**Exhibit 10.2.2**

 

**SECOND AMENDED AND RESTATED**

**ADVISORY AGREEMENT**

 

This SECOND AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”)is made as of December 28, 2004 between Inland Western Retail Real EstateTrust, Inc., a Maryland corporation (the “Company”), and Inland Western RetailReal Estate Advisory Services, Inc., an Illinois corporation (the “Advisor”).

 

WI T N E S S E T H:

 

WHEREAS, the Company and theAdvisor have agreed to enter into this Agreement to cause the Advisor toprovide certain services with respect to the Property (as defined below) onbehalf of the Company; and

 

NOW, THEREFORE, in consideration of the mutual covenants herein setforth, the parties hereto agree as follows:

 

1.             DEFINITIONS. As used herein, the followingterms shall have the meanings set forth below:

 

**a)**     “Acquisition Expenses” means expenses related to the Company’sselection, evaluation and acquisition of, and investment in, properties,whether or not acquired or made, including but not limited to legal fees andexpenses, travel and communications expenses, cost of appraisals and surveys,nonrefundable option payments on property not acquired, accounting fees andexpenses, computer use related expenses, architectural and engineering reports,environmental and asbestos audits, title insurance and escrow fees, loan feesor points or any fee of a similar nature, however designated, and personnel andmiscellaneous expenses related to the selection and acquisition of properties.Acquisition Expenses will accrue and be paid on Properties purchased with theGross Offering Proceeds and proceeds of Shares sold via the Company’sDistribution Reinvestment Program, as well as on the entire purchase price ofall Properties including any acquisition financing related thereto.  

 

**b)****    **“Advisor Asset Management Fee” means anamount equal to 1% of the Average Invested Assets.

 

**c)**     “Affiliate” means, with respect to any other Person: (i) any Persondirectly or indirectly owning, controlling or holding, with the power to vote10% or more of the outstanding voting securities of such other Person; (ii) anyPerson 10% or more of whose outstanding voting securities are directly orindirectly owned, controlled or held, with the power to vote, by such otherPerson; (iii) any Person directly or indirectly controlling, controlled by orunder common control with such other Person; (iv) any executive officer,director, trustee or general partner of such other Person; and (v) any legalentity for which such Person acts as an executive officer, director, trustee orgeneral partner.

 

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**d)**     “Affiliated Directors” means those Directors of the Company who areaffiliated with the Company or its Affiliates.

 

**e)**     “Articles of Incorporation” means the Articles of Incorporation of theCompany, as amended from time to time.

 

**f)**     “Average Invested Assets” means, for any period, the average of theaggregate Book Value of the assets of the Company invested, directly orindirectly, in equity interests and in loans secured by real estate, beforereserves for depreciation or bad debts or other similar noncash reserves,computed by taking the average of such values at the end of each month duringsuch period.

 

**g**)    “Board of Directors” means the board ofdirectors of the Company.

 

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

 

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

 

**j)**     “Company Fixed Assets” means the real estate, together with thebuildings, leasehold interests, improvements, equipment, furniture, fixturesand personal property associated therewith, used by the Company in the conductof its business.

 

**k)**    “Competitive Real Estate Commission” means the real estate or brokeragecommission paid for the purchase or sale of a Property which is reasonable,customary and competitive in light of the size, type and location of suchProperty.

 

**l)**     “Contract Price for the Property” means the amount actually paid orallocated to the purchase, development, construction or improvement of aProperty exclusive of Acquisition Expenses.

 

**m)**   “Cumulative Return” means a cumulative, non-compounded return, equal to10% per annum on Invested Capital commencing upon acceptance of the investor’ssubscription.

 

**n)**    “Current Return” means a noncumulative, non-compounded return, equal to6% per annum on Invested Capital.

 

**o)**     “Fiscal Year” means any period for which any income tax return issubmitted by the Company to the Internal Revenue Service and which is treatedby the Internal Revenue Service as a reporting period.

 

**p)****    **“Gross Dollars Invested in Properties” meansthe amount actually paid or allocated to the purchase, development,construction or improvement of Properties acquired by the Company.

 

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**q)****    **“Gross Offering Proceeds” means the totalproceeds from the sale of the 250,000,000 Shares offered on “best efforts”basis during the public offering period before deductions for OfferingExpenses. For purposes of calculating Gross Offering Proceeds, the purchaseprice for all Shares, including those for which volume discounts apply, shallbe deemed to be $10 per Share. Unless specifically included, Gross OfferingProceeds does not include the total proceeds from the sale of up to 20,000,000Shares under the Company’s Distribution Reinvestment Program during the publicoffering period, the purchase price for which shall be $9.50 per Share;

 

**r)**     “Gross Revenues From Properties” means all cash receipts derived fromthe operation of Company Fixed Assets.

 

**s)**     “Incentive Advisory Fee” means an amount equal to 15% of the netproceeds from the sale of a Property after the Stockholders have firstreceived: (i) their Cumulative Return; and (ii) a return of their InvestedCapital.

 

**t)**     “Independent Directors” means the Directors of the Company who: (i) arenot affiliated and have not been affiliated within the two years prior to theirbecoming an Independent Director, directly or indirectly, with the Company, theSponsor or the Advisor, whether by ownership of, ownership interest in,employment by, any material business or professional relationship with, or asan officer or director of the Company, the Sponsor, the Advisor or any of theirAffiliates; (ii) do not serve as a director for more than two other REITsorganized by the Company or the Advisor or advised by the Advisor; and (in)perform no other services for the Company, except as Directors. For thispurpose, an indirect relationship shall include circumstances in which a memberof the immediate family of a Director has one of the foregoing relationshipswith the Company, the Sponsor or the Advisor or any of their Affiliates. Forpurposes of determining whether or not the business or professionalrelationship is material, the aggregate gross revenue derived by theprospective Independent Director from the Company, the Sponsor, the Advisor andtheir Affiliates shall be deemed material PER SE if it exceeds five percent ofthe prospective Independent Director’s; (i) annual gross revenue, derived fromall sources, during either of the last two years; or (ii) net worth, on a fairmarket value basis.

 

**u)**    “Invested Capital” means the original issue price paid for the Sharesreduced by prior distributions from the sale or financing of the Company’sProperties.

 

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

 

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

 

**x)**     “Management Agent” means an entity which provides property rental,leasing, operation and management services to the Company. The Management Agentis

 

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collectively, Inland USManagement LLC, Inland Southwest Property Management LLC and Inland PacificProperty Management LLC, each an Affiliate of the Advisor, or anyone whichsucceeds any of them in such capacity.

 

**y)**     “Net Income” means, for any period, total revenues applicable to suchperiod, less the expenses applicable to such period other than additions to orallowances for reserves for depreciation, amortization or bad debts or othersimilar noncash reserves; provided, however, that Net Income shall not includethe gain from the sale of the Company’s assets.

 

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

 

**aa)**   “Offering Expenses” means all those expenses incurred by and to be paidfrom the assets of the Companyin connection with and in preparing the Company for registration and subsequently offering anddistributing Shares to the public, including,but not limited to, total underwriting and brokerage discounts and commissions (including fees and expenses ofunderwriters and their accountants andattorneys paid by the Company), expenses for printing, engraving, mailing,salaries of the Company’s employeeswhile engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holders, depositaries,experts, expenses ofqualification of the sale of the securities under federal and state laws,including taxes and fees, andaccountants’ and attorneys’ fees and expenses.  

 

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

 

**cc)****  **“Primary Geographical Area of Investment” ofthe Company means the states west of the Mississippi River in the UnitedStates.

 

**dd)**   “Property” or “Properties” means any, or all, respectively, of the realproperty and improvements thereon owned or to be owned by the Company, directlyor indirectly.

 

**ee)**   “Property Disposition Fee” means a real estate disposition fee, payable(under certain conditions) to the Advisor and its Affiliates upon the sale ofthe Company’s Property in an amount equal to the lesser of: (i) 3% of thecontracted for sales price of the Property; or (ii) 50% of the commission paidto third parties which is reasonable, customary and competitive in light of thesize, type and location of such Property.

 

**ff)****   **“Property Management Fee” means any fee paidto an Affiliate or third party as compensation for management of the Company’sProperties. The Property Management Fee shall be equal to not more than 90% ofthe fee which would be payable to an unrelated party providing such services,which fee shall initially be 4.5% of the gross revenues from the Properties.

 

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**gg)**** **“Prospectus” means the final prospectus ofthe Company in connection with the registration of Shares filed with theSecurities and Exchange Commission on Form S-11, as amended and supplemented.

 

**hh)**  “Real Property” means improved and unimproved land, improvements,furniture and fixtures located on or used in connection with, land and anyinterest in any of the foregoing, including an interest in air and subterraneanor mineral rights.

 

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

 

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

 

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

 

**ll)****   **“Shopping Center” means a group of commercialestablishments planned, developed, owned and managed as a unit related inlocation, size and type of shops to the trade area the unit serves. It provideson-site parking in definite relationship to the types and sizes of stores. “Sponsor”means IREIC.

 

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

 

**nn)**  “Total Operating Expenses” means the aggregate expenses of everycharacter paid or incurred by the Company as determined under generally acceptedaccounting principles, including Advisor Asset Management Fees, but excluding:

 

**i)**  the expenses of raising capitalsuch as Offering Expenses, legal, audit, accounting, underwriting, brokerage,listing, registration and other fees, printing and other such expenses, andtaxes incurred in connection with the issuance, distribution, transfer,registration and stock exchange listing of the Shares;

 

**ii)** interest payments;

 

**iii)** taxes;

 

**iv)** noncash expenditures such asdepreciation, amortization and bad debt reserves;

 

**v)** the incentive Advisory Fee payable tothe Advisor; and

 

**vi)** Acquisition Expenses, real estatecommissions on resale of Real Property and other expenses connected with theacquisition, disposition and ownership of real estate interests, mortgage loansor other property (such as the costs of foreclosure, insurance premiums, legalservices, maintenance, repair and improvement of Real Property).

 

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**2.**             DUTIES OF ADVISOR. The Advisor shall consultwith the Company and shall, at the request of the Board of Directors or theofficers of the Company, furnish advice and recommendations with respect to allaspects of the business and affairs of the Company. In general, the Advisorshall inform the Board of Directors of factors which come to its attentionwhich would influence the policies of the Company. Subject to the supervisionof the Board of Directors and consistent with the provisions of the Articles ofIncorporation, the Advisor shall use its best efforts to:

 

**a)**     Present to the Company a continuing and suitable real estate investmentprogram and opportunities to make investments in Real Properties consistent withthe investment policies of the Company and the investment program adopted bythe Board 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 of thatcertain Property Acquisition Service Agreement, dated the date hereof, amongIWRREAI, the Advisor, and the Company (the “Property Acquisition ServiceAgreement”), as the same may be amended from time to time. To the extent possible,the resolution of conflicting investment opportunities between the Company andother investment entities advised or managed by the Advisor and its Affiliatesfor a prospective investment opportunity (a “Proposed Property”) will be resolvedby giving priority to the Company, provided that the Proposed Property meetsthe acquisition criteria of the Company. The Property Acquisition Service Agreementgrants the Company the first opportunity to purchase such Proposed Propertywhich is placed under contract by IREAI, the Advisor or its Affiliates,provided the Company is able to close the purchase of the Proposed Propertywithin 60 days. Other factors which may be considered in connection withevaluating the suitability of the Proposed Property for investment include:

 

**i)**   the effect of theacquisition on the diversification of each entity’s portfolio; (ii) the amountof funds available for investment;

 

**ii)   **cash flow; and

 

**iii)**  the estimated income tax effectsof the purchase and subsequent disposition. The Independent Directors of theCompany must, by a majority vote, approve all actions by the Advisor or itsAffiliates which present potential conflicts with the Company as set forth inthe Property Acquisition Service Agreement.

 

**b)**     Manage the Company’s day-to-day investment operations, subject to thefinal paragraph of this Section 2, to effect the investment program adopted bythe Board of Directors 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)**     Serve as the Company’s investment advisor, subject to the finalparagraph of this Section 2, in connection with policy decisions to be made bythe Board of Directors and, as requested, furnish reports to the Board ofDirectors and provide research, economic and statistical data in connectionwith the Company’s investments and investment policies;

 

**d)**     On behalf of the Company, investigate, select and conduct relationswith 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 with investmentswhich have been or may be acquired or disposed of by the Company;

 

**e)**     Cooperate with the Management Agent in connection with property managementservices and other activities relating to the Company’s assets as the Advisorshall deem appropriate in the particular circumstances, subject to the requirementthat the 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;

 

**f)**     Upon request of the Company, act, or obtain the services of others toact, as attorney-in-fact or agent of the Company in making, acquiring anddisposing of investments, disbursing, and collecting the funds, paying thedebts and fulfilling the obligations of the Company and handling, prosecutingand settling any claims of the Company, including foreclosing and otherwiseenforcing mortgage and other liens and security interests securing investments;

 

**g)**    Assist in negotiations on behalf of the Company with investment bankingfirms and other institutions or investors for public or private sales ofsecurities of the Company or for other financing on behalf of the Company, butin no event in such a way that the Advisor shall be acting as a broker, dealer,underwater or investment advisor in securities of or for the Company;

 

**h)**    Maintain, with respect to any Real Property and to the extentavailable, title insurance or other assurance of title and customary fire,casualty and public liability insurance;

 

**i)**     Upon request of the Board of Directors, and subject to the finalparagraph of this Section 2, invest and reinvest any money of the Company;

 

**j)****   **Supervise the preparation and filing anddistribution of returns and reports to governmental agencies and to investorsand act on behalf of the Company in connection with investor relations;

 

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**k)****   **Provide office space, equipment and personnelas required for the performance of the foregoing services as Advisor;

 

**1)**    Advise the Company of the operating results of the Company properties,to cause the Manager to prepare on a timely basis, and to review, for suchproperties operating budgets, maintenance and improvement schedules, one, threeand five year projections of operating results and such other reports as may beappropriate;

 

**m)**   As requested by the Company, make reports to the Company of itsperformance of the foregoing services and furnish advice and recommendationswith respect to other aspects of the business of the Company;

 

**n)****   **Prepare on behalf of the Company all reportsand returns required by the Securities and Exchange Commission, InternalRevenue Service and other state or federal governmental agencies;

 

**o)****    **Undertake and perform all services or otheractivities necessary and proper to carry out the investment objectives of theCompany; and

 

**p)**     Undertake communications with Stockholders in accordance withapplicable law and the Articles of Incorporation, provided, however, thatAffiliates of the Advisor have no obligations to the Company other than asexpressly stated herein, and the Advisor and its Affiliates have no obligationsto present to the Company any specific investment opportunity except asdescribed in the Prospectus. In providing advice and services as provided insubparagraphs (a) through (p) above of this Section 2, the Advisor shall not(i) engage in any activity which would require it to be registered as an “InvestmentAdvisor,” as that term is defined in the Investment Advisors Act of 1940 OR inany state securities law or (ii) cause the Company to make such investments aswould cause the Company to become an “Investment Company,” as that term isdefined in the Investment Company Act of 1940.

 

**3.**             NO PARTNERSHIP OR JOINT VENTURE. The Companyand the Advisor are not, and shall not be deemed to be, partners or jointventurers with each other.

 

**4.**             RECORDS. The Advisor shall maintainappropriate books of account and records relating to services performedhereunder, which shall be accessible for inspection by the Company at any timeduring ordinary business hours.

 

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**5.**             REIT QUALIFICATIONS. Notwithstanding an*y*otherprovision of this Agreement to the contrary, the Advisor shall refrain from anyaction which, in its reasonable judgment or in any judgment of the Board ofDirectors of which the Advisor has written notice, would adversely affect thequalification of the Company as a REIT under the Code or which would violateany law, rule or regulation of any governmental body or agency having jurisdictionover the Company or its securities, or which would otherwise not be permittedby the Articles of Incorporation. If any such action is ordered by the Board ofDirectors, the Advisor shall promptly notify the Board of Directors of theAdvisor’s judgment that such action would adversely affect such status orviolate any such law, rule or regulation or the Articles of Incorporation and shallrefrain from taking such action pending further clarification or instructionfrom the Board of Directors.

 

**6.**             BANK ACCOUNTS. At the direction of the Boardof Directors, the Advisor may establish and maintain bank accounts in the nameof the Company, and may collect and deposit into and disburse from suchaccounts moneys on behalf of the Company, upon such terms and conditions as theBoard of Directors may approve, provided mat no funds in any such account shallbe commingled with funds of the Advisor. The Advisor shall from time to time,as the Company may require, render appropriate accountings of such collections,deposits and disbursements to the Board of Directors and to the auditors of theCompany.

 

**7.**             FIDELITY BOND. The Advisor shall not berequired to obtain or maintain a fidelity bond in connection with theperformance of its services hereunder.

 

**8.**             INFORMATION FURNISHED ADVISOR. The Board ofDirectors will keep the Advisor informed in writing concerning the investmentand financing policies of the Company. The Board of Directors shall notify theAdvisor promptly in writing of its intention to make any investments or to sellor dispose of any existing investments. The Company shall furnish the Advisorwith a 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.

 

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

 

**a)**     Acquisition Expenses, for the expenses attendant to Propertyacquisitions, in an aggregate amount not in excess of 0.5% of (i) the GrossOffering Proceeds, and (ii) the gross proceeds from the sale of up to20,000,000 Shares pursuant to the Company’s Distribution Reinvestment Program, PROVIDEDTHAT the Acquisition Expenses respecting any specific Property acquired by the Companyshall not exceed 6% of the gross purchase price of that Property;

 

**b)**     An Advisor 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)**     Reimbursement for the cost to the Advisor and its Affiliates for:

 

**i)**     the cost to the Advisor or its Affiliates of goods and services usedfor and by the Company and obtained from unaffiliated parties; and

 

**ii)**    administrative services related thereto. “Administrative Services”include ministerial services such as typing, record keeping, preparation anddissemination of Company reports, preparation and maintenance of recordsregarding Stockholders, record keeping and administration of the Company’sDistribution Reinvestment and Share Repurchase Programs, preparation anddissemination of responses to Stockholder inquiries and other communications withStockholders and any other record keeping required for Company purposes. Suchreimbursements are subject to limitations imposed by Sections 10(b) and (c)hereof;

 

**d)**     An Incentive Advisory Fee equal to 15% of the remaining proceeds fromthe sale of Real Properties after the Stockholders have first received: (i)their Cumulative Return; and (ii) the return of their Invested Capital. At suchtime as the business of the Advisor is acquired by or consolidated into theCompany pursuant to Section 12 hereof, the Incentive Advisory Fee shall alsoterminate;

 

**e)**     A Property Disposition Fee, payable upon the sale of a Real Propertyequal to the lesser of: (i) 3% of the contracted for sales price of the RealProperty or (ii) 50% of the commission paid to third parties which isreasonable, customary and competitive in light of the size, type and locationof such property (“Competitive Real Estate Commission”). The amount paid to theAdvisor, when added to the sums paid to unaffiliated parties, shall not exceedthe lesser of the Competitive Real Estate Commission or an amount equal to 6%of the contracted for sales price. Payment of such Property Disposition Feeshall be made only if the Advisor provides a substantial amount of services in connectionwith the sale of the particular parcel(s) of Real Property; and

 

**f)**     The compensation and reimbursements paid by the Company to the Advisorand its Affiliates shall be approved by a majority of the Directors (includinga majority of the Independent Directors), as being fair and reasonable to the Companyand not less favorable to the Company than would be available from anunaffiliated source.

 

**10.**          COMPENSATION FOR ADDITIONAL SERVICES, CERTAIN LIMITATIONS.

 

**a)**     If the Company shall request the Advisor or its Affiliates to renderservices for the Company other than those required to be rendered by theAdvisor hereunder, such additional services, if performed, will be compensatedseparately on terms to be agreed upon between such party and the Company fromtime to time in accordance with this Section. The rate of compensation for suchservices and any reimbursements to be paid by the Company to the Advisor andits 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.

 

**b)**     In extraordinary circumstances fully justified to the official oragency administering 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:

 

**i)****    **the goods or services must be necessary tothe prudent operation of the Company;

 

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

 

**iii)****  **if at least 95% of gross revenues attributable to the business ofrendering such services or selling or leasing such goods are derived frompersons other than Affiliates, the compensation, price or fee charged by anunaffiliated person who is rendering comparable services or selling or leasingcomparable goods must be on competitive terms in the same geographic location.Extraordinary circumstances shall be presumed only when there is an emergencysituation requiring immediate action by the Advisor or its Affiliates and thegoods or services are not immediately available from unaffiliated parties.Services which may be performed in such extraordinary circumstances includeemergency maintenance of Company properties, janitorial and other relatedservices due to strikes or lockouts, emergency tenant evictions and repairservices which require immediate action, as well to operating and releasingproperties with respect to which the leases are in default or have beenterminated.

 

**c)**     Permitted reimbursements shall include salaries and related salaryexpenses for nonsupervisory services which could be performed directly for theCompany by independent parties such as legal, accounting, transfer agent, dataprocessing and duplication. The Advisor believes that the employees of theAdvisor and its Affiliates who may perform services for the Company for whichreimbursement is allowed pursuant to Section 10(b) or 10(c), will have theexperience and educational background, in their respective fields of expertise,appropriate for the performance of any such services.

 

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**11.**          STATEMENTS. The Advisor shall furnish to the Company not later than the10th day of each calendar quarter, beginning with the second calendar quarterof the term of this Agreement, a statement showing the computation of anyAdvisor Asset Management Fee payable to it during such quarter under Section 9hereof. The Advisor shall furnish to the Company not later than the 30th dayfollowing the end of each Fiscal Year, a statement showing a computation of:(i) the Incentive Advisory Fee, if any, payable in respect of such Fiscal Year underSection 9 hereof; and (ii) the fees or other compensation payable to theAdvisor or an Affiliate of the Advisor with respect to such Fiscal Year underSections 9 and 10 hereof. The final settlement or compensation payable underSections 9 and 10 hereof for each Fiscal Year shall be subject to adjustmentsin accordance with, and upon completion of, the annual audit of the Company’sfinancial statements.

 

**12.**          BUSINESS COMBINATION OF THE COMPANY AND THE ADVISOR.

 

**a)**     From and after September 15, 2008, the Company shall have the right,but not the obligation, to acquire the entire business, affairs, operations andassets of the Advisor (collectively, the “Advisor’s Business”) in whatever formagreed upon between the Company and the Advisor (a “Business Combination”), asset forth in writing between them (“Merger Agreement”). If the Company desiresto acquire the Advisor’s Business in a Business Combination, the Company shallsend a written notice to the Advisor to that effect (“Election Notice”). Anyagreement with respect to a Business Combination shall contain provisionsproviding for: (i) the termination of this Agreement and all Advisory Agreementsentered into pursuant hereto and the release or waiver of all fees payable bythe Company to the Advisor under the Advisory Agreements (except for thepayment of fees due and payable under the Advisory Agreements for servicesrendered by the Advisor up to and until the consummation of the BusinessCombination); and (ii) the issuance of a certain number of shares of commonstock of the Company as determined below (the “Shares”) to be issued to theAdvisor, or its stockholders, members or other equity holders, as the case maybe, in connection with the Business Combination. The Advisor represents to theCompany that the Advisor has obtained the consent of its board of directors andits shareholders to a Business Combination with the Company and that Advisorwill obtain similar consents from any future shareholders, members or otherequity holders of the Advisor.

 

**b)**     The number 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 per Weighted Average Share” shall be equal tothe annualized Funds from Operations, on the basis of four (4) times the Fundsfrom Operations for the fiscal quarter immediately preceding the

 

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month in which the MergerAgreement is executed, per weighted average Share of the Company for suchquarter as stated in the quarterly report on Form 10-Q of the Company given toits shareholders for such quarter. The resulting quotient shall constitute thenumber of Shares to be issued by the Company to the Advisor or itsshareholders, members or other equity holders as the case may be, with deliverythereof and the closing of the Business Combination to occur within ninety (90)days after the date the Election Notice is given to Advisor. Any suchtransaction will occur, if at all, only if the Board of Directors of theCompany obtains a fairness opinion from an investment banking or valuation firmto the effect that the consideration to be paid for the Business Combination isfair, from a financial point of view, to the Company.

 

**13.****         **EXPENSES OF THE COMPANY. The Company shallpay all of its expenses and shall reimburse the Advisor for its expenses asprovided in Sections 9 and 10 hereof and, without limiting the generality ofthe foregoing, it is agreed that the following expenses of the Company shall bepaid by the Company:

 

**a)**     To the extent the Advisor is not expressly required to pay suchexpenses pursuant to this Agreement, salaries and other employment expenses ofthe personnel employed by the Company, Directors’ fees and expenses incurred inattending Directors meetings, travel and other expenses incurred by Directors, officersand employees of the Company and the cost of Directors, liability insurance;

 

**b)****    **The cost of borrowed moneys;

 

**c)**     All taxes applicable to the Company;

 

**d)**     Legal, accounting, auditing, underwriting, brokerage, listing,registration and other expenses and taxes incurred in connection with theorganization or termination of the Company, the issuance, distribution, transfer,registration and stock exchange or quotation system listing of the Company’ssecurities;

 

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

 

**f)**     Expenses in connection with the acquisition, disposition, leasing andownership of investments, including to the extent not paid by others, but notlimited to, legal fees and other expenses of professional services,maintenance, repair and improvement of property and brokerage and salescommissions, expenses of maintaining and managing Real Property equityinterests (including the fees and charges of the Management Agent);

 

**g)****   **All insurance costs incurred in connectionwith the Company;

 

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**h)**    Expenses connected with payments of dividends or interest ordistributions in cash or in any form made or caused to be made by the Board ofDirectors to holders of securities of the Company;

 

**i)**     All expenses connected with communications to holders of securities ofthe Company and the other bookkeeping and clerical work necessary in maintainingrelations with holders of securities and in complying with the continuousreporting and other requirements of governmental bodies or agencies, includingthe cost of printing and mailing certificates for securities and proxysolicitation materials and reports to holders of the Company’s securities;

 

**j)**     Transfer agent and registrar’s fees and charges; and

 

**k)**    Expenses relating to any office or office facilities maintained by theCompany separate from the office or offices of the Advisor.

 

**14.**          REIMBURSEMENT BY ADVISOR. The Advisor shall be obligated to reimbursethe Company in the following circumstances:

 

**a)**     On or before the 15th day after the completion of the annual audit ofthe Company’s financial statements for each Fiscal Year, the Advisor will reimbursethe Company 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 ofcompensation under Section 9(a) hereof during the balance of the Fiscal Yearnext following the Fiscal Year with respect to which such reimbursement is tobe made; and provided, further, that only so much of such excess specified inclause (i) of this paragraph  (a) need bereimbursed as the Board of Directors, including a majority of the IndependentDirectors of the Company, shall determine should justifiably be reimbursed inlight of such unanticipated, unusual or nonrecurring factors as may haveoccurred within 60 days after the end of an fiscal quarter of the Company forwhich Total Operating Expenses (for the 12 months then ended) exceeded 2% ofAverage Invested Assets or 25% of Net Income, whichever is greater, and thereshall be sent to the Stockholders a written disclosure of such fact, togetherwith an explanation of the factors the Independent Directors considered inarriving at the conclusion that such higher Total Operating Expenses werejustified.

 

**b)**     If the aggregate of all Offering Expenses attendant to the Offering(including Selling Commissions and the Marketing Contribution and Due DiligenceExpense Allowance) should exceed 15% of the Gross Offering Proceeds OR if theaggregate of all Offering Expenses (excluding any Selling Commissions)

 

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

 

**15.****         **OTHER ACTIVITIES OF THE ADVISOR. Nothingherein contained shall prevent the Advisor or an Affiliate of the Advisor fromengaging in any other business or activity including the rendering of servicesand investment advice with respect to real estate investment opportunities toany other person or entity and the management of other investments (including theinvestments of the Advisor and its Affiliates).

 

Directors, officers,employees and agents of the Advisor or of Affiliates of the Advisor may serveas Directors, trustees, officers, employees or agents of the Company, but shallreceive no compensation (other than reimbursement for expenses) from theCompany for such service.

 

**16.****         **TERM; TERMINATION OF AGREEMENT. ThisAgreement shall have an initial term of one year and, thereafter, will continuein force for successive one year renewals with the mutual consent of the partiesincluding an affirmative vote of a majority of the Independent Directors. Eachextension shall be executed in writing by both parties hereto before theexpiration of this Agreement or of any extension thereof.

 

Notwithstandingany other provision of the Agreement to the contrary, either the Company or theAdvisor may terminate this Agreement, or any extension hereof, or the partiesby mutual consent or a majority of the Independent Directors may do so, in eachcase upon 60 days written notice without cause or penalty. In the event of thetermination of the Agreement, the Advisor will cooperate with the Company andtake all reasonable steps requested to assist the Board of Directors in makingan orderly transition of the advisory function.

 

This Agreement shallterminate upon the consummation of a business combination involving the Advisorand the Company as described in Section 12.

 

Ifthis Agreement is terminated pursuant to this Section, such termination shallbe without any further liability or obligation of either party to the other,except as provided in Section 19.

 

If this Agreement isterminated for any reason other than a business combination involving theAdvisor and the Company as described in Section 12, all obligations of theAdvisor and its Affiliates to offer Property to the Company for purchase, asdescribed in Section 2(a), shall also terminate.

 

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**17.**          ASSIGNMENTS. The Company may terminate this Agreement in the event of itsassignment by the Advisor except an assignment to a successor organizationwhich acquires substantially all of the property and carries on the affairs ofthe Advisor, provided that following such assignment the persons who controlledthe operations of the Advisor immediately prior thereto all control theoperations of the successor organization, including the performance of its dutiesunder this Agreement; however, if at any time subsequent to such assignmentsuch 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 the Company, this Agreementshall be terminated immediately upon written notice of termination from theBoard of Directors to the Advisor if any of the following events occurs:

 

**a)**     The Advisor violates any provisions of this Agreement and after noticeof such violation shall not cure such default within 30 days; or

 

**b)**     A court of competent jurisdiction enters a decree or order for reliefin respect of the Advisor in any involuntary case under the applicablebankruptcy, insolvency or other similar law now or hereafter in effect, orappoints a receiver liquidator, assignee, custodian, trustee, sequestrator (orsimilar official) of the Advisor or for any substantial part of its property ororders the winding up or liquidation of the Advisor’s affairs; or

 

**c)**     The Advisor commences a voluntary case under any applicable bankruptcy,insolvency or other similar law now or hereafter in effect, or consents to the entryof an order for relief in an involuntary case under any such law, or consentsto the appointment 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 the benefitof creditors, or fails generally to pay its debts as they become due.

 

TheAdvisor agrees that if any of the events specified in subsections (b) and (c)of this Section 18 occur, it will give written notice thereof to the Companywithin seven days after the occurrence of such event.

 

**19.**          ACTION UPON TERMINATION. The Advisor shall not be entitled tocompensation after the date of termination of this Agreement for furtherservices hereunder, but shall be paid all compensation accruing to the date oftermination. 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:

 

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**a)**     Pay over to the Company all moneys collected and held for the accountof the Company pursuant to this Agreement, after deducting any accrued compensationand reimbursement for its expenses to which it is then entitled;

 

**b)**     Deliver to the Board of Directors a full accounting, including astatement, showing all payments collected by it and a statement of all moneyheld by it, covering the period following the date of the last accountingfurnished to the Board of Directors;

 

**c)**     Deliver to the Board of Directors all property and documents of theCompany then in the custody of the Advisor; and

 

**d)**     Cooperate with the Company and take all reasonable steps requested bythe Company to assist the Board of Directors in making an orderly transition ofthe Advisory function.

 

**20.**          CHANGE OF NAME. The Company recognizes that the name and mark “Inland”have established prestige and goodwill and have acquired valuable secondarymeanings in the real estate and related industries and in the mind of thepublic. 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 Companyagrees that:

 

**a)**     The value of the “Inland” name cannot be reasonably and adequatelycompensated for in damages in action at law and unauthorized use of the “Inland”name will cause irreparable injury and damage to the Advisor and itsAffiliates. The Advisor or its Affiliates shall be entitled as a matter ofright to injunctive relief to prevent the use of the “Inland” name by theCompany in the event of the circumstances described in Subsection (d) below.

 

**b)**     The Company agrees to use the “Inland” name and mark in a manner whichwill protect the right of the Advisor and its Affiliates therein and such useshall be as licensee for the account and benefit of the Advisor and itsAffiliates. To the extent any rights in the name or mark “Inland” are deemed toaccrue to the Company, the Company hereby assigns any and all such rights tothe Advisor and its Affiliates at such time as they may be deemed to accrue.

 

**c)**     Nothing contained in this Agreement shall be construed an assignment orgrant to the Company of any right, title or interest in or to the name or mark “Inland”or any other trademarks, trade names or related service marks, insignias,logos, designs and color schemes, it being understood that all rights relatingthereto are 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

 

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securing and preserving therights of the Advisor and its Affiliates in and to the name and mark “Inland”and to assist the Advisor and its Affiliates in executing and causing to berecorded such documents as may be necessary or desirable to evidence, protectand implement the rights of the Advisor and its Affiliates pursuant to thisAgreement.

 

**d)**     At such time as the Advisor is no longer providing services to theCompany pursuant to this Agreement for some reason other than the consummationof a business combination described in Section 12, the Board of Directors willupon the request of the Advisor and its Affiliates, promptly cause the name ofthe Company 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, terminatedor discharged in whole or in part except by an instrument in writing signed byboth parties hereto, or their respective successors or assigns, or otherwiseprovided herein.

 

**22.***         *SUCCESSORS AND ASSIGNS. This Agreement shallbind any successors or assigns of the parties hereto as herein provided.

 

**23.**          GOVERNING LAW. The provisions of thisAgreement shall be governed, construed and interpreted in accordance with thelaws of the State of Illinois as at the time in effect.

 

**24.**          LIABILITY AND INDEMNIFICATION.

 

**a)**     The Company shall, to the fullest extent permitted by Marylandstatutory or decisional law, as amended or interpreted, and, without limitingthe generality of the foregoing, in accordance with Section 2418 of the GeneralCorporation Law of Maryland, indemnify and pay or reimburse reasonable expensesto the Advisor and its Affiliates, provided, that: (i) the Advisor or otherparty seeking 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)**     The Company shall not indemnify the Advisor or its Affiliates forlosses, liabilities or expenses arising from or out of an alleged violation offederal or state securities laws by such party unless one or more of thefollowing

 

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conditionsare met: (i) there has been a successful adjudication on the merits of eachcount involving alleged securities law violations as to the particularindemnitee; (ii) such claims have been dismissed with prejudice on the meritsby a court of competent jurisdiction as to the particular indemnitee; or (iii)a court of competent jurisdiction approves a settlement of the claims and findsthat indemnification of the settlement and related costs should be made and thecourt considering the request has been advised of the position of theSecurities and Exchange Commission and the published opinions of any statesecurities regulatory authority in which securities of the Company were offeredand sold with respect to the availability or propriety of indemnification forsecurities law violations.

 

**c)****    **The Company may advance amounts to personsentitled to indemnification hereunder for legal and other expenses and costsincurred as a result of any legal action for which indemnification is beingsought only if all of the following conditions are satisfied: (i) the legalaction relates to acts or omissions with respect to the performance of dutiesor services by the indemnified part for or on behalf of the Company; (ii) thelegal action is initiated by a third party and a court of competentjurisdiction specifically approves such advancement; 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 communication required orpermitted to be given hereunder shall be in writing unless some other method ofgiving such notice, report or other communication is accepted by the party towhom it is given and shall be given by being delivered at the followingaddresses of the parties hereto:

 

TheCompany and/or the Board of Directors:

 

Inland Western Retail RealEstate Trust, Inc.

2901Butterfield Road

OakBrook, Illinois 60523

Attention:Ms. Roberta S. Matlin, Vice President

 

TheAdvisor:

 

Inland Western Retail RealEstate Advisory Services, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attention: President

 

Either party may at any timegive notice in writing to the other party of a change of its address for thepurpose of this Section 25.

 

**26.****         **CONFLICTS OF INTEREST AND FIDUCIARY DUTIES TOTHE COMPANY

 

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AND TO THE COMPANY’S STOCKHOLDERS. TheCompany and the Advisor recognize that their relationship is subject to variousconflicts of interest as set forth in the Prospectus. The Advisor, on behalf ofitself and its Affiliates, acknowledges that the Advisor and its Affiliateshave fiduciary duties to the Company and to the Company’s Stockholders. TheAdvisor, on behalf of itself and its Affiliates, represents and agrees (i) thatthe Advisor and its Affiliates will endeavor to balance the interests of theCompany with the interests of the Advisor and its Affiliates in making anydetermination where a conflict of interest exists between the Company and theAdvisor or its Affiliates; and (ii) that the actions and decisions of theAdvisor and its Affiliates under this Agreement (including but not limited toactions and decisions in connection with the purchase of Properties for theCompany) will be made**in themanner most favorable to the Company and to the Company’s Stockholders, so asnot to breach their respective fiduciary duties to the Company and to theCompany’s Stockholders.

 

**27.**          HEADINGS. The section headings hereof have been inserted forconvenience of reference only and shall not be construed to affect the meaning,construction or effect of this Agreement.

 

[REMAINDEROF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the undersigned have executed this Second Amendedand Restated Advisory Agreement as of the date first above written.

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

 

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