Exhibit
10.4.1


 


PROPERTY
ACQUISITION AGREEMENT


 


THIS
PROPERTY ACQUISITION AGREEMENT (this “Agreement”) is entered into as of the 11th day of February,
2005, by and between Inland Real Estate
Acquisitions, Inc., an Illinois corporation (“Acquisitions”), Inland Western Retail Real Estate Trust, Inc., a
Maryland corporation (the “Company”) and Inland
Western Retail Real Estate Advisory Services, Inc., an Illinois
corporation (the “Advisor”). Acquisitions and the Company and the Advisor are
sometimes referred to herein individually as a “Party” and collectively as the “Parties.”


 


WHEREAS, the Company is in the business, among other
things, of acquiring and managing real estate assets, primarily multi-tenant
properties improved for use as retail establishments or improved for use as
multi-family and/or office facilities that also provide retail services and
single-tenant retail or commercial properties, located mainly in the western
United States;


 


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


 


WHEREAS, Robert D. Parks is an affiliated director of
the Company;


 


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


 


WHEREAS, Mr. Parks is also a stockholder and director
of The Inland Group;


 


WHEREAS, Acquisitions is in the business of acquiring
and assisting certain third parties in acquiring properties such as the Subject
Properties;


 


WHEREAS, Acquisitions is willing to grant the Company
an exclusive right of first refusal to acquire each and every Subject Property
identified by Acquisitions;


 


WHEREAS, the Parties have previously entered into a
Property Acquisition Service Agreement dated as of the 18th day of
September, 2003 and now wish to terminate that agreement and enter into this
Agreement;


 


WHEREAS, the Advisor and the Company arc parties to a
certain 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 the
Company, administers the Company’s bookkeeping and accounting functions, serves
as the Company’s consultant in connection with policy decisions to be made by
the directors of the Company (the “Directors”), manages or


 





















 


causes
to be managed by another party the Company’s properties and renders other
services as the Directors deem appropriate; the Advisor is subject to the
supervision of the Directors and has only such functions as are delegated to it
by the Directors; and


 


WHEREAS, the Company, the Advisor and Acquisitions are
all affiliates; and


 


NOW,
THEREFORE, in
consideration of the mutual promises and covenants contained herein, and in
consideration of the expense reimbursement provisions set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:


 


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


 


2.                                       Definitions. The following capitalized terms used in this
Agreement shall have the following meanings:


 


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


 


(b)                                 “Retail Facility” shall mean real estate
improved for use as a multi-tenant shopping center with gross leasable retail
area 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 a
combination of two or more of (a) multi-family use, (b) office use, and (c)
retail facility use, provided such real estate contains gross leasable retail
area of not less than 50,000 square feet and not more than 300,000 square feet.


 


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


 


(e)                                  “Subject Property” shall mean any Retail
Facility, Mixed-Use Property or Single-User Property identified by Acquisitions
and 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 refusal
to acquire each and every Subject Property identified by Acquisitions, and,
until the occurrence of a Right of First Refusal Termination Event (hereinafter
defined) with respect to an applicable Subject Property, Acquisitions covenants
and agrees that it shall not (a) present or offer for sale such Subject Property
to, (b) forward any information regarding the potential acquisition of such
Subject Property to, or (c) pursue the acquisition of any such Subject Property
on behalf or for the benefit of, any of its clients other than the Company. Notwithstanding
the foregoing, the right of first refusal set forth in this Section 3
shall 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 a
manner described in clause (i), (ii) or (iii) of the definition of “Acquisition
of an Operating Company” below) of any entity that owns, directly or
indirectly, in addition to Subject Properties, other real estate located
outside the


 


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Market
Area. Upon Acquisitions’ identification of a Subject Property, Acquisitions
shall deliver to the Company written notice (in form and substance attached
hereto as Exhibit A, each a “Property Notice”) that Acquisitions has
identified, or entered into a letter of intent or acquisition agreement with
respect to, the applicable Subject Property. The Company shall have ten (10)
business days after the date of its receipt of a Property Notice (the “Notice
Period”) to inform Acquisitions in writing (a “Company Notice”) whether the
Company has elected to pursue the acquisition of the applicable Subject
Property. 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 3
to acquire the Subject Property, including any corporate opportunity with
respect to the particular Subject Property. In the event that the right of
first refusal contained in this Section 3 shall not apply as provided in
clause (ii) above, then Acquisitions shall determine, in good faith, an equitable
manner for addressing any potential corporate opportunity issues that may arise
with respect to the Subject Properties owned by the acquired entity. Except as
provided above, Acquisitions will not grant a right of first refusal to any
other person or entity (or Subject Properties owned by such entity) that are
excluded as a result of clause (ii) above from the right of first refusal
contained in Section 3. The Company shall upon request provide
Acquisitions with reasonable evidence (i.e., a resolution adopted by the Board
of Directors of the Company) setting forth the authority of certain officers of
the Company to make decisions in regards to responding to Property Notices and
the acquisition of Subject Properties. If the Company delivers to Acquisitions
a Company Notice pursuant to which the Company elects to pursue the acquisition
of a Subject Property, but thereafter the Company determines not to pursue such
acquisition, then the Company shall deliver to Acquisitions written notice of
same (each, a “Property Termination Notice”).


 


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


 


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


 


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


 


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For the purposes hereof, the term “Operating
Company” 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 on
a going concern basis rather than as a conduit vehicle for investors to
participate 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 managing
general partners, as applicable; and


 


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


 


To the extent possible, the resolution of
conflicting investment opportunities between the Company and other investment
entities advised or managed by the Advisor and its affiliates shall be resolved
by giving priority to the Company, provided that the Proposed Property meets
the acquisition criteria of the Company. The Company shall have the first
opportunity to purchase such Proposed Property placed under contract by
Acquisitions, the Advisor or its affiliates, provided the Company is able to
close the purchase of the Proposed Property within 60 days.


 


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


 


5.                                       Compensation. Acquisitions shall be paid for services
rendered by Acquisitions under this Agreement as follows:


 


(a)                                  the Company shall reimburse Acquisitions in
full for all Acquisition Expenses (as defined below) incurred by Acquisitions
on behalf of the Company in connection with its performance of its duties under
this Agreement; provided, however, the total of all Acquisition
Expenses paid by the Company in connection with the purchase of a Subject Property
by 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 related
to 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 and
communications expenses, cost of appraisals and surveys, nonrefundable option
payments on property not acquired, accounting fees and expenses, computer use
related expenses, architectural and engineering reports, environmental and
asbestos audits, title insurance and escrow fees, loan fees or points or any
fee of a similar nature, however designated, and personnel and miscellaneous
expenses related to the selection and acquisition of properties; and


 


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


 


6.                                       No Partnership or Joint
Venture. The Parties to this
Agreement are independent contractors. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, franchise or joint venture
relationship between the Parties.


 


7.                                       Term; Termination of Agreement. This term of this Agreement shall commence on
the 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 in
Control. For purposes of this Section 7, the term “Change in Control” shall
mean:


 


(a)                                  Any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any person or group of
related persons for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended; provided, however, that
any sale, lease, exchange or transfer to (including, without limitation, any
merger or other business combination with or into) any of the following shall
not constitute a Change of Control: (i) any affiliate controlled by the
Company, (ii) Inland Real Estate Corporation, (iii) Inland Retail Real Estate
Trust, Inc., (iv) Inland American Real Estate Trust, Inc., (v) The Inland
Group, Inc., or (vi) any affiliate controlled by any of the persons or entities
listed in clauses (i) through (v) above (all of the persons and entities
described in clauses (i) through (vi) above to be hereinafter sometimes
referred to as the “Inland Companies”);


 


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


 


(c)                                  Any person or group of related persons for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended (other than any one or more of the Inland Companies) shall become the
owner, directly or indirectly, beneficially or of record, of shares of the
Company representing more than twenty-five percent (25%) of the aggregate
ordinary voting power represented by the issued and outstanding common shares
of the Company; or


 


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


 


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hereof
or whose election as a member of the board of directors of the Company was
previously so approved pursuant to this clause (ii), or (iii) members of the
board of directors of the Company who have been elected pursuant to a proxy
consent solicitation other than in connection with a business combination
transaction that would otherwise result in a “Change in Control” under clauses
(a) or (c) above.


 


8.                                       Business Combination Of Either
Company And Its Advisor. From and after September 15, 2008, the
Company shall have the right, but not the obligation, to acquire the entire
business, affairs, operations and assets of the Advisor (collectively, the “Advisory’s
Business”) in whatever form agreed upon between the Company and the Advisor (a “Business
Combination”), as set forth in writing between them (“Merger Agreement”). If
the Company desires to acquire the Advisor’s Business in a Business
Combination, the Company shall send a written notice to the Advisor to that
effect (“Election Notice”). Any agreement with respect to a Business
Combination shall contain provisions providing for: (i) the termination of this
Agreement and all Advisory Agreements entered into pursuant hereto and the
release or waiver of all fees payable by the Company to the Advisor under the
Advisory Agreements (except for the payment of fees due and payable under the
Advisory Agreements for services rendered by the Advisor up to and until the
consummation of the Business Combination); and (ii) the issuance of a certain
number 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 equity
holders, as the case may be, in connection with the Business Combination. The
Advisor represents to the Company that the Advisor has obtained the consent of
its board of directors and its shareholders to a Business Combination with the
Company and that Advisor will obtain similar consents from any future
shareholders, members or other equity holders of the Advisor.


 


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


 


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


 


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


 


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


 


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


 


12.                               Governing Law. The provisions of this Agreement shall be
governed, construed and interpreted in accordance with the internal laws of the
State of Illinois.


 


13.                               Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed given
or 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 overnight
delivery; (iii) when transmitted, if sent by facsimile copy, provided
confirmation of receipt is received by sender and such notice is sent by an
additional method provided hereunder, in each case above provided such communication
is 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 (in
the 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 Parties
of a change of its address for the purpose of this Section 13.


 


14.                                 Headings. The section headings hereof have been
inserted for convenience of reference only and shall not be construed to affect
the meaning, construction or effect of this Agreement.


 


15.                                 Equitable Relief. Each Party hereto recognizes and acknowledges
that a breach by the other party of this Agreement will cause irreparable
damage to the non-breaching party which cannot be readily remedied in monetary
damages in an action at law. In the event of any default or breach by either
party, the non-breaching party shall be entitled to seek immediate injunctive
relief to prevent such irreparable harm or loss, in addition to any other
remedies available at law and in equity.


 


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IN WITNESS
WHEREOF, the
undersigned 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