**Exhibit10.4.1**

 

**PROPERTYACQUISITION AGREEMENT**

 

**THISPROPERTY ACQUISITION AGREEMENT**(this “Agreement”) is entered into as of the 11th day of February,2005, by and between **Inland Real EstateAcquisitions, Inc.,**an Illinois corporation (“Acquisitions”), **Inland Western Retail Real Estate Trust, Inc.,**aMaryland corporation (the “Company”) and **InlandWestern Retail Real Estate Advisory Services, Inc.,**an Illinoiscorporation (the “Advisor”). Acquisitions and the Company and the Advisor aresometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

**WHEREAS,**the Company is in the business, among otherthings, of acquiring and managing real estate assets, primarily multi-tenantproperties improved for use as retail establishments or improved for use asmulti-family and/or office facilities that also provide retail services andsingle-tenant retail or commercial properties, located mainly in the westernUnited States;

 

**WHEREAS,**Acquisitions is an indirect wholly-ownedsubsidiary of The Inland Group, Inc., an Illinois corporation (“The InlandGroup”);

 

**WHEREAS,**Robert D. Parks is an affiliated director ofthe Company;

 

**WHEREAS,**Mr. Cosenza is an officer and director ofAcquisitions and a stockholder and director of The Inland Group;

 

**WHEREAS,**Mr. Parks is also a stockholder and directorof The Inland Group;

 

**WHEREAS,**Acquisitions is in the business of acquiringand assisting certain third parties in acquiring properties such as the SubjectProperties;

 

**WHEREAS,**Acquisitions is willing to grant the Companyan exclusive right of first refusal to acquire each and every Subject Propertyidentified by Acquisitions;

 

**WHEREAS,**the Parties have previously entered into aProperty Acquisition Service Agreement dated as of the 18th day ofSeptember, 2003 and now wish to terminate that agreement and enter into thisAgreement;

 

**WHEREAS,**the Advisor and the Company arc parties to acertain advisory agreement (the “Advisory Agreement”), dated the date hereof;and

 

**WHEREAS,**under the terms of the Advisory Agreement,the Advisor generally has responsibility for the day-to-day operations of theCompany, administers the Company’s bookkeeping and accounting functions, servesas the Company’s consultant in connection with policy decisions to be made bythe directors of the Company (the “Directors”), manages or

 

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causesto be managed by another party the Company’s properties and renders otherservices as the Directors deem appropriate; the Advisor is subject to thesupervision of the Directors and has only such functions as are delegated to itby the Directors; and

 

**WHEREAS,**the Company, the Advisor and Acquisitions areall affiliates; and

 

**NOW,THEREFORE,**inconsideration of the mutual promises and covenants contained herein, and inconsideration of the expense reimbursement provisions set forth herein, thereceipt and sufficiency of which are hereby acknowledged, the Parties agree asfollows:

 

1.                                       **Incorporation of****Recitals****.**By this reference, the recitals set forthabove are hereby incorporated into this Agreement as if fully set forth herein.

 

2.                                       **Definitions****.** The following capitalized terms used in thisAgreement shall have the following meanings:

 

(a)                                  “Market Area” shall mean the geographic arealocated west of the Mississippi River in the continental United States butexcluding that portion of such geographic area located within a four hundred(400) mile radius of Oak Brook, Illinois.

 

(b)                                 “Retail Facility” shall mean real estateimproved for use as a multi-tenant shopping center with gross leasable retailarea of not less than 50,000 square feet and not more than 300,000 square feet.

 

(c)                                  “Mixed-Use Property” shall mean real estate,other than a Retail Facility or a Single-User Property, improved for use as acombination of two or more of (a) multi-family use, (b) office use, and (c)retail facility use, provided such real estate contains gross leasable retailarea of not less than 50,000 square feet and not more than 300,000 square feet.

 

(d)                                 “Single-User Property” shall mean real estateimproved for use as a single-tenant retail or commercial property.

 

(e)                                  “Subject Property” shall mean any RetailFacility, Mixed-Use Property or Single-User Property identified by Acquisitionsand located within the Market Area.

 

3.**                                      ****Right of First****Refusal****.**For and during the term of this Agreement,Acquisitions hereby grants to the Company an exclusive right of first refusalto acquire each and every Subject Property identified by Acquisitions, and,until the occurrence of a Right of First Refusal Termination Event (hereinafterdefined) with respect to an applicable Subject Property, Acquisitions covenantsand agrees that it shall not (a) present or offer for sale such Subject Propertyto, (b) forward any information regarding the potential acquisition of suchSubject Property to, or (c) pursue the acquisition of any such Subject Propertyon behalf or for the benefit of, any of its clients other than the Company. Notwithstandingthe foregoing, the right of first refusal set forth in this Section 3shall not apply to either (i) the Acquisition of an Operating Company(hereinafter defined), regardless of whether the Operating Company owns,directly or indirectly, a Subject Property, or (ii) the acquisition (in amanner described in clause (i), (ii) or (iii) of the definition of “Acquisitionof an Operating Company” below) of any entity that owns, directly orindirectly, in addition to Subject Properties, other real estate locatedoutside the

 

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MarketArea. Upon Acquisitions’ identification of a Subject Property, Acquisitionsshall deliver to the Company written notice (in form and substance attachedhereto as Exhibit A, each a “Property Notice”) that Acquisitions hasidentified, or entered into a letter of intent or acquisition agreement withrespect to, the applicable Subject Property. The Company shall have ten (10)business days after the date of its receipt of a Property Notice (the “NoticePeriod”) to inform Acquisitions in writing (a “Company Notice”) whether theCompany has elected to pursue the acquisition of the applicable SubjectProperty. Upon the occurrence of a Right of First Refusal Termination Event,the Company shall be deemed to have waived any and all rights under this Section 3to acquire the Subject Property, including any corporate opportunity withrespect to the particular Subject Property. In the event that the right offirst refusal contained in this Section 3 shall not apply as provided inclause (ii) above, then Acquisitions shall determine, in good faith, an equitablemanner for addressing any potential corporate opportunity issues that may arisewith respect to the Subject Properties owned by the acquired entity. Except asprovided above, Acquisitions will not grant a right of first refusal to anyother person or entity (or Subject Properties owned by such entity) that areexcluded as a result of clause (ii) above from the right of first refusalcontained in Section 3. The Company shall upon request provideAcquisitions with reasonable evidence (i.e., a resolution adopted by the Boardof Directors of the Company) setting forth the authority of certain officers ofthe Company to make decisions in regards to responding to Property Notices andthe acquisition of Subject Properties. If the Company delivers to Acquisitionsa Company Notice pursuant to which the Company elects to pursue the acquisitionof a Subject Property, but thereafter the Company determines not to pursue suchacquisition, then the Company shall deliver to Acquisitions written notice ofsame (each, a “Property Termination Notice”).

 

The Company’s election, whether in responseto or at any time after its receipt of a Property Notice, not to pursue theacquisition of a particular Subject Property shall not affect or impair any of the Company’s rights set forth inthis Agreement with respect to any other Subject Property or other propertythat could thereafter constitute a Subject Property.

 

For the purposes hereof, the term “Right ofFirst Refusal Termination Event” shall mean the first to occur of (i) theCompany’s failure to deliver to Acquisitions a Company Notice prior to theexpiration of the Notice Period, (ii) the Company’s delivery to Acquisitions ofa Company Notice pursuant to which the Company elects not to pursue theacquisition of a Subject Property, and (iii) at any time after the expirationof the Notice Period, the Company’s delivery to Acquisitions of a PropertyTermination Notice or the Company’s failure to diligently pursue theacquisition of a Subject Property.

 

For the purposes hereof, the term “Acquisitionof an Operating Company” shall mean the acquisition of an Operating Company(hereinafter defined) (i) by purchasing stock or other equity interest in theentity or by merger or other business combination or reorganization, or tenderoffer, (ii) by acquisition of all or substantially all of an Operating Company’sassets (provided that the excluded assets do not comprise all or substantiallyall of such Operating Company’s non-real property or other non-real estateassets), or (iii) by obtaining management control of such Operating Company,through its board of directors or other comparable management position, suchas, without limitation, managing general partner or managing member.

 

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For the purposes hereof, the term “OperatingCompany” shall mean (a) any entity that has equity securities registered under Section 12(b)or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)or files periodic reports under Sections 13 or 15(d) of the Exchange Act, or(b) any entity that, cither itself or through its subsidiaries:

 

(a)                                  Owns and operates interests in real estate ona going concern basis rather than as a conduit vehicle for investors toparticipate in the ownership of assets for a limited period of time;

 

(b)                                 Has a policy or purpose of reinvesting sale,financing or refinancing proceeds or cash from operations;

 

(c)                                  Has its own directors, managers or managinggeneral partners, as applicable; and

 

(d)                                 Either (i) has its own officers and employeesthat, on a daily basis, actively operate such entity and its subsidiaries andbusinesses, or (ii) has retained the services of an affiliate or sponsor of, oradvisor to, such entity to, on a daily basis, actively operate such entity andits subsidiaries and businesses.

 

To the extent possible, the resolution ofconflicting investment opportunities between the Company and other investmententities advised or managed by the Advisor and its affiliates shall be resolvedby giving priority to the Company, provided that the Proposed Property meetsthe acquisition criteria of the Company. The Company shall have the firstopportunity to purchase such Proposed Property placed under contract byAcquisitions, the Advisor or its affiliates, provided the Company is able toclose the purchase of the Proposed Property within 60 days.

 

4.**                                      ****Acquisition Agreements****.**Acquisitions may, from time to time, enterinto a letter of intent or other acquisition agreement with respect to aSubject Property in its own name to facilitate, among other things, the offerto, and possible purchase by, the Company of the applicable Subject Property.In any such case, if the Company exercises its right of first refusal withrespect to and elects to pursue the acquisition of an applicable SubjectProperty, and the Company is willing to enter into an agreement to acquire suchSubject Property, then, upon the Company’s request, Acquisitions shall assignthe letter of intent or other acquisition agreement to the Company or itsdesignee.

 

5.**                                      ****Compensation****.**Acquisitions shall be paid for servicesrendered by Acquisitions under this Agreement as follows:

 

(a)                                  the Company shall reimburse Acquisitions infull for all Acquisition Expenses (as defined below) incurred by Acquisitionson behalf of the Company in connection with its performance of its duties underthis Agreement; provided, however, the total of all AcquisitionExpenses paid by the Company in connection with the purchase of a Subject Propertyby the Company may not exceed an amount equal to **[3%]**of the Contract Price for the Property (as defined below);

 

(b)                                 “Acquisition Expenses” means expenses relatedto the selection, evaluation and acquisition of, and investment in, properties,whether or not acquired or made,

 

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including but not limited to legal fees and expenses, travel andcommunications expenses, cost of appraisals and surveys, nonrefundable optionpayments on property not acquired, accounting fees and expenses, computer userelated expenses, architectural and engineering reports, environmental andasbestos audits, title insurance and escrow fees, loan fees or points or anyfee of a similar nature, however designated, and personnel and miscellaneousexpenses related to the selection and acquisition of properties; and

 

(c)                                  “Contract Price for the Property” means theamount actually paid or allocated to the purchase of a Subject Propertyexclusive of Acquisition Expenses.

 

6.**                                      ****No Partnership or JointVenture****.**The Parties to thisAgreement are independent contractors. Nothing in this Agreement is intended orshall be deemed to constitute a partnership, agency, franchise or joint venturerelationship between the Parties.

 

7.**                                      ****Term;****Termination of Agreement****.**This term of this Agreement shall commence onthe date hereof and shall continue until the earlier to occur of (a) five (5)years after the date of this Agreement, and (b) the occurrence of a Change inControl. For purposes of this Section 7, the term “Change in Control” shallmean:

 

(a)                                  Any sale, lease, exchange or other transfer(in one transaction or a series of related transactions) of all orsubstantially all of the assets of the Company to any person or group ofrelated persons for purposes of Section 13(d) of the Securities Exchange Act of1934, as amended; *provided, however,*thatany sale, lease, exchange or transfer to (including, without limitation, anymerger or other business combination with or into) any of the following shallnot constitute a Change of Control: (i) any affiliate controlled by theCompany, (ii) Inland Real Estate Corporation, (iii) Inland Retail Real EstateTrust, Inc., (iv) Inland American Real Estate Trust, Inc., (v) The InlandGroup, Inc., or (vi) any affiliate controlled by any of the persons or entitieslisted in clauses (i) through (v) above (all of the persons and entitiesdescribed in clauses (i) through (vi) above to be hereinafter sometimesreferred to as the “Inland Companies”);

 

(b)                                 The approval by the holders of theoutstanding shares of the Company of any plan or proposal for the liquidationor dissolution of the Company;

 

(c)                                  Any person or group of related persons forpurposes of Section 13(d) of the Securities Exchange Act of 1934, asamended (other than any one or more of the Inland Companies) shall become theowner, directly or indirectly, beneficially or of record, of shares of theCompany representing more than twenty-five percent (25%) of the aggregateordinary voting power represented by the issued and outstanding common sharesof the Company; or

 

(d)                                 Following any change in the composition ofthe board of directors of the Company, a majority of the board of directors ofthe Company arc not a combination of either (i) members of the board ofdirectors of the Company as of the date hereof, or (ii) members of the board ofdirectors of the Company whose nomination for election or election to the boardof directors of the Company has been recommended, approved or ratified by atleast eighty percent (80%) of the board of directors of the Company then in officewho were either members of the board of directors of the Company as of the date

 

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hereofor whose election as a member of the board of directors of the Company waspreviously so approved pursuant to this clause (ii), or (iii) members of theboard of directors of the Company who have been elected pursuant to a proxyconsent solicitation other than in connection with a business combinationtransaction that would otherwise result in a “Change in Control” under clauses(a) or (c) above.

 

8.                                       **Business Combination Of EitherCompany And Its Advisor****.** From and after September 15, 2008, theCompany shall have the right, but not the obligation, to acquire the entirebusiness, affairs, operations and assets of the Advisor (collectively, the “Advisory’sBusiness”) in whatever form agreed upon between the Company and the Advisor (a “BusinessCombination”), as set forth in writing between them (“Merger Agreement”). Ifthe Company desires to acquire the Advisor’s Business in a BusinessCombination, the Company shall send a written notice to the Advisor to thateffect (“Election Notice”). Any agreement with respect to a BusinessCombination shall contain provisions providing for: (i) the termination of thisAgreement and all Advisory Agreements entered into pursuant hereto and therelease or waiver of all fees payable by the Company to the Advisor under theAdvisory Agreements (except for the payment of fees due and payable under theAdvisory Agreements for services rendered by the Advisor up to and until theconsummation of the Business Combination); and (ii) the issuance of a certainnumber of shares of common stock of the Company as determined below (the “Shares”)to be issued to the Advisor, or its stockholders, members or other equityholders, as the case may be, in connection with the Business Combination. TheAdvisor represents to the Company that the Advisor has obtained the consent ofits board of directors and its shareholders to a Business Combination with theCompany and that Advisor will obtain similar consents from any futureshareholders, members or other equity holders of the Advisor.

 

The number of Shares to be issued by theCompany to the Advisor or its shareholders, members or other equity holders asthe case may be, shall be determined as follows: The net income of the Advisorfor the calendar month immediately preceding the month in which the MergerAgreement is executed, as determined by an independent audit conducted inaccordance with generally accepted auditing standards, shall be annualized (the“Annual Net Income”). The Annual Net Income shall then be multiplied by ninetypercent (90%) and then divided by the “Funds from Operations per WeightedAverage Share” of the Company. “Funds from Operations per Weighted AverageShare” shall be equal to the annualized Funds from Operations, on the basis offour (4) times the Funds from Operations for the fiscal quarter immediatelypreceding the month in which the Merger Agreement is executed, per weightedaverage Share of the Company for such quarter as stated in the quarterly reporton Form 10-Q of the Company given to its shareholders for such quarter. Theresulting quotient shall constitute the number of Shares to be issued by theCompany to the Advisor or its shareholders, members or other equity holders asthe case may be, with delivery thereof and the closing of the BusinessCombination to occur within ninety (90) days after the date the Election Noticeis given to Advisor. Any such transaction will occur, if at all, only if theBoard of Directors of the Company obtains a fairness opinion from an investmentbanking or valuation firm to the effect that the consideration to be paid forthe Business Combination is fair, from a financial point of view, to theCompany.

 

9.                                       **Assignments****.** This Agreement may not be assigned exceptwith the written consent of each Party hereto, except in the case of assignmentby a Party to a corporation, trust or

 

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other organization which is a successor to such Party. Any assignmentof this Agreement shall bind the assignee hereunder in the same manner as theassignor is bound hereunder.

 

10.                                 **Amendments****.**This Agreement shall not be amended, changed,modified, terminated or discharged in whole or in part except by an instrumentin writing signed by each Party hereto or their respective successors orassigns.

 

11.                                 **Successors****and Assigns****.**ThisAgreement shall bind any successors or assigns of the Parties hereto as herein provided.

 

12.**                              ****Governing Law****.**The provisions of this Agreement shall begoverned, construed and interpreted in accordance with the internal laws of theState of Illinois.

 

13.**                              ****Notices**. All notices or other communicationsrequired or permitted hereunder shall be in writing and shall be deemed givenor delivered: (i) when delivered personally or by commercial messenger; (ii)one business day following deposit with a recognized overnight courier service,provided such deposit occurs prior to the deadline imposed by such service for overnightdelivery; (iii) when transmitted, if sent by facsimile copy, providedconfirmation of receipt is received by sender and such notice is sent by anadditional method provided hereunder, in each case above provided such communicationis addressed to the intended recipient thereof as set forth below:

 

If to Acquisition or the Advisor:

Inland Real Estate Acquisitions, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Phone: (630) 218-8000

Fax: (630) 218-4935

Attn: G. Joseph Cosenza (inthe case of Acquisition)Brenda Gujral (in the case of the Advisor)

 

with a copy to :

 

The Inland Real Estate Group, Inc.

2901 Butter field Road

Oak Brook, Illinois 60523

Attn: Robert H. Baum, General Counsel

 

If to the Company:

Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attention: Steven P. Grimes

Phone: (630) 645-7241

Fax: (630) 218-4955

 

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with a copy to:

 

Duane Morris LLP

227 West Monroe Street

Suite 3400

Chicago, Illinois 60606

Attn: David J. Kaufman, Esq.

Phone: (312) 499-6741

Fax: (312) 499-6701

 

Any Party may at any time give notice in writing to the other Partiesof a change of its address for the purpose of this Section 13.

 

14.                                 **Headings****.**The section headings hereof have beeninserted for convenience of reference only and shall not be construed to affectthe meaning, construction or effect of this Agreement.

 

15.                                 **Equitable Relief****.**Each Party hereto recognizes and acknowledgesthat a breach by the other party of this Agreement will cause irreparabledamage to the non-breaching party which cannot be readily remedied in monetarydamages in an action at law. In the event of any default or breach by eitherparty, the non-breaching party shall be entitled to seek immediate injunctiverelief to prevent such irreparable harm or loss, in addition to any otherremedies available at law and in equity.

 

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**IN WITNESSWHEREOF**, theundersigned have executed this Agreement as of the date first above written.

 

 
|   | INLAND  REAL ESTATE ACQUISITIONS, INC.                      |
|--------|-------------------------------------------------------------|
|   |                                                        |
|   |                                                        |
|   | By:                                                         |   /s/  G. Joseph Cosenza |
|   | Title:                                                      |   President |
|   |                                                        |
|   |                                                        |
|   | INLAND  WESTERN RETAIL REAL ESTATE  TRUST, INC.             |
|   |                                                        |
|   |                                                        |
|   | By:                                                         |   /s/  Roberta S. Matlin |
|   | Title:                                                      |   Vice  President |
|   |                                                        |
|   |                                                        |
|   | INLAND  WESTERN RETAIL REAL ESTATE  ADVISORY SERVICES, INC. |
|   |                                                        |
|   |                                                        |
|   | By:                                                         |   /s/  Steven P. Grimes |
|   | Title:                                                      |   Chief  Financial Officer |

 

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