**Exhibit 10.2.1**

 

**AMENDEDAND RESTATEDADVISORY AGREEMENT**

 

This AMENDED AND RESTATEDADVISORY AGREEMENT (this “Agreement”) is made as of December 28, 2004 betweenInland Western Retail Real Estate Trust, Inc., a Maryland corporation (the “Company”),and Inland Western Retail Real Estate Advisory Services, Inc., an Illinoiscorporation (the “Advisor”).

 

W I TN E S S E T H:

 

WHEREAS, the Company and the Advisor have agreed toenter into this Agreement to cause the Advisor to provide certain services withrespect to the Property (as defined below) on behalf of the Company; and

 

NOW, THEREFORE, in consideration of the mutualcovenants herein set forth, the parties hereto agree as follows:

 

# **1.**                                      DEFINITIONS.  As used herein, the following terms shallhave the meanings set forth below:

 

## **a)****             **“AcquisitionExpenses” means expenses related to the Company’s selection, evaluation andacquisition of, and investment in, properties, whether or not acquired or made,including but not limited to legal fees and expenses, travel and communicationsexpenses, cost of appraisals and surveys, nonrefundable option payments onproperty not acquired, accounting fees and expenses, computer use relatedexpenses, architectural and engineering reports, environmental and asbestosaudits, title insurance and escrow fees, loan fees or points or any fee of asimilar nature, however designated, and personnel and miscellaneous expensesrelated to the selection and acquisition of properties. Acquisition Expenseswill accrue and be paid on Properties purchased with the Gross OfferingProceeds and proceeds of Shares sold via the Company’s DistributionReinvestment Program, as well as on the entire purchase price of all Propertiesincluding any acquisition financing related thereto.

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## **b)****             **“AdvisorAsset Management Fee” means an amount equal to 1% of the Average InvestedAssets.

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## **c)****             **“Affiliate”means, with respect to any other Person: (i) any Person directly or indirectlyowning, controlling or holding, with the power to vote 10% or more of theoutstanding voting securities of such other Person; (ii) any Person 10% or moreof whose outstanding voting securities are directly or indirectly owned,controlled or held, with the power to vote, by such other Person; (iii) anyPerson directly or indirectly controlling, controlled by or under commoncontrol with such other Person; (iv) any executive officer, director, trusteeor general partner of such other Person; and (v) any legal entity for whichsuch Person acts as an executive officer, director, trustee or general partner.

 

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## **d)****             **“AffiliatedDirectors” means those Directors of the Company who are affiliated with theCompany or its Affiliates.

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## **e)****             **“Articlesof Incorporation” means the Articles of Incorporation of the Company, asamended from time to time.

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## **f)****               **“AverageInvested Assets” means, for any period, the average of the aggregate Book Valueof the assets of the Company invested, directly or indirectly, in equityinterests and in loans secured by real estate, before reserves for depreciationor bad debts or other similar noncash reserves, computed by taking the averageof such values at the end of each month during such period.

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## **g)****            **“Boardof Directors” means the board of directors of the Company.

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## **h)****            **“BookValue” of an asset means the value of such asset on the books of the Company,before allowance for depreciation or amortization.

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## **i)****               **“Code”means the Internal Revenue Code of 1986, as amended.

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## **j)****               **“CompanyFixed Assets” means the real estate, together with the buildings, leaseholdinterests, improvements, equipment, furniture, fixtures and personal propertyassociated therewith, used by the Company in the conduct of its business.

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## **k)****           **“CompetitiveReal Estate Commission” means the real estate or brokerage commission paid forthe purchase or sale of a Property which is reasonable, customary andcompetitive in light of the size, type and location of such Property.

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## **l)****               **“ContractPrice for the Property” means the amount actually paid or allocated to thepurchase, development, construction or improvement of a Property exclusive ofAcquisition Expenses.

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## **m)****         **“CumulativeReturn” means a cumulative, non-compounded return, equal to 6% per annum onInvested Capital commencing upon acceptance of the investor’s subscription.

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## **n)****            **“CurrentReturn” means a noncumulative, noncompounded return, equal to 7% per annum onInvested Capital.

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## **o)****             **“FiscalYear” means any period for which any income tax return is submitted by theCompany to the Internal Revenue Service and which is treated by the InternalRevenue Service as a reporting period.

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## **p)****             **“GrossDollars Invested in Properties” means the amount actually paid or allocated tothe purchase, development, construction or improvement of Properties acquiredby the Company.

 

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## **q)****             **“GrossOffering Proceeds” means the total proceeds from the sale of the 250,000,000Shares offered on “best efforts” basis during the public offering period beforedeductions for Offering Expenses. For purposes of calculating Gross OfferingProceeds, the purchase price for all Shares, including those for which volumediscounts apply, shall be deemed to be $10 per Share. Unless specificallyincluded, Gross Offering Proceeds does not include the total proceeds from thesale of up to 20,000,000 Shares under the Company’s Distribution ReinvestmentProgram during the public offering period, the purchase price for which shallbe $9.50 per Share;

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## **r)****             **“GrossRevenues From Properties” means all cash receipts derived from the operation ofCompany Fixed Assets.

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## **s)****             **“IncentiveAdvisory Fee” means an amount equal to 15% of the net proceeds from the sale ofa Property after the Stockholders have first received: (i) their CumulativeReturn; and (ii) a return of their Invested Capital.

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## **t)****               **“IndependentDirectors” means the Directors of the Company who: (i) are not affiliated andhave not been affiliated within the two years prior to their becoming anIndependent Director, directly or indirectly, with the Company, the Sponsor orthe Advisor, whether by ownership of, ownership interest in, employment by, anymaterial business or professional relationship with, or as an officer ordirector of the Company, the Sponsor, the Advisor or any of their Affiliates;(ii) do not serve as a director for more than two other REITs organized by theCompany or the Advisor or advised by the Advisor; and (iii) perform no otherservices for the Company, except as Directors. For this purpose, an indirectrelationship shall include circumstances in which a member of the immediatefamily of a Director has one of the foregoing relationships with the Company,the Sponsor or the Advisor or any of their Affiliates. For purposes ofdetermining whether or not the business or professional relationship ismaterial, the aggregate gross revenue derived by the prospective IndependentDirector from the Company, the Sponsor, the Advisor and their Affiliates shallbe deemed material PER SE if it exceeds five percent of the prospectiveIndependent Director’s: (i) annual gross revenue, derived from all sources,during either of the last two years; or (ii) net worth, on a fair market valuebasis.

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## **u)****            **“InvestedCapital” means the original issue price paid for the Shares reduced by priordistributions from the sale or financing of the Company’s Properties.

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## **v)****              **“IREIC”means Inland Real Estate Investment Corporation, which is a wholly-ownedsubsidiary of The Inland Group, Inc. The Advisor is a wholly owned subsidiaryof IREIC. IREIC is the Sponsor of the Company.

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## **w)****           **“IWRREAI”means Inland Western Retail Real Estate Acquisitions, Inc.

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## **x)****             **“ManagementAgent” means an entity which provides property rental, leasing, operation andmanagement services to the Company. The Management Agent is

 

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## Inland Southeast Property Management Corp., an Affiliateof the Advisor, or anyone which succeeds it in such capacity.

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## **y)****             **“NetIncome” means, for any period, total revenues applicable to such period, lessthe expenses applicable to such period other than additions to or allowancesfor reserves for depreciation, amortization or bad debts or other similarnoncash reserves; provided, however, that Net Income shall not include the gainfrom the sale of the Company’s assets.

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## **z)****             **“Offering”means the offering of Shares of the Company pursuant to the Prospectus.

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## **aa)****       **“OfferingExpenses” means all those expenses incurred by and to be paid from the assetsof the Company in connection with and in preparing the Company for registrationand subsequently offering and distributing Shares to the public, including, butnot limited to, total underwriting and brokerage discounts and commissions(including fees and expenses of underwriters and their accountants andattorneys paid by the Company), expenses for printing, engraving, mailing,salaries of the Company’s employees while engaged in sales activity, charges oftransfer agents, registrars, trustees, escrow holders, depositaries, experts,expenses of qualification of the sale of the securities under federal and statelaws, including taxes and fees, and accountants’ and attorneys’ fees andexpenses.

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## **bb)****       **“Person”means any individual, corporation, business trust, estate, trust, partnership,limited liability company, association, two or more persons having a joint orcommon interest, or any other legal or commercial entity.

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## **cc)****       **“PrimaryGeographical Area of Investment” of the Company means the states west of theMississippi River in the United States.

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## **dd)****       **“Property”or “Properties” means any, or all, respectively, of the real property andimprovements thereon owned or to be owned by the Company, directly orindirectly.

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## **ee)****       **“PropertyDisposition Fee” means a real estate disposition fee, payable (under certainconditions) to the Advisor and its Affiliates upon the sale of the Company’sProperty in an amount equal to the lesser of: (i) 3% of the contracted forsales price of the Property; or  (ii) 50%of the commission paid to third parties which is reasonable, customary andcompetitive in light of the size, type and location of such Property.

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## **ff)****           **“PropertyManagement Fee” means any fee paid to an Affiliate or third party ascompensation for management of the Company’s Properties. The PropertyManagement Fee shall be equal to not more than 90% of the fee which would bepayable to an unrelated party providing such services, which fee shallinitially be 4.5% of the gross revenues from the Properties.

 

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## **gg)****     **“Prospectus”means the final prospectus of the Company in connection with the registrationof Shares filed with the Securities and Exchange Commission on Form S-11, asamended and supplemented.

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## **hh)****     **“RealProperty” means improved and unimproved land, improvements, furniture andfixtures located on or used in connection with, land and any interest in any ofthe foregoing, including an interest in air and subterranean or mineral rights.

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## **ii)****           **“REIT”means a real estate investment trust as defined in Sections 856 through 860 ofthe Code.

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## **jj)****           **“RetailCenter” means real estate primarily improved for use as retail establishments,principally multi-tenant shopping centers.

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## **kk)****   **“Shares”means the shares of common stock, par value $.001 per share, of the Company,and “Share” means one of those Shares.

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## **ll)****           **“ShoppingCenter” means a group of commercial establishments planned, developed, ownedand managed as a unit related in location, size and type of shops to the tradearea the unit serves. It provides on-site parking in definite relationship tothe types and sizes of stores.”Sponsor” means IREIC.

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## **mm) **“Stockholders”means holders of Shares.

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## **nn)****     **“TotalOperating Expenses” means the aggregate expenses of every character paid orincurred by the Company as determined under generally accepted accountingprinciples, including Advisor Asset Management Fees, but excluding:

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### **i)****                           **theexpenses of raising capital such as Offering Expenses, legal, audit,accounting, underwriting, brokerage, listing, registration and other fees,printing and other such expenses, and taxes incurred in connection with theissuance, distribution, transfer, registration and stock exchange listing ofthe Shares;

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### **ii)**                        interestpayments;

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### **iii)**                    taxes;

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### **iv)****                      **noncashexpenditures such as depreciation, amortization and bad debt reserves;

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### **v)****                          **theIncentive Advisory Fee payable to the Advisor; and

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### **vi)****                      **AcquisitionExpenses, real estate commissions on resale of Real Property and other expensesconnected with the acquisition, disposition and ownership of real estateinterests, mortgage loans or other property (such as the costs of foreclosure,insurance premiums, legal services, maintenance, repair and improvement of RealProperty).

 

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# **2.**                                      DUTIES OF ADVISOR.  The Advisor shall consult with the Companyand shall, at the request of the Board of Directors or the officers of theCompany, furnish advice and recommendations with respect to all aspects of thebusiness and affairs of the Company. In general, the Advisor shall inform theBoard of Directors of factors which come to its attention which would influencethe policies of the Company. Subject to the supervision of the Board ofDirectors and consistent with the provisions of the Articles of Incorporation,the Advisor shall use its best efforts to:

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## **a)****             **Presentto the Company a continuing and suitable real estate investment program andopportunities to make investments in Real Properties consistent with theinvestment policies of the Company and the investment program adopted by theBoard of Directors and in effect at the time and furnish the Company withadvice with respect to the making, acquisition, holding and disposition ofinvestments and commitments therefor. In presenting investment opportunitieshereunder, the Advisor shall comply with, and be subject to, the provisions ofthat certain Property Acquisition Service Agreement, dated the date hereof,among IWRREAI, the Advisor, and the Company (the “Property Acquisition ServiceAgreement”), as the same may be amended from time to time. To the extentpossible, the resolution of conflicting investment opportunities between theCompany and other investment entities advised or managed by the Advisor and itsAffiliates for a prospective investment opportunity (a “Proposed Property”)will be resolved by giving priority to the Company, provided that the ProposedProperty meets the acquisition criteria of the Company. The PropertyAcquisition Service Agreement grants the Company the first opportunity topurchase such Proposed Property which is placed under contract by IREAI, theAdvisor or its Affiliates, provided the Company is able to close the purchaseof the Proposed Property within 60 days. Other factors which may be considered in connection with evaluating thesuitability of the Proposed Property for investment include:

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### **i)****                           **theeffect of the acquisition on the diversification of each entity’s portfolio;(ii) the amount of funds available for investment;

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### **ii)****                       **cashflow; and

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### **iii)****                   **theestimated income tax effects of the purchase and subsequent disposition. TheIndependent Directors of the Company must, by a majority vote, approve allactions by the Advisor or its Affiliates which present potential conflicts withthe Company as set forth in the Property Acquisition Service Agreement.

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## **b)****             **Managethe Company’s day-to-day investment operations, subject to the final paragraphof this Section 2, to effect the investment program adopted by the Board ofDirectors and perform or supervise the performance of such other administrativefunctions necessary in connection with the management of the Company as may beagreed upon by the Advisor and the Company;

 

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## **c)****             **Serveas the Company’s investment advisor, subject to the final paragraph of thisSection 2, in connection with policy decisions to be made by the Board ofDirectors and, as requested, furnish reports to the Board of Directors andprovide research, economic and statistical data in connection with the Company’sinvestments and investment policies;

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## **d)****             **Onbehalf of the Company, investigate, select and conduct relations with lenders,consultants, accountants, brokers, property managers, attorneys, underwriters,appraisers, insurers, corporate fiduciaries, banks, builders and developers,sellers and buyers of investments and persons acting in any other capacityspecified by the Company from time to time, and enter into contracts with,retain and supervise services performed by such parties in connection withinvestments which have been or may be acquired or disposed of by the Company;

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## **e)****             **Cooperatewith the Management Agent in connection with property management services andother activities relating to the Company’s assets as the Advisor shall deemappropriate in the particular circumstances, subject to the requirement thatthe Advisor or the Management Agent, as the case may be, qualifies as an “independentcontractor” as that phrase is used in connection with applicable laws, rulesand regulations affecting REITs that own Real Property;

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## **f)****               **Uponrequest of the Company, act, or obtain the services of others to act, asattorney-in-fact or agent of the Company in making, acquiring and disposing ofinvestments, disbursing, and collecting the funds, paying the debts andfulfilling the obligations of the Company and handling, prosecuting andsettling any claims of the Company, including foreclosing and otherwiseenforcing mortgage and other liens and security interests securing investments;

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## **g)****            **Assistin negotiations on behalf of the Company with investment banking firms andother institutions or investors for public or private sales of securities ofthe Company or for other financing on behalf of the Company, but in no event insuch a way that the Advisor shall be acting as a broker, dealer, underwriter orinvestment advisor in securities of or for the Company;

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## **h)****            **Maintain,with respect to any Real Property and to the extent available, title insuranceor other assurance of title and customary fire, casualty and public liabilityinsurance;

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## **i)****               **Uponrequest of the Board of Directors, and subject to the final paragraph of thisSection 2, invest and reinvest any money of the Company;

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## **j)****               **Supervisethe preparation and filing and distribution of returns and reports togovernmental agencies and to investors and act on behalf of the Company inconnection with investor relations;

 

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## **k)****           **Provideoffice space, equipment and personnel as required for the performance of theforegoing services as Advisor;

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## **l)****               **Advisethe Company of the operating results of the Company properties, to cause theManager to prepare on a timely basis, and to review, for such propertiesoperating budgets, maintenance and improvement schedules, one, three and fiveyear projections of operating results and such other reports as may beappropriate;

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## **m)****         **Asrequested by the Company, make reports to the Company of its performance of theforegoing services and furnish advice and recommendations with respect to otheraspects of the business of the Company;

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## **n)****            **Prepareon behalf of the Company all reports and returns required by the Securities andExchange Commission, Internal Revenue Service and other state or federalgovernmental agencies;

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## **o)****             **Undertakeand perform all services or other activities necessary and proper to carry outthe investment objectives of the Company; and

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## **p)****             **Undertakecommunications with Stockholders in accordance with applicable law and theArticles of Incorporation, provided, however, that Affiliates of the Advisorhave no obligations to the Company other than as expressly stated herein, andthe Advisor and its Affiliates have no obligations to present to the Companyany specific investment opportunity except as described in the Prospectus. Inproviding advice and services as provided in subparagraphs (a) through (p)above of this Section 2, the Advisor shall not (i) engage in any activity whichwould require it to be registered as an “Investment Advisor,” as that term isdefined in the Investment Advisors Act of 1940 OR in any state securities lawor (ii) cause the Company to make such investments as would cause the Companyto become an “Investment Company,” as that term is defined in the InvestmentCompany Act of 1940.

 

# **3.**                                      NO PARTNERSHIP OR JOINTVENTURE.  The Company and the Advisor arenot, and shall not be deemed to be, partners or joint venturers with eachother.

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# **4.**                                      RECORDS.  The Advisor shall maintain appropriate booksof account and records relating to services performed hereunder, which shall beaccessible for inspection by the Company at any time during ordinary businesshours.

 

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# **5.**                                      REIT QUALIFICATIONS.  Notwithstanding any other provision of thisAgreement to the contrary, the Advisor shall refrain from any action which, inits reasonable judgment or in any judgment of the Board of Directors of whichthe Advisor has written notice, would adversely affect the qualification of theCompany as a REIT under the Code or which would violate any law, rule orregulation of any governmental body or agency having jurisdiction over theCompany or its securities, or which would otherwise not be permitted by the Articlesof Incorporation. If any such action is ordered by the Board of Directors, theAdvisor shall promptly notify the Board of Directors of the Advisor’s judgmentthat such action would adversely affect such status or violate any such law,rule or regulation or the Articles of Incorporation and shall refrain fromtaking such action pending further clarification or instruction from the Boardof Directors.

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# **6.**                                      BANK ACCOUNTS.  At the direction of the Board of Directors,the Advisor may establish and maintain bank accounts in the name of theCompany, and may collect and deposit into and disburse from such accountsmoneys on behalf of the Company, upon such terms and conditions as the Board ofDirectors may approve, provided that no funds in any such account shall becommingled with funds of the Advisor. The Advisor shall from time to time, asthe Company may require, render appropriate accountings of such collections,deposits and disbursements to the Board of Directors and to the auditors of theCompany.

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# **7.**                                      FIDELITY BOND.  The Advisor shall not be required to obtainor maintain a fidelity bond in connection with the performance of its serviceshereunder.

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# **8.**                                      INFORMATION FURNISHEDADVISOR.  The Board of Directors willkeep the Advisor informed in writing concerning the investment and financingpolicies of the Company. The Board of Directors shall notify the Advisorpromptly in writing of its intention to make any investments or to sell ordispose of any existing investments. The Company shall furnish the Advisor witha certified copy of all financial statements, a signed copy of each reportprepared by independent certified public accountants, and such otherinformation with regard to its affairs as the Advisor may reasonably request.

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# **9.**                                      COMPENSATION.  The Advisor and its Affiliates shall be paidfor services rendered by the Advisor under this Agreement as follows:

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## **a)****             **AcquisitionExpenses, for the expenses attendant to Property acquisitions, in an aggregateamount not in excess of 0.5% of (i) the Gross Offering Proceeds, and (ii) thegross proceeds from the sale of up to 20,000,000 Shares pursuant to the Company’sDistribution Reinvestment Program, PROVIDED THAT the Acquisition Expensesrespecting any specific Property acquired by the Company shall not exceed 6% ofthe gross purchase price of that Property;

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## **b)****             **AnAdvisor Asset Management Fee of not more than 1% of the Average InvestedAssets. This fee will be payable quarterly in an amount equal to one fourth of1% of the Average Invested Assets of the Company as of the last day of theimmediately preceding quarter. For any year in which the Company qualifies as aREIT, the Advisor may be required to reimburse the Company certain sums asdescribed in Section 14;

 

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## **c)****             **Reimbursementfor the cost to the Advisor and its Affiliates for:

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### **i)****                           **thecost to the Advisor or its Affiliates of goods and services used for and by theCompany and obtained from unaffiliated parties; and

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### **ii)****                       **administrativeservices related thereto. “Administrative Services” include ministerialservices such as typing, record keeping, preparation and dissemination ofCompany reports, preparation and maintenance of records regarding Stockholders,record keeping and administration of the Company’s Distribution Reinvestmentand Share Repurchase Programs, preparation and dissemination of responses toStockholder inquiries and other communications with Stockholders and any otherrecord keeping required for Company purposes. Such reimbursements are subject tolimitations imposed by Sections 10(b) and (c) hereof;

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## **d)****             **AnIncentive Advisory Fee equal to 15% of the remaining proceeds from the sale ofReal Properties after the Stockholders have first received: (i) theirCumulative Return; and (ii) the return of their Invested Capital. At such timeas the business of the Advisor is acquired by or consolidated into the Companypursuant to Section 12 hereof, the Incentive Advisory Fee shall also terminate;

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## **e)****             **AProperty Disposition Fee, payable upon the sale of a Real Property equal to thelesser of: (i) 3% of the contracted for sales price of the Real Property or(ii) 50% of the commission paid to third parties which is reasonable, customaryand competitive in light of the size, type and location of such property (“CompetitiveReal Estate Commission”). The amount paid to the Advisor, when added to thesums paid to unaffiliated parties, shall not exceed the lesser of theCompetitive Real Estate Commission or an amount equal to 6% of the contractedfor sales price. Payment of such Property Disposition Fee shall be made only ifthe Advisor provides a substantial amount of services in connection with thesale of the particular parcel(s) of Real Property; and

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## **f)****               **Thecompensation and reimbursements paid by the Company to the Advisor and itsAffiliates shall be approved by a majority of the Directors (including amajority of the Independent Directors), as being fair and reasonable to theCompany and not less favorable to the Company than would be available from anunaffiliated source.

 

# **10.**                               COMPENSATION FORADDITIONAL SERVICES, CERTAIN LIMITATIONS.

 

## **a)****             **Ifthe Company shall request the Advisor or its Affiliates to render services forthe Company other than those required to be rendered by the Advisor hereunder,such additional services, if performed, will be compensated separately on termsto be agreed upon between such party and the Company from time to time inaccordance with this Section. The rate of compensation for such services andany reimbursements to be paid by the Company to the Advisor and its Affiliates

 

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## shall be approved by amajority of the Board of Directors, including a majority of the IndependentDirectors, as being fair and reasonable to the Company and not less favorableto the Company than would be available from an unaffiliated source.

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## **b)****             **Inextraordinary circumstances fully justified to the official or agencyadministering the appropriate state securities laws, the Advisor and itsAffiliates may provide other goods and services to the Company if all of thefollowing criteria are met:

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### **i)****                           **thegoods or services must be necessary to the prudent operation of the Company;

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### **ii)****                       **thecompensation, price or fee must be equal to the lesser of 90% of thecompensation, price or fee the Company would be required to pay to independentparties who are rendering comparable services or selling or leasing comparablegoods on competitive terms in the same geographic location, or 90% of thecompensation, price or fee charged by the Advisor or its Affiliates forrendering comparable services or selling or leasing comparable goods oncompetitive terms; and

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### **iii)****                   **ifat least 95% of gross revenues attributable to the business of rendering suchservices or selling or leasing such goods are derived from persons other thanAffiliates, the compensation, price or fee charged by an unaffiliated personwho is rendering comparable services or selling or leasing comparable goodsmust be on competitive terms in the same geographic location. Extraordinarycircumstances shall be presumed only when there is an emergency situationrequiring immediate action by the Advisor or its Affiliates and the goods orservices are not immediately available from unaffiliated parties. Serviceswhich may be performed in such extraordinary circumstances include emergencymaintenance of Company properties, janitorial and other related services due tostrikes or lockouts, emergency tenant evictions and repair services whichrequire immediate action, as well as operating and releasing properties withrespect to which the leases are in default or have been terminated.

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## **c)****             **Permittedreimbursements shall include salaries and related salary expenses fornonsupervisory services which could be performed directly for the Company byindependent parties such as legal, accounting, transfer agent, data processingand duplication. The Advisor believes that the employees of the Advisor and itsAffiliates who may perform services for the Company for which reimbursement isallowed pursuant to Section 10(b) or 10(c), will have the experience andeducational background, in their respective fields of expertise, appropriatefor the performance of any such services.

 

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# **11.**                               STATEMENTS.  The Advisor shall furnish to the Company notlater than the 10th day of each calendar quarter, beginning with the secondcalendar quarter of the term of this Agreement, a statement showing thecomputation of any Advisor Asset Management Fee payable to it during suchquarter under Section 9 hereof. The Advisor shall furnish to the Company notlater than the 30th day following the end of each Fiscal Year, a statementshowing a computation of: (i) the Incentive Advisory Fee, if any, payable inrespect of such Fiscal Year under Section 9 hereof; and (ii) the fees or othercompensation payable to the Advisor or an Affiliate of the Advisor with respectto such Fiscal Year under Sections 9 and 10 hereof. The final settlement orcompensation payable under Sections 9 and 10 hereof for each Fiscal Year shallbe subject to adjustments in accordance with, and upon completion of, theannual audit of the Company’s financial statements.

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# **12.**                               BUSINESS COMBINATION OFTHE COMPANY AND THE ADVISOR.

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## **a)****             **Fromand after September 15, 2008, the Company shall have the right, but not theobligation, to acquire the entire business, affairs, operations and assets ofthe Advisor (collectively, the “Advisor’s Business”) in whatever form agreedupon between the Company and the Advisor (a “Business Combination”), as setforth in writing between them (“Merger Agreement”). If the Company desires toacquire the Advisor’s Business in a Business Combination, the Company shallsend a written notice to the Advisor to that effect (“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 acertain number of shares of common stock of the Company as determined below(the “Shares”) to be issued to the Advisor, or its stockholders, members orother equity holders, as the case may be, in connection with the BusinessCombination. The Advisor represents to the Company that the Advisor hasobtained the consent of its board of directors and its shareholders to aBusiness Combination with the Company and that Advisor will obtain similarconsents from any future shareholders, members or other equity holders of theAdvisor.

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## **b)****             **Thenumber of Shares to be issued by the Company to the Advisor or itsshareholders, members or other equity holders as the case may be, shall bedetermined as follows: The net income of the Advisor for the calendar monthimmediately preceding the month in which the Merger Agreement is executed, asdetermined by an independent audit conducted in accordance with generallyaccepted auditing standards, shall be annualized (the “Annual Net Income”). TheAnnual Net Income shall then be multiplied by ninety percent (90%) and thendivided by the “Funds from Operations per Weighted Average Share” of theCompany.  “Funds from Operations perWeighted 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 quarterimmediately preceding the

 

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### month in which the Merger Agreement is executed, perweighted average Share of the Company for such quarter as stated in thequarterly report on Form 10-Q of the Company given to its shareholders for suchquarter.  The resulting quotient shallconstitute the number of Shares to be issued by the Company to the Advisor orits shareholders, members or other equity holders as the case may be, withdelivery thereof and the closing of the Business Combination to occur withinninety (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 froman investment banking or valuation firm to the effect that the consideration tobe paid for the Business Combination is fair, from a financial point of view,to the Company.

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# **13.**                               EXPENSES OF THECOMPANY.  The Company shall pay all of itsexpenses and shall reimburse the Advisor for its expenses as provided inSections 9 and 10 hereof and, without limiting the generality of the foregoing,it is agreed that the following expenses of the Company shall be paid by theCompany:

# ** **

## **a)****             **Tothe extent the Advisor is not expressly required to pay such expenses pursuantto this Agreement, salaries and other employment expenses of the personnelemployed by the Company, Directors’ fees and expenses incurred in attendingDirectors meetings, travel and other expenses incurred by Directors, officersand employees of the Company and the cost of Directors’ liability insurance;

##  

## **b)****             **Thecost of borrowed moneys;

##  

## **c)****             **Alltaxes applicable to the Company;

##  

## **d)****             **Legal,accounting, auditing, underwriting, brokerage, listing, registration and otherexpenses and taxes incurred in connection with the organization or terminationof the Company, the issuance, distribution, transfer, registration and stockexchange or quotation system listing of the Company’s securities;

##  

## **e)****             **Feesand expenses paid to advisors, independent contractors, the Management Agent,consultants, managers and other agents employed directly by the Company or bythe Advisor at the Company’s request for the account of the Company or byAffiliates of the Advisor, as provided above;

##  

## **f)****               **Expensesin connection with the acquisition, disposition, leasing and ownership ofinvestments, including to the extent not paid by others, but not limited to,legal fees and other expenses of professional services, maintenance, repair andimprovement of property and brokerage and sales commissions, expenses ofmaintaining and managing Real Property equity interests (including the fees andcharges of the Management Agent);

##  

## **g)****            **Allinsurance costs incurred in connection with the Company;

 

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## **h)****            **Expensesconnected with payments of dividends or interest or distributions in cash or inany form made or caused to be made by the Board of Directors to holders ofsecurities of the Company;

##  

## **i)****               **Allexpenses connected with communications to holders of securities of the Companyand the other bookkeeping and clerical work necessary in maintaining relationswith holders of securities and in complying with the continuous reporting andother requirements of governmental bodies or agencies, including the cost ofprinting and mailing certificates for securities and proxy solicitationmaterials and reports to holders of the Company’s securities;

##  

## **j)****               **Transferagent and registrar’s fees and charges; and

##  

## **k)****           **Expensesrelating to any office or office facilities maintained by the Company separatefrom the office or offices of the Advisor.

##  

# **14.**                               REIMBURSEMENT BYADVISOR.  The Advisor shall be obligatedto reimburse the Company in the following circumstances:

# ** **

## **a)****             **Onor before the 15th day after the completion of the annual audit of the Company’sfinancial statements for each Fiscal Year, the Advisor will reimburse theCompany for the amounts, if any, (i) by which the Total Operating Expenses(including the Advisor Asset Management Fee) of the Company for such FiscalYear exceeded the greater of: (a) 2% of the total of the Company’s AverageInvested Assets for such Fiscal Year; or (b) 25% of the Net Income for suchFiscal Year; PLUS (ii) equal to any deficit between the total amount ofdistributions to Stockholders for such Fiscal Year and the Current Return;provided, however, that the Company may instead permit such reimbursements tobe effected by a reduction in the amount of the monthly payments of compensationunder Section 9(a) hereof during the balance of the Fiscal Year next followingthe Fiscal Year with respect to which such reimbursement is to be made; andprovided, further, that only so much of such excess specified in clause (i) ofthis paragraph  (a) need be reimbursed asthe Board of Directors, including a majority of the Independent Directors ofthe Company, shall determine should justifiably be reimbursed in light of suchunanticipated, unusual or nonrecurring factors as may have occurred within 60 daysafter the end of an fiscal quarter of the Company for which Total OperatingExpenses  (for the 12 months then ended)exceeded 2% of Average Invested Assets or 25% of Net Income, whichever isgreater, and there shall be sent to the Stockholders a written disclosure ofsuch fact, together with an explanation of the factors the IndependentDirectors considered in arriving at the conclusion that such higher TotalOperating Expenses were justified.

##  

## **b)****             **Ifthe aggregate of all Offering Expenses attendant to the Offering (includingSelling Commissions and the Marketing Contribution and Due Diligence ExpenseAllowance) should exceed 15% of the Gross Offering Proceeds OR if the aggregateof all Offering Expenses (excluding any Selling Commissions)

 

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### should exceed 5.5% of the Gross Offering Proceeds, theAdvisor shall pay directly and/or cause its Affiliates to pay directly any suchexcess Offering Expenses incurred by the Company and the Company will have noliability for such excess expenses.

##  

# **15.**                               OTHER ACTIVITIES OF THEADVISOR.  Nothing herein contained shallprevent the Advisor or an Affiliate of the Advisor from engaging in any otherbusiness or activity including the rendering of services and investment advicewith respect to real estate investment opportunities to any other person orentity and the management of other investments (including the investments ofthe Advisor and its Affiliates).

# ** **

# **Directors, officers, employees and agents of theAdvisor or of Affiliates of the Advisor may serve as Directors, trustees,officers, employees or agents of the Company, but shall receive no compensation(other than reimbursement for expenses) from the Company for such service.**

# ** **

# **16.**                               TERM; TERMINATION OFAGREEMENT.  This Agreement shall have aninitial term of one year and, thereafter, will continue in force for successiveone year renewals with the mutual consent of the parties including anaffirmative vote of a majority of the Independent Directors. Each extensionshall be executed in writing by both parties hereto before the expiration ofthis Agreement or of any extension thereof.

# ** **

# **Notwithstanding any other provision of the Agreementto the contrary, either the Company or the Advisor may terminate thisAgreement, or any extension hereof, or the parties by mutual consent or amajority of the Independent Directors may do so, in each case upon 60 dayswritten notice without cause or penalty. In the event of the termination of theAgreement, the Advisor will cooperate with the Company and take all reasonablesteps requested to assist the Board of Directors in making an orderlytransition of the advisory function.**

# ** **

# **This Agreement shall terminate upon the consummationof a business combination involving the Advisor and the Company as described inSection 12.**

# ** **

# **If this Agreement is terminated pursuant to thisSection, such termination shall be without any further liability or obligationof either party to the other, except as provided in Section 19.**

# ** **

# **If this Agreement is terminated for any reason otherthan a business combination involving the Advisor and the Company as describedin Section 12, all obligations of the Advisor and its Affiliates to offerProperty to the Company for purchase, as described in Section 2(a), shall alsoterminate.**

 

15

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# **17.**                               ASSIGNMENTS.  The Company may terminate this Agreement inthe event of its assignment by the Advisor except an assignment to a successororganization which acquires substantially all of the property and carries onthe affairs of the Advisor, provided that following such assignment the personswho controlled the operations of the Advisor immediately prior thereto allcontrol the operations of the successor organization, including the performanceof its duties under this Agreement; however, if at any time subsequent to suchassignment such persons shall cease to control the operations of the successororganization, the Company may thereupon terminate this Agreement. ThisAgreement shall not be assignable by the Company without the consent of theAdvisor, except in the case of assignment by the Company to a corporation,trust or other organization which is a successor to the Company. Any assignmentof this Agreement shall bind the assignee hereunder in the same manner as theassignor is bound hereunder.

# ** **

# **18.**                               DEFAULT, BANKRUPTCY,ETC.  At the option solely of theCompany, this Agreement shall be terminated immediately upon written notice oftermination from the Board of Directors to the Advisor if any of the followingevents occurs:

# ** **

## **a)****             **TheAdvisor violates any provisions of this Agreement and after notice of suchviolation shall not cure such default within 30 days; or

##  

## **b)****             **Acourt of competent jurisdiction enters a decree or order for relief in respectof the Advisor in any involuntary case under the applicable bankruptcy,insolvency or other similar law now or hereafter in effect, or appoints areceiver liquidator, assignee, custodian, trustee, sequestrator (or similarofficial) of the Advisor or for any substantial part of its property or ordersthe winding up or liquidation of the Advisor’s affairs; or

##  

## **c)****             **TheAdvisor commences a voluntary case under any applicable bankruptcy, insolvencyor other similar law now or hereafter in effect, or consents to the entry of anorder for relief in an involuntary case under any such law, or consents to theappointment of or taking possession by a receiver, liquidator, assignee,custodian, trustee, sequestrator (or similar official) of the Advisor or forany substantial part of its property, or makes any general assignment for thebenefit of creditors, or fails generally to pay its debts as they become due.

##  

# **The Advisor agrees that if any of the eventsspecified in subsections(b) and (c) of this Section 18 occur, it will givewritten notice thereof to the Company within seven days after the occurrence ofsuch event.**

# ** **

# **19.**                               ACTION UPONTERMINATION.  The Advisor shall not beentitled to compensation after the date of termination of this Agreement forfurther services hereunder, but shall be paid all compensation accruing to thedate of termination. Subject to the provisions of Section 12, the Advisor shallforthwith upon a termination caused by factors other than the listing fortrading of the Shares on a national stock exchange or market:

 

16

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## **a)****             **Payover to the Company all moneys collected and held for the account of theCompany pursuant to this Agreement, after deducting any accrued compensationand reimbursement for its expenses to which it is then entitled;

##  

## **b)****             **Deliverto the Board of Directors a full accounting, including a statement showing allpayments collected by it and a statement of all money held by it, covering theperiod following the date of the last accounting furnished to the Board ofDirectors;

##  

## **c)****             **Deliverto the Board of Directors all property and documents of the Company then in thecustody of the Advisor; and

##  

## **d)****             **Cooperatewith the Company and take all reasonable steps requested by the Company toassist the Board of Directors in making an orderly transition of the Advisoryfunction.

##  

# **20.**                               CHANGE OF NAME.  The Company recognizes that the name and mark“Inland” have established prestige and goodwill and have acquired valuablesecondary meanings in the real estate and related industries and in the mind ofthe public. The Company desires to associate itself with and benefit from the “Inland”name, and in consideration of the grant by the Advisor and its Affiliates of aperpetual royalty free license to the Company (which license has beenauthorized), subject to the conditions set forth in this Section 20, to use thename and mark “Inland” in connection with a real estate investment trustthroughout the United States, its territories and possessions, the Company agreesthat:

# ** **

## **a)****             **Thevalue of the “Inland” name cannot be reasonably and adequately compensated forin damages in action at law and unauthorized use of the “Inland” name willcause irreparable injury and damage to the Advisor and its Affiliates. TheAdvisor or its Affiliates shall be entitled as a matter of right to injunctiverelief to prevent the use of the “Inland” name by the Company in the event ofthe circumstances described in Subsection (d) below.

##  

## **b)****             **TheCompany agrees to use the “Inland” name and mark in a manner which will protectthe right of the Advisor and its Affiliates therein and such use shall be aslicensee for the account and benefit of the Advisor and its Affiliates. To theextent any rights in the name or mark “Inland” are deemed to accrue to theCompany, the Company hereby assigns any and all such rights to the Advisor andits Affiliates at such time as they may be deemed to accrue.

##  

## **c)****             **Nothingcontained in this Agreement shall be construed an assignment or grant to theCompany of any right, title or interest in or to the name or mark “Inland” orany other trademarks, trade names or related service marks, insignias, logos,designs and color schemes, it being understood that all rights relating theretoare reserved by the Advisor and its Affiliates, except for the licensehereunder to the Company of the rights to use the name or mark as specificallyand expressly provided herein. The Company agrees to cooperate fully and ingood faith with the Advisor and its Affiliates, at the expense of the Advisorand its Affiliates, in

 

17

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### securing and preserving the rights of the Advisor andits Affiliates in and to the name and mark “Inland” and to assist the Advisorand its Affiliates in executing and causing to be recorded such documents asmay be necessary or desirable to evidence, protect and implement the rights ofthe Advisor and its Affiliates pursuant to this Agreement.

##  

## **d)****             **Atsuch time as the Advisor is no longer providing services to the Companypursuant to this Agreement for some reason other than the consummation of abusiness combination described in Section 12, the Board of Directors will uponthe request of the Advisor and its Affiliates, promptly cause the name of theCompany to be changed in perpetuity to a name which does not include anyreference to the name “Inland” or any successor thereof. Without limiting thegenerality of the foregoing, upon termination of this Agreement by either partyfor some reason other than the consummation of a business combination describedin Section 12, the Board of Directors will promptly cause the name of theCompany to be changed in perpetuity to a name which does not include anyreferences to the name “Inland” or any successor thereof.

##  

# **21.**                               AMENDMENTS.  This Agreement shall not be amended, changed,modified, terminated or discharged in whole or in part except by an instrumentin writing signed by both parties hereto, or their respective successors orassigns, or otherwise provided herein.

# ** **

# **22.**                               SUCCESSORS ANDASSIGNS.  This Agreement shall bind anysuccessors or assigns of the parties hereto as herein provided.

# ** **

# **23.**                               GOVERNING LAW.  The provisions of this Agreement shall begoverned, construed and interpreted in accordance with the laws of the State ofIllinois as at the time in effect.

# ** **

# **24.**                               LIABILITY ANDINDEMNIFICATION.

# ** **

## **a)****             **TheCompany shall, to the fullest extent permitted by Maryland statutory ordecisional law, as amended or interpreted, and, without limiting the generalityof the foregoing, in accordance with Section 2418 of the General CorporationLaw of Maryland, indemnify and pay or reimburse reasonable expenses to theAdvisor and its Affiliates, provided, that: (i) the Advisor or other partyseeking indemnification has determined, in good faith, that the course ofconduct which caused the loss or liability was in the best interests of theCompany; (ii) the Advisor or other person seeking indemnification was acting onbehalf of or performing services on the part of the Company; (iii) suchliability or loss was not the result of negligence or misconduct on the part ofthe indemnified party; and (iv) such indemnification or agreement to be heldharmless is recoverable only out of the assets of the Company and not from theStockholders thereof.

##  

## **b)****             **TheCompany shall not indemnify the Advisor or its Affiliates for losses,liabilities or expenses arising from or out of an alleged violation of federalor state securities laws by such party unless one or more of the following

 

18

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### conditions are met: (i) there has been a successfuladjudication on the merits of each count involving alleged securities lawviolations as to the particular indemnitee; (ii) such claims have beendismissed with prejudice on the merits by a court of competent jurisdiction asto the particular indemnitee; or (iii) a court of competent jurisdictionapproves a settlement of the claims and finds that indemnification of thesettlement and related costs should be made and the court considering therequest has been advised of the position of the Securities and ExchangeCommission and the published opinions of any state securities regulatoryauthority in which securities of the Company were offered and sold with respectto the availability or propriety of indemnification for securities lawviolations.

##  

## **c)****             **TheCompany may advance amounts to persons entitled to indemnification hereunderfor legal and other expenses and costs incurred as a result of any legal actionfor which indemnification is being sought only if all of the followingconditions are satisfied: (i) the legal action relates to acts or omissionswith respect to the performance of duties or services by the indemnified partfor or on behalf of the Company; (ii) the legal action is initiated by a thirdparty and a court of competent jurisdiction specifically approves suchadvancement; and  (iii) the indemnifiedparty receiving such advances undertakes to repay the advanced funds to theCompany, together with the applicable legal rate of interest thereon, in anycase(s) in which such party is found not to be entitled to indemnification.

##  

# **25.**                               NOTICES.  Any notice, report or other communicationrequired or permitted to be given hereunder shall be in writing unless someother method of giving such notice, report or other communication is acceptedby the party to whom it is given and shall be given by being delivered at thefollowing addresses of the parties hereto:

# ** **

TheCompany and/or the Board of Directors:

 

InlandWestern Retail Real Estate Trust, Inc.

2901Butterfield Road

OakBrook, Illinois 60523

Attention:Ms. Roberta S. Matlin, Vice President

 

TheAdvisor:

 

InlandWestern Retail Real Estate Advisory Services, Inc.

2901Butterfield Road

OakBrook, Illinois 60523

Attention:President

 

# **Either party may at any time give notice in writingto the other party of a change of its address for the purpose of this Section25.**

 

19

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# **26.**                               CONFLICTS OF INTEREST ANDFIDUCIARY DUTIES TO THE COMPANY AND TO THE COMPANY’S STOCKHOLDERS.  The Company and the Advisor recognize thattheir relationship is subject to various conflicts of interest as set forth inthe Prospectus. The Advisor, on behalf of itself and its Affiliates, acknowledgesthat the Advisor and its Affiliates have fiduciary duties to the Company and tothe Company’s Stockholders. The Advisor, on behalf of itself and itsAffiliates, represents and agrees (i) that the Advisor and its Affiliates willendeavor to balance the interests of the Company with the interests of theAdvisor and its Affiliates in making any determination where a conflict ofinterest exists between the Company and the Advisor or its Affiliates; and (ii)that the actions and decisions of the Advisor and its Affiliates under thisAgreement (including but not limited to actions and decisions in connectionwith the purchase of Properties for the Company) will be made in the mannermost favorable to the Company and to the Company’s Stockholders, so as not tobreach their respective fiduciary duties to the Company and to the Company’sStockholders.

# ** **

# **27.**                               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.

 

 

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK]

 

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IN WITNESSWHEREOF, the undersigned have executed this First Amended and Restated AdvisoryAgreement as of the date first above written.

 
|   | **COMPANY:**                                              |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   | INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.             |
|   |                                                      |
|   |                                                      |
|   | By: /s/ Roberta S. Matlin                                 |   |
|   | Title: Vice President - Administration                    |
|   |                                                      |
|   |                                                      |
|   | **ADVISOR:**                                              |
|   |                                                      |
|   | INLAND WESTERN RETAIL REAL ESTATE ADVISORY SERVICES, INC. |
|   |                                                      |
|   |                                                      |
|   | By: /s/ Robert D. Parks                                   |   |
|   | Title: President                                          |

 

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