (the “
Purchase Agreement
”), which provides, among other things, for Buyer to purchase from Seller,
Seller’s right, title and interest in the Assets, upon the terms and subject to the conditions set forth in the Purchase
Agreement (capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in
the Purchase Agreement); and
WHEREAS
, as a condition to its willingness
to enter into the Purchase Agreement, Buyer has required that each Shareholder, and as an inducement and in consideration therefor,
each Shareholder (solely in such Shareholder’s capacity as a holder of the Subject Shares) has agreed to, enter into this
Agreement.
NOW, THEREFORE
, in consideration of the
foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
ARTICLE
I
AGREEMENT TO VOTE
1.1
Agreement
to Vote
. Subject to the terms of this Agreement, each Shareholder hereby irrevocably and unconditionally agrees that, during
the time this Agreement is in effect, at every annual or special meeting of the shareholders of the Parent held with respect to
the matters specified in
Section 1.1(b)
, however called, including any adjournment or postponement thereof, and in connection
with any action proposed to be taken by written consent of the shareholders of the Parent, the Shareholders shall, in each case
to the fullest extent that the Subject Shares are entitled to vote thereon:
(a)
cause
the Subject Shares to be counted as present thereat for purposes of determining a quorum; and
(b)
be
present (in person or by proxy) and vote (or cause to be voted), or deliver (or cause to be delivered) a written consent with respect
to, the Subject Shares:
(i)
in
favor of (A) adoption of the Purchase Agreement and approval of the transactions contemplated thereby and (B) each of the actions
contemplated by the Purchase Agreement in respect of which approval of the Parent’s shareholders is requested; and
(ii)
against
(A) any change in the Parent Board, (B) any Acquisition Proposal or any other any proposal made in opposition to the Purchase Agreement
or the transactions contemplated by the Purchase Agreement and (C) any other proposal or action that (i) could reasonably be expected
to constitute a breach of any covenant, representation or warranty or any other obligation or agreement of the Parent under the
Purchase Agreement or of the Shareholders under this Agreement, (ii) is intended or could reasonably be expected to prevent, frustrate,
impede, interfere with, materially delay or adversely affect the transactions contemplated by the Purchase Agreement or (iii) could
reasonably be expected to dilute in any material respect the benefits to Buyer of the transactions contemplated by the Purchase
Agreement.
(c)
Each
Shareholder agrees that the obligations specified in this
Section 1.1
shall not be affected by any Adverse Recommendation
Change except to the extent the Purchase Agreement is terminated as a result thereof.
(d)
During
the time this Agreement is in effect, each Shareholder shall retain at all times the right to vote the Subject Shares in the Shareholder’s
sole discretion, and without any other limitation, on any matters other than those set forth in this
Section 1.1
that are
at any time or from time to time presented for consideration to the Parent’s shareholders generally.
ARTICLE
II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Shareholder represents and warrants to
Buyer that:
2.1
Organization;
Authority; Execution and Delivery; Enforceability
. If such Shareholder is not a natural person, (i) such Shareholder is
duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) the execution and
delivery of this Agreement by such Shareholder, the consummation by such Shareholder of the transactions contemplated by this Agreement
and the compliance by such Shareholder with the terms of this Agreement have been duly authorized by all necessary action on the
part of such Shareholder and its governing body, members, stockholders and trustees, as applicable, and (iii) no other proceedings
on the part of such Shareholder (or such Shareholder’s governing body, members, stockholders or trustees, as applicable)
are necessary to authorize this Agreement, to consummate the transactions contemplated by this Agreement or to comply with the
terms of this Agreement. Such Shareholder has all requisite corporate, company, partnership or other power and authority to execute
and deliver this Agreement (and each Person executing this Agreement on behalf of such Shareholder that is not a natural person
has full power, authority and capacity to execute and deliver this Agreement on behalf of such Shareholder and to thereby bind
such
Shareholder), to consummate the transactions contemplated
by this Agreement and to comply with the terms of this Agreement. This Agreement has been duly executed and delivered by such Shareholder
and, assuming due authorization, execution and delivery by Buyer, constitutes a valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms. If such Shareholder is married and the Subject Shares of such
Shareholder constitute community property or if spousal or other approval is required for this Agreement to be legal, valid and
binding, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of,
such Shareholder’s spouse, enforceable against such spouse in accordance with its terms.
2.2
Non-Contravention;
Consents
. The execution and delivery of this Agreement, the consummation of the transactions contemplated by this Agreement
and the compliance by such Shareholder with the terms of this Agreement do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in termination,
amendment, cancelation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any
pledges, liens, charges, mortgages, encumbrances and security interests (collectively, “
Liens
”) in or upon any
of the properties or assets of such Shareholder under, or give rise to any increased, additional, accelerated or guaranteed rights
or entitlements under, (i) if such Shareholder is not a natural person, any provision of any certificate of incorporation, bylaws,
or trust or other organizational document of such Shareholder, (ii) any contract to or by which such Shareholder is a party or
bound or to or by which any of the properties or assets of such Shareholder (including such Shareholder’s Subject Shares)
is bound or subject or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law,
in each case, applicable to such Shareholder or to such Shareholder’s properties or assets (including such Shareholder’s
Subject Shares) other than, in the case of clauses (ii) and (iii) of this paragraph, conflicts, violations, breaches, defaults,
rights, losses, Liens or entitlements that individually or in the aggregate are not reasonably likely to (x) impair in any material
respect the ability of such Shareholder to perform its obligations under this Agreement or (y) prevent or materially impede or
delay the consummation of any of the transactions contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Authority or other Person (including with respect to natural
persons, any spouse, and with respect to trusts, any co-trustee or beneficiary) is required by or with respect to such Shareholder
in connection with the execution and delivery of this Agreement by such Shareholder, the consummation by such Shareholder of the
transactions contemplated by this Agreement or the compliance by such Shareholder with the terms of this Agreement, except for
filings with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the transactions
contemplated hereby.
2.3
Ownership
of Subject Shares; Total Shares
. (i) Such Shareholder is the record or beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) of its Subject Shares set forth on
Schedule A
and has good, valid and marketable title to such Subject
Shares free and clear of any Liens in respect of such Subject Shares, except as provided hereunder or pursuant to any applicable
restrictions on transfer under the Securities Act (collectively, “
Permitted Liens
”) and (ii) the Subject Shares
owned by such Shareholder are all of the equity securities of the Parent owned, either of record or beneficially, by such Shareholder
as of the date hereof.
2.4
Voting
Power
. Other than as provided in this Agreement or as would not reasonably be expected to prevent or materially delay the
consummation by the Shareholder of the transactions contemplated by this Agreement or otherwise adversely impact the Shareholder’s
ability to perform its obligations hereunder in any material respect, the Shareholder has full voting power with respect to its
Subject Shares, full power of disposition, full power to issue instructions with respect to the matters set forth herein, and full
power to agree to all of the matters set forth in this Agreement. The Shareholder has not appointed or granted any proxy inconsistent
with this Agreement, which appointment or grant is still effective, with respect to its Subject Shares. Except as would not reasonably
be expected to prevent or materially delay the consummation by the Shareholder of the transactions contemplated by this Agreement
or otherwise adversely impact the Shareholder’s ability to perform its obligations hereunder in any material respect, none
of its Subject Shares are directly bound by any stockholders’ agreement, proxy, voting trust or other agreement or arrangement
with respect to the voting of such Subject Shares, except as provided hereunder.
2.5
Reliance
.
The Shareholder understands and acknowledges that Buyer is entering into the Purchase Agreement in reliance upon the Shareholders’
execution, delivery and performance of this Agreement.
2.6
Absence
of Litigation
. As of the date hereof, there is no Proceeding pending against, or, to the knowledge of the Shareholder,
threatened in writing against such Shareholder or any of such Shareholder’s properties or assets (including the Subject Shares),
nor, to the knowledge of such Shareholder, is there any investigation of a Governmental Authority pending or threatened in writing
with respect to the Shareholder, and the Shareholder is not subject to any outstanding order, writ, injunction or decree, that,
in each case, would, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation by
the Shareholder of the transactions contemplated by this Agreement or otherwise adversely impact the Shareholder’s ability
to perform its obligations hereunder in any material respect.
2.7
Brokers
.
No broker, finder, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission for which the Parent, Seller or Buyer will be liable in connection with the
transactions contemplated hereby based upon arrangements made by or, to the knowledge of the Shareholder, on behalf of the Shareholder.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Shareholders
that:
3.1
Organization;
Power and Authority
. Buyer is duly organized, validly existing and in good standing under the laws of the State of Delaware
and consummation by Buyer of the transactions contemplated hereby are within Buyer’s organizational powers and have been
duly authorized by all necessary organizational actions on the part of Buyer.
3.2
Authorization;
Binding Agreement
. Buyer has full power and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. Buyer has duly and validly executed and delivered this Agreement and, assuming due authorization,
execution and delivery by the Shareholders, this Agreement constitutes its legal,
valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights and by general principles of equity (whether applied in a proceeding
at law or in equity).
3.3
Non-Contravention
.
The execution and delivery of this Agreement by Buyer does not, and the performance by Buyer of its obligations hereunder and the
consummation by Buyer of the transactions contemplated hereby will not, (i) except as may be required by applicable U.S. Federal
securities laws, require any consent, approval, order, authorization or other action by, or filing with or notice to, any Person
(including any Governmental Authority) under, constitute a default (with or without the giving of notice or the lapse of time or
both) under, or give rise to any right of termination, cancellation or acceleration under any agreement, trust, commitment, order,
judgment, writ, stipulation, settlement, award, decree or other instrument binding on Buyer or (ii) violate any provision of Buyer’s
organizational documents, in case of each of clauses (i) and (ii), except as would not reasonably be expected to prevent or materially
delay the consummation by Buyer of the transactions contemplated by this Agreement or otherwise adversely impact Buyer’s
ability to perform its obligations hereunder in any material respect.
3.4
Absence
of Litigation
. As of the date hereof, there is no Proceeding pending against, or, to the knowledge of Buyer, threatened
in writing against Buyer, any of its subsidiaries or any of Buyer’s or its subsidiaries’ properties or assets that
would reasonably be expected to prevent or materially delay the consummation by Buyer of the transactions contemplated by this
Agreement or otherwise adversely impact Buyer’s ability to perform its obligations hereunder in any material respect.
ARTICLE
IV
ADDITIONAL COVENANTS OF THE SHAREHOLDERS
Each Shareholder hereby covenants and agrees
that until the termination of this Agreement:
4.1
No
Transfer; No Inconsistent Arrangements
. Except as expressly provided hereunder or pursuant to the Purchase Agreement, from
and after the date hereof and until this Agreement is terminated in accordance with
Section 5.2
, each Shareholder shall
not, directly or indirectly, (i) grant or create any Lien, other than Permitted Liens, on any or all of the Subject Shares, (ii)
transfer, sell, assign, tender, gift, hedge, pledge or otherwise dispose (whether by sale, liquidation, dissolution, dividend or
distribution) of, or enter into any derivative arrangement with respect to (collectively, “
Transfer
”), any of
the Subject Shares, or any right, title or interest therein (including any right or power to vote to which the Shareholder may
be entitled) (or consent to any of the foregoing), (iii) enter into (or caused to be entered into) any Contract with respect to
any Transfer of the Subject Shares, (iv) grant or permit the grant of any proxy, power-of-attorney or other authorization or consent
in or with respect to any of the Subject Shares, (v) deposit or permit the deposit of any of the Subject Shares into a voting trust
or enter into a voting agreement or similar arrangement, commitment or understanding with respect to any of the Subject Shares
or (vi) take or permit any other action that would reasonably be expected to prevent or materially restrict, disable or delay the
consummation by the Shareholder of the transactions contemplated by this Agreement or otherwise adversely impact the Shareholder’s
ability to perform its obligations hereunder in any material respect.
Notwithstanding the foregoing, (x) direct or indirect
Transfers of equity or other interests in the Shareholder by its equityholders is not prohibited by this
Section 4.1
and
(y) the Shareholder may make Transfers of Subject Shares as Buyer may, in its sole discretion, agree in writing. Any Transfer in
violation of this
Section 4.1
shall be null and void
ab initio
. If any involuntary Transfer of any of the Subject
Shares shall occur (including, but not limited to, a sale by Shareholder’s trustee in any bankruptcy, or a sale to a purchaser
at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent
transferees of the initial transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities
and rights under this Agreement, which shall continue in full force and effect until is terminated in accordance with
Section
5.2
.
4.2
No
Exercise of Appraisal Rights; Actions
. To the extent a Shareholder is found to have a right to demand appraisal of any
of its Subject Shares or a right to dissent from the transactions contemplated by the Purchase Agreement (collectively, “
Appraisal
Rights
”), such Shareholder (i) waives and agrees not to exercise any such Appraisal Rights (including, without limitation,
under Section 607.1302 of the Florida Business Corporation Act); (ii) agrees not to commence, participate in or voluntarily aid
in any way any claim or proceeding to seek (or file any petition related to) Appraisal Rights in connection with the transactions
contemplated by the Purchase Agreement; and (iii) agrees not to commence or join in, and agrees to take all actions necessary to
opt out of, any class in any class action with respect to any claim, derivative or otherwise, against Buyer or any of its successors
(x) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (y) alleging breach
of any fiduciary duty of any Person in connection with the negotiation and entry into the Purchase Agreement or the transactions
contemplated thereby. Notwithstanding the foregoing, nothing in this
Section 4.2
shall constitute, or be deemed to constitute,
a waiver or release by the Shareholder of any claim or cause of action against Buyer to the extent arising out of a breach of this
Agreement by Buyer.
4.3
Documentation
and Information
. Except as required by applicable law, each Shareholder shall not make any public announcement regarding
this Agreement, the Purchase Agreement or the transactions contemplated hereby or thereby without the prior written consent of
Buyer (which consent may be withheld in Buyer’s sole discretion). Each Shareholder consents to and hereby authorizes Buyer
and Parent to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure
document that Buyer or Parent reasonably determines to be necessary in connection with the Purchase Agreement and any transactions
contemplated by the Purchase Agreement, the Shareholder’s identity and ownership of the Subject Shares, the existence of
this Agreement and the nature of the Shareholder’s commitments and obligations under this Agreement, and the Shareholder
acknowledges that Buyer and Parent may, in their sole discretion, file this Agreement or a form hereof with the SEC or any other
Governmental Authority. Each Shareholder agrees to promptly give Buyer and Parent any information that is in its possession that
Buyer and Parent may reasonably request for the preparation of any such disclosure documents, and each Shareholder agrees to promptly
notify Buyer and Parent of any required corrections with respect to any written information supplied by it specifically for use
in any such disclosure document, if and to the extent that the Shareholder shall become aware that any such information shall have
become false or misleading in any material respect.
4.4
No
Solicitation
. Subject to
Section 5.18
, each Shareholder shall not, and shall cause its directors and officers in
their capacities as such not to, and shall direct its other Representatives not to directly or indirectly, (i) solicit, initiate,
knowingly encourage or knowingly facilitate any inquiry, proposal or offer that constitutes, or could reasonably be expected to
lead to, an Acquisition Proposal, (ii) enter into, continue or otherwise participate or engage in any negotiations or discussions
regarding, or furnish to any person other than Buyer or its Representatives any non-public information or data in furtherance of,
any Acquisition Proposal or Inquiry, (iii) approve, recommend, declare advisable or enter into an Alternative Acquisition Agreement,
(iv) agree to or propose publicly to do any of the foregoing. Each Shareholder shall, and shall cause each of its subsidiaries
to, and shall direct the Representatives of such Shareholder and its subsidiaries to (A) immediately cease and cause to be terminated
all existing discussions and negotiations with any Person and its Representatives (other than Buyer or any of its Representatives)
conducted heretofore with respect to any Acquisition Proposal and (B) not terminate, amend, release or modify any provision of
any standstill agreement (including any standstill provisions contained in any confidentiality or other agreement) to which it
or any of its Affiliates or Representatives is a party. Nothing in this
Section 4.4
shall prohibit each Shareholder or its
Representatives from informing any Person of the existence of the provisions contained in this
Section 4.4
.
4.5
Adjustments
.
In the event of any stock split (including a reverse stock split), stock dividend, merger, reorganization, recapitalization, reclassification,
combination, exchange of shares or similar transaction with respect to the capital stock of the Parent that affects the Subject
Shares, the terms of this Agreement shall apply to the resulting securities.
4.6
Further
Assurances
.
(a)
Each
of the parties hereto shall execute and deliver any additional certificate, instruments and other documents, and take any additional
actions, as may be reasonably necessary or appropriate to carry out and effectuate the purpose and intent of this Agreement.
(b)
Each
Shareholder agrees, while this Agreement is in effect, to notify Buyer promptly in writing of the number and description of any
Subject Shares acquired by the Shareholder after the date hereof which are not set forth on
Schedule A
hereto.
ARTICLE
V
MISCELLANEOUS
5.1
Notices
.
All notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective
for all purposes if (a) hand delivered, (b) sent by certified or registered United States mail, postage prepaid, return receipt
requested, (c) sent by expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted
delivery, or (d) sent by electronic mail, addressed as follows (or at such other address and Person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for
in this
Section 5.1
):
(a)
if
to Buyer, to
c/o Blackstone
Real Estate Advisors L.P.
345 Park Avenue
New York, New York
10154
Attn: Head, U.S.
Asset Management
Email: realestatenotices@blackstone.com
and
c/o Blackstone
Real Estate Advisors L.P.
345 Park Avenue
New York, New York
10154
Attn: General Counsel
Email: realestatenotices@blackstone.com
with copies thereof to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
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Attn:
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Sasan Mehrara
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Benjamin Schaye
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Email:
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smehrara@stblaw.com
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ben.schaye@stblaw.com
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(b)
if
to the Shareholders, to
John D. Baker
II
200 W. Forsyth
Street, 7
th
Floor
Jacksonville, Florida
32202
with copies thereof to:
Nelson Mullins
Riley & Scarborough LLP
Attn: Daniel B.
Nunn, Jr.
50 N. Laura Street,
41
st
Floor
Jacksonville, Florida
32202
Ropes & Gray
Attn: Geoffrey M. Mason
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199
A notice shall be deemed to have been given:
(i) in the case of hand delivery, when delivered; (ii) in the case of registered or certified mail, when delivered or upon the
first attempted delivery on a Business Day; (iii) in the case of expedited prepaid delivery service, when delivered or upon the
first attempted delivery on a Business Day; and (iv) in the case of
email, upon the sender’s receipt of confirmation
(which may be in the form of an automated electronic response) of delivery or upon the first attempted delivery on a Business Day.
5.2
Termination
.
This Agreement shall terminate automatically and be of no further force or effect, without any notice or other action by any Person,
upon the first to occur of (i) the valid termination of the Purchase Agreement in accordance with its terms, (ii) the Closing,
and (iii) the mutual written consent of all of the parties hereto. Upon termination of this Agreement, no party shall have any
further obligations or liabilities under this Agreement;
provided
,
however
, that solely in the event of a termination
of this Agreement pursuant to clause (i) above, (x) nothing set forth in this
Section 5.2
shall relieve any party from liability
for any willful and material breach of this Agreement prior to termination hereof and (y) the provisions of this
Article V
shall survive any termination of this Agreement.
5.3
Amendments
.
This Agreement may not be amended, modified, supplemented or terminated, nor may any of the obligations of the parties hereto be
waived, except by written agreement executed by the parties hereto.
5.4
No
Waiver
. No waiver by a party of any failure or refusal by another party to comply with its obligations hereunder shall
be deemed a waiver of any other or subsequent failure or refusal to so comply.
5.5
Expenses
.
All fees and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the transactions contemplated by the Purchase Agreement are consummated.
5.6
Successors
and Assigns; No Third-Party Beneficiaries
. The stipulations, terms, covenants and agreements contained in this Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective permitted successors and assigns
(including any successor entity after a public offering of stock, merger, consolidation, purchase or other similar transaction
involving a party hereto) and nothing herein expressed or implied shall give or be construed to give to any Person, other than
the parties hereto and such assigns, any legal or equitable rights hereunder.
5.7
Assignment
.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by any
of the parties (whether by operation of law or otherwise) without the prior written consent of the other parties, except to the
extent that such rights, interests or obligations are assigned pursuant to a Transfer expressly permitted under
Section 4.1
.
5.8
Governing
Law
. This Agreement shall be governed by, interpreted under, and construed and enforced in accordance with, the laws of
the State of Florida.
5.9
Waiver
of Jury Trial
. Each party hereto hereby irrevocably waives trial by jury in any action, proceeding or counterclaim brought
by one party against another party on any matter arising out of or in any way connected with this Agreement.
5.10
Counterparts
.
This Agreement may be executed in two or more counterparts and by facsimile signatures, which taken together still constitute collectively
one agreement. In
making proof of this Agreement it shall not be necessary
to produce or account for more than one such counterpart with each party’s counterpart or facsimile signature.
5.11
Entire Agreement
. This Agreement and the Purchase Agreement contain all of the terms agreed upon between
the parties hereto with respect to the subject matter of this Agreement and the Purchase Agreement and supersede all prior agreements
and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof. This Agreement and
the Voting Agreement fully and completely express the agreement of the parties hereto.
5.12
Severability
.
If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid
or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by Applicable Law
5.13
Specific
Performance
. The parties agree that irreparable damage may occur to the Buyer if any provision of this Agreement were not
performed in accordance with the terms hereof, and, accordingly, that the Buyer shall be entitled to seek an injunction or injunctions
to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition
to any other remedy to which the Buyer is entitled at law or in equity. In any proceeding for specific performance, the Shareholders
will waive any requirement for the securing or posting of any bond in connection with the remedies referred to in this
Section
5.13
.
5.14
Section
Headings
. The headings of the various Sections of this Agreement have been inserted only for purposes of convenience, are
not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.
5.15
Construction
.
The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any amendments hereto.
5.16
Interpretation
.
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The word “shall” shall
be construed to have the same meaning as the word “will.” The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word “extent”
in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall
not mean simply “if.” Unless the context requires otherwise (i) any definition of or reference to any contract, instrument
or other document or any law herein shall be construed as referring to such contract, instrument or other document or law as from
time to time amended, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision
hereof and (iv) all references herein to Articles and Sections shall be construed
to refer to Articles and Sections of this Agreement.
5.17
Capacity
as Shareholder
. Notwithstanding anything herein to the contrary, (i) each Shareholder signs this Agreement solely in the
Shareholder’s capacity as a shareholder of the Parent, and not in any other capacity and this Agreement shall not limit or
otherwise affect the actions of the Shareholder or any affiliate, employee or designee of the Shareholder or any of its affiliates
in its capacity, if applicable, as an officer or director of the Parent or any other Person, and (ii) nothing herein shall in any
way restrict a director or officer of the Parent in the taking of any actions (or failure to act) in his or her capacity as a director
or officer of the Parent, or in the exercise of his or her fiduciary duties as a director or officer of the Parent, or prevent
or be construed to create any obligation on the part of any director or officer of the Parent from taking any action in his or
her capacity as such director or officer.
5.18
No
Ownership Interest
. Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to vest in
Buyer any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares. All rights, ownership
and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Shareholders, and Buyer shall
not have any authority to manage, direct, restrict, regulate, govern or administer any of the policies or operations of the Parent
or exercise any power or authority to direct the Shareholders in the voting of any of the Subject Shares, except as otherwise provided
herein.
[Signature Page Follows]
The parties are executing this Agreement on
the date set forth in the introductory clause.
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BUYER
:
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BRE FOXTROT PARENT LLC
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By:
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/s/ David Levine
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Name: David Levine
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Title: Managing Director and Vice President
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[
Signature Page to
Voting and Support Agreement
]
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SHAREHOLDERS:
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/s/ John
D. Baker II
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JOHN D. BAKER II
, in his individual capacity
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JOHN D. BAKER II LIVING TRUST
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By:
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/s/ John
D. Baker II
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JOHN D. BAKER II
, as trustee
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TRUST FOR JOHN D. BAKER II
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By:
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/s/ John
D. Baker II
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JOHN D. BAKER II
, as trustee
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TRUST FBO JOHN D. BAKER II U/A CYNTHIA L. BAKER TRUST DATED 4/30/1965
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By:
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/s/ John
D. Baker II
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JOHN D. BAKER II
, as trustee
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By:
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/s/ Edward L. Baker II
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EDWARD L. BAKER II
, as trustee
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ANNE D. BAKER REVOCABLE LIVING TRUST
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By:
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/s/ Anne D. Baker
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ANNE D. BAKER
, as trustee
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SIGNATURES CONTINUE
ON THE NEXT PAGE
[
Signature Page to
Voting and Support Agreement
]
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SHAREHOLDERS:
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/s/ Edward L. Baker II
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EDWARD L. BAKER II
, in his individual capacity
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EDWARD L’ENGLE BAKER II REVOCABLE LIVING TRUST
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By:
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/s/ Edward L. Baker II
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EDWARD L. BAKER II
, as trustee
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JOHN D. BAKER III REVOCABLE LIVING TRUST
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By:
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/s/ John
D. Baker III
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JOHN D. BAKER III
, as trustee
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SUSAN A. BAKER REVOCABLE LIVING TRUST
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By:
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/s/ Susan A. Baker
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SUSAN A. BAKER
, as trustee
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SIGNATURES CONTINUE
ON THE NEXT PAGE
[
Signature Page to
Voting and Support Agreement
]
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SHAREHOLDERS:
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/s/ Edward L. Baker
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EDWARD L. BAKER
, in his individual capacity
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EDWARD L. BAKER LIVING TRUST
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By:
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/s/ Edward L. Baker
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EDWARD L. BAKER
, as trustee
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By:
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/s/ John
D. Baker II
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JOHN D. BAKER II
, as trustee
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TRUST FBO JOHN D. BAKER II U/A CYNTHIA L. BAKER TRUST DATED 4/30/1965
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By:
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/s/ Edward L. Baker
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EDWARD L. BAKER
, as trustee
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By:
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/s/ Thompson S. Baker II
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THOMPSON S. BAKER II
, as trustee
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SIGNATURES CONTINUE
ON THE NEXT PAGE
[
Signature Page to
Voting and Support Agreement
]
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SHAREHOLDERS:
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THOMPSON S. BAKER II REVOCABLE LIVING TRUST
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By:
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/s/ Thompson S. Baker II
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THOMPSON S. BAKER II
, as trustee
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MARTHA F. BAKER REVOCABLE LIVING TRUST
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By:
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/s/ Martha F. Baker
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|
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MARTHA F. BAKER
, as trustee
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|
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JULIA ELIZABETH BAKER TRUST
|
|
|
|
|
By:
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/s/ Thompson S. Baker II
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THOMPSON S. BAKER II
, as trustee
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|
|
|
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By:
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/s/ Martha F. Baker
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|
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MARTHA F. BAKER
, as trustee
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|
|
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MARY CAMERON BAKER TRUST
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|
|
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By:
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/s/ Thompson S. Baker II
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THOMPSON S. BAKER II
, as trustee
|
|
|
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By:
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/s/ Martha F. Baker
|
|
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MARTHA F. BAKER
, as trustee
|
|
|
|
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SAMUEL MCDONALD BAKER TRUST
|
|
|
|
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By:
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/s/ Thompson S. Baker II
|
|
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THOMPSON S. BAKER II
, as trustee
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|
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By:
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/s/ Martha F. Baker
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MARTHA F. BAKER
, as trustee
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SIGNATURES CONTINUE
ON THE NEXT PAGE
[
Signature Page to
Voting and Support Agreement
]
Schedule A
Name of Shareholder
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Subject Shares
1
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Edward L. Baker
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4,121
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Edward L. Baker Living Trust
2
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69,220
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Edward L. Baker & Thompson S. Baker II Trust FBO Edward L. Baker U/A Cynthia L. Baker Trust dated 4/30/1965
3
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423,474
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John D. Baker II
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22,025
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John D. Baker II Living Trust
4
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236,449
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John D. Baker II and Edward L. Baker II Trust FBO John D. Baker II U/A Cynthia L. Baker Trust dated 4/30/1965
5
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1,113,474
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Anne D. Baker Revocable Living Trust
6
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3,789
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Edward L. Baker II
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97,299
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Susan A. Baker Revocable Living Trust
7
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97,297
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John D. Baker III
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97,300
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Thompson S. Baker II
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39
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Thompson S. Baker II Revocable Living Trust
8
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155,600
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Martha F. Baker Revocable Living Trust
9
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2,199
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Julia Elizabeth Baker Trust
10
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2,199
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Mary Cameron Baker Trust
11
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2,199
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Samuel McDonald Baker Trust
12
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2,199
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Trust FBO Sarah B. Porter U/A Cynthia L. Baker Trust dated 4/30/1965
13
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913,911
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TOTAL
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3,242,794
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1
With respect
to the individuals listed on Schedule A, beneficial ownership excludes those shares of Common Stock that are otherwise accounted
for on this Schedule A by virtue of being held by a trust or another individual listed herein.
2
Edward L. Baker
is the sole trustee and beneficiary and has sole voting power.
3
Edward L. Baker and Thompson
S. Baker II serve as co-trustees and have shared voting power.
4
John D. Baker
II is the sole trustee and beneficiary and has sole voting power.
5
John D. Baker
II and Edward L. Baker II serve as co-trustees and have shared voting power.
6
Anne D. Baker
is the sole trustee and beneficiary and has sole voting power.
7
Susan A. Baker is the
sole trustee and beneficiary and has sole voting power.
8
Thompson S. Baker
II is the sole trustee and beneficiary and has sole voting power.
9
Martha F. Baker
is the sole trustee and beneficiary and has sole voting power.
10
Thompson S.
Baker II and Martha F. Baker serve as co-trustees and have shared voting power.
11
Thompson S.
Baker II and Martha F. Baker serve as co-trustees and have shared voting power.
12
Thompson S.
Baker II and Martha F. Baker serve as co-trustees and have shared voting power.
13
Cynthia P. Ogden serves
as sole trustee and has sole voting power.
ANNEX C
March 20, 2018
The Board of Directors
FRP Holdings, Inc.
200 West Forsyth Street, 7
th
Floor
Jacksonville, FL 32202
Dear Board of Directors:
We understand that FRP
Holdings, Inc. (the “Company”), certain selling entities which are wholly owned by the Company (collectively, “Seller”),
and BRE Foxtrot Parent LLC (“Buyer”), which is affiliated with The Blackstone Group L.P. (“Blackstone”),
propose to enter into the Agreement (defined below) pursuant to which, among other things, Seller will sell to Buyer specified
“flex” industrial real estate properties, which are identified by the street addresses listed on Schedule A-1 attached
to the Agreement (the “Company Properties”), and certain related assets (such sale, the “Transaction”),
for aggregate consideration of $358,900,000 in cash (the “Aggregate Consideration”), subject to certain adjustments
and an escrow arrangement as provided for in the Agreement (as to which adjustments and escrow arrangement we express no opinion).
The Board of Directors
of the Company (the “Board”) has requested that Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) provide
an opinion (the “Opinion”) to the Board as to whether, as of the date hereof, the Aggregate Consideration to be received
for the Company Properties in the Transaction pursuant to the Agreement is fair to the Company from a financial point of view.
At the direction of the Company, we have evaluated the foregoing as if the Aggregate Consideration will be directly received by
the Company in the Transaction.
In connection with this
Opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
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1.
|
reviewed a draft dated March 18, 2018 of the Agreement of Purchase and Sale to be entered
into by the Company, Seller and Buyer (the “Agreement”);
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2.
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reviewed certain information relating to the Company Properties made available to us by the Company, including financial projections (and adjustments thereto) prepared by or discussed with the management of the Company relating to the Company Properties;
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3.
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spoken with certain members of the management of the Company and certain representatives and advisors of the Company regarding the Company Properties, the Transaction and related matters;
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4.
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considered the publicly available financial terms of certain real estate transactions that we deemed to be relevant in evaluating the land holdings of certain of the Company Properties; and
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5.
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conducted such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate.
|
3455 Peachtree Road NE,
Ste 2000, 20th Floor ● Atlanta, GA 30326 ● 404.495.7000 ● fax.404.495.9545 ● www.HL.com
Broker/dealer services
through Houlihan Lokey Capital, Inc.
The Board of Directors
FRP Holdings, Inc.
March 20, 2018
|
-2-
|
We have relied upon and
assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished,
or otherwise made available, to us, discussed with or reviewed by us, or publicly available, and do not assume any responsibility
with respect to such data, material and other information. In addition, management of the Company has advised us, and we have assumed,
that the financial projections (and adjustments thereto) reviewed by us have been reasonably prepared in good faith on bases reflecting
the best currently available estimates and judgments of such management as to the future financial results and condition of the
Company Properties, and we express no opinion with respect to such projections or the assumptions on which they are based. We have
relied upon and assumed, without independent verification, that there has been no change in any of the Company Properties or the
financial condition, results of operations, cash flows or prospects thereof since the respective dates of the most recent financial
statements and other information, financial or otherwise, provided to us that would be material to our analyses or this Opinion,
that the financial projections reviewed by us reflect all assets to be sold in the Transaction and that there is no information
or any facts that would make any of the information reviewed by us incomplete or misleading. This Opinion is based on analyses
of the Company Properties in their entirety as a portfolio.
We have relied upon and
assumed, without independent verification, that (a) the representations and warranties of all parties to the Agreement and all
other related documents and instruments that are referred to therein are true and correct, (b) each party to the Agreement and
such other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed
by such party, (c) all conditions to the consummation of the Transaction will be satisfied without waiver thereof, and (d) the
Transaction will be consummated in a timely manner in accordance with the terms described in the Agreement and suchother related
documents and instruments, without any amendments or modifications thereto. We have relied upon and assumed, without independent
verification, that (i) the Transaction will be consummated in a manner that complies in all respects with all applicable federal
and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for
the consummation of the Transaction will be obtained and that no delay, limitations, restrictions or conditions will be imposed
or amendments, modifications or waivers made that would have an effect on the Transaction, the Company, Seller or the Company Properties
that would be material to our analyses or this Opinion. We have also relied upon and assumed, without independent verification,
at the direction of the Company, that any adjustments to the Aggregate Consideration pursuant to the Agreement (including, without
limitation, adjustments for prorations or the elimination (if any) of certain Company Properties from the Transaction) will not
be material to our analyses or this Opinion. In addition, we have relied upon and assumed, without independent verification, that
the final form of the Agreement will not differ in any respect from the draft of the Agreement identified above.
Furthermore, in connection
with this Opinion, we have not been requested to make, and have not made, any physical inspection or independent appraisal of any
of the Company Properties or the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise)
of the Company, Seller (with respect to the Company Properties or otherwise) or any other party, nor were we provided with any
such appraisal. We express no opinion as to the price at which any of the Company Properties may be transferable at any time. We
did not estimate, and express no opinion regarding, the liquidation value of any entity or business. We have undertaken no independent
analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities,
to which the Company, Seller or any of the Company Properties is or may be a party or is or may be subject, or of any governmental
investigation of any possible unasserted claims or other contingent liabilities to which the Company, Seller or any of the Company
Properties is or may be a party or is or may be subject.
The Board of Directors
FRP Holdings, Inc.
March 20, 2018
|
-3-
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We have not been requested
to, and did not, (a) initiate or participate in any discussions or negotiations with, or solicit any indications of interest from,
third parties with respect to the Transaction, the Company Properties, the securities, assets, businesses or operations of the
Company, Seller or any other party, or any alternatives to the Transaction, (b) negotiate the terms of the Transaction, or (c)
advise the Board, the Company, Seller or any other party with respect to alternatives to the Transaction. We express no view or
opinion as to any such matters, including the terms that could have been obtained if any of the foregoing had been undertaken.
This Opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof. We have not undertaken, and are under no obligation, to update, revise, reaffirm or withdraw
this Opinion, or otherwise comment on or consider events occurring or coming to our attention after the date hereof.
This Opinion is furnished
for the use of the Board (in its capacity as such) in connection with its evaluation of the Transaction and may not be used for
any other purpose without our prior written consent. This Opinion should not be construed as creating any fiduciary duty on Houlihan
Lokey’s part to any party. This Opinion is not intended to be, and does not constitute, a recommendation to the Board, the
Company, any security holder or any other party as to how to act or vote with respect to any matter relating to the Transaction
or otherwise.
In the ordinary course
of business, certain of our employees and affiliates, as well as investment funds in which they may have financial interests or
with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities
and financial instruments (including loans and other obligations) of, or investments in, the Company, one or more affiliates of
Blackstone or any other party that may be involved in the Transaction and their respective affiliates or security holders or any
currency or commodity that may be involved in the Transaction.
Houlihan Lokey and certain
of its affiliates have in the past provided and are currently providing investment banking, financial advisory and/or other financial
or consulting services to Blackstone or one or more security holders or affiliates of, and/or portfolio companies of investment
funds affiliated or associated with, Blackstone (collectively, with Blackstone, the “Blackstone Group”), for which
Houlihan Lokey and its affiliates have received, and may receive, compensation, including, among other things, (i) having acted
as financial advisor to Seneca Mortgage Servicing LLC (“Seneca”), a member of the Blackstone Group, in connection with
its sale of mortgage servicing rights, which transaction closed in September 2017, (ii) having acted as financial advisor to a
member of the Blackstone Group in connection with the sale by Seneca of certain mortgage servicing rights in June 2016, and (iii)
having acted as financial advisor to a member of the Blackstone Group, in connection with its sale of its German real estate portfolio,
which occurred in 2016. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or
other financial or consulting services to the Company, members of the Blackstone Group, other participants in the Transaction or
certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive
compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of our and their respective employees may have
committed to invest in private equity or other investment funds managed or advised by Blackstone, other participants in the Transaction
or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested
with members of the Blackstone Group, other participants in the Transaction or certain of their respective affiliates or security
holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar
matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future
act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without
limitation,
The Board of Directors
FRP Holdings, Inc.
March 20, 2018
|
-4-
|
formal and informal committees or groups of
creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse
to, the Company, members of the Blackstone Group, other participants in the Transaction or certain of their respective affiliates
or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.
In addition, we will receive
a fee for rendering this Opinion, which is not contingent upon the successful completion of the Transaction or the conclusion contained
in this Opinion. The Company has agreed to reimburse certain of our expenses and to indemnify us and certain related parties for
certain potential liabilities arising out of our engagement.
We have not been requested
to opine as to, and this Opinion does not express an opinion as to or otherwise address, among other things: (i) the underlying
business decision of the Board, the Company, its security holders or any other party to proceed with or effect the Transaction,
(ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion
or aspect of, the Transaction (other than the Aggregate Consideration to the extent expressly specified herein) or otherwise, including,
without limitation, the allocation of the Aggregate Consideration among the Company Properties to be sold in the Transaction or
the terms or any aspect of any indemnification, escrow or other agreements or arrangements to be entered into in connection with
the Transaction, (iii) the fairness of any portion or aspect of the Transaction to the holders of any class of securities, creditors
or other constituencies of the Company, or to any other party, except to the Company if and only to the extent expressly set forth
in the last sentence of this Opinion, (iv) the relative merits of the Transaction as compared to any alternative business strategies
or transactions that might be available for the Company or any other party, (v) the fairness of any portion or aspect of the Transaction
to any one class or group of the Company’s or any other party’s security holders or other constituents vis-à-vis
any other class or group of the Company’s or such other party’s security holders or other constituents (including,
without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other constituents),
(vi) whether or not the Company, its security holders, Seller, Buyer or any other party is receiving or paying reasonably equivalent
value in the Transaction, (vii) the solvency, creditworthiness or fair value of the Company, Seller, Buyer or any other participant
in the Transaction, or any of their respective assets (including, without limitation, any of the Company Properties), under any
applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, (viii) the fairness, financial or
otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers,
directors or employees of any party to the Transaction, any class of such persons or any other party, relative to the Aggregate
Consideration or otherwise, or (ix) the tax consequences and financial or other implications and effects of the Transaction on
the Company, any security holders, creditors or other constituencies of the Company, or any other party, or the use or distribution
of proceeds from the Transaction. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal,
regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations
have been or will be obtained from appropriate professional sources. Furthermore, we have relied, with the consent of the Board,
on the assessments by the Company and its advisors as to all legal, regulatory, accounting, insurance, tax and other similar matters
with respect to the Company Properties, the Company, Seller and the Transaction or otherwise. The issuance of this Opinion was
approved by a committee authorized to approve opinions of this nature.
The Board of Directors
FRP Holdings, Inc.
March 20, 2018
|
-5-
|
Based upon and subject
to the foregoing, and in reliance thereon, it is our opinion that, as of the date hereof, the Aggregate Consideration to be received
for the Company Properties in the Transaction pursuant to the Agreement is fair to the Company from a financial point of view.
Very truly yours,
HOULIHAN LOKEY CAPITAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
OF
FRP HOLDINGS, INC.
[______], 2018
GO
GREEN
|
e-Consent
makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents
online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
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NOTICE OF INTERNET AVAILABILITY
OF PROXY MATERIAL
:
The Notice of Meeting, proxy statement and proxy card
are
available at http://www.frpholdings.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Please
detach along perforated line and mail in the envelope provided.
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20530003003030300000 2
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051818
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE FOLLOWING NOMINEES, “FOR” PROPOSALS 1, 2, 3, 5 AND 6.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE
☒
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4. Election of the five director nominees listed below for a one-year term (the “Director Election Proposal”) (the Board recommends a vote “
FOR
” each nominee)
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☐
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NOMINEES:
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FOR
ALL NOMINEES
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John D. Baker II
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Charles E. Commander III
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☐
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WITHHOLD AUTHORITY
FOR
ALL NOMINEES
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H. W. Shad III
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Martin E. Stein, Jr.
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William H. Walton III
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☐
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FOR ALL EXCEPT
(See
instructions below)
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INSTRUCTIONS:
To
withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
●
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To
change the address on your account, please check the box at right and indicate your new
address in the address space above. Please note that changes to the registered name(s)
on the account may not be submitted via this method.
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☐
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FOR
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AGAINST
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ABSTAIN
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1.
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Approval of the agreement of purchase and sale (the “Sale Agreement”), dated as of March 22,
2018, by and among FRP Holdings, Inc. (“FRP”), certain of its subsidiaries (collectively, “Seller”) and
BRE Foxtrot Parent LLC, a Delaware limited liability company (“Purchaser”), pursuant to which FRP and Seller agreed
to sell to Purchaser its portfolio of 41 warehouse properties and three additional land parcels to Purchaser, subject to the terms
and conditions of the Sale Agreement (the “Asset Sale Proposal”) (The Board recommends a vote “
FOR
”
this proposal).
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☐
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☐
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☐
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2.
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Approval
of, on a non-binding, advisory basis, the compensation that may be paid or become payable
to certain of FRP’s named executive officers, in connection with the transactions
contemplated by the Sale Agreement, including the agreements and understandings pursuant
to which such compensation may be paid or become payable (the “Sale-Related Compensation
Proposal”) (The Board recommends a vote
“FOR”
this proposal).
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☐
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☐
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☐
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3.
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Approval
of an adjournment of the annual meeting, if necessary, to solicit additional proxies
if there are not sufficient votes in favor of the Asset Sale Proposal (the “Adjournment
Proposal”) (The Board recommends a vote
“FOR”
this proposal).
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☐
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☐
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☐
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5.
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Ratification
of the audit committee’s selection of FRP’s independent registered public
accounting firm, Hancock Askew & Co., LLP (the “Auditor Proposal”) (The
Board recommends a vote
“FOR”
this proposal).
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☐
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☐
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☐
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6.
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Approval
of, on an advisory basis, the compensation of FRP’s named executive officers (the
“Compensation Proposal”) (The Board recommends a vote
“FOR”
this proposal).
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☐
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☐
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☐
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NOTE:
Such other business as may properly come before the meeting or any adjournments thereof.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please
sign in partnership name by authorized person.
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0
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FRP HOLDINGS, INC.