Exhibit 10.577


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of August 15,
2008, but shall be effective, nunc pro tunc,
as of January 1, 2008, by and between INLAND WESTERN RETAIL
REAL ESTATE TRUST, INC., a Maryland corporation (the “Company”), and Michael J.
O’Hanlon (the “Executive”).


 


RECITALS:


 


A.            The
Company is a real estate investment trust which owns, operates and acquires
primarily retail real estate throughout the United States (the “Business”).


 


B.            Executive
has served as the Company’s President and Chief Executive Officer and has
demonstrated certain unique and particular talents and abilities with regard to
the Business.


 


C.            The
Company desires to continue to assure itself of the availability of the talents
and abilities of Executive, by entering into a new employment agreement to
become effective as of January 1, 2008.


 


D.            Executive
desires to continue to be employed by the Company, subject to the terms,
conditions and covenants hereinafter set forth.


 


E.             As
a condition for the Company to enter into this Agreement, Executive has agreed
to restrict his ability to enter into competition with the Company.


 


NOW, THEREFORE, in consideration of the foregoing and the agreements,
covenants and conditions set forth herein, Executive and the Company hereby
agree as follows:


 


ARTICLE I


EMPLOYMENT


 


1.1           Employment.


 


(a)           The Company hereby
employs and engages Executive, and Executive hereby accepts employment, upon
the terms and conditions set forth in this Agreement. Effective as of January 1,
2008 (the “Effective Date”), Executive shall serve as President and Chief
Executive Officer, with duties commensurate with such positions and such other
duties and responsibilities as assigned from time to time by the Company


 


(b)           In addition, Executive shall provide advice,
consultation and services to any other entities which control, are controlled
by or are under common control with the Company now or in the future
(collectively, “Affiliates”), as may be requested by the Company.


 


1.2           Activities
and Duties During Employment. Executive represents and warrants to the
Company that he is free to engage in full-time employment with the Company, and
that he has no prior or other commitments or obligations of any kind to anyone
else which would hinder or interfere with his acceptance of his obligations
under this Agreement, or the exercise of his reasonable commercial efforts as
an employee of the Company. During the Employment Term (as defined below),
Executive agrees:


 

















 


(a)           to
faithfully serve and further the interests of the Company in every lawful way,
giving honest, diligent, loyal and cooperative service to the Company and its
Affiliates;


 


(b)           to
comply with all reasonable rules and policies which are consistent with
the terms of this Agreement and which, from time to time, may be adopted by the
Company or its Affiliates; and


 


(c)           to
devote all of his business time, attention and efforts to the faithful and
diligent performance of his services to the Company and its Affiliates.


 


ARTICLE II


TERM


 


2.1           Term.  The term of employment under this Agreement
shall commence on the Effective Date and shall last through and including December 31,
2008 (the “Employment Term”) except as this Agreement may be terminated as
provided in Section 2.2.


 


2.2           Termination.  The Employment Term and employment of
Executive may be terminated as follows:


 


(a)           By the Company
immediately for Cause (as hereinafter defined).


 


(b)           By the Company
immediately without Cause.


 


(c)           Automatically, without
the action of either party, upon the death of the Executive.


 


(d)           By either party upon a determination of
Total Disability (as hereinafter defined) of Executive.


 


(e)           Voluntarily
by Executive, upon two (2) weeks prior written notice.


 


(f)            By
Executive, immediately for Good Reason (as hereinafter defined).


 


(g)           On
expiration of the Employment Term if not extended by the mutual consent of the
Company and Executive.


 


2.3           Definitions
of “Cause,” “Total Disability,” “Good Reason” and “Change of Control.”


 


(a)           For the purpose of this Agreement, “Cause”
shall mean: (i) conduct amounting to fraud, embezzlement, disloyalty or
illegal misconduct in connection with Executive’s duties under this Agreement
and as an employee of the Company; (ii) conduct that the Company
reasonably believes has brought the Company into substantial public disgrace or
disrepute; (iii) failure to perform his duties hereunder as reasonably
directed by the Company after providing written notice of the failure to
Executive and Executive has failed to cure within ten (10) days of
receiving notice; (iv) gross negligence or willful misconduct by the
Executive with respect to the Company, its clients, its employees and its
activities; or (v) material breach by the Executive of this Agreement or
any other agreement to which Executive and the Company are a party or any
material breach by the Executive of any written policy adopted by the Company
concerning conflicts of interest, standards of business 


 

















 


conduct or fair employment practices and any other similar matter,
provided that the Company has provided written notice of the breach to
Executive and Executive has failed to cure the breach within ten (10) days
of receiving notice.


 


(b)           For
purposes of this Agreement, Executive shall be determined to have a “Total Disability”
upon the determination of a physician, acceptable to the Company and Executive
that Executive is unable, by reason of accident or illness, to substantially
perform his duties or is expected to be in the condition for periods totaling
six (6) months (whether or not consecutive) during any period of twelve
(12) months. Nothing herein shall limit Executive’s right to receive any
payments to which Executive may be entitled under any disability or employee
benefit plan of the Company or under any disability or insurance policy or
plan. During a period of Total Disability prior to termination hereunder,
Executive shall continue to receive his full compensation (including base
salary) and benefits.


 


(c)           “Good
Reason” will mean any of the following events which have not been cured within
ten (10) days following the Company’s receipt of Executive’s written
notice specifying the events or factors constituting Good Reason:


 


(i)            the Company requires Executive to relocate
his principal residence to a location outside the Greater Chicago Metropolitan
Area in order to perform his duties and responsibilities hereunder;


 


(ii)           the
Executive’s base salary or other compensation and benefits is reduced to less
than the amount of the Base Salary and other compensation and benefits as set
forth in Section 3.1 below;


 


(iii)          a material breach by the Company of the
provisions of this Agreement; or


 


(iv)          following a Change of Control, the assignment
to Executive of duties which constitute a material reduction in Executive’s
title or authority and which are materially inconsistent with Executive’s
position as contemplated by this Agreement.


 


(d)           “Change of Control” shall mean any of the
following events:


 


(i)            the
members of the Company’s board of directors as of the date of this Agreement
fail to constitute a majority of the members of the board; provided, however,
that any individual becoming a member of the board who is nominated or
appointed to the board seat on the recommendation and approval of the Company’s
Nominating and Corporate Governance Committee shall be treated as if he or she
were a member of the board as of the date of this Agreement;


 


(ii)           the
disposition by the Company of all, or substantially all, of the assets of the
Company; or


 


(iii)          the
termination and liquidation of the Company.


 

















 


ARTICLE III


COMPENSATION AND BENEFITS


 


3.1           Compensation.


 


(a)           Base
Salary. 
During the Employment Term, the Company shall pay Executive a base
salary (the “Base Salary”) of $ 450,000.00 per annum.


 


(b)           Annual
Incentive Bonus.  The Company shall, in addition to Executive’s
Base Salary, pay Executive an Annual Incentive Bonus of up to fifty (50%)
percent of Base Salary, which shall be payable within 120 days of the end of
each fiscal year.  One half of the Annual
Incentive Bonus may be payable at the discretion of the Chairman of the Board,
with the approval of the Executive Compensation Committee and the Board of
Directors; and one half of the Annual Incentive Bonus shall be payable in
accordance with the formula set forth on Exhibit A, attached hereto and made a part hereof.


 


(c)           Annual Stock Option Award.  Subject to approval of the 2008 Long-Term
Equity Compensation Plan (the “2008 Equity Award Plan”) by the Company’s
stockholders, no later than June 30 of each fiscal year during the
Employment Term, the Company shall grant Executive an Annual Stock Option Award
to purchase shares of the common stock of the Company (“Annual Stock Options”),
subject to the conditions set forth below and in accordance with the schedule
set forth on Exhibit B, attached hereto and made a part hereof. Twenty
percent (20%) of any Annual Stock Options granted hereunder shall vest on each
successive yearly anniversary of the grant of the Annual Stock Options.  In the event that the 2008 Equity Award Plan
is approved after June 30 of the fiscal year in question, the Annual Stock
Option Award for such year shall be granted as soon as practicable after such
approval.


 


(i)            All
Annual Stock Options shall be issued under, and in accordance with, the 2008
Equity Award Plan; to the extent the terms of any Annual Stock Options awarded
pursuant to this Agreement conflict with the terms of the 2008 Equity Award
Plan, the terms of the 2008 Equity Award Plan shall apply to the minimum extent
necessary to eliminate the conflict. Any Annual Stock Options that have not yet
vested shall be forfeited and redeemed by the Company, without any further
action on the part of the Company or the Executive, if Executive is no longer
employed by the Company for any reason, other than in connection with a
termination as described in Sections 2.2(b), (c) or (d). Executive
may not sell, transfer, hypothecate, pledge or assign any Annual Stock Options
which have not vested.


 


(ii)           Upon the occurrence of any forfeiture of
Annual Stock Options, Executive shall immediately take all actions necessary to
permit the Company to redeem any forfeited Annual Stock Options.


 


(iii)          All Annual Stock Options which may be
issuable hereunder shall be issued in reliance upon the following
representations, warranties and agreements of Executive, each of which shall be
true and correct as of the date of issuance and each of which shall survive the
termination of this Agreement.


 


(A)          Executive
acknowledges that the common stock underlying any Annual 


 

















 


Stock Options will be required to be registered under
the Securities Act pursuant to an effective registration statement subsequent
to stockholder approval of the 2008 Equity Plan;


 


(B)           Executive
acknowledges that once the common stock underlying any Annual Stock Options has
been issued to Executive, the common stock may not be subsequently transferred
or sold by Executive except in compliance with the registration requirements of
federal and state securities law or exemptions therefrom;


 


(C)           Executive
acknowledges that an investment in the Company’s common stock is subject to
significant risk, including the risks described, from time to time, in the
Company’s annual reports on Form 10-K. Executive represents and warrants
that he has such knowledge and expertise in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Company’s common stock and the ability to bear the economic risk of the
investment; and


 


(D)          Executive represents and warrants that he has
had the opportunity to ask questions of the Company concerning its business and
to obtain any information which he considers necessary to verify the accuracy
of or to amplify upon the Company’s disclosures and that all questions which
have been asked have been answered by the Company to Executive’s satisfaction


 


3.2           Payment.  All Base Salary due Executive hereunder shall
be paid in accordance with the general payroll payment practice of the Company
for executive level employees; except that any payment relating to the termination
of Executive shall be paid as a lump sum payment within fifteen (15) days of
termination.


 


3.3           Business
Expenses.


 


(a)           Reimbursement.   The Company shall
reimburse Executive for all ordinary and necessary business expenses incurred
by him in connection with the performance of his duties hereunder. The
reimbursement of business expenses will be governed by the policies for the
Company as they are in effect from time to time during the term of this
Agreement.


 


(b)           Accounting.  Executive shall provide
the Company with an accounting of any expenses, for which reimbursement is
sought including a description of the purpose for which each expense was
incurred. Executive shall provide the Company with such other supporting
documentation and other substantiation of reimbursable expenses as may be
required by Company to conform to Internal Revenue Service or other
requirements. All such reimbursements shall be payable by the Company to
Executive within a reasonable time after receipt by the Company of appropriate
documentation required by the Company.


 


3.4           Other
Benefits.  The Company shall provide
Executive with such retirement benefits and group health and other insurance
coverage at such levels and on such terms as the  Company generally provides to its executive
level employees in accordance with its Company sponsored benefit plans as they
are in effect from time to time during the term of the Agreement.


 


3.5           Compensation
Upon Termination.  If Executive’s
employment hereunder and this Agreement 


 

















 


is terminated
in accordance with the provisions of Article II, the Company will
be obligated to provide to Executive compensation and benefits, in lieu of any
severance under any severance plan that the Company may then have in effect,
and subject to setoff for any amounts owed by Executive to the Company or any
affiliate of the Company by reason of any contract, agreement, promissory note,
advance, failure to return Company property or loan document, as follows:


 


(a)           Upon Termination for Death or Total
Disability.  If Executive’s
employment hereunder and this Agreement is terminated by reason of his death or
Total Disability, under Sections 2.2(c) or (d), then within thirty
(30) days of the date of termination the Company will pay Executive (or his
estate or beneficiaries):


 


(i)            any Base Salary that has been accrued but not paid as of the
date of termination (the “Accrued Base Salary”);


 


(ii)           any
compensation for unused vacation days accrued as of the termination date in an
amount equal to Executive’s Base Salary multiplied by a fraction, the numerator
of which is the number of accrued unused vacation days and the denominator of
which is 360 (the “Accrued Vacation Payment”);


 


(iii)          any expenses incurred by Executive prior to
the date of termination that may be reimbursed pursuant to this Agreement (the “Accrued
Reimbursable Expenses”);


 


(iv)          any
accrued and vested benefits required to be provided upon death or Total
Disability by the terms of any Company-sponsored benefit plans or programs
exclusive of any Annual Stock Options (the “Accrued Benefits”), together with
any benefits required to be paid or provided in the event of Executive’s death
or Total Disability under applicable law; and


 


(v)           an
amount equal to either the prorated portion of the Annual Incentive Bonus that
Executive received for the last fiscal year completed prior to termination
equal to the relevant Annual Incentive Bonus multiplied by a fraction, the
numerator of which is the number of days in the year prior to the date of death
or Total Disability and the denominator of which is 360, or if the termination
occurs in the first year of the Employment Term, then the prorated portion of
the Annual Incentive Bonus as if the Target bonus was received for that year
(the “Accrued Bonus”) calculated in the same fashion.


 


In addition, if Executive’s employment and this Agreement is terminated
under Sections 2.2(c) or (d), any Annual Stock Options issued to
Executive under this Agreement which have not yet vested shall immediately vest
and shall no longer be subject to forfeiture.


 


(b)           Upon Termination by Company for Cause or
Voluntarily by Executive.  If
Executive’s employment hereunder and this Agreement is terminated under Sections
2.2(a) or (e), within fifteen (15) days of the date of such
termination, the Company will pay Executive:


 


(i)            any Accrued Base Salary;


 


(ii)           any Accrued Vacation Payment;


 


(iii)          any Accrued Reimbursable Expenses; and


 

















 


(iv)          any Accrued Benefits, together with any
benefits required to be paid or provided under applicable law.


 


In addition, if Executive’s employment and this Agreement is terminated
under Sections 2.2(a) or (e), any Stock Option Awards issued to
Executive which have not yet vested shall immediately be forfeited by
Executive.


 


(c)           Upon
Termination by the Company Without Cause or by Executive for Good Reason.  If Executive’s employment hereunder and this
Agreement is terminated under Sections 2.2(b) or (f), the Company
will pay Executive:


 


(i)            any Accrued Base Salary;


 


(ii)           any
Accrued Vacation Payment;


 


(iii)          any Accrued Reimbursable Expenses;


 


(iv)          any
Accrued Benefits, together with any benefits required to be paid or provided
under applicable law;


 


(v)           any
Accrued Bonus; and


 


(vi)          an
amount equal to 1.00 times the sum of: (A) Executive’s then current per
annum base salary; plus (B) an amount equal to the Annual Incentive Bonus
which was paid to Executive for the fiscal year immediately preceding the year
of termination; provided, however, that the payment to Executive
pursuant to this Section 3.5(c)(vi) shall in no event exceed
an amount which would cause Executive to receive an “excess parachute payment”
as defined in the Internal Revenue Code of 1986, as amended (the “Code”); provided,
however that if the termination occurs within one year of a Change of
Control, then in addition to the amounts described in clauses (i) through
(v) above, the Company will pay Executive an amount equal to 1.5 times
the sum of: (A) Executive’s then current per annum base salary; plus (B) an
amount equal to the Annual Incentive Bonus which was paid to Executive for the
fiscal year immediately preceding the year of termination; plus (C) the
aggregate dollar value of each of the Annual Stock Option Award that was
granted to Executive for the fiscal year immediately preceding the year of termination;
provided, however, that the payment to Executive pursuant to this
Section 3.5(c)(vi) shall in no event exceed an amount which
would cause Executive to receive an “excess parachute payment” as defined in
the Code.


 


In addition, if Executive’s employment
hereunder and this Agreement is terminated under Section 2.2(b),
any Annual Stock Options issued to Executive which have not yet vested shall
immediately vest and shall no longer be subject to forfeiture by Executive. If
Executive’s employment hereunder is terminated under Section 2.2(f),
any Annual Stock Options issued to Executive which have not vested shall
immediately be forfeited by Executive; provided that if this Agreement
is terminated under Section 2.2(f) within one year of a Change of
Control, then any Annual Stock Options issued to Executive under this Agreement
shall immediately vest and shall no longer be subject to forfeiture by
Executive.


 


3.6           Cessation
of Rights and Obligations: Survival of Certain Provisions. On the date of
expiration 


 

















 


or earlier
termination of the Employment Term for any reason, all of the respective
rights, duties, obligations and covenants of the parties, as set forth herein,
shall, except as specifically provided herein to the contrary, cease and become
of no further force or effect as of the date of termination, and shall only
survive as expressly provided for herein.


 


ARTICLE IV


CONFIDENTIALITY AND NON-COMPETE AGREEMENT


 


4.1           Non-Disclosure of Confidential
Information. Executive hereby acknowledges and agrees that the duties and
services to be performed by Executive under this Agreement are special and
unique and that as a result of his employment by the Company hereunder
Executive has developed over time and will acquire, develop and use information
of a special and unique nature and value that is not generally known to the
public or to the Company’s industry, including but not limited to, certain
records, secrets, documentation, software programs, price lists, ledgers and
general information, employee records, mailing lists, stockholder lists, tenant
lists and profiles, prospective customer, acquisition candidate or tenant
lists, accounts receivable and payable ledgers, financial and other records of
the Company or its Affiliates, information regarding its stockholders, tenants
or joint venture partners, and other similar matters (all such information
being hereinafter referred to as “Confidential Information”). Executive further
acknowledges and agrees that the Confidential Information is of great value to
the Company and that the restrictions and agreements contained in this
Agreement are reasonably necessary to protect the Confidential Information and
the goodwill of the Company and the Affiliates. 
Accordingly, Executive hereby agrees that:


 


(a)           Executive
will not, during the Employment Term or at any time thereafter, directly or
indirectly, except in connection with Executive’s performance of his duties
under this Agreement, or as otherwise authorized in writing by the Company for
the benefit of the Company or any Affiliate, divulge to any person, firm,
corporation, limited liability company, partnership or organization, or any
affiliated entity (hereinafter referred to as “Third Parties”), or use or cause
or authorize any Third Parties to divulge or use, the Confidential Information,
except as required by law; and


 


(b)           Upon
the termination of the Employment Term and this Agreement for any reason
whatsoever, Executive shall deliver or cause to be delivered to the Company any
and all Confidential Information, including drawings, notebooks, keys, data and
other documents and materials belonging to the Company or its Affiliates which
is in his possession or under his control relating to the Company or its
Affiliates, regardless of the medium upon which it is stored, and will deliver
to the Company upon termination, any other property of the Company or its
Affiliates which is in his possession or under his control.


 


4.2           Non-Solicitation
and Covenant Not to Compete.


 


(a)           General.
Executive acknowledges that the covenants set forth in this Section 4.2
are reasonable in scope and essential to the preservation of the business and
the goodwill of the Company, and are consideration for the amounts to be paid
to Executive hereunder. Executive also acknowledges that the enforcement of the
covenants set forth in this Section 4.2 will not preclude Executive
from being gainfully employed in such manner and to the extent as to provide a
standard of living for himself, the members of his family and the others
dependent upon him of at least the level provided by this Agreement. In
addition, Executive acknowledges that the Company and its Affiliates have
obtained an advantage over their competitors that is characterized by
relationships with clients, principals, tenants and other contacts.


 
















 


(b)           Covenants.
Executive hereby covenants and agrees that, except as permitted by the Company,
during the Employment Term, and any extensions thereof, and for a period of one
(1) year following the expiration, termination or extension of this
Agreement, Executive shall not, directly or indirectly: (i) alone,
together or in association with others, either as a principal, agent, owner,
stockholder, officer, director, partner, employee, lender, investor or in any
other capacity, engage in, have any financial interest in or be in any way
connected or affiliated with, or render advice or services to, Developers
Diversified Realty Corp., Kimco Realty Corporation or Regency Centers
Corporation; (ii) directly or indirectly divert, take away, solicit or
interfere with or attempt to divert, take away, solicit or interfere with any
present or prospective customer, except on behalf of the Company as an employee
thereof; (iii) directly or indirectly solicit, induce, influence or
attempt to solicit, induce or influence any employee or agent of the Company to
leave his employment or engagement with the Company, or offer employment or
engagement to or employ or engage any such employee of the Company, or assist
or attempt to assist any such employee of the Company in seeking other
employment; (iv) in any manner slander, libel or by other means take
action which is or intended, or could reasonably be expected, to be detrimental
to the Company or an Affiliate or their respective employees or operations; (v) knowingly
make or participate in any “solicitation” of “proxies” or “consents” (as such
terms are used in the proxy rules of the United States Securities and
Exchange Commission) or make proposals for approval of the Company’s
stockholders; (vi) knowingly form, join or participate in a “group”
(within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to the Company’s securities; (vii) otherwise knowingly act to
control or seek to control the management, board of directors or policies of
the Company (except with respect to actions taken solely in Executive’s
capacity as an officer of the Company in the exercise of his fiduciary duties;
or (viii) make any agreement to do any of the foregoing to the extent
restricted thereby. As used in this Section 4.2, the term “Company”
shall mean the Company or any Affiliate thereof. As used in this Section 4.2(b),
“customer” and “prospective customer” shall include: (i) any tenant of the
Company’s properties or any other person or entity with whom the Company is
negotiating for the leasing of real property from the Company or an Affiliate
at the time of the termination of this Agreement or during the six month period
immediately prior to such termination; (ii) any owner or prospective owner
of real property the purchase or sale of which is being negotiated by the
Company at the time of the termination of this Agreement or during the six
month period immediately prior to such termination; or (iii) any joint
venture partner of the Company. The restrictions imposed by this subparagraph
4.2(b) shall not apply to the ownership of one percent (1%) or less of
all of the outstanding securities of any entity whose securities are listed on
a national securities exchange, or included for quotation on any interdealer
quotation system.


 


4.3           Remedies.


 


(a)           Injunctive
Relief. Executive expressly acknowledges and agrees that the business of
the Company is highly competitive and that a violation of any of the provisions
of Sections 4.1 or 4.2 would cause immediate and irreparable harm, loss
and damage to the Company or an Affiliate not adequately compensable by a
monetary award. Executive further acknowledges and agrees that the time periods
and territorial areas provided for herein are the minimum necessary to
adequately protect the business of the Company, the enjoyment of the
Confidential Information and the goodwill of the Company. Without limiting any
of the other remedies available to the Company at law or in equity, or the
Company’s light or ability to collect money damages, Executive agrees that any
actual or threatened violation of any of the provisions of Sections 4.1
or  4.2 may be immediately restrained
or enjoined by any court of competent jurisdiction, and that a temporary
restraining order or 


 

















 


emergency, preliminary or final injunction may be
issued in any court of competent jurisdiction, upon twenty-four (24) hour
notice and without bond.


 


(b)           Enforcement. Executive expressly acknowledges and
agrees that the provisions of Sections 4.1 or 4.2 shall be enforced to
the fullest extent permissible under the laws and public policies in each
jurisdiction in which enforcement might be sought. Accordingly, if any
particular portion of Sections 4.1 or 4.2 shall ever be adjudicated as
invalid or unenforceable, or if the application thereof to any party or
circumstance shall be adjudicated to be prohibited by or invalidated by such
laws or public policies, such section or sections shall be: (i) deemed
amended to delete therefrom such portions so adjudicated; or (ii) modified
as determined appropriate by such a court, such deletions or modifications to
apply only with respect to the operation of such section or sections in the
particular jurisdictions so adjudicating on the parties and under the
circumstances as to which so adjudicated.


 


ARTICLE V


MISCELLANEOUS


 


5.1           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
(1) 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:


 


To Executive at his home address.


 


	
  To the Company at:

  	
  Inland
  Western Retail Real Estate Trust, Inc.

  
	
   

  	
  2901
  Butterfield Road

  
	
   

  	
  Oak Brook,
  Illinois 60523

  
	
   

  	
  Attn: Robert
  D. Parks

  
	
   

  	
  Chairman of
  the Board

  
	
   

  	
  Telephone:
  (630) 586-4773

  
	
   

  	
  Fax: (630)
  218-4955

  
	
   

  	
   

  
	
  With a copy to:

  	
  Inland
  Western Retail Real Estate Trust, Inc.

  
	
   

  	
  2901
  Butterfield Road

  
	
   

  	
  Oak Brook,
  Illinois 60523

  
	
   

  	
  Attn: Dennis
  K. Holland

  
	
   

  	
  General
  Counsel and Secretary

  
	
   

  	
  Telephone:
  (630) 368-2861

  
	
   

  	
  Fax: (630)
  586-6446

  



 


Any party may
change its address for purposes of this paragraph by giving the other party
written notice of the new address in the manner set forth above.


 


5.2           Entire Agreement;
Amendments. Etc. This Agreement contains the entire agreement and
understanding of the parties hereto, and supersedes all prior agreements and
understandings relating to the 


 

















 


subject matter
thereof. No modification, amendment, waiver or alteration of this Agreement or
any provision or term hereof shall in any event be effective unless the same
shall be in writing, executed by both parties hereto, and any waiver so given
shall be effective only in the specific instance and for the specific purpose
for which given.


 


5.3           Benefit.  This Agreement shall be binding upon, and
inure to the benefit of, and shall be enforceable by, the heirs, successors and
legal representatives of Executive and the successors, assignees and
transferees of the Company and its current or future Affiliates. This Agreement
or any right or interest hereunder may not be assigned by Executive.


 


5.4           No Waiver. No
failure or delay on the part of any party hereto in exercising any right, power
or remedy hereunder or pursuant hereto shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder or pursuant thereto.


 


5.5           Severability.
Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law but, if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. If any part of any covenant or other
provision in this Agreement is determined by a court of law to be overly broad
thereby making the covenant unenforceable, the parties hereto agree, and it is
their desire, that the court shall substitute a judicially enforceable
limitation in its place, and that as so modified the covenant shall be binding
upon the parties as if originally set forth herein.


 


5.6           Compliance and
Headings.  The headings in this
Agreement are intended to be for convenience and reference only, and shall not
define or limit the scope, extent or intent or otherwise affect the meaning of
any portion hereof.


 


5.7           Governing Law.  The parties agree that this Agreement shall
be governed by, interpreted and construed in accordance with the internal laws
of the State of Illinois without regard to its conflicts of law provisions, and
the parties agree that any suit, action or proceeding with respect to this
Agreement shall be brought in the state courts in Chicago, Illinois or in the
U.S. District Court for the Northern District of Illinois. The parties hereto
hereby accept the exclusive jurisdiction of those courts for the purpose of any
such suit, action or proceeding. Venue for any such action, in addition to any
other venue permitted by statute, will be in Chicago, Illinois.


 


5.8           Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed an original and all of which together will constitute one and the
same instrument.


 


5.9           No Presumption
Against Drafter. Each of the parties hereto has jointly participated in the
negotiation and drafting of this Agreement. In the event an ambiguity or a
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by each of the parties hereto and no presumptions or burdens
of proof shall arise favoring any party by virtue of the authorship of any
provisions of this Agreement.


 


5.10         Enforcement.
In the event either of the parties to this Agreement shall bring an action
against the other party with respect to the enforcement or breach of any
provision of this Agreement, the prevailing party in such action shall recover
from the non-prevailing party the costs incurred by the prevailing party 


 

















 


with respect
to such action including court costs and reasonable attorneys’ fees.


 


5.11         Recitals. The
Recitals set forth above are hereby incorporated in and made a part of this
Agreement by this reference.


 


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blank]


 

















 


IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed and delivered as of the day and year first above written.


 


	
   

  	
  INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.,

  
	
   

  	
  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert D. Parks

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert D. Parks

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michal J. O’Hanlon

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael J. O’Hanlon

  



 

















 


EXHIBIT A


(FORMULA FOR DETERMINING ANNUAL INCENTIVE
BONUS)


 


I.                                         One half of
the Executive’s Annual Incentive Bonus Opportunity (“FFO AIBO”) shall be
determined based on performance of the Company, measured to either a Threshold,
Target, or High level of performance.


 


·                  The
Company will have achieved a Threshold level of performance if the Company’s
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the FFO AIBO is calculated, when
compared to FFO per fully-diluted share for the next preceding completed fiscal
year, is not less than 80% of the median FFO growth rate for the applicable
year as published by NAREIT for the Retail REIT Shopping Center subsector of
the NAREIT Equity REIT Total Return Index (or, if not then in existence, a
comparable retail REIT shopping center index mutually agreeable to the Company
and Executive).


 


·                  The
Company will have achieved a Target level of performance if the Company’s
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the FFO AIBO is calculated, when
compared to FFO per fully-diluted share for the next preceding completed fiscal
year, is not less than 100% of the median FFO growth rate for the applicable
year as published by NAREIT for the Retail REIT Shopping Center subsector of
the NAREIT Equity REIT Total Return Index (or, if not then in existence, a
comparable retail REIT shopping center index mutually agreeable to the Company
and Executive).


 


·                  The Company will
have achieved a High level of performance if the Company’s annual growth in FFO
per fully-diluted share for the completed fiscal year immediately preceding the
year in which the FFO AIBO is calculated, when compared to FFO per fully-diluted
share for the next preceding completed fiscal year, is not less than 130% of
the median FFO growth rate for the applicable year as published by NAREIT for
the Retail REIT Shopping Center subsector of the NAREIT Equity REIT Total
Return Index (or, if not then in existence, a comparable retail REIT shopping
center index mutually agreeable to the Company and Executive).


 


For purposes
of calculating FFO AIBO, “FFO” shall have the same meaning ascribed to that
term in the Company’s annual report on Form 10-K as filed with the SEC for
the year in which the bonus is to be calculated, but excluding therefrom the
performance of Inland Western I (Common and Preferred) Stock Portfolio, and
Western Dedicated (Preferred) Stock Portfolio.


 


Subject to Section II.
below, if the Company achieves a Threshold level of performance, the Executive’s
FFO AIBO will be equal to one half of 20% of Executive’s Base Salary for the
applicable year. If the Company achieves a Target level of performance, the
Executive’s FFO AIBO will be equal to one half of 30% of Executive’s Base
Salary for the applicable year. If the Company achieves a High level of
performance, the Executive’s FFO AIBO will be equal to one half of 50% of
Executive’s Base Salary for the applicable year.


 


II.                                     The amount of any Annual Incentive Bonus determined pursuant
to this Exhibit A shall be non-discretionary on the part of the
Company, and shall be paid to the Executive in accordance with the provisions
of Section 3.I(b) of the Agreement.


 

















 


EXHIBIT B


(FORMULA FOR DETERMINING ANNUAL STOCK OPTION
AWARD)


 


I.              The Executive will be awarded an
Annual Stock Option Award only if the Company shall have achieved a Threshold
level of performance in the completed fiscal year immediately preceding the
award. For these purposes, the Company will have achieved a Threshold level of
performance if the Company’s annual growth in FFO per fully-diluted share for
the completed fiscal year immediately preceding the year in which the award of
Annual Stock Options is calculated, when compared to FFO per fully-diluted
share for the next preceding completed fiscal year, is not less than 80% of the
median FFO growth rate for the applicable year as published by NAREIT for the
Retail REIT Shopping Center subsector of the NAREIT Equity REIT  Total
Return Index (or, if not then in existence, a comparable retail REIT shopping center
index mutually agreeable to the Company and Executive).


 


II.            If the Company achieves a Threshold
level of performance, the Executive’s Annual Stock Option Award will authorize
the Executive to purchase the number of shares equal to 15,000 shares. The
strike price for each share underlying each Annual Stock Option Award will be
equal to (i) until such time, if ever, that the Company’s shares are
listed on a national exchange, the market value of shares established annually
by the Company for the purposes of the ERISA valuation; or (ii) after the
Company’s shares are listed on a national exchange, if ever, the market value
of such shares.