Holdback Agreement (15K)
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HOLDBACK AGREEMENT
This HOLDBACK AGREEMENT (this "Holdback Agreement") is made and entered
into as of the 13th, day of May, 2004, by and among Lansing Pavilion, LLC
(hereinafter referred to as "Seller"), Inland Western Lansing Eastwood, L.L.C.,
(hereinafter referred to as "Purchaser"), and Chicago Title and Trust Company
(hereinafter referred to as "Escrow Agent") having as its address 171 N. Clark
Street, Chicago, Illinois 60601.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated as of
the 29th day of March, 2004 (collectively, the "Contract"), Purchaser acquired
on and as of the date hereof from Seller certain real property commonly known as
Eastwood Towne Center Shopping Center located in Lansing, Michigan (the
"Property"); and
WHEREAS, one of the tenants in the Property is Dick's Sporting Goods
("Dick's") under a lease, dated June 28, 2001 (the "Lease"); and
WHEREAS, the Lease provides that until Walmart and Sam's open their doors
for business within the Property, Dick's has the option of paying percentage
rent based on sales, rather than the Minimum Rent (as defined in the Lease) of
$450,000.00 per year ($37,500.00 per month) (the "Minimum Rent"); and
WHEREAS, Dick's has elected to pay percentage rent based on sales because
Walmart and Sam's have not yet opened for business; and
WHEREAS, Seller and Purchaser reasonably expect that Walmart and Sam's
will open for business in approximately September, 2004, at which time Dick's
will be required to stop paying percentage rent and will be required to start
paying Minimum Rent; and
WHEREAS, Purchaser and Seller negotiated the purchase price of the
Property based upon the assumption that at the closing of this transaction
("Closing") Dick's would be paying Minimum Rent; and
WHEREAS, if Dick's was paying Minimum Rent, the total purchase price of
the Property attributable to the Lease would have been $5,480,453.00
($450,000.00 x a capitalization rate of 8.211%); and
WHEREAS, Purchaser and Seller agreed that only $1,644,136.00 of the
$5,480,453.00 attributable to the Lease would be paid ($135,000.00 x
capitalization rate of 8.211%), leaving a balance due of the purchase price
attributable to the Lease of $3,836,317.00; and
WHEREAS, Seller and Purchaser have agreed that an amount equal to
$3,836,317.00 (the "Escrow Deposit") will be held back from the purchase price
and deposited with Escrow Agent at Closing and will then be held and disbursed
in accordance with this Holdback Agreement; and
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WHEREAS, Escrow Agent is willing to accept the Escrow Deposit and hold
and disburse same in accordance with the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the premises hereto, the
covenants and agreements hereinafter made, and for Ten and 00/100 Dollars
($10.00) in hand paid to Escrow Agent, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEPOSIT. Purchaser hereby deposits with Escrow Agent, and Escrow
Agent hereby acknowledges receipt of the Escrow Deposit. Escrow Agent hereby
agrees to deposit the Escrow Deposit into an interest bearing account with U.S.
Bank National Association or other depository reasonably satisfactory to
Purchaser, Seller and Escrow Agent with interest accruing and added to the
Escrow Deposit. The federal taxpayer identification of Seller is as follows:
31-1783213.
2. TERM. The term of this Holdback Agreement shall commence on the date
hereof and end on the earlier of (the "Expiration Date") (i) the Minimum Rent
Date (as hereinafter defined) or (ii) May ______, 2005.
3. MONTHLY REPORTS. At the written request of Seller, made no more than
once each calendar month, Purchaser shall give Seller, within five (5) business
days of such request, a written report on the status of Walmart and Sam's
opening their stores for business. In addition, if there is any reason that
Purchaser believes that Dick's will not start paying Minimum Rent when Walmart
and Sam's opens for business, Purchaser shall so notify Seller in such written
reports. If Purchaser indicates that there may be a problem or issue with Dick's
paying Minimum Rent when Walmart and Sam's opens for business, Seller and
Purchaser shall confer and the parties shall work together to resolve, if
possible, any such problem.
4. NOTIFYING DICK'S. When Walmart and Sam's open for business,
Purchaser shall take reasonable action to ensure that Dick's knows that they are
open for business and that Dick's begins to pay Minimum Rent instead of
percentage rent based on sales.
5. MINIMUM RENT DATE. Purchaser covenants and agrees that as promptly
as is reasonably possible and in any event not more than ten (10) days after the
date upon which Dick's is obligated to and commences paying the Minimum Rent
pursuant to the Lease, Purchaser shall deliver notice thereof ("Purchaser's
Notice") to Escrow Agent and Seller. The "Minimum Rent Date" is the date that is
the later of (a) the date upon which Escrow Agent receives Purchaser's Notice or
(b) the date upon which the Escrow Deposit is received by Seller's bank account
as described below.
6. DISBURSEMENT OF ESCROW DEPOSIT. If Purchaser's Notice is received by
Escrow Agent on or before May ____, 2005, Escrow Agent shall upon receipt
thereof, without requirement of further direction from any party, disburse the
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