Exhibit 10.18
TAX INDEMNITY AGREEMENT
This Tax Indemnity Agreement (this "Agreement") is made as of June 2,
2004 by and among PREIT Associates, L.P. ("PALP"), Ivyridge Investment Corp.
("Ivyridge"), Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Pan American Office Investments,
LP ("Pan American Office"), Xxxxxx Xxxxx, Xxxxxx Xxxxx, and the Non QTIP Marital
Trust under the will of Xxxxxxx X. Xxxxx (the "Trust," and together with
Ivyridge, Pan American Office, Messrs. Shore and Stone, Xxxxxx Xxxxx, and Xxxxxx
Xxxxx, the "Limited Partners").
WHEREAS, reference is made to (i) that certain Call and Put Option
Agreement dated April 28, 2003 by and among PR New Castle LLC (the "General
Partner"), PALP, Ivyridge, and Pan American (the "Option Agreement") and (ii)
that certain Contribution Agreement dated April 22, 2003 by and among PALP,
Ivyridge, Pan American, certain prior limited partners of New Castle Associates,
and Pennsylvania Real Estate Investment Trust (the "Contribution Agreement");
and
WHEREAS, pursuant to Section 2(a) of the Option Agreement, PALP has
delivered to the Ivyridge and Pan American written notice of its election to
exercise the Call (as defined in the Option Agreement); and
WHEREAS, PALP is required to deliver this Agreement in connection with
the closing effecting the consummation of the Call.
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound, the parties hereby agree as follows:
1. PALP, as the sole member of the General Partner, shall not permit the
Replacement Property (as defined in the Contribution Agreement) or the
Retained Interests (as defined in the Option Agreement) to be disposed
of for a period of eight years following April 28, 2003 (the "Period")
in such a manner that may cause the Limited Partners to recognize
taxable income, and if PALP, as the sole member of the General Partner,
disposes of the Replacement Property or the Retained Interests within
the Period, such disposition shall be pursuant to a tax-free exchange
under Section 1031 of the Internal Revenue Code (the "Code") or shall
otherwise be a tax-free disposition.
2. Notwithstanding Paragraph 1, PALP, as the sole member of the General
Partner, may dispose of the Replacement Property or the Retained
Interests during the Period in a taxable transaction if the Limited
Partners are paid by PALP an amount sufficient to reimburse each such
partner for any tax liability resulting from such transfer by reason of
Section 704(c) of the Code, together with all taxes payable on such
reimbursement.
3. PALP shall cooperate in good faith with the Limited Partners in
executing such documentation as may be required (such as limited
guarantees of indebtedness by the Limited Partners) to avoid
recognition of income or gain to such Limited Partners by reason of a
constructive distribution to them under Section 752 of the Code
relating to relief from liabilities.
4. The covenants, terms, and provisions of this Agreement shall be binding
upon and inure to benefit of the parties hereto and their respective
heirs, legal representatives, successors, transferees, and assigns.
5. The laws of the Commonwealth of Pennsylvania shall govern the validity
of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties hereto.
6. This Agreement may be executed in any number of counterparts with the
same effect as if all of the parties hereto had signed the same
document and any and all counterparts may be executed by facsimile. All
counterparts shall be construed together and shall constitute one
agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first written above.
PREIT ASSOCIATES, L.P.
By: Pennsylvania Real Estate Investment Trust, its general partner
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President and General Counsel
IVYRIDGE INVESTMENT CORP.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
PAN AMERICAN ASSOCIATES
By: Pan American Office Investments, L.P., its general partner
By: Pan American Office Investments - G.P., Inc., its general partner
By: /s/ Xxxxxx Xxxxx
-----------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
PR NEW CASTLE LLC, A PENNSYLVANIA LIMITED LIABILITY COMPANY
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment Trust, its general partner
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President and General Counsel
XXXXXXX X. XXXXX & CO.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Partner
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XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
--------------------------
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxx
--------------------------
PAN AMERICAN OFFICE INVESTMENTS, L.P.
By: Pan American Office Investments - G.P., Inc., its general partner
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: President
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
---------------------------
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
---------------------------
THE NON QTIP MARITAL TRUST
UNDER THE WILL OF XXXXXXX X. XXXXX
By: /s/ Xxxxxx Xxxxx
------------------------
Name: Xxxxxx Xxxxx
Title: Trustee
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