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Exhibit 10.27
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                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"),  dated as of June 11,
2007, by and among Paradigm  Medical  Industries,  Inc., a Delaware  corporation
with its headquarters  located at 2355 South 1070 West, Salt Lake City, UT 84119
(the  "Company"),  and each of the undersigned  (together with their  respective
affiliates  and any assignee or  transferee  of all of their  respective  rights
hereunder, the "Initial Investors").

         WHEREAS:

         A.In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"),  the
Company  has  agreed,  upon the terms and  subject to the  conditions  contained
therein,  to issue and sell to the Initial  Investors  (i)  secured  convertible
notes in the aggregate  principal  amount of up to Five Hundred Thousand Dollars
($500,000)  (the  "Notes")  that are  convertible  into shares of the  Company's
common stock (the "Common Stock"), upon the terms and subject to the limitations
and  conditions  set forth in such Notes and (ii) warrants (the  "Warrants")  to
acquire an aggregate of 10,000,000  shares of Common  Stock,  upon the terms and
conditions  and  subject  to the  limitations  and  conditions  set forth in the
Warrants; and

         B.  To  induce  the  Initial  Investors  to  execute  and  deliver  the
Securities  Purchase  Agreement,  the  Company  has  agreed to  provide  certain
registration rights under the Securities Act of 1933, as amended,  and the rules
and regulations thereunder, or any similar successor statute (collectively,  the
"1933 Act"), and applicable state securities laws;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the Company and each
of the Initial Investors hereby agree as follows:

         1. DEFINITIONS.

              a. As used in this  Agreement,  the following terms shall have the
following meanings:

                     (i)  "Investors"   means  the  Initial  Investors  and  any
transferee  or assignee  who agrees to become  bound by the  provisions  of this
Agreement in accordance with Section 9 hereof.

                     (ii) "register,"  "registered," and "registration" refer to
a  registration  effected by preparing  and filing a  Registration  Statement or
Statements  in  compliance  with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"),  and the  declaration or ordering of  effectiveness  of such
Registration  Statement by the United States Securities and Exchange  Commission
(the "SEC").

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                     (iii) "Registrable  Securities" means the Conversion Shares
issued or  issuable  upon  conversion  or  otherwise  pursuant  to the Notes and
Additional Notes (as defined in the Securities  Purchase  Agreement)  including,
without limitation,  Damages Shares (as defined in the Notes) issued or issuable
pursuant to the Notes,  shares of Common  Stock issued or issuable in payment of
the Standard  Liquidated  Damages Amount (as defined in the Securities  Purchase
Agreement), shares issued or issuable in respect of interest or in redemption of
the Notes in accordance  with the terms  thereof) and Warrant  Shares  issuable,
upon exercise or otherwise pursuant to the Warrants and Additional  Warrants (as
defined in the Securities Purchase  Agreement),  and any shares of capital stock
issued or issuable as a dividend on or in exchange for or otherwise with respect
to any of the foregoing.

                     (iv)   "Registration   Statement"   means  a   registration
statement of the Company under the 1933 Act.

              b. Capitalized  terms used herein and not otherwise defined herein
shall  have  the  respective  meanings  set  forth  in the  Securities  Purchase
Agreement or the Convertible Note.

         2. REGISTRATION.

              a. Mandatory  Registration.  The Company shall prepare, and, on or
prior to sixty (60) days from the date of Closing (as defined in the  Securities
Purchase  Agreement)  (the  "Filing  Date"),  file  with the SEC a  Registration
Statement  on Form S-3 (or, if Form S-3 is not then  available,  on such form of
Registration  Statement  as is then  available to effect a  registration  of the
Registrable Securities,  subject to the consent of the Initial Investors,  which
consent  will  not  be  unreasonably   withheld)  covering  the  resale  of  the
Registrable  Securities  underlying  the Notes and  Warrants  issued or issuable
pursuant to the Securities Purchase Agreement,  which Registration Statement, to
the  extent  allowable  under  the  1933  Act  and  the  rules  and  regulations
promulgated  thereunder (including Rule 416), shall state that such Registration
Statement also covers such  indeterminate  number of additional shares of Common
Stock as may become  issuable upon  conversion  of or otherwise  pursuant to the
Notes and  exercise of the  Warrants to prevent  dilution  resulting  from stock
splits, stock dividends or similar transactions.  The number of shares of Common
Stock initially included in such Registration Statement shall be no less than an
amount  equal to two (2) times the sum of the number of  Conversion  Shares that
are then issuable upon  conversion of the Notes and  Additional  Notes (based on
the  Variable  Conversion  Price as would  then be in effect  and  assuming  the
Variable  Conversion Price is the Conversion Price at such time), and the number
of Warrant Shares that are then issuable upon exercise of the Warrants,  without
regard to any  limitation  on the  Investor's  ability to  convert  the Notes or
exercise  the  Warrants.  The  Company  acknowledges  that the  number of shares
initially  included  in the  Registration  Statement  represents  a  good  faith
estimate of the maximum number of shares  issuable upon  conversion of the Notes
and upon exercise of the Warrants.

              b.   Underwritten   Offering.   If  any  offering  pursuant  to  a
Registration  Statement pursuant to Section 2(a) hereof involves an underwritten
offering,  the  Investors  who hold a majority in  interest  of the  Registrable

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Securities  subject  to  such  underwritten  offering,  with  the  consent  of a
majority-in-interest  of the Initial  Investors,  shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers to
administer  the  offering,  which  investment  banker or  bankers  or manager or
managers shall be reasonably satisfactory to the Company.

              c. Payments by the Company. The Company shall use its best efforts
to obtain effectiveness of the Registration Statement as soon as practicable. If
(i) the Registration  Statement(s) covering the Registrable  Securities required
to be filed by the Company  pursuant to Section  2(a) hereof is not filed by the
Filing  Date or  declared  effective  by the SEC on or prior to one  hundred and
thirty-five  (135) days from the date of Closing (as  defined in the  Securities
Purchase Agreement),  or (ii) after the Registration Statement has been declared
effective by the SEC, sales of all of the Registrable  Securities cannot be made
pursuant to the Registration  Statement, or (iii) the Common Stock is not listed
or included for quotation on the Nasdaq National Market  ("Nasdaq"),  the Nasdaq
SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange (the "NYSE") or
the American  Stock  Exchange (the "AMEX") after being so listed or included for
quotation,  or (iv) the Common Stock ceases to be traded on the Over-the-Counter
Bulletin  Board (the "OTCBB") or any  equivalent  replacement  exchange prior to
being listed or included for  quotation  on one of the  aforementioned  markets,
then the Company will make payments to the Investors in such amounts and at such
times as shall be determined pursuant to this Section 2(c) as partial relief for
the  damages to the  Investors  by reason of any such delay in or  reduction  of
their  ability to sell the  Registrable  Securities  (which  remedy shall not be
exclusive  of any other  remedies  available  at law or in equity).  The Company
shall pay to each holder of the Notes or Registrable  Securities an amount equal
to the then  outstanding  principal  amount  of the Notes  (and,  in the case of
holders of Registrable Securities, the principal amount of Notes from which such
Registrable  Securities  were  converted)   ("Outstanding   Principal  Amount"),
multiplied by the Applicable Percentage (as defined below) times the sum of: (i)
the number of months  (prorated for partial months) after the Filing Date or the
end of the aforementioned one hundred and thirty-five (135) day period and prior
to the  date  the  Registration  Statement  is  declared  effective  by the SEC,
provided,  however,  that there  shall be  excluded  from such period any delays
which are  solely  attributable  to changes  required  by the  Investors  in the
Registration  Statement with respect to  information  relating to the Investors,
including,  without limitation,  changes to the plan of distribution,  or to the
failure of the Investors to conduct their review of the  Registration  Statement
pursuant to Section 3(h) below in a reasonably prompt manner; (ii) the number of
months  (prorated  for  partial  months)  that  sales of all of the  Registrable
Securities  cannot be made  pursuant  to the  Registration  Statement  after the
Registration   Statement  has  been  declared  effective   (including,   without
limitation,  when  sales  cannot be made by reason of the  Company's  failure to
properly  supplement or amend the prospectus included therein in accordance with
the terms of this Agreement,  but excluding any days during an Allowed Delay (as
defined in Section 3(f));  and (iii) the number of months  (prorated for partial
months)  that the Common  Stock is not listed or included  for  quotation on the
OTCBB, Nasdaq,  Nasdaq SmallCap,  NYSE or AMEX or that trading thereon is halted
after  the  Registration  Statement  has  been  declared  effective.   The  term
"Applicable  Percentage"  means  two  hundredths  (.02).  (For  example,  if the
Registration Statement becomes effective one (1) month after the end of such one
hundred and thirty-five (135) day period,  the Company would pay $5,000 for each
$250,000 of Outstanding Principal Amount. If thereafter, sales could not be made
pursuant  to the  Registration  Statement  for an  additional  period of one (1)
month,  the  Company  would  pay an  additional  $5,000  for  each  $250,000  of
Outstanding  Principal  Amount.)  Such amounts  shall be paid in cash or, at the
Company's  option,  in shares of Common Stock priced at the Conversion Price (as
defined in the Notes) on such payment date.

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              d. Piggy-Back Registrations.  Subject to the last sentence of this
Section 2(d), if at any time prior to the expiration of the Registration  Period
(as  hereinafter  defined)  the Company  shall  determine to file with the SEC a
Registration  Statement  relating  to an  offering  for its own  account  or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents  relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity  securities  issuable in  connection  with stock  option or other bona
fide,  employee  benefit plans),  the Company shall send to each Investor who is
entitled to  registration  rights under this Section 2(d) written notice of such
determination  and, if within fifteen (15) days after the effective date of such
notice, such Investor shall so request in writing,  the Company shall include in
such Registration  Statement all or any part of the Registrable  Securities such
Investor  requests  to be  registered,  except that if, in  connection  with any
underwritten  public  offering  for the  account  of the  Company  the  managing
underwriter(s)  thereof  shall  impose a  limitation  on the number of shares of
Common Stock which may be included in the  Registration  Statement  because,  in
such  underwriter(s)'   judgment,   marketing  or  other  factors  dictate  such
limitation  is necessary to  facilitate  public  distribution,  then the Company
shall be obligated to include in such  Registration  Statement only such limited
portion of the  Registrable  Securities  with respect to which such Investor has
requested  inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable  Securities  shall be made pro rata among the  Investors  seeking to
include  Registrable  Securities  in  proportion  to the  number of  Registrable
Securities sought to be included by such Investors;  provided, however, that the
Company  shall not exclude  any  Registrable  Securities  unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to  inclusion  of such  securities  in such  Registration  Statement  or are not
entitled to pro rata inclusion with the  Registrable  Securities;  and provided,
further,  however,  that,  after  giving  effect  to the  immediately  preceding
proviso,  any exclusion of  Registrable  Securities  shall be made pro rata with
holders of other  securities  having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights.  No right to registration of Registrable  Securities  under this Section
2(d) shall be construed to limit any  registration  required  under Section 2(a)
hereof.  If an  offering  in  connection  with which an  Investor is entitled to
registration  under this Section  2(d) is an  underwritten  offering,  then each
Investor  whose  Registrable   Securities  are  included  in  such  Registration
Statement shall,  unless  otherwise  agreed by the Company,  offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and  conditions  as other shares of Common Stock  included in such  underwritten
offering.  Notwithstanding  anything  to the  contrary  set  forth  herein,  the
registration rights of the Investors pursuant to this Section 2(d) shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain  effectiveness  of any  Registration  Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.

              e. Eligibility for Form S-3, SB-2 or S-1;  Conversion to Form S-3.
The Company  represents and warrants that it meets the  requirements for the use
of Form S-3, SB-2 or S-1 for  registration of the sale by the Initial  Investors
and any other  Investors of the  Registrable  Securities.  The Company agrees to

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file all reports  required  to be filed by the Company  with the SEC in a timely
manner so as to remain  eligible  or become  eligible,  as the case may be,  and
thereafter to maintain its eligibility,  for the use of Form S-3. If the Company
is not currently eligible to use Form S-3, not later than five (5) business days
after the  Company  first meets the  registration  eligibility  and  transaction
requirements for the use of Form S-3 (or any successor form) for registration of
the  offer  and  sale by the  Initial  Investors  and  any  other  Investors  of
Registrable Securities,  the Company shall file a Registration Statement on Form
S-3 (or such successor form) with respect to the Registrable  Securities covered
by the Registration Statement on Form SB-2 or Form S-1, whichever is applicable,
filed  pursuant to Section 2(a) (and include in such  Registration  Statement on
Form S-3 the information required by Rule 429 under the 1933 Act) or convert the
Registration Statement on Form SB-2 or Form S-1, whichever is applicable,  filed
pursuant to Section  2(a) to a Form S-3  pursuant to Rule 429 under the 1933 Act
and  cause  such  Registration  Statement  (or such  amendment)  to be  declared
effective no later than sixty (60) days after  filing.  In the event of a breach
by the Company of the  provisions  of this  Section  2(e),  the Company  will be
required to make payments pursuant to Section 2(c) hereof.

         3. OBLIGATIONS OF THE COMPANY.

         In connection with the registration of the Registrable Securities,  the
Company shall have the following obligations:

              a. The Company shall prepare  promptly,  and file with the SEC not
later than the Filing Date, a Registration  Statement with respect to the number
of Registrable  Securities provided in Section 2(a), and thereafter use its best
efforts to cause such Registration  Statement relating to Registrable Securities
to become  effective as soon as possible after such filing but in no event later
than one hundred and thirty-five (135) days from the date of Closing),  and keep
the  Registration  Statement  effective  pursuant to Rule 415 at all times until
such  date as is the  earlier  of (i) the date on which  all of the  Registrable
Securities have been sold and (ii) the date on which the Registrable  Securities
(in the opinion of counsel to the Initial  Investors) may be immediately sold to
the public without registration or restriction  (including,  without limitation,
as to  volume by each  holder  thereof)  under  the 1933 Act (the  "Registration
Period"),  which Registration Statement (including any amendments or supplements
thereto  and  prospectuses  contained  therein)  shall not  contain  any  untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated therein, or necessary to make the statements therein not misleading.

              b. The Company shall prepare and file with the SEC such amendments
(including  post-effective  amendments)  and  supplements  to  the  Registration
Statements  and  the  prospectus  used  in  connection  with  the   Registration
Statements as may be necessary to keep the Registration  Statements effective at
all times during the Registration  Period, and, during such period,  comply with
the  provisions  of  the  1933  Act  with  respect  to  the  disposition  of all
Registrable  Securities of the Company  covered by the  Registration  Statements
until such time as all of such  Registrable  Securities have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof as set forth in the Registration Statements.  In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover all of the  Registrable  Securities  issued or issuable
upon  conversion  of the Notes and exercise of the  Warrants,  the Company shall
amend the Registration  Statement,  or file a new Registration Statement (on the
short form available  therefor,  if applicable),  or both, so as to cover all of

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the Registrable  Securities,  in each case, as soon as  practicable,  but in any
event within fifteen (15) days after the necessity therefor arises (based on the
market price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best efforts to cause such
amendment  and/or new  Registration  Statement  to become  effective  as soon as
practicable  following the filing  thereof,  but in any event within thirty (30)
days  after  the date on which  the  Company  reasonably  first  determines  (or
reasonably should have determined) the need therefor.  The provisions of Section
2(c) above shall be  applicable  with respect to such  obligation,  with the one
hundred and thirty-five  (135) days running from the day the Company  reasonably
first determines (or reasonably should have determined) the need therefor.

              c. The Company shall furnish to each  Investor  whose  Registrable
Securities  are included in a  Registration  Statement and its legal counsel (i)
promptly  (but in no event more than two (2)  business  days)  after the same is
prepared  and  publicly  distributed,  filed with the SEC,  or  received  by the
Company, one copy of each Registration Statement and any amendment thereto, each
preliminary  prospectus and prospectus and each amendment or supplement thereto,
and, in the case of the Registration Statement referred to in Section 2(a), each
letter  written  by or on behalf of the  Company  to the SEC or the staff of the
SEC,  and each item of  correspondence  from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment),  and (ii) promptly (but in no event more than two (2) business days)
after the Registration  Statement is declared  effective by the SEC, such number
of  copies  of  a  prospectus,  including  a  preliminary  prospectus,  and  all
amendments and supplements thereto and such other documents as such Investor may
reasonably  request in order to facilitate the  disposition  of the  Registrable
Securities  owned by such  Investor.  The Company will  immediately  notify each
Investor by facsimile of the effectiveness of each Registration Statement or any
post-effective  amendment.  The  Company  will  promptly  respond to any and all
comments  received from the SEC (which comments shall promptly be made available
to the Investors upon request),  with a view towards  causing each  Registration
Statement or any amendment  thereto to be declared  effective by the SEC as soon
as  practicable,  shall  promptly  file  an  acceleration  request  as  soon  as
practicable  (but in no event more than two (2)  business  days)  following  the
resolution  or  clearance  of all SEC  comments  or,  if  applicable,  following
notification  by the SEC that any such  Registration  Statement or any amendment
thereto  will not be subject to review  and shall  promptly  file with the SEC a
final  prospectus  as soon as  practicable  (but in no event  more  than two (2)
business  days)  following  receipt  by the  Company  from  the SEC of an  order
declaring the Registration Statement effective.  In the event of a breach by the
Company of the  provisions of this Section 3(c), the Company will be required to
make payments pursuant to Section 2(c) hereof.

              d. The Company  shall use  reasonable  efforts to (i) register and
qualify the Registrable Securities covered by the Registration  Statements under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as the  Investors  who hold a majority  in  interest  of the  Registrable
Securities  being  offered  reasonably  request,  (ii) prepare and file in those
jurisdictions  such  amendments   (including   post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to

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maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (a)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(d),  (b) subject  itself
to general  taxation  in any such  jurisdiction,  (c) file a general  consent to
service of process in any such  jurisdiction,  (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its charter
or bylaws,  which in each case the Board of Directors of the Company  determines
to be contrary to the best interests of the Company and its shareholders.

              e. In the event Investors who hold a  majority-in-interest  of the
Registrable  Securities  being  offered in the offering  (with the approval of a
majority-in-interest  of the  Initial  Investors)  select  underwriters  for the
offering,  the Company  shall enter into and  perform its  obligations  under an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,  customary  indemnification and contribution  obligations,  with the
underwriters of such offering.

              f. As promptly as practicable  after becoming aware of such event,
the Company shall notify each  Investor of the happening of any event,  of which
the Company has knowledge,  as a result of which the prospectus  included in any
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the  statements  therein not  misleading,  and use its best
efforts  promptly  to prepare a  supplement  or  amendment  to any  Registration
Statement to correct such untrue statement or omission,  and deliver such number
of copies of such  supplement or amendment to each Investor as such Investor may
reasonably  request;  provided  that,  for not more  than  ten (10)  consecutive
trading days (or a total of not more than twenty (20) trading days in any twelve
(12) month period),  the Company may delay the disclosure of material non-public
information  concerning  the  Company  (as well as  prospectus  or  Registration
Statement  updating)  the  disclosure  of which at the time is not,  in the good
faith opinion of the Company,  in the best interests of the Company (an "Allowed
Delay");  provided,  further,  that the Company  shall  promptly  (i) notify the
Investors  in writing of the  existence  of (but in no event,  without the prior
written consent of an Investor,  shall the Company disclose to such investor any
of the facts or circumstances  regarding) material non-public information giving
rise to an Allowed  Delay and (ii) advise the  Investors in writing to cease all
sales under such Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed  Delay,  the Company shall again be bound by the first
sentence  of this  Section  3(f) with  respect to the  information  giving  rise
thereto.

              g. The Company  shall use its best efforts to prevent the issuance
of any stop  order or other  suspension  of  effectiveness  of any  Registration
Statement,  and, if such an order is issued,  to obtain the  withdrawal  of such
order at the  earliest  possible  moment and to notify each  Investor  who holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the  managing  underwriters)  of the  issuance of such order and the  resolution
thereof.

              h. The Company shall permit a single firm of counsel designated by
the Initial Investors to review such  Registration  Statement and all amendments
and  supplements   thereto  (as  well  as  all  requests  for   acceleration  or

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effectiveness  thereof) a  reasonable  period of time prior to their filing with
the SEC, and not file any  document in a form to which such  counsel  reasonably
objects and will not request acceleration of such Registration Statement without
prior  notice to such  counsel.  The  sections  of such  Registration  Statement
covering  information with respect to the Investors,  the Investor's  beneficial
ownership  of  securities  of the Company or the  Investors  intended  method of
disposition of Registrable  Securities shall conform to the information provided
to the Company by each of the Investors.

              i. The Company  shall make  generally  available  to its  security
holders as soon as  practicable,  but not later than  ninety (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with the  provisions  of Rule 158 under the 1933 Act)  covering  a  twelve-month
period  beginning not later than the first day of the Company's  fiscal  quarter
next following the effective date of the Registration Statement.

              j. At the request of any Investor,  the Company shall furnish,  on
the date that  Registrable  Securities are delivered to an underwriter,  if any,
for sale in connection  with any  Registration  Statement or, if such securities
are not being sold by an underwriter,  on the date of effectiveness  thereof (i)
an opinion,  dated as of such date,  from counsel  representing  the Company for
purposes of such  Registration  Statement,  in form,  scope and  substance as is
customarily  given  in  an  underwritten  public  offering,   addressed  to  the
underwriters, if any, and the Investors and (ii) a letter, dated such date, from
the Company's  independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering,  addressed to the underwriters,  if any, and
the Investors.

              k. The Company  shall make  available  for  inspection  by (i) any
Investor,  (ii) any underwriter  participating in any disposition  pursuant to a
Registration Statement,  (iii) one firm of attorneys and one firm of accountants
or other agents  retained by the Initial  Investors,  (iv) one firm of attorneys
and one firm of accountants or other agents retained by all other Investors, and
(v) one firm of attorneys retained by all such underwriters  (collectively,  the
"Inspectors") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company,  including without limitation,  records
of conversions by other holders of convertible  securities issued by the Company
and  the  issuance  of  stock  to  such  holders  pursuant  to  the  conversions
(collectively,  the "Records"),  as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause  the  Company's  officers,  directors  and  employees  to  supply  all
information which any Inspector may reasonably  request for purposes of such due
diligence;  provided,  however, that each Inspector shall hold in confidence and
shall not make any  disclosure  (except to an  Investor)  of any Record or other
information which the Company  determines in good faith to be confidential,  and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a  misstatement  or omission in
any Registration Statement,  (b) the release of such Records is ordered pursuant
to a  subpoena  or other  order  from a court or  government  body of  competent
jurisdiction,  or (c) the  information  in such Records has been made  generally
available  to the public  other than by  disclosure  in violation of this or any
other agreement.  The Company shall not be required to disclose any confidential
information  in such Records to any  Inspector  until and unless such  Inspector
shall  have  entered  into  confidentiality  agreements  (in form and  substance
satisfactory   to  the  Company)   with  the  Company   with  respect   thereto,
substantially  in the form of this Section 3(k).  Each  Investor  agrees that it
shall,  upon learning that disclosure of such Records is sought in or by a court

                                       8
<PAGE>

or  governmental  body of competent  jurisdiction  or through other means,  give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate  action to prevent  disclosure  of, or to obtain a protective  order
for,  the  Records  deemed  confidential.   Nothing  herein  (or  in  any  other
confidentiality  agreement between the Company and any Investor) shall be deemed
to limit the Investor's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.

              l.  The  Company  shall  hold  in  confidence  and  not  make  any
disclosure of information  concerning an Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant  to a subpoena or other order
from a court  or  governmental  body of  competent  jurisdiction,  or (iv)  such
information  has been made  generally  available  to the  public  other  than by
disclosure in violation of this or any other agreement.  The Company agrees that
it shall,  upon  learning  that  disclosure  of such  information  concerning an
Investor  is  sought  in  or  by a  court  or  governmental  body  of  competent
jurisdiction  or through other means,  give prompt notice to such Investor prior
to making such disclosure,  and allow the Investor, at its expense, to undertake
appropriate  action to prevent  disclosure  of, or to obtain a protective  order
for, such information.

              m. The  Company  shall (i) cause  all the  Registrable  Securities
covered by the Registration  Statement to be listed on each national  securities
exchange on which  securities  of the same class or series issued by the Company
are then listed,  if any, if the listing of such Registrable  Securities is then
permitted under the rules of such exchange, or (ii) to the extent the securities
of the same  class  or  series  are not then  listed  on a  national  securities
exchange,   secure  the  designation  and  quotation,  of  all  the  Registrable
Securities  covered by the Registration  Statement on Nasdaq or, if not eligible
for  Nasdaq,  on  Nasdaq  SmallCap  or,  if not  eligible  for  Nasdaq or Nasdaq
SmallCap, on the OTCBB and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities  Dealers,  Inc.  ("NASD") as such with respect to such Registrable
Securities.

              n. The Company shall provide a transfer agent and registrar, which
may be a single  entity,  for the  Registrable  Securities  not  later  than the
effective date of the Registration Statement.

              o.  The  Company  shall  cooperate  with  the  Investors  who hold
Registrable   Securities   being  offered  and  the  managing   underwriter   or
underwriters,  if any, to  facilitate  the timely  preparation  and  delivery of
certificates  (not bearing any  restrictive  legends)  representing  Registrable
Securities to be offered  pursuant to a  Registration  Statement and enable such
certificates to be in such denominations or amounts,  as the case may be, as the
managing  underwriter or  underwriters,  if any, or the Investors may reasonably
request  and   registered  in  such  names  as  the  managing   underwriter   or
underwriters,  if any, or the  Investors  may  request,  and,  within  three (3)
business  days  after  a  Registration   Statement  which  includes  Registrable

                                       9
<PAGE>

Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel  selected by the Company to deliver,  to the transfer  agent
for the Registrable  Securities (with copies to the Investors whose  Registrable
Securities  are included in such  Registration  Statement) an instruction in the
form  attached  hereto as Exhibit 1 and an  opinion of such  counsel in the form
attached hereto as Exhibit 2.

              p. At the request of the holders of a majority-in-interest  of the
Registrable  Securities,  the Company  shall  prepare and file with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  any  prospectus   used  in  connection  with  the
Registration  Statement  as may be  necessary  in  order to  change  the plan of
distribution set forth in such Registration Statement.

              q. From and after the date of this  Agreement,  the Company  shall
not, and shall not agree to, allow the holders of any  securities of the Company
to include any of their securities in any  Registration  Statement under Section
2(a) hereof or any  amendment or  supplement  thereto  under Section 3(b) hereof
without the consent of the holders of a majority-in-interest  of the Registrable
Securities.

              r. The Company shall take all other reasonable  actions  necessary
to  expedite  and  facilitate   disposition  by  the  Investors  of  Registrable
Securities pursuant to a Registration Statement.

         4. OBLIGATIONS OF THE INVESTORS.

         In connection with the registration of the Registrable Securities,  the
Investors shall have the following obligations:

              a. It shall be a condition  precedent  to the  obligations  of the
Company to complete the registration  pursuant to this Agreement with respect to
the  Registrable  Securities of a particular  Investor that such Investor  shall
furnish to the  Company  such  information  regarding  itself,  the  Registrable
Securities  held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably request. At least three (3)
business  days prior to the first  anticipated  filing date of the  Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.

              b. Each Investor, by such Investor's acceptance of the Registrable
Securities,  agrees to cooperate with the Company as reasonably requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statements  hereunder,  unless such Investor has notified the Company in writing
of such  Investor's  election  to  exclude  all of such  Investor's  Registrable
Securities from the Registration Statements.

              c. In the event Investors  holding a  majority-in-interest  of the
Registrable  Securities  being  registered  (with the  approval  of the  Initial
Investors)  determine to engage the services of an  underwriter,  each  Investor
agrees  to  enter  into  and  perform  such  Investor's   obligations  under  an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,  customary  indemnification and contribution  obligations,  with the
managing  underwriter  of such  offering  and take  such  other  actions  as are
reasonably  required in order to expedite or facilitate  the  disposition of the
Registrable Securities, unless such Investor has notified the Company in writing
of such  Investor's  election  to  exclude  all of such  Investor's  Registrable
Securities from such Registration Statement.

                                       10
<PAGE>

              d. Each Investor  agrees that, upon receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(f) or
3(g),  such Investor will  immediately  discontinue  disposition  of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities  until such Investor's  receipt of the copies of the  supplemented or
amended  prospectus  contemplated by Section 3(f) or 3(g) and, if so directed by
the Company,  such Investor  shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies in such  Investor's  possession,  of the  prospectus  covering  such
Registrable Securities current at the time of receipt of such notice.

              e. No Investor may  participate in any  underwritten  registration
hereunder  unless such Investor (i) agrees to sell such  Investor's  Registrable
Securities on the basis provided in any  underwriting  arrangements in usual and
customary  form  entered into by the Company,  (ii)  completes  and executes all
questionnaires,  powers of attorney,  indemnities,  underwriting  agreements and
other  documents  reasonably  required  under  the  terms  of such  underwriting
arrangements,  and (iii)  agrees to pay its pro rata  share of all  underwriting
discounts  and  commissions  and any expenses in excess of those  payable by the
Company pursuant to Section 5 below.

         5. EXPENSES OF REGISTRATION.

         All  reasonable  expenses,   other  than  underwriting   discounts  and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration,  listing and qualification fees, printers and accounting fees, the
fees and  disbursements of counsel for the Company,  and the reasonable fees and
disbursements  of one  counsel  selected by the  Initial  Investors  pursuant to
Sections 2(b) and 3(h) hereof shall be borne by the Company.

         6. INDEMNIFICATION.

         In the event any Registrable  Securities are included in a Registration
Statement under this Agreement:

              a. To the extent  permitted by law,  the Company  will  indemnify,
hold  harmless  and  defend  (i)  each  Investor  who  holds  such   Registrable
Securities, (ii) the directors,  officers, partners,  employees, agents and each
person who  controls  any  Investor  within  the  meaning of the 1933 Act or the
Securities  Exchange Act of 1934, as amended (the "1934 Act"), if any, (iii) any
underwriter  (as  defined  in the  1933  Act)  for the  Investors,  and (iv) the
directors,  officers,  partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"Indemnified  Person"),  against any joint or several losses,  claims,  damages,

                                       11
<PAGE>

liabilities  or expenses  (collectively,  together with actions,  proceedings or
inquiries by any regulatory or self-regulatory  organization,  whether commenced
or  threatened,  in respect  thereof,  "Claims") to which any of them may become
subject  insofar as such Claims  arise out of or are based upon:  (i) any untrue
statement  or alleged  untrue  statement  of a material  fact in a  Registration
Statement or the omission or alleged  omission to state  therein a material fact
required  to  be  stated  or  necessary  to  make  the  statements  therein  not
misleading;  (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or  supplemented,  if the  Company  files any  amendment  thereof or  supplement
thereto with the SEC) or the omission or alleged  omission to state  therein any
material fact  necessary to make the  statements  made therein,  in light of the
circumstances  under which the statements therein were made, not misleading;  or
(iii) any  violation  or alleged  violation  by the Company of the 1933 Act, the
1934 Act, any other law,  including,  without  limitation,  any state securities
law, or any rule or regulation  thereunder  relating to the offer or sale of the
Registrable  Securities (the matters in the foregoing  clauses (i) through (iii)
being,  collectively,  "Violations").  Subject to the  restrictions set forth in
Section  6(c) with  respect to the number of legal  counsel,  the Company  shall
reimburse the Indemnified Person, promptly as such expenses are incurred and are
due and payable,  for any  reasonable  legal fees or other  reasonable  expenses
incurred by them in connection with  investigating  or defending any such Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by any Indemnified  Person
or underwriter for such Indemnified  Person expressly for use in connection with
the preparation of such Registration  Statement or any such amendment thereof or
supplement  thereto, if such prospectus was timely made available by the Company
pursuant  to  Section  3(c)  hereof;  (ii)  shall not apply to  amounts  paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company,  which consent shall not be unreasonably  withheld;  and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified  Person if the untrue  statement or omission of material fact
contained in the  preliminary  prospectus was corrected on a timely basis in the
prospectus,  as then amended or  supplemented,  such  corrected  prospectus  was
timely made  available by the Company  pursuant to Section 3(c) hereof,  and the
Indemnified  Person was  promptly  advised in writing  not to use the  incorrect
prospectus  prior to the use giving  rise to a  Violation  and such  Indemnified
Person,  notwithstanding  such advice,  used it. Such indemnity  shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
the  Indemnified  Person  and shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.

              b. In  connection  with  any  Registration  Statement  in which an
Investor is  participating,  each such Investor agrees severally and not jointly
to  indemnify,  hold  harmless  and  defend,  to the same extent and in the same
manner set forth in Section 6(a), the Company,  each of its  directors,  each of
its  officers who signs the  Registration  Statement,  each person,  if any, who
controls  the Company  within the  meaning of the 1933 Act or the 1934 Act,  any
underwriter  and  any  other  shareholder  selling  securities  pursuant  to the
Registration  Statement  or any of its  directors  or officers or any person who
controls such  shareholder or underwriter  within the meaning of the 1933 Act or
the  1934  Act  (collectively  and  together  with  an  Indemnified  Person,  an
"Indemnified Party"), against any Claim to which any of them may become subject,
under the 1933 Act, the 1934 Act or otherwise,  insofar as such Claim arises out
of or is based upon any Violation by such  Investor,  in each case to the extent
(and only to the extent)  that such  Violation  occurs in  reliance  upon and in
conformity  with written  information  furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and subject to

                                       12
<PAGE>

Section 6(c) such Investor will reimburse any legal or other expenses  (promptly
as such  expenses are incurred and are due and payable)  reasonably  incurred by
them in connection  with  investigating  or defending any such Claim;  provided,
however,  that the indemnity  agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior written  consent of such Investor,  which consent shall not be
unreasonably withheld;  provided,  further,  however, that the Investor shall be
liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds to such  Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the   Registrable   Securities   by  the   Investors   pursuant  to  Section  9.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained  in this  Section  6(b)  with  respect  to any  preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the  preliminary  prospectus
was  corrected  on a  timely  basis  in  the  prospectus,  as  then  amended  or
supplemented.

              c. Promptly after receipt by an Indemnified  Person or Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a  Claim  in  respect  thereof  is  to  be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnified  Person or the Indemnified Party, as the
case may be; provided,  however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel  with the fees and expenses to be
paid by the  indemnifying  party,  if,  in the  reasonable  opinion  of  counsel
retained by the indemnifying  party, the  representation  by such counsel of the
Indemnified  Person or  Indemnified  Party and the  indemnifying  party would be
inappropriate  due to actual  or  potential  differing  interests  between  such
Indemnified  Person or Indemnified Party and any other party represented by such
counsel  in such  proceeding.  The  indemnifying  party  shall  pay for only one
separate legal counsel for the Indemnified  Persons or the Indemnified  Parties,
as applicable,  and such legal counsel shall be selected by Investors  holding a
majority-in-interest  of the Registrable Securities included in the Registration
Statement   to   which   the   Claim   relates   (with   the   approval   of   a
majority-in-interest of the Initial Investors), if the Investors are entitled to
indemnification  hereunder,  or the  Company,  if the  Company  is  entitled  to
indemnification  hereunder, as applicable. The failure to deliver written notice
to the  indemnifying  party within a reasonable time of the  commencement of any
such action shall not relieve such  indemnifying  party of any  liability to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent  that the  indemnifying  party is actually  prejudiced  in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by  periodic   payments  of  the  amount   thereof  during  the  course  of  the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

                                       13
<PAGE>

         7. CONTRIBUTION.

         To  the  extent  any   indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided,  however, that
(i) no contribution shall be made under  circumstances where the maker would not
have been  liable for  indemnification  under the fault  standards  set forth in
Section  6, (ii) no  seller  of  Registrable  Securities  guilty  of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution  from any seller of Registrable  Securities who was not
guilty of such fraudulent  misrepresentation,  and  (iii)contribution  (together
with any  indemnification  or other  obligations  under this  Agreement)  by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

         8. REPORTS UNDER THE 1934 ACT.

         With a view to making  available to the  Investors the benefits of Rule
144  promulgated  under the 1933 Act or any other  similar rule or regulation of
the SEC that may at any time  permit the  investors  to sell  securities  of the
Company to the public without registration ("Rule 144"), the Company agrees to:

              a. make and keep public information available,  as those terms are
understood and defined in Rule 144;

              b.file  with the SEC in a timely  manner  all  reports  and  other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company  remains  subject to such  requirements  (it being  understood  that
nothing herein shall limit the Company's  obligations  under Section 4(c) of the
Securities  Purchase  Agreement)  and the  filing  of  such  reports  and  other
documents is required for the applicable provisions of Rule 144; and

              c.  furnish  to  each  Investor  so long  as  such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
1933 Act and the 1934 Act,  (ii) a copy of the most recent  annual or  quarterly
report of the  Company  and such other  reports  and  documents  so filed by the
Company,  and (iii) such other  information  as may be  reasonably  requested to
permit  the  Investors  to sell such  securities  pursuant  to Rule 144  without
registration.

         9. ASSIGNMENT OF REGISTRATION RIGHTS.

         The rights under this Agreement  shall be  automatically  assignable by
the Investors to any transferee of all or any portion of Registrable  Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights,  and a copy of such  agreement is furnished to the Company within a
reasonable time after such assignment,  (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such  transferee or assignee,  and (b) the  securities  with
respect to which such  registration  rights are being  transferred  or assigned,
(iii)  following  such transfer or assignment,  the further  disposition of such
securities by the  transferee  or assignee is restricted  under the 1933 Act and
applicable  state  securities  laws,  (iv) at or  before  the time  the  Company

                                       14
<PAGE>

receives the written notice  contemplated  by clause (ii) of this sentence,  the
transferee or assignee  agrees in writing with the Company to be bound by all of
the  provisions  contained  herein,  (v) such  transfer  shall have been made in
accordance  with  the  applicable   requirements  of  the  Securities   Purchase
Agreement,  and (vi) such transferee  shall be an "accredited  investor" as that
term defined in Rule 501 of Regulation D promulgated under the 1933 Act.

         10. AMENDMENT OF REGISTRATION RIGHTS.

         Provisions of this Agreement may be amended and the observance  thereof
may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively or prospectively),  only with written consent of the Company, each
of the  Initial  Investors  (to the  extent  such  Initial  Investor  still owns
Registrable  Securities)  and  Investors  who hold a  majority  interest  of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.

         11. MISCELLANEOUS.

              a. A person or  entity  is  deemed  to be a holder of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

              b. Any notices  required or  permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt  requested)
or delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective  five days after being placed in
the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized  overnight delivery service) or
by  facsimile,  in each  case  addressed  to a  party.  The  addresses  for such
communications shall be:

                           If to the Company:

                           Paradigm Medical Industries, Inc.
                           2355 South 1070 West
                           Salt Lake City, UT 84119
                           Attention: Chief Executive Officer
                           Telephone:       (801) 977-8970
                           Facsimile:       (801) 977-8973

                                       15
<PAGE>

                           With a copy to:

                           Mackey Price Thompson & Ostler
                           350 American Plaza II
                           57 West 200 South
                           Salt Lake City, UT 84101
                           Attention:   Randall A. Mackey, Esq.
                           Telephone:  (801) 575-5000
                           Facsimile:   (801) 575-5006

If to an Investor:  to the address set forth  immediately  below such Investor's
name on the signature pages to the Securities Purchase Agreement.

                           With a copy to:

                           Ballard Spahr Andrews & Ingersoll, LLP
                           1735 Market Street
                           51st Floor
                           Philadelphia, Pennsylvania  19103
                           Attention:  Gerald J. Guarcini, Esq.
                           Telephone:  215-865-8625
                           Facsimile:  215-864-8999

              c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

              d. THIS AGREEMENT SHALL BE ENFORCED,  GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF  CONFLICT  OF  LAWS.  THE  PARTIES  HERETO  HEREBY  SUBMIT  TO THE  EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED NEW YORK, NEW YORK WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES   IRREVOCABLY  WAIVE  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE
OF  PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS  MAIL SHALL BE DEEMED IN EVERY
RESPECT  EFFECTIVE  SERVICE  OF  PROCESS  UPON THE  PARTY  IN ANY  SUCH  SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL  MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE  ARISING  UNDER
THIS  AGREEMENT  SHALL  BE  RESPONSIBLE  FOR ALL FEES  AND  EXPENSES,  INCLUDING
ATTORNEYS'  FEES,  INCURRED  BY THE  PREVAILING  PARTY IN  CONNECTION  WITH SUCH
DISPUTE.

                                       16
<PAGE>

              e. In the event that any provision of this Agreement is invalid or
unenforceable  under any applicable  statute or rule of law, then such provision
shall be deemed  inoperative  to the extent that it may conflict  therewith  and
shall be deemed  modified  to  conform  with such  statute  or rule of law.  Any
provision  hereof which may prove invalid or  unenforceable  under any law shall
not affect the validity or enforceability of any other provision hereof.

              f. This  Agreement,  the Notes,  the Warrants  and the  Securities
Purchase Agreement (including all schedules and exhibits thereto) constitute the
entire  agreement  among the parties  hereto with respect to the subject  matter
hereof  and  thereof.  There  are  no  restrictions,   promises,  warranties  or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Securities  Purchase Agreement  supersede all prior agreements
and  understandings  among the parties hereto with respect to the subject matter
hereof and thereof.

              g. Subject to the requirements of Section 9 hereof, this Agreement
shall be  binding  upon and  inure  to the  benefit  of the  parties  and  their
successors and assigns.

              h. The headings in this Agreement are for convenience of reference
only and  shall  not  form  part of,  or  affect  the  interpretation  of,  this
Agreement.

              i. This  Agreement  may be executed  in two or more  counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same agreement and shall become  effective when  counterparts  have been
signed by each party and  delivered to the other  party.  This  Agreement,  once
executed by a party,  may be  delivered  to the other party  hereto by facsimile
transmission  of a copy of this Agreement  bearing the signature of the party so
delivering this Agreement.

              j.  Each  party  shall  do and  perform,  or  cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

              k. Except as  otherwise  provided  herein,  all consents and other
determinations  to be made by the Investors  pursuant to this Agreement shall be
made by Investors holding a majority of the Registrable  Securities,  determined
as if the all of the  Notes  then  outstanding  have  been  converted  into  for
Registrable Securities.

              l. The Company acknowledges that a breach by it of its obligations
hereunder will cause  irreparable  harm to each Investor by vitiating the intent
and purpose of the transactions  contemplated hereby.  Accordingly,  the Company
acknowledges  that the  remedy at law for breach of its  obligations  under this
Agreement will be inadequate and agrees,  in the event of a breach or threatened
breach by the Company of any of the provisions  under this Agreement,  that each
Investor shall be entitled,  in addition to all other available  remedies in law

                                       17
<PAGE>

or in  equity,  and  in  addition  to the  penalties  assessable  herein,  to an
injunction or injunctions  restraining,  preventing or curing any breach of this
Agreement and to enforce  specifically the terms and provisions hereof,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

              m. The language  used in this  Agreement  will be deemed to be the
language  chosen by the parties to express their mutual intent,  and no rules of
strict construction will be applied against any party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

         IN WITNESS WHEREOF,  the Company and the undersigned  Initial Investors
have  caused  this  Agreement  to be duly  executed  as of the date first  above
written.

PARADIGM MEDICAL INDUSTRIES, INC.

/s/ Raymond P.L. Cannefax
-------------------------
Raymond P.L. Cannefax
President and Chief Executive Officer

AJW PARTNERS, LLC
By:  SMS Group, LLC

/s/ Corey S. Ribotsky
---------------------
Corey S. Ribotsky
Manager

AJW MASTER FUND, LTD.
By:  First Street Manager II, LLC

/s/ Corey S. Ribotsky
---------------------
Corey S. Ribotsky
Manager

NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
By:  First Street Manager II, LLC

/s/ Corey S. Ribotsky
---------------------
Corey S. Ribotsky
Manager

                                       19

--------------------------------------------------------------------------------Exhibit 10.1

EXECUTION
COPY

AGREEMENT AND PLAN OF
MERGER

DATED AS OF AUGUST 14,
2007

by and among

INLAND WESTERN RETAIL
REAL ESTATE TRUST, INC.,

IWEST ACQUISITION 1, INC.
,

IWEST ACQUISITION 2,
INC.,

IWEST ACQUISITION 3,
INC.,

IWEST ACQUISITION 4,
INC.,

INLAND WESTERN RETAIL
REAL ESTATE ADVISORY SERVICES, INC.,

INLAND SOUTHWEST
MANAGEMENT CORP.,

INLAND NORTHWEST
MANAGEMENT CORP.,

INLAND WESTERN MANAGEMENT
CORP.,

INLAND REAL ESTATE
INVESTMENT CORPORATION,

and

IWEST MERGER AGENT, LLC,
as Agent for the Stockholders

 

   
 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  2

  
	
  SECTION 1.1

  	
   

  	
  Definitions.

  	
   

  	
  2

  
	
  SECTION 1.2

  	
   

  	
  Other Defined Terms.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II CLOSING; THE MERGERS

  	
   

  	
  12

  
	
  SECTION 2.1

  	
   

  	
  The Mergers.

  	
   

  	
  12

  
	
  SECTION 2.2

  	
   

  	
  Conversion of Service Provider Shares.

  	
   

  	
  16

  
	
  SECTION 2.3

  	
   

  	
  Conversion of Acquisition Entity Shares.

  	
   

  	
  18

  
	
  SECTION 2.4

  	
   

  	
  Appraisal Rights.

  	
   

  	
  18

  
	
  SECTION 2.5

  	
   

  	
  Exchange of Certificates.

  	
   

  	
  19

  
	
  SECTION 2.6

  	
   

  	
  Appointment of Agent.

  	
   

  	
  20

  
	
  SECTION 2.7

  	
   

  	
  Adjustments to Reflect Net Working Capital.

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF IWEST

  	
   

  	
  23

  
	
  SECTION 3.1

  	
   

  	
  Organization and Qualification.

  	
   

  	
  23

  
	
  SECTION 3.2

  	
   

  	
  Capitalization.

  	
   

  	
  23

  
	
  SECTION 3.3

  	
   

  	
  Issuance of Securities.

  	
   

  	
  24

  
	
  SECTION 3.4

  	
   

  	
  Authority; No Conflicts; Approvals.

  	
   

  	
  24

  
	
  SECTION 3.5

  	
   

  	
  Proxy Statement.

  	
   

  	
  25

  
	
  SECTION 3.6

  	
   

  	
  Disclosure; Financial Statements; Absence of Certain
  Changes.

  	
   

  	
  26

  
	
  SECTION 3.7

  	
   

  	
  Brokers and Finders.

  	
   

  	
  26

  
	
  SECTION 3.8

  	
   

  	
  Litigation.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF IREIC, THE SERVICE PROVIDERS AND THE AGENT

  	
   

  	
  27

  
	
  SECTION 4.1

  	
   

  	
  Organization and Qualification.

  	
   

  	
  27

  
	
  SECTION 4.2

  	
   

  	
  Capitalization.

  	
   

  	
  27

  
	
  SECTION 4.3

  	
   

  	
  Authority; No Conflicts; Approvals.

  	
   

  	
  28

  
	
  SECTION 4.4

  	
   

  	
  Financial Statements; Internal Controls.

  	
   

  	
  30

  
	
  SECTION 4.5

  	
   

  	
  Absence of Certain Changes or Events.

  	
   

  	
  31

  
	
  SECTION 4.6

  	
   

  	
  Taxes.

  	
   

  	
  31

  
	
  SECTION 4.7

  	
   

  	
  No Undisclosed Liabilities.

  	
   

  	
  33

  
	
  SECTION 4.8

  	
   

  	
  Litigation.

  	
   

  	
  33

  
	
  SECTION 4.9

  	
   

  	
  Compliance with Laws and Permits.

  	
   

  	
  33

  
	
  SECTION 4.10

  	
   

  	
  Insurance.

  	
   

  	
  34

  
	
  SECTION 4.11

  	
   

  	
  Employment Matters - Benefit Plans.

  	
   

  	
  34

  
	
  SECTION 4.12

  	
   

  	
  Employee Arrangements; Labor Matters.

  	
   

  	
  36

  
	
  SECTION 4.13

  	
   

  	
  Intellectual Property.

  	
   

  	
  36

  
	
  SECTION 4.14

  	
   

  	
  Brokers and Finders.

  	
   

  	
  37

  
	
  SECTION 4.15

  	
   

  	
  Investment Company Act.

  	
   

  	
  37

  
	
  SECTION 4.16

  	
   

  	
  Related Party Transactions.

  	
   

  	
  37

  
	
  SECTION 4.17

  	
   

  	
  Investment in Securities.

  	
   

  	
  38

  

 

 i
 

 

	
  SECTION 4.18

  	
   

  	
  Title to Assets; Sufficiency of Assets; Real
  Property and Related Matters.

  	
   

  	
  39

  
	
  SECTION 4.19

  	
   

  	
  Corporate Documents.

  	
   

  	
  40

  
	
  SECTION 4.20

  	
   

  	
  Contracts.

  	
   

  	
  40

  
	
  SECTION 4.21

  	
   

  	
  Projections.

  	
   

  	
  42

  
	
  SECTION 4.22

  	
   

  	
  Representations and Warranties of IWEST.

  	
   

  	
  42

  
	
  SECTION 4.23

  	
   

  	
  Change of Control of IWEST.

  	
   

  	
  43

  
	
  SECTION 4.24

  	
   

  	
  Proxy Statement.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V CONDUCT OF BUSINESS PENDING THE EFFECTIVE
  TIME

  	
   

  	
  43

  
	
  SECTION 5.1

  	
   

  	
  Conduct of Business of Each Service Provider.

  	
   

  	
  43

  
	
  SECTION 5.2

  	
   

  	
  Conduct of Business of IWEST.

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI ADDITIONAL AGREEMENTS

  	
   

  	
  46

  
	
  SECTION 6.1

  	
   

  	
  Access to Information; Notice of Certain Events.

  	
   

  	
  46

  
	
  SECTION 6.2

  	
   

  	
  Stockholder Approvals; Stockholder Ratification.

  	
   

  	
  47

  
	
  SECTION 6.3

  	
   

  	
  Expenses.

  	
   

  	
  48

  
	
  SECTION 6.4

  	
   

  	
  Proxy Statement.

  	
   

  	
  48

  
	
  SECTION 6.5

  	
   

  	
  Agreement to Cooperate.

  	
   

  	
  49

  
	
  SECTION 6.6

  	
   

  	
  Public Statements.

  	
   

  	
  49

  
	
  SECTION 6.7

  	
   

  	
  Confidentiality.

  	
   

  	
  49

  
	
  SECTION 6.8

  	
   

  	
  Employee Matters.

  	
   

  	
  51

  
	
  SECTION 6.9

  	
   

  	
  Tax Matters.

  	
   

  	
  51

  
	
  SECTION 6.10

  	
   

  	
  Intercompany Accounts and Arrangements.

  	
   

  	
  54

  
	
  SECTION 6.11

  	
   

  	
  Restrictive Legends and Stop Transfer Orders.

  	
   

  	
  55

  
	
  SECTION 6.12

  	
   

  	
  Post-Closing Access.

  	
   

  	
  55

  
	
  SECTION 6.13

  	
   

  	
  Non-Solicitation.

  	
   

  	
  56

  
	
  SECTION 6.14

  	
   

  	
  Delivery of Financial Statements.

  	
   

  	
  57

  
	
  SECTION 6.15

  	
   

  	
  Director and Officer Liability.

  	
   

  	
  58

  
	
  SECTION 6.16

  	
   

  	
  Estimated Service Payment.

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS

  	
   

  	
  58

  
	
  SECTION 7.1

  	
   

  	
  Conditions to Each Party’s Obligations.

  	
   

  	
  58

  
	
  SECTION 7.2

  	
   

  	
  Conditions to Obligations of IWEST and the
  Acquisition Entities.

  	
   

  	
  59

  
	
  SECTION 7.3

  	
   

  	
  Conditions to Obligations of the Service Providers.

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER

  	
   

  	
  62

  
	
  SECTION 8.1

  	
   

  	
  Termination.

  	
   

  	
  62

  
	
  SECTION 8.2

  	
   

  	
  Effect of Termination.

  	
   

  	
  63

  
	
  SECTION 8.3

  	
   

  	
  Amendment.

  	
   

  	
  64

  
	
  SECTION 8.4

  	
   

  	
  Waiver.

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX SURVIVAL AND REMEDY; INDEMNIFICATION

  	
   

  	
  64

  
	
  SECTION 9.1

  	
   

  	
  Survival.

  	
   

  	
  64

  
	
  SECTION 9.2

  	
   

  	
  Indemnification.

  	
   

  	
  65

  
	
  SECTION 9.3

  	
   

  	
  Limitations.

  	
   

  	
  68

  

 

 ii
 

 

	
  SECTION 9.4

  	
   

  	
  Exclusive Remedy.

  	
   

  	
  70

  
	
  SECTION 9.5

  	
   

  	
  Tax Indemnification.

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X GENERAL PROVISIONS

  	
   

  	
  71

  
	
  SECTION 10.1

  	
   

  	
  Notices.

  	
   

  	
  71

  
	
  SECTION 10.2

  	
   

  	
  Interpretation.

  	
   

  	
  72

  
	
  SECTION 10.3

  	
   

  	
  Applicable Law.

  	
   

  	
  73

  
	
  SECTION 10.4

  	
   

  	
  Arbitration.

  	
   

  	
  73

  
	
  SECTION 10.5

  	
   

  	
  Entire Agreement.

  	
   

  	
  75

  
	
  SECTION 10.6

  	
   

  	
  Severability.

  	
   

  	
  75

  
	
  SECTION 10.7

  	
   

  	
  Further Assurances.

  	
   

  	
  75

  
	
  SECTION 10.8

  	
   

  	
  Enforcement of this Agreement.

  	
   

  	
  76

  
	
  SECTION 10.9

  	
   

  	
  Parties in Interest.

  	
   

  	
  76

  
	
  SECTION 10.10

  	
   

  	
  Successors and Assigns.

  	
   

  	
  76

  
	
  SECTION 10.11

  	
   

  	
  No Presumption Against Drafter.

  	
   

  	
  76

  
	
  SECTION 10.12

  	
   

  	
  Counterparts.

  	
   

  	
  76

  
	
  SECTION 10.13

  	
   

  	
  Facsimile Signatures.

  	
   

  	
  76

  

 

EXHIBITS

	
  

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
  Sample Closing Balance Sheet and Sample Closing
  Statement

  
	
  Exhibit B

  	
   

  	
  -

  	
  Form of Sublease Agreement by IREIC to IWEST

  
	
  Exhibit C-1

  	
   

  	
  -

  	
  Form of Transition Property Due Diligence Services
  Agreement

  
	
  Exhibit C-2

  	
   

  	
  -

  	
  Form of Amendment to Office and Facilities
  Management Services Agreement

  
	
  Exhibit C-3

  	
   

  	
  -

  	
  Form of Amendment to Insurance and Risk Management
  Services Agreement

  
	
  Exhibit C-4

  	
   

  	
  -

  	
  Form of Amendment to Computer Services Agreement

  
	
  Exhibit C-5

  	
   

  	
  -

  	
  Form of Amendment to Personnel Services Agreement

  
	
  Exhibit C-6

  	
   

  	
  -

  	
  Form of Amendment to Property Tax Services Agreement

  
	
  Exhibit C-7

  	
   

  	
  -

  	
  Form of Amendment to Communications Services
  Agreement

  
	
  Exhibit C-8

  	
   

  	
  -

  	
  Form of Amendment to Loan Services Agreement

  
	
  Exhibit C-9

  	
   

  	
  -

  	
  Form of Second Amendment to Mortgage Brokerage
  Services Agreement

  
	
  Exhibit C-10

  	
   

  	
  -

  	
  Form of Institutional Investor Relationships
  Services Agreement

  
	
  Exhibit C-11

  	
   

  	
   

  	
  Form of Legal Services Agreement

  
	
  Exhibit D

  	
   

  	
  -

  	
  Form of Escrow Agreement

  
	
  Exhibit E

  	
   

  	
  -

  	
  Form of Opinion of Jenner & Block LLP

  
	
  Exhibit F

  	
   

  	
  -

  	
  Form of Registration Rights Agreement

  
	
  Exhibit G

  	
   

  	
  -

  	
  Form of Opinion of Duane Morris LLP

  
	
  Exhibit H

  	
   

  	
  -

  	
  Form of Agent Appointment Agreement

  
	
  Exhibit I

  	
   

  	
  -

  	
  Form of TIGI Letter Agreement

  
	
  Exhibit J-1

  	
   

  	
  -

  	
  Form of Amendment to License Agreement

  
	
  Exhibit J-2

  	
   

  	
   

  	
  Form of Manager License Agreement for Inland
  Southwest

  
	
  Exhibit J-3

  	
   

  	
   

  	
  Form of Manager License Agreement for Inland
  Northwest

  
	
  Exhibit J-4

  	
   

  	
   

  	
  Form of Manager License Agreement for Inland Western

  

 

 iii
 

SCHEDULES

	
  

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
   

  	
  Advisor Knowledge Persons

  
	
  Schedule 1.1(b)

  	
   

  	
  Manager Knowledge Persons

  
	
  Schedule 1.1(c)

  	
   

  	
  IREIC Knowledge Persons

  
	
  Schedule 1.1(d)

  	
   

  	
  Principal Stockholder Inquiry Persons

  
	
  Schedule 2.1(a)(iv)

  	
   

  	
  Directors and Officers of Advisor Surviving
  Corporation

  
	
  Schedule 2.1(b)(iv)

  	
   

  	
  Directors and Officers of Inland Southwest Surviving
  Corporation

  
	
  Schedule 2.1(c)(iv)

  	
   

  	
  Directors and Officers of Inland Northwest Surviving
  Corporation

  
	
  Schedule 2.1(d)(iv)

  	
   

  	
  Directors and Officers of Inland Western Surviving
  Corporation

  
	
  Schedule 3.2(b)

  	
   

  	
  Capitalization of IWEST

  
	
  Schedule 3.4(c)

  	
   

  	
  IWEST Required Consents

  
	
  Schedule 3.5(a)

  	
   

  	
  IWEST Proxy Statement Sections

  
	
  Schedule 3.7

  	
   

  	
  IWEST Brokers and Finders

  
	
  Schedule 4.2(b)

  	
   

  	
  Agreements or Options for Acquisition of Shares;
  Service Provider Subsidiaries

  
	
  Schedule 4.3(c)

  	
   

  	
  Service Provider Required Consents

  
	
  Schedule 4.4

  	
   

  	
  Service Provider Financial Statements

  
	
  Schedule 4.5

  	
   

  	
  Absence of Certain Changes or Events

  
	
  Schedule 4.6

  	
   

  	
  Tax Extensions and Audits

  
	
  Schedule 4.10

  	
   

  	
  Service Provider Insurance Policies

  
	
  Schedule 4.11(a)

  	
   

  	
  Employee Benefit Plans

  
	
  Schedule 4.13(a)

  	
   

  	
  Intellectual Property

  
	
  Schedule 4.14

  	
   

  	
  Brokers and Finders

  
	
  Schedule 4.16

  	
   

  	
  Related Party Transactions

  
	
  Schedule 4.18(b)

  	
   

  	
  Personal Property Leases

  
	
  Schedule 4.18(c)

  	
   

  	
  Leased Real Property

  
	
  Schedule 4.20(a)

  	
   

  	
  Contracts

  
	
  Schedule 4.21

  	
   

  	
  Projections 

  
	
  Schedule 4.22

  	
   

  	
  Representations and Warranties of IWEST

  
	
  Schedule 4.24(a)

  	
   

  	
  Service Provider, IREIC and Agent Proxy Statement
  Sections

  
	
  Schedule 5.1(i)

  	
   

  	
  Conduct of Business Pending the Effective Time

  
	
  Schedule 6.8(a)

  	
   

  	
  Service Employees

  

 

 iv

AGREEMENT AND PLAN OF
MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of August 14, 2007  (this “Agreement”), is
entered into by and among Inland Western Retail Real Estate Trust, Inc., a
Maryland corporation (“IWEST”), IWEST
Acquisition 1, Inc., an Illinois corporation and wholly-owned subsidiary of
IWEST (“Acquisition 1”), IWEST Acquisition
2, Inc., a Delaware corporation and wholly-owned subsidiary of IWEST (“Acquisition 2”), IWEST Acquisition 3, Inc., a
Delaware corporation and wholly-owned subsidiary of IWEST (“Acquisition 3”), IWEST Acquisition 4, Inc., a
Delaware corporation and wholly-owned subsidiary of IWEST (“Acquisition 4”), Inland Western Retail Real
Estate Advisory Services, Inc., an Illinois corporation (the “Advisor”), Inland Southwest Management Corp., a
Delaware corporation (“Inland Southwest”),
Inland Northwest Management Corp., a Delaware corporation (“Inland Northwest”), Inland Western Management
Corp., a Delaware corporation (“Inland Western”),
Inland Real Estate Investment Corporation, a Delaware corporation (“IREIC”), and IWEST Merger Agent, LLC, as agent
for the Stockholders (as defined herein) (the “Agent”).  Terms used herein are defined in Article I.

RECITALS

WHEREAS, the respective Boards of Directors of IWEST,
based upon the recommendation of the IWEST Special Committee, each Acquisition
Entity, the Advisor and each Manager, as applicable have approved and declared
advisable, upon the terms and subject to the conditions of this Agreement:

(1)                                  The
merger of Acquisition 1 with and into the Advisor, with the Advisor being the
surviving corporation in the merger (the “Acquisition
1 Merger”) and becoming a wholly-owned subsidiary of IWEST;

(2)                                  The
merger of Acquisition 2 with and into Inland Southwest, with Inland Southwest
being the surviving corporation in the merger (the “Acquisition
2 Merger”) and becoming a wholly-owned subsidiary of IWEST;

(3)                                  The
merger of Acquisition 3 with and into Inland Northwest, with Inland Northwest
being the surviving corporation in the merger (the “Acquisition
3 Merger”) and becoming a wholly-owned subsidiary of IWEST; and

(4)                                  The
merger of Acquisition 4 with and into Inland Western, with Inland Western being
the surviving corporation in the merger (the “Acquisition
4 Merger”; and, together with the Acquisition 1 Merger, the
Acquisition 2 Merger and the Acquisition 3 Merger, the “Mergers”)
and becoming a wholly-owned subsidiary of IWEST;

WHEREAS, the respective Board of Directors of IWEST
(based upon the recommendation of the IWEST Special Committee), each
Acquisition Entity, the Advisor and each of the Managers, as applicable, have
determined that the Mergers and the other transactions contemplated by this
Agreement are in furtherance of and consistent with their respective business
strategies and in the best interests of their respective stockholders;

WHEREAS, for federal income Tax purposes, it is
intended that each of the Mergers shall qualify as a “reorganization” within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Code”);

WHEREAS, IWEST is entering into employment agreements
(the “Employment Agreements”) and consulting agreements  (the
“Consulting Agreements”) with specified individuals concurrent
with the execution of this Agreement, to become effective upon the Closing; and

WHEREAS, concurrent with the execution of this
Agreement, each of IREIC, as sole stockholder of the Adviser, and the Principal
Stockholders, as stockholders of each of the Manager Parents, have executed an
irrevocable written consent in lieu of a stockholder meeting (the “Written
Consents”) approving this Agreement and the Mergers contemplated hereby.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1         Definitions.

As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined).

“Acquisition Entity”
or “Acquisition Entities” shall mean
Acquisition 1, Acquisition 2, Acquisition 3 and Acquisition 4, individually or
collectively, as the case may be.

“Action” shall
mean any claim, suit, action, proceeding, Environmental Claim, arbitration or
investigation.

“Advisory Agreement”
shall mean that certain Second Amended and Restated Advisory Agreement, made as
of December 28, 2004, as amended, between IWEST and the Advisor.

“Affiliate” shall
mean, except as otherwise provided herein, with respect to any Person, any
other Person which, at the time of determination, directly or indirectly
controls, is controlled by or is under common control with, such Person.  For the purposes of this definition, “control” (including, with correlative meaning,
the terms “controlling,” “controlled by” and “under
common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of management and policies of
such Person through the ownership of voting securities, by contract or
otherwise.  For the avoidance of doubt,
IWEST shall not be considered an Affiliate of any of TIGI, IREIC, the
Stockholders or the Service Providers for purposes of this Agreement, and vice
versa.

 2
 

“Agent” shall mean
the entity identified in the Preamble or any successor representative appointed
by the Stockholders pursuant to the Agent Appointment Agreements.

“Agent
Appointment Agreements” shall mean the agreements in the form attached
hereto as Exhibit H.

“Ancillary Agreements”
shall mean the Registration Rights Agreement, the Sublease Agreement, the
Transition Property Due Diligence Services Agreement, the Amendment to Office
and Facilities Management Services Agreement, the Amendment to Insurance and
Risk Management Services Agreement, the Amendment to Computer Services
Agreement, the Amendment to Personnel Services Agreement, the Amendment to
Property Tax Services Agreement, the Amendment to Communications Services
Agreement, the Second Amendment to the Mortgage Brokerage Services Agreement,
the Amendment to Loan Services Agreement, the Institutional Relationships
Services Agreement, the License Agreements, the Legal Services Agreement, the
Escrow Agreement, the TIGI Letter Agreement, the Agent Appointment Agreements
and any other agreement, instrument or document being or to be executed or
amended and delivered under this Agreement by IWEST on the one hand and a
Service Provider, the Agent and/or IREIC on the other hand, in each case as
amended or restated as of the Closing.

“Business Day”
shall mean any day other than a Saturday or a Sunday or a day on which banks
located in Chicago, Illinois generally are authorized or required by law or regulation
to close.

“Change of
Control” shall mean (i) a reorganization, merger or consolidation involving
a Person or direct or indirect sale, exchange, transfer or other disposition of
all or substantially all of the consolidated assets of a Person, except where
such reorganization, merger, consolidation or sale of assets is with or to a
wholly-owned subsidiary of such Person; or (ii) the acquisition by any other
Person or group of (a) beneficial ownership of 50 percent or more of the then
outstanding voting power of such Person or (b) the ability to control the
voting power of 50 percent or more of the then outstanding voting securities of
such Person entitled to vote generally in the election of the board of
directors of such Person.

“Commission” shall
mean the United States Securities and Exchange Commission.

“Contract” shall
mean any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, commitment, lease or other instrument,
obligation, agreement or arrangement of any kind.

“Copyrights” shall mean United States and
non-U.S. copyrights, copyrightable works and mask works (as defined in 17
U.S.C. §901), whether registered or unregistered, and pending applications to
register the same.

“Damages”
shall mean any and all costs, losses, Taxes, liabilities, obligations,
lawsuits, deficiencies, claims, demands, penalties, fines, and expenses,
including, without limitation, the reasonable fees and expenses of attorneys,
accountants, environmental engineers or consultants, fees and expenses arising
from environmental investigation, remediation or other response action, costs
and expenditures required or incurred to comply with consent decrees, 

 3
 

administrative
orders, injunctions and other judicial equitable relief, and all amounts paid
in investigation, defense or settlement of any of the foregoing.

“Environment”
shall mean surface waters, groundwaters, sediment, soil, subsurface strata,
ambient air and other environmental medium.

“Environmental Claims”
shall mean any and all actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, notices of liability or potential
liability, investigations, proceedings, consent orders or consent agreements
relating in any way to any Environmental Law or any Hazardous Material or
arising from any alleged injury or threat of injury to health or the
Environment.

“Environmental Law”
shall mean any Law with respect to the preservation of the Environment,
including but not limited to any Law whatsoever relating to Hazardous
Materials, drinking water, surface water, groundwater, wetlands, landfills,
open dumps, storage tanks, underground storage tanks, solid waste, waste water,
storm water run-off, noises, odors, air quality, air emissions, waste emissions
or wells.  Without limiting the
generality of the foregoing, the term will encompass each of the following
statutes and the regulations promulgated thereunder, and any similar applicable
state, local or foreign Law, each as amended: (a) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980; (b) the Solid Waste
Disposal Act; (c) the Hazardous Materials Transportation Act; (d) the Toxic
Substance Control Act; (e) the Clean Water Act, (f) the Clean Air Act; (g) the
Safe Drinking Water Act; (h) the National Environmental Policy Act of 1969; (i)
the Superfund Amendments and Reauthorization Act of 1986; (j) Title III of the
Superfund Amendments and Reauthorization Act; (k) the Federal Insecticide,
Fungicide and Rodenticide Act; (l) the provisions of the Occupational Safety
and Health Act of 1970 relating to the handling of and exposure to Hazardous
Materials and similar substances; and (m) the National Environmental Policy
Act.

“Environmental Permit”
shall mean with respect to a specified Person, any permit, approval,
identification number, license, or other authorization required, necessary or
useful to operate the business of such Person under any applicable
Environmental Law.

“Equity Interests”
shall mean (a) with respect to a corporation, as determined under the laws of
the jurisdiction of organization of such entity, shares of capital stock
(whether common, preferred or treasury); (b) with respect to a partnership,
limited liability company, limited liability partnership or similar Person, as
determined under the laws of the jurisdiction of organization of such entity,
units, interests, or other partnership or limited liability company interests;
or (c) any other equity ownership.

“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations issued thereunder.

“ERISA Affiliate”
shall mean each corporation, trade or business which is treated as a single
employer with any Service Provider under Section 414 of the Code or Section
4001(a) of ERISA.

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 4
 

“GAAP” means
United States generally accepted accounting principles, in effect on the date
hereof, consistently applied.

“Governmental Authority”
shall mean any United States or other international, national, state or local
government, any political subdivision thereof or any other governmental,
judicial, public or statutory instrumentality, authority, body, agency,
department, bureau, commission or entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, or any arbitrator with authority to bind a party at law.

“Hazardous Materials”
shall mean each and every element, compound, chemical, containment, pollutant,
material, waste or other substance that is defined, determined or identified as
hazardous, toxic or a contaminant under any Environmental Law or the release of
which is prohibited under any Environmental Law.  Without limiting the generality of the
foregoing, the term will include, without limitation: (a) “hazardous substance”
as defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, or Title III of the Superfund Amendments and Reauthorization Act and
regulations promulgated thereunder, each as amended; (b) “hazardous waste” as
defined in the Solid Waste Disposal Act and regulations promulgated thereunder,
each as amended: (c) “hazardous materials” as defined in the Hazardous Material
Transportation Act and the regulations promulgated thereunder, each as amended;
(d) ”chemical substance or mixture” as defined in the Toxic Substances
Control Act and regulation promulgated thereunder, each as amended; (e)
petroleum products and by products; (f) asbestos; (g) PCBs; and (h) mold.

“HoldCo” means Inland Holdco Management LLC.

“Intellectual Property”
shall mean Copyrights, Patent Rights, Software, Trademarks and Trade Secrets or
any other proprietary rights known or unknown.

“IRS” shall mean
the United States Internal Revenue Service.

“IWEST Material Adverse
Effect” shall mean any fact, occurrence, condition, circumstance,
change, effect or development that, individually or in the aggregate with all
other facts, occurrences, conditions, circumstances, changes, effects and
developments, that is or could reasonably be expected to be materially adverse
to the equity, business, properties, assets, liabilities, profits, financial
condition or results of operations of IWEST and its Subsidiaries, taken as a
whole; provided, however, that IWEST Material Adverse Effect
shall not be deemed to include any fact, occurrence, condition, circumstance,
change, effect or development arising from or related to any act (other than
any act taken at the written direction of the Board of Directors of IWEST or
mandated by this Agreement) or omission of the Service Providers, their
Affiliates, employees, officers or other related parties who have provided services
to IWEST or its Subsidiaries in any capacity.

“IWEST Special Committee”
shall mean the Special Committee of the Board of Directors of IWEST formed in
connection with the contemplation of the Mergers, the members of which
currently are Kenneth H. Beard, Paul R. Gauvreau, Gerald M. Gorski, and Barbara
A. Murphy.

 5
 

“Judgments” shall
mean any judgments, injunctions, orders, decrees, writs, rulings, settlements,
or awards of any court or other judicial authority or any other Governmental
Authority.

“Knowledge of IREIC” shall mean the actual
knowledge of the individuals listed on Schedule 1.1(c), including the
facts of which each such individual, in the reasonable prudent exercise of his
or her duties, should be aware.

“Knowledge of IWEST Special
Committee” or similar language shall mean the actual knowledge of
Kenneth H. Beard, Paul R. Gauvreau, Gerald M. Gorski, and Barbara A. Murphy,
after such person has reasonably inquired of the executive officers of IWEST.

“Knowledge of the Service
Providers” shall mean, with respect to (i) the Advisor, the actual
knowledge of the individuals listed on Schedule 1.1(a), including the
facts of which each such individual, in the reasonable prudent exercise of his
or her duties, should be aware and (ii) the Managers, the actual knowledge of
the individuals listed on Schedule 1.1(b),
including the facts of which each such individual, in the reasonable prudent
exercise of his or her duties, should be aware.

“Laws” shall mean
all laws, including Environmental Laws, statutes, by-laws, ordinances, rules,
regulations, common law or Judgments of any Governmental Authority.

“Licenses” shall
mean all Contracts or agreements (including any licenses, outstanding decrees,
orders, judgments, permits, covenants not to sue, agreements not to assert
rights, settlement agreements or stipulations) to which a Service Provider is a
party or otherwise bound (whether between such Service Provider and an
independent Person, or between such Service Provider or an Affiliate of such
Service Provider or TIREG, on the one hand, and TIREG, on the other hand),
which contain provisions (a) granting or providing to such Service Provider
rights in any Intellectual Property, (b) granting to third Persons, TIGI and/or
an Affiliate of such Service Provider or TIGI any rights owned by such Service
Provider in any Intellectual Property or (c) restricting such Service Provider’s
right to use any Intellectual Property.

“Liens” shall mean
all liens, mortgages, easements, charges, assignments, pledges, restrictions,
claims, security interests, options or other encumbrances of any nature.

“Management Agreements”
shall mean, individually or collectively, as the case may be, (a) that certain
Master Management Agreement, entered into as of November 11, 2003, by and
between IWEST and Inland Southwest, as the same has been and may be amended
from time to time, together with all separate Management Agreements between
Subsidiaries of IWEST and Inland Southwest entered into pursuant thereto; (b)
that certain Master Management Agreement, entered into as of November 11, 2003,
by and between IWEST and Inland Northwest, as the same has been and may be
amended from time to time, together with all separate Management Agreements
between Subsidiaries of IWEST and Inland Northwest entered into pursuant
thereto; and (c) that certain Master Management Agreement, entered into as of
September 13, 2003, by and between IWEST and Inland Western, as the same has
been and may be amended from time to time, together with all separate
Management Agreements between Subsidiaries of IWEST and Inland Western entered
into pursuant thereto.

 6
 

“Manager” or “Managers” shall mean Inland Southwest, Inland
Northwest and Inland Western, each of their Subsidiaries and any Person, a
majority of whose stock or other Equity Interests are owned, directly or
indirectly, by Inland Southwest, Inland Northwest and Inland Western,
individually or collectively, as the case may be.

“Manager
Parents” shall mean Inland Southwest, Inland Northwest and Inland Western,
excluding their Subsidiaries.

“Patent Rights” shall mean United States and
non-U.S. patents, provisional patent applications, patent applications,
continuations, continuations-in-part, divisions, reissues, patent disclosures,
industrial designs, inventions (whether or not patentable or reduced to
practice) or improvements thereto.

“Permit” shall
mean, with respect to a specified Person, any permit, license, consent, order,
authorization, Environmental Permit or approval of any Governmental Authority
that is required to enable such Person to carry on its business as presently
conducted.

“Permitted Liens”
shall mean (a) Liens for or in respect of Taxes not yet due and payable or
which are being contested in good faith for which adequate reserves have been
set up in accordance with GAAP; (b) the rights of lessors and lessees under
leases executed in the ordinary course of business; (c) Liens of mechanics,
warehousemen, carriers, workers, repairmen and other similar Liens arising or
incurred in the ordinary course of business, securing obligations not yet due
or payable or being contested in good faith by appropriate proceedings for
which adequate reserves have been set up in accordance with GAAP; (d) Liens in
connection with purchase money obligations incurred in the ordinary course of
business; and (e) Liens incurred or deposits made in the ordinary course of
business to secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of like nature.

“Person” shall
mean any individual, corporation, limited liability company, partnership, joint
venture, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

“Post-Closing Tax Period”
shall mean any Tax Period beginning after the Closing Date and the portion of
any Straddle Period beginning after the Closing Date.

“Pre-Closing Tax Period”
shall mean any Tax Period ending on or before the Closing Date and the portion
of any Straddle Period ending on and including the Closing Date including
operations through the Closing Date.

“Principal Stockholders”
shall mean each of Robert H. Baum, G. Joseph Cosenza, Daniel L. Goodwin and
Robert D. Parks.

“Property Acquisition Agreement” shall mean the
property acquisition agreement dated February 11, 2005 between Inland Real
Estate Acquisitions, Inc., IWEST, and the Advisor, and any amendments,
supplements, or modifications thereto.

 7
 

“Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

“Services Agreements” means the Loan Services
Agreement, the Mortgage Brokerage Services Agreement, the Computer Services
Agreement, the Software and Consulting Shared Services Agreement, the Software
License Agreement, the License Agreements, the Transition Property Due
Diligence Services Agreement, the Office and Facilities Management Services
Agreement, the Insurance and Risk Management Services Agreement, the Personnel
Services Agreement, the Property Tax Services Agreement, the Communications
Services Agreement, the Institutional Investor Relationships Services
Agreement, and the Property Acquisition Agreement, in each case as amended or
restated as of the Closing.

“Service Provider”
or “Service Providers” shall mean the
Advisor and each Manager, individually or collectively, as the case may be.

“Service Provider Material
Adverse Effect” or “Service Provider Material Adverse Change”
shall mean, with respect to any Service Provider, any fact, occurrence,
condition, circumstance, change, effect or development that, individually or in
the aggregate with all other facts, occurrences, conditions, circumstances,
changes, effects and developments, that is or could reasonably be expected to
be materially adverse to the equity, business, properties, assets, liabilities,
profits, financial condition or results of operations of such Service Provider.

“Software” shall
mean any and all: (a) computer programs, including any and all software
implementation of algorithms, models and methodologies whether in source code
or object code, and (b) all documentation, including user manuals and training
materials, relating to any of the foregoing.

“Stockholder
Agreements” shall mean collectively, the Inland Southwest Management Corp.
Shareholders Agreement, the Inland Northwest Management Corp. Shareholders
Agreement and the Inland Western Management Corp. Amended and Restated
Shareholders Agreement, between the respective Manager Parent and each of its
respective Stockholders.

“Stockholders”
shall mean the stockholders of the Manager Parents.

“Straddle Period”
shall mean any Tax Period beginning before and ending after the Closing Date.

“Subsidiary” or “Subsidiaries” of any Person shall mean any
corporation, partnership, limited liability company, association, trust, joint
venture or other entity or organization of which such Person, either alone or
through or together with any other Subsidiary, owns, directly or indirectly, more
than 50% of the stock or other Equity Interests, the holder of which is
generally entitled to vote for the election of the board of directors, managers
or other governing body of the entity or organization which such Person so
owns.

“Tax Period” shall
mean any period prescribed by any taxing or other Governmental Authority for
which a Tax Return (or a TIGI Combined Return) is required to be filed or a Tax
is required to be paid.

 

 8

“Tax Returns”
shall mean any report, return (including information return), schedule,
election, document, estimated tax filing, declaration or other filing required
to be supplied to any taxing or other Governmental Authority with respect to
Taxes, including any amendments thereto, but not including any TIGI Combined
Return.

“Taxes” shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding,
social security, occupation, use, service, service and use, license, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof whether computed on a separate, consolidated, unitary, combined
or any other basis; and such term shall include any interest, fines, penalties
or additional amounts attributable to or imposed on or with respect to any such
taxes, charges, fees, levies or other assessments and (ii) any liability for
the payment of amounts determined by reference to amounts described in clause
(i) as a result of being a member of an affiliated, consolidated, combined or
unitary group.

“TIGI”
means The Inland Group, Inc., a Delaware corporation.

“TIGI Combined Return”
shall mean a TIGI Tax Return for any Taxes imposed by a federal, state, local
or foreign Tax authority for which TIGI or any Affiliate of TIGI other than the
Advisor files with the Advisor on a consolidated, combined or unitary basis.

“TIREG” means The Inland Real Estate Group,
Inc., an Illinois corporation.

“Trademarks” means United States, state and
non-U.S. trademarks, service marks, trade names, Internet domain names, moral
rights, designs, logos, slogans and general intangibles of like nature, whether
registered or unregistered, and pending registrations and applications to
register the foregoing, and all goodwill of the business associated therewith.

“Trade Secrets” means confidential ideas, trade
secrets, know-how, concepts, methods, processes, formulae, technology,
algorithms, models, reports, data, customer lists, supplier lists, mailing
lists, business plans, or other proprietary information.

SECTION 1.2                          Other Defined Terms.

The terms set forth below shall have the meanings
ascribed to them in the corresponding sections of this Agreement:

	
  Term

  	
   

  	
  Section

  
	
  Acquisition 1

  	
   

  	
  Preamble

  
	
  Acquisition 1 Effective
  Time

  	
   

  	
  Section 2.1(e)(i)

  
	
  Acquisition 1 Merger

  	
   

  	
  Recitals

  
	
  Acquisition 2

  	
   

  	
  Preamble

  
	
  Acquisition 2 Effective
  Time

  	
   

  	
  Section 2.1(e)(ii)

  
	
  Acquisition 2 Merger

  	
   

  	
  Recitals

  
	
  Acquisition 3

  	
   

  	
  Preamble

  
	
  Acquisition 3
  Effective Time

  	
   

  	
  Section 2.1(e)(iii)

  
	
  Acquisition 3
  Merger

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  

 

 9
 

 

	
  Acquisition 4

  	
   

  	
  Preamble

  
	
  Acquisition 4 Effective
  Time

  	
   

  	
  Section 2.1(e)(iv)

  
	
  Acquisition 4 Merger

  	
   

  	
  Recitals

  
	
  Advisor

  	
   

  	
  Preamble

  
	
  Advisor Audited
  Financial Statements

  	
   

  	
  Section 4.4(a)

  
	
  Advisor Shares

  	
   

  	
  Section 2.2(a)

  
	
  Advisor Surviving
  Corporation

  	
   

  	
  Section 2.1(a)(i)

  
	
  Advisor Unaudited
  Financial Statements

  	
   

  	
  Section 4.4(a)

  
	
  Agent

  	
   

  	
  Preamble

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Amendment to Advisor
  License Agreement

  	
   

  	
  Section 7.2(r)

  
	
  Arbitrated Claim

  	
   

  	
  Section 10.4

  
	
  Arbitration Answer

  	
   

  	
  Section 10.4(c)

  
	
  Arbitration Claimants

  	
   

  	
  Section 10.4(c)

  
	
  Arbitration Demand

  	
   

  	
  Section 10.4(c)

  
	
  Arbitration Reply

  	
   

  	
  Section 10.4(c)

  
	
  Arbitration Respondents

  	
   

  	
  Section 10.4(c)

  
	
  Audited Financial
  Statements

  	
   

  	
  Section 4.4(a)

  
	
  Certificates

  	
   

  	
  Section 2.5(a)

  
	
  Closing

  	
   

  	
  Section 2.1(e)

  
	
  Closing Balance Sheet

  	
   

  	
  Section 2.7(d)

  
	
  Closing Date

  	
   

  	
  Section 2.1(e)

  
	
  Closing Statement

  	
   

  	
  Section 2.7(d)

  
	
  Code

  	
   

  	
  Recitals

  
	
  Confidential Material

  	
   

  	
  Section 6.7(a)

  
	
  Consulting Agreements

  	
   

  	
  Recitals

  
	
  Converted Shares

  	
   

  	
  Section 2.2(d)

  
	
  DGCL

  	
   

  	
  Section 2.1(b)(i)

  
	
  Director and Officer
  Indemnified Parties

  	
   

  	
  Section 6.15(a)

  
	
  Dissenting Shares

  	
   

  	
  Section 2.4(a)

  
	
  Effective Time

  	
   

  	
  Section 2.1(e)(iv)

  
	
  Employee Arrangements

  	
   

  	
  Section 4.12(a)

  
	
  Employee Benefit Plans

  	
   

  	
  Section 4.11(a)

  
	
  Employment Agreements

  	
   

  	
  Recitals

  
	
  Employment Obligations

  	
   

  	
  Section 6.8(c)

  
	
  Escrow Agent

  	
   

  	
  Section 2.2(g)

  
	
  Escrow Agreement

  	
   

  	
  Section 7.2(i)

  
	
  Escrowed Shares

  	
   

  	
  Section 2.5(b)

  
	
  Estimated Service
  Payment

  	
   

  	
  Section 6.16

  
	
  IBCA

  	
   

  	
  Section 2.1(a)(i)

  
	
  Indemnified Party

  	
   

  	
  Section 9.2(c)(i)

  
	
  Indemnifying Party

  	
   

  	
  Section 9.2(c)(i)

  
	
  Inland Northwest

  	
   

  	
  Preamble

  
	
  Inland Northwest Shares

  	
   

  	
  Section 2.2(c)

  
	
  Inland Northwest Surviving
  Corporation

  	
   

  	
  Section 2.1(c)(i)

  
	
  Inland Southwest

  	
   

  	
  Preamble

  

 

 10
 

 

	
  Inland Southwest Shares

  	
   

  	
  Section 2.2(b)

  
	
  Inland Southwest
  Surviving Corporation

  	
   

  	
  Section 2.1(b)(i)

  
	
  Inland Western

  	
   

  	
  Preamble

  
	
  Inland Western
  Shares

  	
   

  	
  Section 2.2(d)

  
	
  Inland Western
  Surviving Corporation

  	
   

  	
  Section 2.1(d)(i)

  
	
  IREIC

  	
   

  	
  Preamble

  
	
  IWEST

  	
   

  	
  Preamble

  
	
  IWEST Deductible

  	
   

  	
  Section 9.3(b)

  
	
  IWEST Disclosure
  Schedule

  	
   

  	
  Section 10.2(c)

  
	
  IWEST Form 10-K

  	
   

  	
  Section 3.6(a)

  
	
  IWEST
  Indemnified Parties

  	
   

  	
  Section 9.2(a)

  
	
  IWEST Preferred
  Stock

  	
   

  	
  Section 3.2(a)

  
	
  IWEST Required
  Consents

  	
   

  	
  Section 3.4(c)

  
	
  IWEST Required
  Statutory Approvals

  	
   

  	
  Section 3.4(c)

  
	
  IWEST SEC
  Filings

  	
   

  	
  Section 3.6(a)

  
	
  IWEST/Service
  Provider Agreements

  	
   

  	
  Section 4.20(a)(i)

  
	
  IWEST Shares

  	
   

  	
  Section 2.2(a)

  
	
  IWEST Stockholders’
  Meeting

  	
   

  	
  Section 6.2(a)

  
	
  IWEST
  Stockholders’ Ratification

  	
   

  	
  Section 6.2(a)

  
	
  Leased Real
  Property

  	
   

  	
  Section 4.18(c)

  
	
  Letter of
  Transmittal

  	
   

  	
  Section 2.5(a)

  
	
  License
  Agreements

  	
   

  	
  Section 7.2(q)

  
	
  Manager Audited
  Financial Statements

  	
   

  	
  Section 4.4(a)

  
	
  Manager License
  Agreements

  	
   

  	
  Section 7.2(r)

  
	
  Manager
  Stockholders’ Approval

  	
   

  	
  Section 6.2(b)

  
	
  Manager
  Unaudited Financial Statements

  	
   

  	
  Section 4.4(a)

  
	
  Material Contracts

  	
   

  	
  Section 4.20(a)

  
	
  Mergers

  	
   

  	
  Recitals

  
	
  Net Working Capital

  	
   

  	
  Section 2.7(c)

  
	
  New Material Contracts

  	
   

  	
  Section 4.20(c)

  
	
  Other Filings

  	
   

  	
  Section 6.4(a)

  
	
  Outside Date

  	
   

  	
  Section 8.1(b)(i)

  
	
  Paid Taxes

  	
   

  	
  Section 6.9(c)

  
	
  Providing Party

  	
   

  	
  Section 6.7(a)

  
	
  Proxy Statement

  	
   

  	
  Section 3.4(c)

  
	
  Receiving Party

  	
   

  	
  Section 6.7(a)

  
	
  Registration
  Rights Agreement

  	
   

  	
  Section 7.3(p)

  
	
  Representatives

  	
   

  	
  Section 6.7(a)

  
	
  Required
  Consents

  	
   

  	
  Section 4.3(c)

  
	
  Required
  Statutory Approvals

  	
   

  	
  Section 4.3(c)

  
	
  Required
  Supplemental Financial Statements

  	
   

  	
  Section 6.14(b)

  
	
  Review Period

  	
   

  	
  Section 2.7(e)

  
	
  Service
  Employees

  	
   

  	
  Section 6.8(a)

  
	
  Service Provider
  Deductible

  	
   

  	
  Section 9.3(a)

  
	
  Service Provider
  Disclosure Schedule

  	
   

  	
  Section 10.2(d)

  

 

 11
 

 

	
  Service Provider Financial
  Statements

  	
   

  	
  Section 4.4(a)

  
	
  Service Provider
  Required Consents

  	
   

  	
  Section 4.3(c)

  
	
  Service Provider
  Required Statutory Approvals

  	
   

  	
  Section 4.3(c)

  
	
  Settlement Accountant

  	
   

  	
  Section 2.7(f)

  
	
  Statement of Objections

  	
   

  	
  Section 2.7(e)

  
	
  Stockholder Indemnified Parties

  	
   

  	
  Section 9.2(b)

  
	
  Sublease Agreement

  	
   

  	
  Section 7.2(g)

  
	
  Supplemental Financial
  Statements

  	
   

  	
  Section 6.14(b)

  
	
  Surviving Entities 

  	
   

  	
  Section 2.1(d)(i)

  
	
  Tax Claim

  	
   

  	
  Section 6.9(e)

  
	
  Third Party Claims

  	
   

  	
  Section 9.2(c)(ii)

  
	
  TIGI Letter Agreement

  	
   

  	
  Section 7.2(j)

  
	
  Unaudited Financial Statements

  	
   

  	
  Section 4.4(a)

  
	
  Unaudited Supplemental Financial Statement

  	
   

  	
  Section 6.14(a)

  
	
  Welfare Plan

  	
   

  	
  Section 4.11(d)

  
	
  Written
  Consents

  	
   

  	
  Recitals

  

 

ARTICLE II

CLOSING; THE MERGERS

SECTION 2.1                          The Mergers.

(a)   The Acquisition 1 Merger.

(i)            Generally. 
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Illinois Business Corporation Act of
1983, as amended (the “IBCA”), at the
Acquisition 1 Effective Time, Acquisition 1 shall be merged with and into the
Advisor.  Following the Acquisition 1
Effective Time, the separate corporate existence of Acquisition 1 shall cease
and the Advisor shall continue as the surviving corporation in the merger (the “Advisor Surviving Corporation”) and a
wholly-owned subsidiary of IWEST.

(ii)           Effect of the Merger.  At the Acquisition 1 Effective Time, the
effect of the Acquisition 1 Merger shall be as provided in the applicable
provisions of the IBCA and as set forth in this Agreement.  Without limiting the generality of the
foregoing, at the Acquisition 1 Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises of the
Advisor and Acquisition 1 shall vest in the Advisor Surviving Corporation, and
all debts, liabilities and duties of Advisor and Acquisition 1 shall become the
debts, liabilities and duties of the Advisor Surviving Corporation.

(iii)          Articles of Incorporation; Bylaws.  At the Acquisition 1 Effective Time, (a) the
Bylaws of Acquisition 1 as in effect immediately prior to the Acquisition 1
Effective Time shall be the Bylaws of the Advisor Surviving 

 12
 

Corporation until thereafter changed or amended as provided therein by
applicable Law; and (b) the Articles of Incorporation of the Advisor Surviving
Corporation shall be amended in their entirety to be identical to the Articles
of Incorporation of Acquisition 1, except that the name of the corporation
shall remain that of the Advisor Surviving Corporation and the provision with
respect to the incorporator shall be deleted.

(iv)          Directors and Officers.  The individuals slated to be directors and
officers of the Advisor Surviving Corporation will be the individuals set forth
on Schedule 2.1(a)(iv) hereto and shall
serve until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.

(b)   The Acquisition 2 Merger.

(i)            Generally. 
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the applicable provisions of the Delaware
General Corporation Law, as amended (“DGCL”), at the Acquisition 2
Effective Time, Acquisition 2 shall be merged with and into Inland
Southwest.  Following the Acquisition 2
Effective Time, the separate existence of Acquisition 2 shall cease and Inland
Southwest shall continue as the surviving corporation in the merger (the “Inland Southwest Surviving Corporation”) and a
wholly-owned subsidiary of IWEST.

(ii)           Effect of the Merger.  At the Acquisition 2 Effective Time, the
effect of the Acquisition 2 Merger shall be as provided in the applicable
provisions of the DGCL and as set forth in this Agreement.  Without limiting the generality of the
foregoing, at the Acquisition 2 Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises of Inland
Southwest and Acquisition 2 shall vest in the Inland Southwest Surviving
Corporation, and all debts, liabilities and duties of Inland Southwest and
Acquisition 2 shall become the debts, liabilities and duties of the Inland
Southwest Surviving Corporation.

(iii)          Certificate
of Incorporation; Bylaws.  At the Acquisition
2 Effective Time, (a) the Bylaws of Acquisition 2 as in effect immediately
prior to the Acquisition 2 Effective Time shall be the Bylaws of the Inland
Southwest Surviving Corporation until thereafter changed or amended as provided
therein by applicable Law; and (b) the Certificate of Incorporation of the
Inland Southwest Surviving Corporation shall be amended in their entirety to be
identical to the Certificate of Incorporation of Acquisition 2, except that the
name of the corporation shall remain that of the Inland Southwest Surviving
Corporation and the provision with respect to the incorporator shall be
deleted.

 13
 

(iv)          Directors and Officers.  The individuals slated to be the directors
and officers of the Inland Southwest Surviving Corporation will be the
individuals set forth on Schedule 2.1(b)(iv)
hereto and shall serve until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.

(c)   The Acquisition 3 Merger.

(i)            Generally. 
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the applicable provisions of the DGCL, at the
Acquisition 3 Effective Time, Acquisition 3 shall be merged with and into
Inland Northwest.  Following the
Acquisition 3 Effective Time, the separate existence of Acquisition 3 shall
cease and Inland Northwest shall continue as the surviving corporation in the
merger (the “Inland Northwest Surviving Corporation”)
and a wholly-owned subsidiary of IWEST.

(ii)           Effect of the Merger.  At the Acquisition 3 Effective Time, the
effect of the Acquisition 3 Merger shall be as provided in the applicable
provisions of the DGCL and as set forth in this Agreement.  Without limiting the generality of the
foregoing, at the Acquisition 3 Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises of Inland
Northwest and Acquisition 3 shall vest in the Inland Northwest Surviving
Corporation, and all debts, liabilities and duties of Inland Northwest and
Acquisition 3 shall become the debts, liabilities and duties of the Inland
Northwest Surviving Corporation.

(iii)          Certificate
of Incorporation; Bylaws.  At the
Acquisition 3 Effective Time, (a) the Bylaws of Acquisition 3 as in effect
immediately prior to the Acquisition 3 Effective Time shall be the Bylaws of
the Inland Northwest Surviving Corporation until thereafter changed or amended
as provided therein by applicable Law; and (b) the Certificate of Incorporation
of the Inland Northwest Surviving Corporation shall be amended in their
entirety to be identical to the Certificate of Incorporation of Acquisition 3,
except that the name of the corporation shall remain that of the Inland
Northwest Surviving Corporation and the provision with respect to the
incorporator shall be deleted.

(iv)          Directors
and Officers.  The individuals slated
to be directors and officers of the Inland Northwest Surviving Corporation will
be the individuals set forth on Schedule 2.1(c)(iv) hereto and shall serve
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.

 14
 

(d)   The Acquisition 4 Merger.

(i)            Generally. 
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the applicable provisions of the DGCL, at the
Acquisition 4 Effective Time, Acquisition 4 shall be merged with and into
Inland Western.  Following the
Acquisition 4 Effective Time, the separate existence of Acquisition 4 shall
cease and Inland Western shall continue as the surviving corporation in the
merger (the “Inland Western Surviving Corporation”;
and, together with the Advisor Surviving Corporation, the Inland Southwest
Surviving Corporation and the Inland Northwest Surviving Corporation, the “Surviving Entities”) and a wholly-owned
subsidiary of IWEST.

(ii)           Effect of the Merger.  At the Acquisition 4 Effective Time, the
effect of the Acquisition 4 Merger shall be as provided in the applicable
provisions of DGCL and as set forth in this Agreement.  Without limiting the generality of the
foregoing, at the Acquisition 4 Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises of Inland
Western and Acquisition 4 shall vest in the Inland Western Surviving
Corporation, and all debts, liabilities and duties of Inland Western and
Acquisition 4 shall become the debts, liabilities and duties of the Inland
Western Surviving Corporation.

(iii)          Certificate
of Incorporation; Bylaws.  At the
Acquisition 4 Effective Time, (a) the Bylaws of Acquisition 4 as in effect
immediately prior to the Acquisition 4 Effective Time shall be the Bylaws of
the Inland Western Surviving Corporation until thereafter changed or amended as
provided therein by applicable Law; and (b) the Certificate of Incorporation of
the Inland Western Surviving Corporation shall be amended in their entirety to
be identical to the Certificate of Incorporation of Acquisition 1, except that
the name of the corporation shall remain that of the Inland Western Surviving
Corporation and the provision with respect to the incorporator shall be
deleted.

(iv)          Directors and Officers.  The individuals slated to be the directors
and officers of the Inland Western Surviving Corporation will be the
individuals set forth on Schedule 2.1(d)(iv)
hereto and shall serve until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.

(e)   Closing; Effective Time of the Mergers.  The consummation (the “Closing”)
of the Mergers shall take place at the offices of Sidley Austin LLP Chicago,
Illinois, at 5:00 p.m.  local time on
the last Business Day of the calendar month in which all of the conditions to
Closing (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions)
shall have been satisfied or waived, or at such other time, place and date as
IWEST, IREIC and the Agent may mutually agree. 
The date on which the Closing occurs is referred to as the “Closing Date.” At the Closing, the parties hereto
shall cause:

 

 15

(i)            the Acquisition 1
Merger to be consummated by filing articles of merger with the Secretary of
State of Illinois, in such form as required by, and executed in accordance with
the relevant provisions of, the IBCA (the later of the date and time specified
in such certificate of merger and the date and time of such filing, being the “Acquisition 1 Effective Time”);

(ii)           the Acquisition 2
Merger to be consummated by filing a certificate of merger with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the later of the date and
time specified in such certificate of merger and the date and time of such
filing, being the “Acquisition 2 Effective Time”);

(iii)          the Acquisition 3
Merger to be consummated by filing a certificate of merger with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the later of the date and
time specified in such certificate of merger and the date and time of such
filing, being the “Acquisition 3 Effective Time”);
and

(iv)          the Acquisition 4
Merger to be consummated by filing a certificate of merger with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the later of the date and
time specified in such certificate of merger and the date and time of such
filing, being the “Acquisition 4 Effective Time”;
each of the Acquisition 1 Effective Time, the Acquisition 2 Effective Time, the
Acquisition 3 Effective Time and the Acquisition 4 Effective Time are
generically referred to herein as the “Effective Time”).

It is the intention of the parties that each of the events
set forth in this Section 2.1 shall occur
simultaneously.

SECTION 2.2                          Conversion of Service Provider Shares.

At the applicable Effective Time, by virtue of the
applicable Merger and without any action on the part of IWEST, the Service
Providers, the Acquisition Entities or their respective stockholders:

(a)   Each
share of common stock, no par value per share, of the Advisor (“Advisor Shares”) issued and outstanding
immediately prior to the Acquisition 1 Effective Time (other than any shares
held in the treasury of the Advisor or any Subsidiary of the Advisor, which
shall be canceled and extinguished without any conversion thereof) shall be
converted into 18,750 duly authorized, validly issued, fully paid and
nonassessable shares of common stock, par value $0.001 per share of IWEST (“IWEST Shares”).

(b)   Each share of common stock, par value $0.01
per share, of Inland Southwest (“Inland Southwest Shares”) issued and
outstanding immediately prior to the 

 16
 

Acquisition 2
Effective Time (other than any shares held in the treasury of Inland Southwest
or any Subsidiary of Inland Southwest, which shall be canceled and extinguished
without any conversion thereof and other than Dissenting Shares) shall be
converted into 620.656  IWEST Shares.

(c)   Each
share of common stock, par value $0.01 per share, of Inland Northwest (“Inland
Northwest Shares”) issued and outstanding immediately prior to the
Acquisition 3 Effective Time (other than any shares held in the treasury of
Inland Northwest or any Subsidiary of Inland Northwest, which shall be canceled
and extinguished without any conversion thereof and other than Dissenting
Shares) shall be converted into 620.348 IWEST Shares.

(d)   Each
share of common stock, par value $0.01 per share, of Inland Western (“Inland
Western Shares”; and together with the Advisor Shares, the Inland Southwest
Shares and the Inland Northwest Shares, the “Converted
Shares”) issued and outstanding immediately prior to the Acquisition
4 Effective Time (other than any shares held in the treasury of Inland Western
or any Subsidiary of Inland Western, which shall be canceled and extinguished
without any conversion thereof and other than Dissenting Shares) shall be
converted into 655.824 IWEST Shares.

(e)   No fractional IWEST Shares shall be issued by
IWEST pursuant to the Mergers.  All
fractional IWEST Shares that IREIC or any Stockholder would otherwise be
entitled to receive pursuant to the Mergers (for each Stockholder, taking into
account all IWEST Shares such Stockholder is entitled to receive pursuant to
all of the Mergers) shall be rounded up to the nearest whole number of IWEST
Shares.

(f)    IWEST Shares issued in the Mergers shall be
subject to the restrictions and entitled to the registration and other rights
set forth in the Registration Rights Agreement and shall bear the legend set
forth in Section 6.11 of this
Agreement.  As of the applicable
Effective Time, all Converted Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing such Converted Shares shall cease to have any
rights with respect thereto, except the right to receive the IWEST Shares,
subject in each case to the terms and conditions of this Agreement and the
Escrow Agreement.

(g)   Notwithstanding the preceding subsections of
this Section 2.2, at the Effective Time, certificates representing
fifty-five percent (55%) of  all
IWEST Shares (rounded up to the nearest whole Share on a holder by holder
basis) issued to IREIC and each Stockholder pursuant to the Mergers shall be
delivered or caused to be delivered by IREIC and such Stockholders (or by the
Agent on behalf of the Stockholders) directly to LaSalle Bank, N.A., as escrow
agent (the “Escrow Agent”), to be held in
escrow and released therefrom pursuant to the terms of the Escrow Agreement.

(h)   Notwithstanding any other provision in this
Agreement, in no event shall the IWEST Shares issued by IWEST to IREIC and the
Stockholders in connection with the Mergers exceed 37,500,000 IWEST Shares in
the aggregate, except for any additional IWEST 

 17
 

Shares (but
not more than 200 IWEST Shares in the aggregate) issued as a result of rounding
up of IWEST Shares pursuant to Section 2.2(e) above.

SECTION 2.3                          Conversion of Acquisition Entity Shares.

At the applicable Effective Time, by virtue of each
Merger and without any action on the part of the Service Providers, the
Acquisition Entities or IWEST:

(a)   Each share of common stock, no par value, of
Acquisition 1 issued and outstanding immediately prior to the Acquisition 1
Effective Time shall be converted into and exchanged for one newly and validly
issued, fully paid and nonassessable share of common stock of the Advisor
Surviving Corporation;

(b)   Each share of Acquisition 2 common stock
issued and outstanding immediately prior to the Acquisition 2 Effective Time
shall be converted into and exchanged for one newly and validly issued, fully
paid and nonassessable share of common stock of the Inland Southwest Surviving
Corporation;

(c)   Each share of Acquisition 3 common stock
issued and outstanding immediately prior to the Acquisition 3 Effective Time
shall be converted into and exchanged for one newly and validly issued, fully
paid and nonassessable share of common stock of the Inland Northwest Surviving
Corporation; and

(d)   Each share of Acquisition 4 issued and
outstanding immediately prior to the Acquisition 4 Effective Time shall be
converted into and exchanged for one newly and validly issued, fully paid and
nonassessable share of common stock of the Inland Western Surviving
Corporation.

SECTION 2.4                          Appraisal Rights.

(a)   Notwithstanding any provision of this
Agreement to the contrary, Inland Southwest Shares, Inland Northwest Shares and
Inland Western Shares outstanding immediately prior to the applicable Effective
Time held by Stockholders (i) who have not voted in favor of adopting this
Agreement and approval of the applicable Merger or consented thereto in writing
and (ii) who have properly demanded appraisal for such Inland Southwest Shares,
Inland Northwest Shares or Inland Western Shares in accordance with the DGCL
(the “Dissenting Shares”), shall not be
converted into or represent the right to receive IWEST Shares as provided in Section 2.2 of this Agreement unless such
Stockholder fails to perfect or withdraws or otherwise loses such Stockholder’s
right to appraisal.  To the extent
provided under Section 262 of the DGCL, Stockholders that perfect their right
to appraisal shall be entitled to receive payment of the fair value of such
Dissenting Shares held by them from Inland Southwest Surviving Corporation,
Inland Northwest Surviving Corporation or Inland Western Surviving Corporation,
as applicable, in accordance with Section 262 of the DGCL, unless such
Stockholder withdraws or otherwise loses such Stockholder’s right to
appraisal.  If after the applicable
Effective Time a Stockholder who has demanded appraisal fails to perfect or
withdraws or loses his right to appraisal, such Inland Southwest Shares, Inland
Northwest Shares or Inland Western Shares shall no longer be considered
Dissenting Shares and be deemed to have been converted as of the applicable
Effective Time into a right to receive 

 18
 

IWEST Shares
as provided in Section 2.2 of this
Agreement, and, following receipt from such Stockholder of a Letter of
Transmittal, (i) certificates representing fifty-five percent (55%) of the
number of IWEST Shares for which appraisal rights have been withdrawn or lost
or not perfected (rounded up to the nearest whole share) shall be placed into
the Escrow Fund by the Stockholder, or by the Agent on behalf of the
Stockholder, which shares placed in the Escrow Fund shall be governed by the
terms of the Escrow Agreement, and (ii) a number of IWEST Shares equal to
forty-five percent (45%) of the number of IWEST Shares for which appraisal
rights have been withdrawn or lost or not perfected (rounded down to the
nearest whole share) shall be delivered to the Agent (for further delivery to
the Stockholder) by IWEST.  Each of Inland
Southwest, Inland Northwest and Inland Western shall give prompt notice to
IWEST of each demand for appraisal received by it, and IWEST shall have the
right to participate in negotiations and proceedings regarding such
demand.  None of Inland Southwest, Inland
Northwest or Inland Western shall, except with prior written consent of IWEST,
settle, offer to settle or voluntarily make any payment regarding such
demand.  Each holder of Dissenting Shares
who is entitled to payment of the fair value of such Dissenting Shares shall
receive payment therefor only after surrender to IWEST of the certificate or
certificates representing the Dissenting Shares.

(b)   To the extent permitted by law, on behalf of
each Stockholder who has executed on or after the date hereof an Agent
Appointment Agreement, the Agent hereby irrevocably waives and disclaims any
and all rights to appraisal that such Stockholder may have under applicable
law.  For the avoidance of doubt, each of
the Principal Stockholders hereby irrevocably waives and disclaims any and all
rights to appraisal that such Principal Stockholder may have under applicable
law.

(c)   IREIC (as sole stockholder of the Advisor)
hereby irrevocably waives and disclaims any and all rights to appraisal that it
may have under applicable law.

SECTION 2.5                          Exchange of Certificates.

(a)   Letter of Transmittal.  Promptly after the date hereof, IWEST will
deliver to IREIC and to the Agent, for delivery to each Stockholder, (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to shares  covered
thereby shall pass, only upon proper delivery thereof to IWEST of the
certificate representing such shares  (the “Certificates”),
and such letter shall be in customary form and include such other documents as
are required pursuant to the instructions thereto (“Letter
of Transmittal”) and (ii) instructions for use in surrendering such
securities in exchange for the right to receive IWEST Shares, as contemplated
by and subject to the terms of this Agreement.

(b)   Exchange Procedures. 
Upon surrender and delivery to IWEST of any Certificates by means of a
Letter of Transmittal, upon or after the Closing, each holder of Converted
Shares shall be entitled to receive, and IWEST shall thereupon deliver to IREIC
or the Agent, for the benefit of the Stockholder, in exchange therefor (i)
certificates representing fifty-five percent (55%) of the total number of IWEST
Shares which such holder has the right to receive pursuant to Section 2.2
(rounded up to the nearest whole share) to be deposited into the Escrow Fund
(the “Escrowed Shares”) and (ii) a number of IWEST Shares equal to
forty-five percent (45%) of the total number of IWEST Shares which such holder
has the right to 

 19
 

receive
pursuant to Section 2.2 (rounded down to the nearest whole share).  Any Certificates so surrendered shall
forthwith be canceled.

(c)   Transfer
of IWEST Shares.  If IWEST
Shares are to be issued to any Person other than the Person in whose name a
Certificate surrendered in exchange therefor is registered, it shall be a condition
to such exchange that the Certificate so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that any applicable transfer
Taxes have been paid by the holder of the Certificate.

(d)   No Further
Transfer of Converted Shares. 
Subsequent to the applicable Effective Time, there shall be no further
transfer of Certificates on the records of the applicable Service Providers,
and if Certificates are presented to such Service Providers for transfer, they
shall be canceled against delivery of IWEST Shares as provided for herein,
subject to the provisions of this Section 2.5 and Section 2.2
hereof.  Until surrendered as
contemplated by Section 2.5(b), each
Certificate shall be deemed at any time after the applicable Effective Time to
represent only the right to receive upon such surrender IWEST Shares as
provided for herein, and not any Equity Interest in, or right to any dividends
or other distributions from, the applicable Service Provider.

(e)   No Further Rights in Converted Shares.  The IWEST Shares paid upon the surrender and
delivery of the documentation described in Section
2.5(b) hereof shall be deemed to be full satisfaction of all rights
pertaining to the Converted Shares represented thereby.

(f)    Contribution
of Additional Shares.  If, for
any reason, the aggregate number of IWEST Shares deposited into the Escrow Fund
in connection with the Closing is less than fifty-five percent (55%) multiplied
by the total number of IWEST Shares issued by IWEST at the Effective Time pursuant
to the Mergers, IREIC and/or the Agent, on behalf of one or more of the
Principal Stockholders,  shall
deposit within five (5) Business Days of the Effective Time into the Escrow
Fund a certificate or certificates representing an additional number of IWEST
Shares, such that fifty-five percent (55%) of the aggregate number of IWEST
Shares which IREIC and the Stockholders have the right to receive pursuant to
the Mergers shall have been deposited into the Escrow Fund, rounded up to the
nearest whole share.

SECTION 2.6                          Appointment of Agent.

(a)   Pursuant to the Agent Appointment Agreements,
the Agent shall serve as the agent, representative and attorney-in-fact (with
full power of substitution) of each Stockholder who has signed an Agent
Appointment Agreement, with the full and exclusive power and authority to
represent and bind each such Stockholder with respect to all matters arising
under and pursuant to this Agreement and the transactions contemplated
hereby.  The Agent shall use its
commercially reasonable efforts to cause each Stockholder to execute an Agent
Appointment Agreement prior to the Closing. 
As of the date hereof, the Agent has entered into an Agent Appointment
Agreement with each of the Principal Stockholders, and each Principal
Stockholder has duly executed and delivered his respective Agent Appointment
Agreement.

 20
 

(b)   IWEST shall be entitled to deal exclusively
with the Agent on all matters relating to this Agreement with respect to or
that otherwise concern any Stockholder (or the Stockholders as a group) or his
or her rights under this Agreement or in connection with the transactions
contemplated hereby, including Article IX
hereof, and shall be entitled to rely conclusively (without further evidence of
any kind) on any document executed or purported to be executed by the Agent on
behalf of any Stockholder, and on any other action taken or purported to be
taken by the Agent on behalf of any Stockholder, as fully binding upon the
Stockholder or the Stockholders as a group.

(c)   Except as otherwise provided herein,
including in Article IX, IWEST, the Acquisition Entities and the Service
Providers shall have no liability for any liabilities, fees, costs or other
expenses incurred (i) by the Agent or (ii) in connection with the execution of
any Agent Appointment Agreement.

SECTION 2.7                          Adjustments to Reflect Net Working Capital.

(a)   Adjustments to Reflect Positive Net Working Capital.  In the event Net Working Capital (as defined
below) is greater than $10,000, IWEST shall, within five (5) Business Days of
the final determination thereof, pay and deliver to IREIC and the Agent, on
behalf of the Stockholders,  cash
equal to the amount by which Net Working Capital exceeds $10,000.  Any amounts paid by IWEST pursuant to this Section
2.7(a) shall be allocated among IREIC and the Stockholders (by the Agent)
on a pro rata basis in accordance with the number of IWEST Shares received by
IREIC and the Stockholders pursuant to Section 2.2 unless IREIC and the
Agent agree to a different allocation.

(b)   Adjustments to Reflect Negative Net Working Capital.  In the event Net Working Capital is below
negative $10,000, IREIC or the Agent shall, within five (5) Business Days of
the final determination thereof, pay and deliver to IWEST cash equal to the
amount by which Net Working Capital is below negative $10,000.

(c)   Definition of Net Working Capital; Valuation of Shares.  For the purposes of this Agreement, “Net Working Capital” shall mean the aggregate  difference in current assets and current liabilities of the
Service Providers (on a consolidated basis) as reflected on the Closing Balance
Sheet of the Service Providers prepared in accordance with GAAP.

(d)   Preparation of Closing
Balance Sheet and Closing Statement.  As soon as practicable, but in no event later
than thirty (30) days after the Closing Date, IREIC and the Agent shall prepare
and deliver to IWEST an unaudited balance sheet  for the Service Providers (on a consolidated basis) dated
as of the close of business on the Closing Date and prepared in accordance with
GAAP (collectively, the “Closing Balance Sheet”),
together with a statement (the “Closing Statement”)
calculating the aggregate Net Working Capital of the Service Providers (on a
consolidated basis), in each case, as of the close of business on the Closing
Date on a basis consistent (including the basis of calculation of individual
line items and the determination of allowances and reserves) with the sample
Closing Balance Sheet and sample Closing Statement attached as Exhibit
A hereto, and all of the methods and practices used in the
preparation thereof.  IWEST shall give
IREIC and the Agent full access at all 

 21
 

reasonable times to the books, records and
other materials of the Surviving Entities and the personnel of the Surviving
Entities to the extent that they relate to the Surviving Entities and
preparation of the Closing Balance Sheet and the Closing Statement, including
such historical financial information relating to the Surviving Entities as
IREIC and the Agent shall reasonably request.

(e)   Examination and Objection by IWEST.  Upon receipt of the Closing Balance Sheet and
the Closing Statement, IWEST shall have thirty (30) days (the “Review Period”) to review such statement and the
related computations of Net Working Capital. 
On or prior to the last day of the Review Period, IWEST may object to
the Closing Balance Sheet, the Closing Statement and/or the computations of Net
Working Capital or adjustments by delivering to IREIC and the Agent a written
statement from IWEST setting forth in reasonable detail objections thereto (the
“Statement of Objections”).  If IWEST does not deliver a Statement of
Objections in accordance with this Section 2.7(e)
within the Review Period, the Closing Balance Sheet and the Closing Statement
(and related computations of Net Working Capital) shall be deemed to have been
accepted and shall be final and binding on the parties.  If IWEST delivers a Statement of Objections
to IREIC and the Agent within the Review Period, IWEST, IREIC and the Agent
shall use good faith efforts to resolve such objections by written agreement,
and any objections that are resolved by a written agreement between IWEST,
IREIC and the Agent shall be final and binding on the parties hereto and all
holders of Converted Shares.

(f)    Resolution of Disputes. 
If IWEST, IREIC and the Agent fail to reach a written agreement with
respect to all of the matters set forth in any Statement of Objections, then
the matters still in dispute shall, not later than thirty (30) days after the
delivery of such Statement of Objections (or, if earlier, the date on which
either IWEST, on the one hand, or IREIC and the Agent, on the other hand,
affirmatively terminates discussions in writing with respect to the Statement
of Objections), be submitted for resolution to such accounting firm agreed to
by IWEST, IREIC and the Agent (the “Settlement
Accountant”) who, acting as an expert and not an arbitrator, shall
resolve the matters in dispute and adjust the Closing Balance Sheet and the
Closing Statement to reflect such resolution; provided, however, that the Settlement Accountant may not
determine an amount of Net Working Capital for any of the Service Providers in
excess of that claimed by IREIC or the Agent, as applicable, or less than that
claimed by IWEST.  The Settlement Accountant shall
make such determination (based solely on the presentations by IWEST, IREIC, and
the Agent as to whether any disputed matter has been determined in a manner
consistent with GAAP consistently applied) within sixty (60) days following the
submission of the matter to the Settlement Accountant for resolution, and such
determination shall be final and binding upon the parties hereto and all
holders of Converted Shares.  In the
event any dispute is submitted to the Settlement Accountant for resolution as
provided herein, the fees, charges and expenses of the Settlement Accountant
shall be paid one half by IWEST, on the one hand, and one half by IREIC and the
Stockholders, on the other hand.  Each of IWEST, IREIC and the Agent
shall execute a reasonably acceptable engagement letter, if requested to do so
by the Settlement Accountant.

 

 22

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF IWEST

IWEST hereby represents and warrants to the Service
Providers, IREIC and the Agent (on behalf of the Stockholders), as of the date
hereof and as of the Closing Date (or, if made as of a specified date, as of
such date), as follows:

SECTION 3.1                          Organization and Qualification.

IWEST is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland.  Each of Acquisition 1, Acquisition 2,
Acquisition 3 and Acquisition 4 is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization.  Each of IWEST and each
Acquisition Entity has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted except where the failure to have such power and
authority would not reasonably be expected to have an IWEST Material Adverse
Effect.  Each of IWEST and each
Acquisition Entity is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would not
reasonably be expected to have an IWEST Material Adverse Effect.

SECTION 3.2                          Capitalization.

(a)   The authorized capital stock of IWEST
consists of 640,000,000 IWEST Shares and 10,000,000  shares of preferred stock, par value $.001 per share (“IWEST Preferred Stock”).  As of June 1, 2007, 449,194,910 IWEST Shares were issued and outstanding, all of
which are validly issued, fully paid and non-assessable and free of preemptive
rights.  As of the date hereof, no shares
of IWEST Preferred Stock were issued and outstanding.  All outstanding Equity Interests of each
Acquisition Entity are owned by IWEST and are validly issued, fully paid and
non-assessable.

(b)   To the Knowledge of the IWEST Special
Committee, except as contemplated by this Agreement, as of the date hereof,
there are no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, agreements, arrangements, rights (including
preemptive rights) or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement or commitment of
any character, obligating IWEST to issue, deliver or sell, or cause to be
issued, delivered or sold, additional IWEST Shares or obligating IWEST to
grant, extend or enter into any such agreement or commitment.  To the Knowledge of the IWEST Special
Committee, there are no voting trusts, proxies or other agreements or
understandings to which IWEST is a party or by which IWEST is bound with
respect to the voting of any IWEST Shares. 
To the Knowledge of the IWEST Special Committee, except as contemplated
by this Agreement or as set forth in Schedule 3.2(b),
there are no registration rights held by any individual or entity with respect
to any securities of the IWEST (whether such securities are currently
outstanding or issuable in the future).

 23
 

SECTION 3.3                          Issuance of Securities.

The IWEST Shares to be issued in connection with the
Mergers, when issued in accordance with the provisions of this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable.

SECTION 3.4                          Authority; No Conflicts; Approvals.

(a)   Each of IWEST and each Acquisition Entity has
full corporate power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and, subject to the approval of
IWEST as sole stockholder of each Acquisition Entity of this Agreement and the
Mergers and the filing of the applicable Articles of Merger or Certificates of
Merger, to consummate the transactions contemplated hereby and thereby (it
being understood and agreed that the approval by the stockholders of IWEST of
this Agreement and the transactions contemplated hereby is not required by Law
but is a condition to completion of the Mergers as set forth in Section 7.2(d)).  The execution and delivery by each of IWEST
and each Acquisition Entity of this Agreement and each Ancillary Agreement to
which it is a party, and the consummation by IWEST and such Acquisition Entity
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary corporate action and no other proceedings on the part of IWEST
or such Acquisition Entity are necessary to authorize the execution and
delivery of this Agreement and such Ancillary Agreements and the consummation
of the transactions contemplated hereby or thereby, except for obtaining the
approval of IWEST as sole stockholder of each Acquisition Entity of this
Agreement and the Mergers and the filing of the applicable Articles of Merger
or Certificates of Merger.  This
Agreement has been, and each Ancillary Agreement to which IWEST or any
Acquisition Entity is a party when executed and delivered will be, duly and
validly executed and delivered by IWEST and such Acquisition Entity or
Acquisition Entities, as applicable, and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto or
thereto, constitutes or will constitute, as applicable, a legal, valid and
binding agreement of IWEST or such Acquisition Entity or Acquisition Entities,
as applicable, enforceable against IWEST or such Acquisition Entity or
Acquisition Entities, as applicable, in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally, (ii) general equitable principles, and (iii) to
the extent this Agreement or such Ancillary Agreement contains indemnification
provisions for violations of federal or state securities laws, as
enforceability of such provisions may be limited under federal and state
securities laws.

(b)   The execution and delivery by each of IWEST
and each Acquisition Entity of this Agreement and each Ancillary Agreement to
which it is a party does not and will not, and the consummation by IWEST and
such Acquisition Entity of the transactions contemplated hereby and thereby
will not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
assets of IWEST or any Acquisition Entity under any of the terms, conditions or
provisions of, (i) the organizational documents of IWEST or any Acquisition 

 24
 

Entity, (ii) to the Knowledge of the IWEST
Special Committee, subject to obtaining the IWEST Required Statutory Approvals
and the approval of IWEST as sole stockholder of each Acquisition Entity of
this Agreement and the Mergers, any Law applicable to IWEST, any Acquisition
Entity or any of their respective properties, or (iii) to the Knowledge of the
IWEST Special Committee, and except for the IWEST Required Consents, any
material Contract to which IWEST or any Acquisition Entity is a party or by
which IWEST, any Acquisition Entity or any of their respective assets or
properties is bound, except as to each of (i) (ii) and (iii) to the extent that
such breach or default of would not reasonably be expected to have an IWEST
Material Adverse Effect.

(c)   To the Knowledge of the IWEST Special
Committee, except for (i) the filing by IWEST of a proxy statement relating to
the IWEST Stockholders’ Meeting (together with any amendments thereof or
supplements thereto, the “Proxy Statement”)
with the Commission pursuant to the Exchange Act, (ii) any required filings by
or on behalf of IWEST to effect the Mergers, (iii) any required filings by or
on behalf of IWEST under applicable blue sky Laws (the filings and approvals
referred to in clauses (i) through (iii) are collectively referred to as the “IWEST Required Statutory Approvals”), and
(iv) the IWEST Stockholders’ Ratification (it being understood and agreed
that the approval by the stockholders of IWEST of this Agreement and the
transactions contemplated hereby is not required by Law but is a condition to
completion of the Mergers as set forth in Section 7.2(d)) and the
approval of IWEST as sole stockholder of each Acquisition Entity of this
Agreement and the Mergers, no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any Governmental Authority
or any other Person is required to be made, obtained or given by or on behalf
of IWEST or any Acquisition Entity the absence of which would have an IWEST
Material Adverse Effect or prevent or materially delay the consummation by
IWEST or any Acquisition Entity of the transactions contemplated hereby and
thereby or the performance by IWEST or any Acquisition Entity of its
obligations under this Agreement and the Ancillary Agreements to which it is
party, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals set forth on Schedule
3.4(c) hereto (the “IWEST Required Consents”).

SECTION 3.5                          Proxy Statement.

The sections of the Proxy Statement set forth on Schedule
3.5(a) hereto, will not, as of (a) the time it is first mailed to the stockholders
of IWEST and (b) the date of the IWEST Stockholders’ Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.  To the Knowledge of the Special Committee,
the remainder of the Proxy Statement  (excluding
those sections of the Proxy Statement set forth on Schedule 4.24(a)
hereto) will not, as of (a) the time it is first mailed to the stockholders
of IWEST and (b) the date of the IWEST Stockholders’ Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.  To the Knowledge of the IWEST Special
Committee, the Proxy Statement will, as of (x) the time it is first mailed to
stockholders of the IWEST and (y) the date of the IWEST Stockholders’ Meeting,
comply as to form in all material respects with the applicable requirements of
the Exchange Act and other 

 25
 

applicable Laws.  The representations and warranties contained
in this Section 3.5 will not apply to statements
included in or omissions from the Proxy Statement based upon information
furnished in writing, or failed to be so furnished, to IWEST or any Acquisition
Entity by the Agent, TIGI, the Service Providers, IREIC or any Stockholder
specifically for use therein.

SECTION 3.6                          Disclosure; Financial Statements; Absence of Certain
Changes.

(a)   To the Knowledge of the IWEST Special
Committee, each of IWEST’s Annual Report on Form 10-K for the year ended
December 31, 2006 (the “IWEST Form 10-K”)
and each other report or document filed after December 31, 2006 and until the
Closing by IWEST with the Commission under the Exchange Act other than the
Proxy Statement (the IWEST Form 10-K and such other reports or documents, other
than the Proxy Statement, the “IWEST SEC Filings”),
(i) at the time it was filed with the Commission (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing), complied in all material respects with the requirements of the
Exchange Act and (ii) did not at the time it was filed with the Commission (or
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.

(b)   To the Knowledge of the IWEST Special
Committee, the consolidated financial statements (including, in each case, any
notes thereto) contained in the IWEST SEC Filings have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and, in the case of unaudited quarterly financial statements,
as permitted by Form 10-Q under the Exchange Act), and each fairly presents, in
all material respects, the consolidated financial position of IWEST and its
consolidated Subsidiaries as of the respective dates set forth therein and the
results of operations and cash flows for the respective periods indicated
therein, subject, in the case of unaudited statements, to normal or recurring
year-end adjustments.

(c)   To the Knowledge of the IWEST Special
Committee, since December 31, 2006 there has not been any IWEST Material
Adverse Effect.

SECTION
3.7                          Brokers
and Finders.

Except as set forth on Schedule 3.7 hereto, the IWEST Special
Committee, on behalf of IWEST, has not retained, paid or become obligated to
pay any fee to any broker, finder or other for or on account of the
transactions contemplated by this Agreement.

SECTION
3.8                          Litigation.

To the Knowledge
of the IWEST Special Committee, there are no Actions pending or threatened
against or investigations with respect to IWEST, that, if determined in a manner adverse to IWEST would,
individually or in the aggregate, reasonably be expected to result in an IWEST
Material Adverse Effect or otherwise reasonably be expected to prohibit,
restrict or delay the consummation of the transactions contemplated by this Agreement
or any Ancillary Agreement to which it is a party.  To the Knowledge of the IWEST Special
Committee, IWEST 

 26
 

is not subject to any Judgment, settlement order, agreement or
other arrangement which would, individually or in the aggregate, reasonably be
expected to result in an IWEST Material Adverse
Effect or otherwise reasonably be expected to prohibit, restrict or delay the
consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement to which it is a party.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF IREIC, THE SERVICE PROVIDERS AND THE AGENT

Except as set forth in the Service Provider Disclosure
Schedules (as defined in Section 10.2) attached hereto and
delivered by the Service Providers, each of IREIC, the Agent (on behalf of the
Stockholders) and each Service Provider hereby represents and warrants to
IWEST, as of the date hereof and as of the Closing Date (or, if made as of a
specified date, as of such date), as follows:

SECTION 4.1                          Organization and Qualification.

Each of IREIC and each Service Provider is a
corporation or limited liability company duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and has
requisite corporate or company power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted, except where the failure to have such power and authority would not
reasonably, individually or in the aggregate, be expected to have a Service
Provider Material Adverse Effect.  Each
of IREIC and each Service Provider is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it make such qualification
necessary, except where the failure to be so qualified and in good standing
would not reasonably, individually or in the aggregate, be expected to have a
Service Provider Material Adverse Effect.

SECTION 4.2                          Capitalization.

(a)   The authorized capital stock of the Advisor
consists of 100,000  Advisor
Shares, of which 1,000  shares are
issued and outstanding and no shares are held as treasury shares or reserved
for any purpose.  The Advisor Shares
constitute all of the issued and outstanding Equity Interests of the
Advisor.  All of the issued and
outstanding Advisor Shares are owned by IREIC and are validly issued, fully
paid and non-assessable, free of preemptive rights with respect thereto and
have been issued in compliance with all applicable federal and state securities
laws.  The authorized capital stock of
Inland Southwest consists of 11,000 Inland Southwest Shares, of which 10,070  shares are issued and outstanding and no shares are held as
treasury shares or reserved for any purpose. 
All of the issued and outstanding Inland Southwest Shares are validly
issued, fully paid and non-assessable, free of preemptive rights with respect
thereto and have been issued in compliance with all applicable federal and
state securities laws.  The authorized
capital stock of Inland Northwest consists of  11,000
Inland Northwest Shares, of which 10,075 shares are issued and outstanding and
no shares are held as treasury shares or reserved for any purpose.  All of the issued and outstanding Inland
Northwest Shares are validly issued, fully paid and non-assessable, free of
preemptive rights with respect thereto and have been issued in compliance with
all applicable federal and state securities laws.  

 27
 

The authorized capital stock of Inland
Western consists of 10,000 Inland Western Shares, of which 9,530  shares are issued and outstanding and no shares are held as
treasury shares or reserved for any purpose. 
All of the issued and outstanding Inland Western Shares are validly
issued, fully paid and non-assessable, free of preemptive rights with respect
thereto and have been issued in compliance with all applicable federal and
state securities laws.  IREIC has good
and marketable title to, and is the record and beneficial owner of all Advisor
Shares, free and clear of any Liens.  As
of the Closing, each Stockholder will have good and marketable title to and
will be the record beneficial owner of its Inland Southwest Shares, Inland
Northwest Shares and Inland Western Shares as applicable, free and clear of any
Liens.

(b)   Except as provided in this Agreement, no
Person has any agreement or option or any right or privilege capable of
becoming an agreement, option or right for the acquisition of (i) Advisor
Shares or (ii) Inland Southwest Shares, Inland Northwest Shares or Inland
Western Shares.  There are no outstanding
subscriptions, options, warrants, calls, agreements rights or convertible or
exchangeable securities or any other commitments of any character or other
instruments giving any Person the right to acquire any shares of capital stock,
or other Shares Interests in, any Service Provider or giving any Person any
right or privilege (whether preemptive or contractual) capable of becoming an
agreement or option to acquire such shares. 
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights for which any Service Provider
has any liability or obligation.  There
are no voting trusts, proxies or other agreements or understandings to which
IREIC or any Stockholder is party with respect to the voting of any Equity
Interests of any Service Provider.  No
Service Provider owns, directly or indirectly, any capital stock or other
Equity Interest in any corporation, partnership, business association, joint
venture or other entity.  Neither the
Advisor nor any of the Manager Parents has any Subsidiaries.  There are no issued or outstanding bonds,
indentures, notes or other indebtedness having the right to vote (or
convertible into securities that have the right to vote) on any matters on
which stockholders of any Service Provider may vote.  There are no other Equity Interests in any
Service Provider outstanding or reserved.

SECTION 4.3                          Authority; No Conflicts; Approvals.        

(a)   Each of IREIC, the Service Providers and the
Agent has the requisite corporate or limited liability company power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is a party and (subject to obtaining the Manager Stockholders’ Approval, as
defined in Section 6.2(b), below, and the Written Consent of IREIC as
the sole stockholder of the Advisor, each of which is being delivered
concurrent with the execution of this Agreement) to consummate the transactions
contemplated hereby and thereby.  The
execution and delivery by each of IREIC, each Service Provider and the Agent of
this Agreement and each Ancillary Agreement to which it is a party, and the
consummation by IREIC, such Service Provider and the Agent of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate or limited liability company action  and no other proceedings on the part of IREIC, such Service
Provider, the Agent or any Stockholder is necessary to authorize the execution
and delivery of this Agreement and such Ancillary Agreements or to consummate
the transactions contemplated hereby or thereby.  This Agreement has been, and each Ancillary
Agreement to which IREIC, any Service Provider or the Agent (on behalf of the
Stockholders) is a party when executed and delivered will be, duly 

 28
 

and validly executed and delivered by IREIC,
such Service Provider or the Agent (on behalf of the Stockholders), as
applicable, and, assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto or thereto, constitutes or will
constitute, as applicable, a valid and binding agreement of IREIC, such Service
Provider and the Agent (on behalf of the Stockholders), as applicable,
enforceable against IREIC, such Service Provider or the Agent (on behalf of the
Stockholders), as applicable, in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally, (ii) general equitable principles, and (iii) to
the extent this Agreement or such Ancillary Agreement contains indemnification
provisions for violations of federal or state securities laws, as
enforceability of such provisions may be limited under federal and state
securities laws.

(b)   The execution and delivery by IREIC, each
Service Provider and the Agent (on behalf of the Stockholders) does not and
will not, and the consummation by IREIC, each Service Provider and the Agent
(on behalf of the Stockholders) of this Agreement and each Ancillary Agreement
to which it is a party of the transactions contemplated hereby and thereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
assets of any Service Provider under any of the terms, conditions or provisions
of (i) the organizational documents of IREIC and each Service Provider, (ii)
any Law applicable to IREIC, any Service Provider, the Agent or any Stockholder
or any of their respective assets or properties, or (iii) except for the
Service Provider Required Consents, any Contract to which IREIC, any Service
Provider, the Agent or any Stockholder is a party or by which IREIC, any
Service Provider, the Agent or any Stockholder or their respective assets or
properties may be bound, except as to each of (i), (ii) and (iii) to the extent
that such breach or default would not reasonably be expected to have a Service
Provider Material Adverse Effect.

(c)   Except for (i) any required filings by or on
behalf of the Service Providers to effect the Mergers under the law of the
applicable jurisdiction (the “Service Provider
Required Statutory Approvals”; and, together with the IWEST Required
Statutory Approvals, the “Required Statutory Approvals”),
(ii) the notices, authorizations, consents or approvals set forth on Schedule 4.3(c) hereto (the “Service Provider Required Consents”; and,
together with the IWEST Required Consents, the “Required
Consents”), no declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any Governmental Authority or any
other Person is necessary for the execution and delivery by each of IREIC, each
Service Provider and the Agent (on behalf of the Stockholders) of this
Agreement and the Ancillary Agreements to which it is party or the consummation
by IREIC, such Service Provider or the Agent (on behalf of the Stockholders) of
the transactions contemplated hereby and thereby.

(d)   Each of IREIC, as the sole stockholder of the
Advisor, and the Principal Stockholders, as stockholders of each of the Manager
Parents, has the requisite power and authority to execute the Written Consents
and no other proceedings on the part of IREIC or such Principal Stockholder is
necessary to authorize the execution and delivery of the Written Consents.  The execution and delivery by IREIC and the
Principal Stockholders of the Written 

 29
 

Consents does not and will not, violate,
conflict with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under (i) the organizational documents of IREIC, (ii) any Law applicable to
IREIC or any Principal Stockholder or any of their respective assets or
properties, or (iii) any Contract to which IREIC, or any Principal Stockholder
is a party or by which IREIC or any Principal Stockholder or their respective
assets or properties may be bound.

SECTION 4.4                          Financial Statements; Internal Controls.

(a)   Attached as Schedule
4.4 are (i) audited balance sheets for each Manager at December 31,
2005 and 2006 (provided such entities were in existence as of such date) and
audited statements of income, changes in owners’ equity and cash flow for the
fiscal years ended December 31, 2005 and 2006 (or such shorter periods as such
entities have been in existence) (such financial statements, including the
footnotes contained therein, the “Manager Audited
Financial Statements”), (ii) unaudited balance sheets for each
Manager at June 30, 2007 and unaudited statements of income for the six months
ending on June 30, 2007 (the “Manager Unaudited
Financial Statements”), (iii) an audited balance sheet for the
Advisor at December 31, 2005 and 2006 and audited statements of income, changes
in owners’ equity and cash flow for the fiscal years ended December 31, 2005
and 2006 (such financial statements, including the footnotes contained therein,
the “Advisor Audited Financial Statements”;
and, together with the Manager Audited Financial Statements, the “Audited
Financial Statements”), and (iv) an unaudited balance sheet for the Advisor
at June 30, 2007 and unaudited statements of income and changes in owners’
equity and cash flow for the six months ended June 30, 2007 (the “Advisor Unaudited Financial Statements”; and
together with the Manager Unaudited Financial Statements, the “Unaudited Financial Statements”).  The Audited Financial Statements and
Unaudited Financial Statements are collectively referred to herein as the “Service Provider Financial Statements.” The
Service Provider Financial Statements of each Service Provider (including, in
each case, any notes thereto if required by GAAP) have been prepared in
accordance with GAAP and fairly present, in all material respects, the
financial condition of such Service Provider as of the respective dates and the
results of operations and cash flows of such Service Provider for the
respective periods then ended, as applicable, subject, in the case of unaudited
statements, to normal or recurring year-end immaterial adjustments.

(b)   No Service Provider has any significant
deficiencies in the design or operation of its internal controls which could
adversely affect its ability to record, process, summarize and report financial
data with respect to such Service Provider and (ii) no Service Provider has
identified any fraud, whether or not material, that involves management or
other employees of such Service Provider who have a significant role in such
Service Provider’s internal controls. 
There have been no significant changes in the internal controls of any
Service Provider or in other factors with respect to any Service Provider’s
operations that could significantly affect internal controls with respect to
such Service Provider subsequent to the date of its most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

 30
 

SECTION 4.5                          Absence of Certain Changes or Events.

Since December 31, 2006, there has not been any change
or any event which would, individually or in the aggregate, reasonably be
expected to have a Service Provider Material Adverse Effect.  In addition to the foregoing, since December
31, 2006, except as otherwise permitted by this Agreement, each Service
Provider has conducted in all material respects its business in the ordinary
course consistent with past practice.  Since December 31, 2006, except as
otherwise permitted by this Agreement, no Service Provider has (a) permitted or
suffered any Lien on any portion of its properties except for Permitted Liens,
(b) experienced material  damage,
destruction or casualty loss to any part of its properties or assets or (c)
taken any action that, if taken without the consent of IWEST during the period
from the date of this Agreement through the Effective Time, would constitute a
breach of Section 5.1 of this Agreement.

SECTION 4.6                          Taxes.

(a)   Each Service Provider has timely filed
(taking into account any extensions) or will timely file with the appropriate
taxing or other Governmental Authority all material Tax Returns required to be
filed through the Closing Date.  TIGI has
timely filed (taking into account any extensions) or will timely file with the
appropriate taxing or other Governmental Authority all material TIGI Combined
Returns required to be filed through the Closing Date.  Such Tax Returns and TIGI Combined Returns,
as applicable, are complete, correct and accurate in all material
respects.  No Service Provider has
requested any extension of time within which to file any such Tax Returns.  Each Service Provider has delivered to IWEST
complete and accurate copies of all of such Service Provider’s federal, state
and local Tax Returns for all open Tax Periods. 
TIGI has not delivered and will not deliver to IWEST, the TIGI Combined
Returns, but has provided the Advisor’s schedules to the TIGI Combined Returns.

(b)   All Taxes for which each Service Provider is
or may be liable, in respect of Tax Periods or portions thereof ending on or
before the Closing Date, shall have been paid, or an adequate reserve for Tax
liability (in conformity with GAAP) has been established therefor on the face
of the applicable most recent balance sheet included as part of the Service
Provider Financial Statements.  All Taxes
that each Service Provider has been required to collect or withhold have been
duly collected or withheld and, to the extent required, have been or will be
duly paid to the proper taxing or other Governmental Authority.

(c)   No material deficiencies for Taxes of any
Service Provider have been claimed, proposed or assessed by any taxing or other
Governmental Authority.  There are no
pending or, to the Knowledge of the Service Providers, threatened audits,
suits, proceedings, Actions, investigations or claims for or relating to any
liability in respect of Taxes of any Service Provider, and there are no matters
under discussion with any taxing or other Governmental Authority with respect
to Taxes of any Service Provider.  As of
the date hereof, with respect to any Tax Return for a Tax Period beginning on
or after January 1, 2004, neither TIGI, with respect to any TIGI Combined
Return, nor any Service Provider has been audited or notified that any taxing
or other Governmental Authority intends to audit its Tax Returns or the TIGI
Combined Returns, as the case may be, for any other Tax Periods.  No extension of a statute of limitations
relating to Taxes is in effect with respect to any Service Provider.  No 

 31
 

written claim has ever been made by an
authority in a jurisdiction where any Service Provider does not file Tax
Returns that the applicable entity is or may be subject to taxation in that
jurisdiction.

(d)   The only material elections with respect to
Taxes affecting any Service Provider as of the date hereof are federal and
state S corporation elections for the Manager Parents and the election by TIGI
to file consolidated federal and combined state income tax returns.  None of the Service Providers has made an
election, or is required to treat any of its assets as owned by another person
except to the extent such Service Provider is disregarded as an entity separate
from its owner for federal income Tax purposes. 
None of the Service Providers is required to treat any of its assets as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code or under any comparable provision of state or local
Tax law.

(e)   There are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of any Service Provider.  None of the Surviving Entities shall be
required to include in a Tax Period ending after the Closing Date taxable
income attributable to income that accrued in a prior Tax Period but was not
recognized in any prior Tax Period as a result of the installment method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or
local Tax law.  Except for the interests
of Inland Southwest, Inland Northwest and Inland Western in Holdco, which is
treated as a partnership for federal, state, local and foreign Tax purposes, no
Service Provider is or has been a party to any joint venture, partnership or
other arrangement or Contract that could be treated as a partnership for
federal, state or local Tax purposes. 
Each of Inland U.S. Management LLC, Inland Southwest Property Management
LLC and Inland Pacific Property Services LLC has, at all times since its
inception, been properly disregarded as an entity separate from its owner for
federal income Tax purposes.

(f)    Other than the Advisor’s liability under
Treasury Regulation 1.1502-6 with respect to any TIGI Combined Return, no
Service Provider, or any predecessor, has ever been liable (whether by
contract, as transferee or successor, by law or otherwise) for the Taxes of any
other person or entity, including under Treasury Regulation Section 1.1502-6 or
any similar provision of state, local or foreign law.  None of the Service Providers has been, nor
has any predecessor of the Service Providers been, a member of any affiliated
group of corporations within the meaning of Section 1504 of the Code (or any
similar provision of state, local or foreign law) other than the affiliated
group or groups of which it is currently a member.

(g)   Each of the Manager Parents has made a valid
election under Section 1362 of the Code to be treated as an “S corporation”
and has at all times since the date it was organized qualified as an “S
corporation” for purposes of Subchapter S of the Code.  With respect to all states which for state
Tax purposes allow a corporation to be treated as an “S corporation” or similar
entity entitled to special Tax treatment, all elections for such treatment have
been properly and validly made in such states and each of the Manager Parents
has complied at all times with all applicable requirements and filing
procedures for such treatment.

 

 32

SECTION 4.7                          No Undisclosed Liabilities.

None of the Service Providers had, at December 31,
2006, and none of the Service Providers has incurred since such date, any
liability (including unasserted claims, whether known or unknown) whether
absolute, accrued, contingent or otherwise except for (a) any liabilities
accrued or reserved against or disclosed in the Service Provider Financial
Statements or reflected in the notes thereto, (b) any liabilities that were
incurred in the ordinary course of business, (c) any liabilities for fees,
expenses and costs relating to the transactions described in this Agreement and
the Ancillary Agreements, (d) any liabilities with respect to violations or
alleged violations of Environmental Law to the extent such liabilities are also
liabilities of IWEST or (e) any liabilities that would not, individually or in
the aggregate, reasonably be expected to result in a Service Provider Material
Adverse Effect.

SECTION 4.8                          Litigation.

(a)   There are no Actions pending or, to the
Knowledge of the Service Providers, threatened against any of the Service
Providers or IREIC or any of their respective properties or assets which, if
adversely determined, would, individually or in the aggregate, reasonably be
expected to adversely affect (i) such party’s ability to consummate the
transactions contemplated by this Agreement (including those transactions
contemplated by the Ancillary Agreements), perform its obligations under this
Agreement or satisfy the conditions precedent applicable to it and contained in
this Agreement or (ii) the ownership of its Equity Interests in any Service
Provider.

(b)   There are no pending or, to the Knowledge of
the Service Providers, threatened investigations or Actions, in each case
against any Service Provider or any of its properties or assets (tangible or
intangible) that, if determined in a manner adverse to such Service Provider,
would, individually or in the aggregate, reasonably be expected to result in a
material liability of such Service Provider. 
No Service Provider is subject to any Judgment, settlement order,
agreement or other arrangement which would, individually or in the aggregate,
reasonably be expected to result in a material  liability of such Service Provider or otherwise reasonably
be expected to prohibit, restrict or delay the consummation of the transactions
contemplated by this Agreement.

SECTION 4.9                          Compliance with Laws and Permits.

(a)   Each of IREIC and the Agent (on behalf of the
Stockholders) is in compliance with all Laws and Permits applicable to it,
except for violations which would not reasonably be expected to adversely
affect (i) in any material respect such party’s ability to consummate the
transactions contemplated by this Agreement, perform its obligations under this
Agreement or satisfy the conditions precedent applicable to it and contained in
this Agreement or (ii) the ownership of its Equity Interests in any Service
Provider.

(b)   No Service Provider is in violation of or has
been given written or oral notice of or been charged with any violation of any
Law or Permit, except for violations which would not, individually or in the
aggregate, reasonably be expected to result in a material  liability to such Service Provider.  Each Service Provider possesses all necessary
Permits to 

 33
 

operate its business, and all such Permits are valid and in full force
and effect, except as would not, individually or in the aggregate, reasonably
be expected to have a Service Provider Material Adverse Effect.  No material Permits will be terminated or impaired
or become terminable as a result of the transactions contemplated by this
Agreement or any Ancillary Agreement.  No
investigation or review by any Governmental Authority is pending, or, to the
Knowledge of the Service Providers,  threatened,
which could result in the revocation or impairment of any material  Permit.  Complete and
correct copies of all material Permits have heretofore been delivered to IWEST
by the Service Providers.

SECTION 4.10                    Insurance.

Schedule 4.10
sets forth a list of all policies of insurance maintained, owned or held by on
or behalf of the Service Providers.  Each
policy set forth on Schedule 4.10 is in
full force and effect, and the Service Providers (or the party or parties
obtaining insurance on their behalf) are not delinquent in the payment of any
premiums thereon, and no written notice of cancellation or termination has been
received with respect to any such policy. 
No Service Provider has received written notice within the last 18 months
from any insurance company, agent, broker or board of underwriters of any
conditions, defects or inadequacies that would adversely affect the
insurability of, or cause any increase in the premiums for the policies set
forth on Schedule 4.10 that have not been
cured or repaired to the satisfaction of the party issuing the notice.  The Service Providers shall keep such
insurance or comparable insurance in full force and effect through the Closing
Date.

SECTION 4.11                    Employment Matters - Benefit Plans.

(a)   Schedule 4.11(a) lists each employee benefit plan (as
defined in Section 3(3) of ERISA) and all plans, programs, policies or
arrangements, including, but not limited to, pension, bonus, deferred
compensation, incentive compensation, unit purchase, supplemental retirement,
severance or termination pay, thrift, savings, option, salary continuation,
vacation, supplemental unemployment benefit, profit-sharing, or retirement
plan, maintained, or contributed to (or required to be contributed to), by or
for the benefit of Service Employees, whether or not such plan is funded,
formal or informal, or legally binding or not (collectively, the “Employee Benefit Plans”).  Each Service Provider furnished to IWEST (i)
true and complete copies of all Employee Benefit Plans (or in the case of
unwritten Employee Benefit Plans, descriptions thereof), including, without
limitation, with respect to each Employee Benefit Plan, all amendments to the
Employee Benefit Plans, and any trust or other funding arrangement, (ii) Forms
5500 for each Employee Benefit Plan for the two most recent plan years, (iii)
the most recently completed actuarial valuation for each Employee Benefit Plan
for which an actuarial report is required by ERISA or for financial reporting
purposes, and (iv) the most recent summary plan description for each Employee
Benefit Plan for which a summary plan description is required by ERISA.

(b)   None
of the Employee Benefit Plans is a “pension plan” within the meaning of Section
3(2) of ERISA (a “Pension Plan”).

 34
 

(c)   None
of the Service Providers or any ERISA Affiliate has incurred any liability for
any penalty or tax under Sections 4971, 4972, 4975, 4976, 4979, or 4980 of the
Code or Section 502 of ERISA.

(d)   Each
of the Employee Benefit Plans that is a “group health plan” (as defined in Code
Section 5000(b)) has at all times been in compliance with the provisions of
Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA and any similar
applicable state laws.  No Employee
Benefit Plan that is a “welfare plan” (as defined in Section 3(1) of ERISA) (a “Welfare Plan”) provides or promises
post-retirement health or life benefits to current employees or retirees of the
Service Providers, except to the extent required under any applicable state law
or under Section 601 of ERISA.  Each
Welfare Plan contains a procedure for amendment and termination of such plan.

(e)   Full
payment of all amounts has been made to each Employee Benefit Plan which are
required to be made as contributions thereto, under applicable Law or under any
Employee Benefit Plan or any agreement relating to an Employee Benefit Plan as
of the last day of the most recent fiscal year of such Employee Benefit Plan
ended prior to the date hereof.  Each
Service Provider has made adequate provision for reserves to meet contributions
that have not been made because they are not yet due under the terms of any
Employee Benefit Plan or related agreements. 
Benefits under all Employee Benefit Plans are as represented and have
not been increased subsequent to the date as of which documents have been
provided to IWEST.

(f)    The
execution and delivery of, and performance of the transactions contemplated by,
this Agreement and the Ancillary Agreements will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under
any Employee Benefit Plan or individual Contract or agreement that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
vesting or increase in benefits with respect to any employee of any Service
Provider.

(g)   Each
Employee Benefit Plan has been administered in accordance with its terms and
all applicable Law, including ERISA and the Code.  The terms of each Employee Benefit Plan are
in material compliance with the requirements of ERISA, the Code and all other
applicable Law.  Except as would not,
individually or in the aggregate, reasonably be expected to have a Service
Provider Material Adverse Effect, no event has occurred and, to the Knowledge
of the Service Providers, there exists no condition or set of circumstances in
connection with which any Service Provider could be subject to any liability in
excess of $25,000 (other than for benefit liabilities contemplated by each
Employee Benefit Plan) under the terms of, or with respect to, such Employee
Benefit Plans, ERISA, the Code or any other applicable Law.

(h)   No
suit, administrative proceeding, Action or other litigation has been brought,
or to the Knowledge of the Service Providers is threatened, against or with
respect to any such Employee Benefit Plan, including any audit or inquiry by
the IRS or United States Department of Labor (other than routine benefits
claims).

(i)    None of the assets of any Service Provider
is, or may reasonably be expected to become, the subject of any Lien arising
under ERISA or Section 412(n) of the 

 35
 

Code and no Service Provider has any liability, contingent or otherwise
with respect to any employee benefit plan (as defined in Section 3(3) of ERISA)
maintained by an ERISA Affiliate.

SECTION 4.12                    Employee Arrangements; Labor Matters.

(a)   None
of the Service Providers is a party to or bound by any written employment or
consulting Contract or agreement, any collective bargaining agreement or other
labor agreement (collectively, “Employee Arrangements”).

(b)   With
respect to each Service Provider, there are no (i) unfair labor practice
charges or complaints pending or, to the Knowledge of the Service Providers,  threatened against it before any Governmental Authority or
arbitrators, (ii) grievances pending or, to the Knowledge of the Service Providers,
threatened against it, (iii) labor strike, slowdown, work stoppage or lockout
actually pending or, to the Knowledge of the Service Providers,  threatened against it or (iv) charges pending against it
before agencies of any state or locality responsible for the prevention of
unlawful employment practices.  To the
Knowledge of the Service Providers, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made
or threatened involving employees of any Service Provider.

(c)   Each
Service Provider is and has been in material  compliance with all applicable Laws regarding employment
and employment practices, including without limitation those Laws relating to
terms and conditions of employment, wages and hours, occupational safety,
health and workers compensation.

(d)   To
the Knowledge of the Service Providers, no employee of any of the Service
Providers (as of the date of this Agreement) has given written notice to such
Service Provider of any intention to terminate employment with such Service
Provider, either as a result of the Mergers or otherwise.

SECTION 4.13                    Intellectual Property.

(a)   Schedule 4.13(a) sets forth a true and complete
list of the material  Intellectual
Property owned or licensed by each Service Provider.  Each Service Provider’s use of any
Intellectual Property in its business as now conducted does not infringe,
misappropriate, dilute or violate any valid and asserted Intellectual Property
rights of any other Person.  The
Intellectual Property owned or licensed by the Service Providers (together with
the Intellectual Property used pursuant to the Ancillary Agreements, the
Intellectual Property owned or licensed by IWEST or available for use by or
provided to such Service Providers as of the Closing) is sufficient for the
conduct of the business of the Service Providers as currently conducted.

(b)   Each License is in full force and effect and
is a legal, valid, binding and enforceable obligation or right of the parties
thereto.  No Service Provider, or, to the
Knowledge of the Service Providers, any other party to such License, is in
breach of or in default under, and no event has occurred which with notice or
lapse of time, or both, would become a breach of or a default under such
License or permit the termination or modification of 

 36
 

any terms under any License. 
There is no outstanding or, to the Knowledge of the Service Providers,
threatened dispute or disagreement with respect to any License and no License
is subject to any Action to revoke same. 
The execution, delivery and performance by IREIC, each Service Provider
and the Agent (on behalf of the Stockholders) of this Agreement and each
Ancillary Agreement to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, will not result in the loss or
impairment of, or give rise to any right of any third Person to terminate any
rights of any Service Provider to own any of its Intellectual Property or any
rights of any Service Provider under any Licenses to which it is a party or
enjoys rights thereunder, nor require the consent of any Governmental Authority
or third Person in respect of any such Intellectual Property.  Correct and complete executed copies of all
Licenses have been furnished  to
IWEST.

(c)   To
the Knowledge of the Service Providers, no third party has infringed,
misappropriated or violated any rights of any Service Provider in or to any
Intellectual Property owned by such Service Provider.  None of the Service Providers has brought or
threatened a claim against any third Person, TIGI or any Affiliate thereof
(A) alleging infringement, misappropriation, dilution or any other
violation of such Service Provider’s Intellectual Property or the Intellectual
Property that is the subject of a License, or (B) challenging any third
Person’s, TIGI’s or any Affiliate’s ownership or use of, or the validity,
enforceability or registerability of, any Intellectual Property and, to the
Knowledge of the Service Providers, there is no reasonable basis for a claim
regarding any of the foregoing.

SECTION 4.14                    Brokers and Finders.

None of IREIC, any Service Provider, the Agent (on
behalf of the Stockholders) nor any of their respective Affiliates has
retained, paid or become obligated to pay any fee to any broker, finder or
other intermediary in connection with the transactions contemplated by this
Agreement.

SECTION 4.15                    Investment Company Act.

No Service Provider is an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, nor an “investment
adviser” within the meaning of the Investment Advisers Act of 1940, as amended.

SECTION 4.16                    Related Party Transactions.

(a)   Except
for ordinary course trade payables, expense reimbursement obligations and any
obligation of the Service Providers to pay dividends or make distributions,
there is no outstanding indebtedness between any Service Provider, on the one
hand, and TIGI, IREIC, any Stockholder or any officer, director, employee or
Affiliate of TIGI, IREIC or any Stockholder, on the other;

(b)   Except in the case of ownership of less than
5% of a company listed or traded on a national securities exchange or quoted on
an interdealer quotation system, none of TIGI, IREIC or any Stockholder, nor
any officer, director, manager, member or Affiliate of TIGI, IREIC or any
Stockholder provides, directly or indirectly, or owns, in whole or in part, any
Person that provides, directly or indirectly, to any Service Provider, any
assets, services or facilities used by any Service Provider in the conduct of
its business (other than from another 

 37
 

Service Provider) except for services of a type and nature provided in
the Ancillary Agreements;

(c)   No
Service Provider provides or causes to be provided any assets, services or
facilities to TIGI, IREIC, any Stockholder or any officer, director, manager,
member, employee or Affiliate of TIGI, IREIC or any Stockholder (other than to
another Service Provider or IWEST);

(d)   No
Service Provider  beneficially
owns, directly or indirectly, any investment in or issued by TIGI, IREIC or any Affiliate of TIGI or IREIC
(other than in another Service Provider); and

(e)   Other than for services of the type and
nature provided in the Services Agreements, and except for dividends and
distributions paid to the Stockholders (and IREIC in the case of the Advisor),
no Service Provider made any payment to TIGI, IREIC, any Stockholder or any
officer, director, manager, member, employee or Affiliate of TIGI, IREIC or any
Stockholder (other than IWEST and its Subsidiaries) since December 31, 2006
other than compensation to employees of the Service Providers.

SECTION 4.17                    Investment in Securities.

(a)   Not more than thirty-three (33) persons who
hold Converted Shares are not “accredited investors” within the meaning of Rule
501 under the Securities Act, as presently in effect.

(b)   IREIC understands, and each of the
Stockholders will understand at or prior to the Closing, that (i) no federal or
state agency has passed upon the IWEST Shares to be issued in connection with
the Mergers or made any finding or determination as to the fairness of the
investment therein by holders of Converted Shares or the terms of the offer and
the sale thereof pursuant to this Agreement and (ii) each holder of Converted
Shares must bear the economic risk of its investment in the IWEST Shares to be
issued in connection with the Mergers for an indefinite period of time because
such shares will not be registered under the Securities Act or any state
securities laws, and, therefore, cannot be sold or transferred unless either they
are subsequently registered under the Securities Act and applicable state
securities laws or an exemption from such registrations is available.

(c)   IREIC and each of the Stockholders are
acquiring the IWEST Shares to be issued in connection with the Mergers for
their own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(a)(11) of the Securities Act)
thereof in violation of applicable securities laws, or with any present
intention of selling or distributing any such shares in violation of applicable
securities laws.

(d)   IREIC and each of the Stockholders, together
with any appointed purchaser representative, has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the IWEST Shares to be issued in connection with
the Mergers.

 38
 

(e)   Each holder of Converted Shares will be given
the opportunity to examine all documents provided by, conduct due diligence and
ask questions of, and to receive answers from, IWEST and its representatives
concerning the risks related to an investment in the IWEST Shares.

(f)    Each holder of Converted Shares will be
informed that the IWEST Shares have not been registered under the Securities
Act, or any applicable state securities laws, and, except as provided in Section 6.11, no holder of Converted Shares may
sell, transfer or otherwise dispose of such IWEST Shares for value unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available.

SECTION 4.18                    Title to Assets; Sufficiency of Assets; Real Property
and Related Matters.

(a)    The Service Providers have good, valid and
marketable title to, or a valid and enforceable license or leasehold interest
in, (a) all of their properties and assets (tangible and intangible) reflected
in the Service Provider Financial Statements, except as indicated in the notes
thereto and except for properties and assets disposed of in the ordinary course
of business, and (b) all of the properties and assets purchased by a Service
Provider since the date of such financial statements, except for properties and
assets disposed of in the ordinary course of business, in each case subject to
no Lien, other than Permitted Liens.

(b)   No Service Provider is a party to any
Contract, lease or similar agreement under which it is a lessee of any personal
property.

(c)   Schedule 4.18(c) contains a list of
all real property leases to which any Service Provider is a party (the “Leased
Real Property”).  No Service Provider
owns any real property.  The Leased Real
Property, together with any and all easements appurtenant to such real property
granted to any Service Provider thereunder, if any, include all of the real
property used or held for use in connection with the business of such Service
Provider as now conducted.  Each Service
Provider holds the leasehold interests in the Leased Real Property listed as
held by it free and clear of all Liens other than Permitted Liens.

(d)   None of the Service Providers currently owns,
leases or licenses any material tangible assets.  Upon consummation of the Mergers, IWEST will,
directly or indirectly, own (or have access through the Services Agreements and
the Licenses) to all material tangible and intangible assets, if any, which had
been used by the Service Providers to provide services to IWEST since January
1, 2007.

(e)   With respect to the Leased Real Property:

(i)            There
are no Contracts granting to any party or parties the right of use or occupancy
of any portion of the Leased Real Property.

(ii)           No
Service Provider has any outstanding options or rights of first refusal to
purchase any Leased Real Property or any portion thereof or interest therein.

 39
 

(iii)          To
the Knowledge of the Service Providers, there are no pending or contemplated
proceedings to modify or amend any building code or zoning or land use Laws or
regulations which would reasonably be expected to have a Service Provider
Material Adverse Effect with respect to the present use of the Leased Real
Property by any Service Provider.

(iv)          To
the Knowledge of the Service Providers, there are no pending audits or disputes
with respect to the Leased Real Property related to common area management,
Taxes or any other fees or charges involving amounts in excess of $25,000.

(v)           To
the Knowledge of the Service Providers, the improvements to, or which
constitute a portion of, the Leased Real Property are in good condition and
repair, ordinary wear and tear excepted. 
To the Knowledge of the Service Providers, all building systems located
on or which constitute a portion of the Leased Real Property are in good
operating condition.

SECTION 4.19                    Corporate Documents.

Each of the Service Providers has furnished to IWEST
for its examination: (i) copies of each Service Provider’s certificate or
articles of incorporation and bylaws (as applicable) or other organizational
documents; and (ii) minute books containing all records of the proceedings,
consents, actions, and meetings of the stockholders, the board of directors or
managing committees, as applicable, and any committees thereof for each Service
Provider.  The books and records of the
Service Providers are complete and accurate in all material respects  and the signatures appearing on all
documents contained therein are the true signatures of the persons purporting
to have signed the same.

SECTION 4.20                    Contracts.

(a)   Schedule 4.20(a)
contains, as of the date of this Agreement, a true and correct list of all
written Contracts of the following types to which any Service Provider is a
party or by which any of the assets of any Service Provider are bound or
affected (collectively, the “Material Contracts”):

(i)            any
Contract to which both IWEST and any Service Provider is a party including, but
not limited to, the Advisory Agreement and the Management Agreements and any
other Contracts, agreements or arrangements between IWEST and any Service
Provider (the “IWEST/Service Provider Agreements”);
provided, that
the Service Providers shall not be required to list in the Service Provider
Disclosure Schedule the separate management agreements with respect to
particular properties owned by IWEST or its Affiliates, even though such
separate management agreements shall constitute Material Contracts;

(ii)           any
note, mortgage, indenture or other obligation or agreement or other instrument
for or relating to indebtedness for borrowed money, or 

 40
 

any capitalized lease obligations, or any
guarantee of third-party obligations, of more than $25,000 individually, or
under which a Lien has been imposed on any Service Provider’s assets, tangible
or intangible, other than Permitted Liens;

(iii)          joint
venture or partnership agreements in which any Service Provider is a member,
partner or other participant, any agreements or arrangements including a
sharing of profit or loss, or any agreements or arrangements that are treated
as partnerships for Tax purposes, other than Holdco;

(iv)          Contracts
by their terms expressly prohibiting, restricting or otherwise limiting the
ability of any Service Provider or, after the Mergers, IWEST and its
Affiliates, to compete with any Person, engage in its business or operate in
any geographical area;

(v)           other
than this Agreement and other than the Stockholder Agreements, any stock
purchase agreements, asset purchase agreements and other acquisition or
divestiture agreements relating to the acquisition, lease or disposition by any
Service Provider of assets and properties or any Equity Interest of such
Service Provider;

(vi)          any
Contract involving aggregate annual payments reasonably expected to be in
excess of $25,000 to be made by or to any Service Provider after the date of
this Agreement;

(vii)         any
Employee Arrangements;

(viii)        any
Contract that requires making capital expenditures in excess of $25,000;

(ix)           leases
with respect to Leased Real Property;

(x)            Licenses,
Software license or telecommunication services agreements (excluding material
shrinkwrap, clickwrap and commercially available off-the-shelf Software
licenses); provided, that this clause shall
cover any material licenses acquired or used by any Service Provider pursuant
to a volume purchase agreement, enterprise license agreement, or similar
arrangement by which such Service Provider is permitted to acquire rights to
use multiple licenses;

(xi)           Contracts,
other than the Stockholder Agreements and the Services Agreements, between any
Service Provider, on the one hand, and any of IREIC, any Stockholder or any
Affiliate thereof, on the other hand; and

(xii)          any
material Contract involving the provision of services by any Service Provider
to any Person, other than IWEST and its Affiliates.

 41
 

(b)   Each Service Provider has furnished to IWEST
or its representatives true  and
complete copies of the Material Contracts (or, where applicable, representative
forms  thereof), as in effect on
the date of this Agreement.  There are no
oral Contracts to which any Service Provider is a party or by which any of the
assets of any Service Provider are bound or affected that would be a “Material
Contract” if in written form.

(c)   Each Material Contract and all Contracts that
may be entered into by any Service Provider after the date hereof and before
the Closing which, but for the date on which such Contract was entered into,
would otherwise be a Material Contract (the “New
Material Contracts”), is or will be in full force and effect and is
or will be a legal, valid, binding and enforceable obligation of the Service
Provider party thereto and, to the Knowledge of the Service Providers, each
other party thereto, subject in each case to applicable bankruptcy, insolvency
and similar laws affecting creditors’ rights generally and to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).  No
Service Provider or, to the Knowledge of the Service Providers, any other party
to such Scheduled Contract or New Material Contract, is in breach of or in
default under, and, to the Knowledge of the Services Providers, no event has
occurred which with notice or lapse of time, or both, would become a breach of
or a default under, such Material Contract or New Material Contract or permit
the termination, modification or acceleration of any obligations under any
Material Contract or New Material Contract. 
No party has repudiated any terms of any Material Contract or New
Material Contract, and there are no negotiations of, rights to renegotiate or
attempts to renegotiate any amounts paid or payable by or to any Service
Provider under any Material Contract or New Material Contract, and no party has
made any demand for such renegotiation. 
No Material Contract contains, and no New Material Contract will
contain, any provision providing that the other party may terminate, or receive
any additional or accelerated benefit under, such Material Contract or New
Material Contract as a result of the consummation of the transactions
contemplated by this Agreement.

SECTION 4.21                    Projections.

The projections prepared by the Service Providers and
furnished to IWEST are attached hereto as Schedule 4.21.  The projections attached hereto as Schedule
4.21 have been prepared in good faith. 
However, no representation or warranty is made by any Service Provider,
IREIC or the Agent (on behalf of the Stockholders) that the results set forth
in such projections or the assumptions underlying such projections will in fact
be realized.

SECTION 4.22                    Representations and Warranties of IWEST.

To the actual knowledge of the Principal Stockholders
after reasonable inquiry of the individuals set forth on Schedule 1.1(d)
hereto, the representations and warranties of IWEST contained in (i) Article
III of this Agreement (excluding, for the avoidance of doubt, Section
3.5 of this Agreement) and (ii) each Ancillary Agreement (in the form
attached hereto as an exhibit on the date hereof), if any, are true and correct
(without regard to any knowledge qualifications contained in such
representations and warranties) as of the date of this Agreement.

 

 42

SECTION 4.23                    Change of Control of IWEST.

To the Knowledge of the Service Providers, the
Knowledge of IREIC and the Agent, since December 31, 2005, there have been no
inquiries or proposals by, or negotiations or discussions of any character
with, any third party relating to an actual or potential (i) acquisition of a
majority of the voting power of IWEST, (ii) a merger, consolidation or other
business combination, in which an unaffiliated third party would acquire voting
control of IWEST or (iii) sale of all or substantially all of the assets of
IWEST.

SECTION 4.24                    Proxy Statement.

The sections of the Proxy Statement set forth on Schedule
4.24(a) hereto, will not, as of (a) the time it is first mailed to
stockholders of the IWEST and (b) the date of the IWEST Stockholders’ Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.  To the actual knowledge of
the Principal Stockholders after reasonable inquiry of the individuals set
forth on Schedule 1.1(d) hereto, the remainder of the Proxy Statement (excluding those sections of the Proxy Statement set forth
on Schedule 3.5(a) hereto) will not, as of (a) the time it is first
mailed to stockholders of the IWEST and (b) the date of the IWEST Stockholders’
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

ARTICLE V

CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME

SECTION 5.1                          Conduct of Business of Each Service Provider.

From the date hereof and prior to the Closing or
earlier termination of this Agreement, except as IWEST (with the prior written
authorization of the IWEST Special Committee, which authorization will not be
unreasonably withheld or delayed) shall otherwise agree in writing or as
otherwise specifically permitted by this Agreement, each Service Provider will,
and IREIC and the Agent will cause each Service Provider to:

(a)   conduct its businesses conducted in the
ordinary course of business, consistent with past practice and  substantially as presently operated and, as to the Advisor,
consistent with the requirements of the Advisory Agreement, and as to each
Manager, consistent with the requirements of the applicable Management
Agreement;

(b)   not issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any additional shares or Equity
Interests of, or any options, warrants or rights of any kind to acquire any
shares of the capital stock or other Equity Interests of, a Service Provider of
any class or any debt or equity securities convertible into or exchangeable for
such stock or Equity Interests or amend or modify the terms or conditions of
any of the foregoing;

(c)   not (i) incur or become contingently liable
for any indebtedness, (ii) take any action which would adversely affect IWEST’s
status as a “real estate investment trust” 

 43
 

under the Code, (iii) sell or otherwise
dispose of any of its assets, except in the ordinary course of business or (iv)
enter into any Contract or violate any existing Contract with respect to any of
the foregoing;

(d)   use commercially reasonable efforts to
preserve intact its business, organization and goodwill, keep available the
services of its employees and preserve the goodwill and business relationships
with all lessees, suppliers, distributors, customers and others having business
relationships with it and not engage in any action, directly or indirectly,
with the intent to adversely impact the transactions contemplated by this
Agreement;

(e)   confer with one or more representatives of
IWEST designated by the IWEST Special Committee when requested to report on
operational matters and the status of ongoing operations of its business;

(f)    maintain, in full force and effect, with all
premiums due thereon paid, policies of insurance covering its respective
insurable assets and business in amounts and as to risks substantially as in
effect as of the date hereof;

(g)   not declare, set aside or pay any non cash
dividends or non cash distributions or purchase, redeem or otherwise acquire
any shares or Equity Interests, except as may be permitted under the
Stockholder Agreements;

(h)   not acquire or agree to acquire by merging or
consolidating, or by purchasing a portion of Equity Interests or assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association, or other business organization or division thereof;

(i)    not (i) acquire or agree to acquire any
assets in excess of $25,000  individually
or $100,000 in the aggregate, or make or agree to make any capital expenditures
except as set forth on Schedule 5.1(i)  or
(ii) incur, assume or suffer to exist any Lien on any asset other than
Permitted Liens;

(j)    not adopt, amend or terminate any Employee
Benefit Plan or Employee Arrangement or increase the salary, wage, rate of
compensation, commission, bonus or other direct or indirect remuneration
payable to any Service Employee, other than increases for individuals in the
ordinary course of business consistent with past practice not to exceed  10% of the sum of (i) the aggregate payroll costs of the
Service Providers as of December 31, 2006 and (ii) the aggregate payroll costs
of the Service Employees who are not employees of the Service Providers as of
December 31, 2006 or increase the compensation or fringe benefits payable by
any Service Provider to any former director or employee, in each case, other
than as required by law, existing contractual obligations or in order to meet
the obligations of Section 6.8(b);

(k)   not (i) adopt a plan of complete or partial
liquidation; (ii) adopt any amendment to its Articles or Certificates of
Incorporation, bylaws or other organizational documents; (iii) enter into any
Contract involving more than $25,000  annually
or which is not terminable without penalty on less than six months notice; (iv)
make any change in its management structure, including, without limitation, the
hiring of additional management 

 44
 

employees out of the ordinary course of
business; (v) waive, release, grant, or transfer any rights of material value
or modify or change in any material respect any existing license, lease,
Contract or other documents; (vi) engage in any conduct the nature of which is
different than the business in which it is currently engaged; or (vii) enter
into any agreement providing for acceleration of payment or performance or
other consequences as a result of a change of control of it;

(l)    not make any change in accounting policies
or procedures, except as required by GAAP or a Governmental Authority;

(m)  not (i) make any material elections or change
current elections with respect to Taxes of any Service Provider, (ii) prepare
or file any Tax Return required to be filed by or with respect to any Service
Provider that is inconsistent with past practice or, on any such Tax Return,
take any position or adopt any method that is inconsistent with positions taken
or methods used in preparing or filing similar Tax Returns in prior periods or
(iii) settle any Tax audit or dispute with respect to Taxes of any Service
Provider with any taxing or Governmental Authority;

(n)   not acquire any stock, loan or other debt or
equity securities of another entity (including an Affiliate of the Service
Provider) except for advances to IWEST under the Advisory Agreement or
Management Agreements;

(o)   except as permitted under Section 6.16,
not accelerate or delay collection of any notes or accounts receivable in
advance of or beyond their regular due dates or the dates when the same would
have been collected in the ordinary course of the business consistent with past
practice; and

(p)   not agree or commit to do any of the
prohibited actions in the foregoing clauses (a) through (o).

SECTION 5.2                          Conduct of Business of IWEST.

From the date hereof and prior to the Closing or
earlier termination of this Agreement, except as IREIC or the Agent, as the
case may be, shall agree in writing or as otherwise specifically permitted by
this Agreement (which agreement will not be unreasonably withheld or delayed),
the Board of Directors of IWEST shall not authorize or cause:

(a)   any action that would adversely affect IWEST’s
status as a “real estate investment trust” under the Code; or

(b)   any action to reclassify, combine, split or
subdivide any of IWEST’s capital stock or to alter any stockholder rights with
respect thereto.

 45
 

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.1                          Access to Information; Notice of Certain Events.

Each Service Provider shall provide IWEST and its
accountants, counsel, financial advisors and other representatives (including
counsel and financial and other advisors to the IWEST Special Committee)
reasonable access, during normal business hours throughout the period prior to
the Closing or earlier termination of this Agreement, to all properties,
personnel, books, assets, operations, offices, Contracts, commitments and
records (including, but not limited to Tax Returns other than TIGI Combined
Returns and other than any forms K-1 with respect to the Property Managers; provided, that TIGI shall provide all Tax
information with respect thereto that is relevant to IWEST in preparing the
Advisor’s Tax Returns after the Closing Date (including tax basis schedules),
of such Service Provider, and shall furnish promptly to IWEST (a) a copy of
each report, schedule and other document filed or received pursuant to the
requirements of federal or state securities laws or federal tax laws or filed
with the Commission during such period, and (b) such other information
concerning their respective businesses, properties, Contracts, personnel and
other aspects of such Service Provider as shall be reasonably requested, provided that no investigation pursuant to this Section 6.1 shall affect any representation or
warranty made herein, or rights to indemnification hereunder, or the conditions
to the obligations of the respective parties hereto to consummate the
transactions contemplated hereby or thereby. 
At the Closing, each Service Provider shall retain possession of all
files, books, Contracts, commitments and records (including, but not limited to
copies of Tax Returns, but excluding any federal forms K-1’s or equivalent
state forms from such Tax Returns and the TIGI Combined Returns; provided, that TIGI shall provide all Tax
information that will be relevant to IWEST in preparing the Advisor’s Tax
Returns after the Closing Date (including tax basis schedules)), of such
Service Provider; provided, that following
the Closing IREIC and the Agent shall continue to have reasonable access to
such files, books, Contracts, commitments and records.

IREIC, each Service Provider and the Agent shall
promptly advise IWEST and the IWEST Special Committee in writing of any change
or the occurrence of any event after the date of this Agreement that,
individually or in the aggregate, (i) has had or would reasonably be expected
to have a Service Provider Material Adverse Effect or (ii) has resulted in any
of the representations and warranties in Article IV
of this Agreement becoming untrue, false or misleading, or in any of the
conditions to the Mergers set forth in Article VII
not being satisfied, provided that
notification shall not be deemed to amend or modify the representations and
warranties made herein for any purpose under this Agreement.

IWEST shall promptly advise IREIC and the Agent in
writing of any change or the occurrence of any event after the date of this
Agreement that, individually or in the aggregate, to the Knowledge of IWEST
Special Committee: (i) has had or would reasonably be expected to have a IWEST
Material Adverse Effect or (ii) has resulted in any of the representations and
warranties in Article III of this Agreement
becoming untrue, false or misleading, or in any of the conditions to the
Mergers set forth in Article VII not being
satisfied, provided that notification shall
not be deemed to amend or modify the representations and warranties made herein
for any purpose under this Agreement.

 46
 

In furtherance and not in limitation of the foregoing,
IREIC, the Service Providers and the Agent shall promptly deliver to IWEST: (a)
notice of all Actions filed against any Service Provider; and (b) all notices
or other written communications delivered to, or received from, any party under
any Contract or License or any Governmental Authority, that, in any of the
foregoing instances, would, or is reasonably likely to: (i) have an adverse
effect on any Service Provider’s ability to consummate the transactions
contemplated by this Agreement, perform its obligations under this Agreement or
satisfy the conditions precedent applicable to it and contained in this
Agreement; (ii) have an adverse effect on the ownership of the Equity Interests
in any Service Provider; or (iii) have a Service Provider Material Adverse
Effect.

SECTION 6.2                          Stockholder Approvals; Stockholder Ratification.

(a)   On the
Part of IWEST.  At a meeting
of IWEST stockholders called for such purpose and for which notice has properly
been given (together with any adjournments or postponements thereof, the “IWEST Stockholders’ Meeting”), IWEST shall,
subject to the duties of the Board of Directors and the IWEST Special Committee
to IWEST’s stockholders under applicable Law, seek and use its commercially
reasonable efforts to obtain the ratification of the IWEST Board of Directors’
decision to enter into this Agreement and the Mergers by the holders of a
majority of the votes cast at the IWEST Stockholders’ Meeting (if a quorum is
present at such meeting) by IWEST’s stockholders other than TIGI, IREIC, each
Principal Stockholder or any of their Affiliates (the “IWEST
Stockholders’ Ratification”). 
Each of IWEST and IREIC (through one or more of its Affiliates) will use
their respective commercially reasonable efforts to (i) solicit proxies in
favor of the IWEST Stockholders’ Ratification and (ii) hold the IWEST
Stockholders’ Meeting, in each case as promptly as practicable following
clearance by the Commission of the Proxy Statement and, in the case of IWEST,
subject to the duties of the Board of Directors and the IWEST Special Committee
to IWEST’s stockholders under applicable Law. 
IWEST will use its commercially reasonable efforts to ensure that all
proxies solicited in connection with the IWEST Stockholders’ Meeting are
solicited in compliance in all material respects with all applicable Laws.  Subject to the duties of the Board of
Directors of IWEST and the IWEST Special Committee to IWEST’s stockholders
under applicable Law, IWEST shall include in the Proxy Statement the
recommendation of its Board of Directors and the members of the IWEST Special
Committee that the stockholders vote to ratify IWEST’s entry into this Agreement
and the contemplated Mergers.  IWEST, as
sole stockholder of each Acquisition Entity, shall prepare, execute and deliver
a written consent to adopt this Agreement on the date hereof.

(b)   On the Part of the Service Providers.  The approval of the Mergers, by means of the
Written Consents, by the holders of the requisite number of issued and
outstanding shares of each Manager Parent, pursuant to such Manager Parent’s
Certificate of Incorporation and bylaws (the “Manager
Stockholders’ Approval”) has been delivered concurrent with the
execution of this Agreement to each of the Managers as of the date hereof.  IREIC, as sole stockholder of the Advisor,
has prepared, executed and delivered a Written Consent to adopt this Agreement
as of the date hereof.  All documents
that the Service Providers are responsible for filing with the Commission in
connection with the transactions contemplated herein will comply as to form and
substance with the applicable requirements of the Exchange Act and other
applicable Law.

 47
 

SECTION 6.3                          Expenses.

Whether or not the transactions contemplated by this
Agreement and the Ancillary Agreements are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such expenses.  For the avoidance of doubt, (i) the
reasonable costs and expenses of the IWEST Special Committee, including
reasonable fees and expenses of its counsel and financial advisors, and all
fees and expenses in connection with filing, printing and distributing the
Proxy Statement and proxy solicitations, shall be paid by IWEST and (ii) the
reasonable costs and expenses of the Service Providers, including the expenses
of their counsel and financial advisors, shall be paid by the Service Providers
and included in the calculation of Net Working Capital.

Notwithstanding the foregoing, in the event that the
Board of Directors of IWEST (i) publicly announces a change of its
recommendation and recommends against the IWEST Stockholder Ratification and
(ii) the IWEST Stockholder Ratification is not obtained at the IWEST
Stockholders Meeting, then IWEST shall pay to the Service Providers an amount
equal to the actual, documented, out-of-pocket expenses incurred by the Service
Providers to third parties in connection with the negotiation of this
Agreement, up to a maximum of $1,200,000.

SECTION 6.4                          Proxy Statement.

(a)   As promptly as practicable after the
execution of this Agreement, IWEST shall prepare and file with the Commission
the Proxy Statement.  IWEST shall prepare
and file with the Commission any filings other than the Proxy Statement (the “Other Filings”) required to be made by IWEST
prior to the Closing, as and when required or requested by the Commission.  IWEST and the Service Providers will use
their commercially reasonable efforts to respond as promptly as practicable to
any comments made by the Commission with respect to the Proxy Statement and any
Other Filings.  Each Service Provider,
IREIC or the Agent shall furnish to IWEST all information required by the
Exchange Act and other applicable Law or as IWEST may reasonably request in
connection with the preparation of the Proxy Statement and any Other Filings
required to be made by IWEST.  All
information furnished by the Service Providers, IREIC or the Agent to IWEST for
use in the Proxy Statement and any Other Filings will be true and correct in
all material respects.

(b)   If at any time prior to the Closing, any
event or circumstance relating to any Service Provider, or its respective
officers or directors, the disclosure of which is required so that the Proxy
Statement is not misleading, should be discovered by IREIC, the Agent or any
Service Provider, which is not disclosed in the Proxy Statement or any Other Filing,
IREIC, such Service Provider or the Agent, as the case may be, shall promptly
inform IWEST, together with specific details of such event or
circumstance.  All documents that the
Service Providers are responsible for filing with the Commission in connection
with the transactions contemplated herein will comply as to form and substance
with the applicable requirements of the Exchange Act and other applicable Law.

 48
 

SECTION 6.5                          Agreement to Cooperate.

Subject to the terms and conditions herein provided,
each of the parties hereto shall cooperate and use its respective commercially
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
Mergers as soon as practicable following the date of this Agreement, including
using commercially reasonable efforts to identify and obtain necessary or
appropriate waivers, consents and approvals and to effect all necessary
registrations, filings and submissions (including the Required Statutory
Approvals, Required Consents, Proxy Statement and Other Filings).  Without limiting the foregoing, prior to the
Closing, IREIC, the Agent and the Service Providers agree not to, and to cause
their respective officers, directors, managers, members, employees,
representatives, counsel and advisors not to, solicit, discuss or negotiate
with any Person (other than IWEST) a sale or transfer of the assets, business
or Equity Interests of any of the Service Providers.

SECTION 6.6                          Public Statements.

The parties hereto shall consult with each other prior
to issuing any press release or making any other public statement with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any such press release or public statement prior to review and approval by
IWEST, IREIC and the Agent, except that prior review and approval shall not be
required if, in the reasonable judgment of counsel to the party seeking to
issue such press release or make such public statement, prior review and
approval would prevent the timely dissemination of such release or statement in
violation of applicable Law, except that in such case the issuing party shall
use its commercially reasonable efforts to consult with the other party before
issuing such release or making such public statement.  Required approvals under this Section 6.6 shall not be unreasonably withheld or
delayed.

SECTION
6.7                          Confidentiality.

(a)   As used herein, “Confidential
Material” means, with respect to the parties hereto, information, whether
oral, written or otherwise, furnished by a party hereto (the “Providing
Party”) or any of the Providing Party’s directors, officers, partners,
Affiliates, employees, agents, attorneys, advisors, accountants, consultants or
representatives (collectively, “Representatives”) to another party
hereto (the “Receiving Party”) or any of the Receiving Party’s
Representatives, and all reports, analyses, compilations, studies and other
material prepared by the Receiving Party or any of its Representatives (in
whatever form maintained whether documentary, computer storage or otherwise)
containing, reflecting or based upon, in whole or in part, any such
information.  The term “Confidential
Material” does not include information which: (i) is or becomes generally
available to the public other than as a result of a disclosure by the Receiving
Party, any of its Representatives or anyone to whom the Receiving Party or any
of its Representatives transmit any Confidential Material in violation of this
Agreement; (ii) is or becomes known or available to the Receiving Party on a
non-confidential basis from a source (other than the Providing Party or one of
its Representatives) who is not, to the actual knowledge of the Receiving
Party, prohibited from transmitting information to the Receiving Party or its
Representatives by a contractual, legal, fiduciary or other obligation; or
(iii) is contained in the IWEST SEC Filings.

 49
 

(b)   Subject
to paragraph
(c) below or except as required by applicable Laws, for the period ending one
(1) year after the Closing Date, the Confidential Material will be kept
confidential and will not, without the prior written consent of the Providing
Party, be disclosed by the Receiving Party or its Representatives, in whole or
in part, and will not be used by the Receiving Party or its Representatives,
directly or indirectly, for any purpose other than in connection with this
Agreement or any Ancillary Agreement and the transactions contemplated hereby
or evaluating,
negotiating or advising with respect to these matters.  Moreover, the Receiving Party agrees to
transmit Confidential Material to its Representatives only if and to the extent
that the Representatives need to know the Confidential Material for purposes of
the transactions contemplated hereby and are informed by the Receiving Party of
the confidential nature of the Confidential Material and of the terms of this Section
6.7. In any event, the Receiving Party will be responsible for any actions
by its Representatives which are not in accordance with the provisions
hereof.  Notwithstanding the foregoing,
from and after the Closing Date, IWEST shall only be subject to this Section
6.7 with respect to Confidential Material of or pertaining to TIGI, the
Stockholders, IREIC and their respective Affiliates, but excluding the Service
Providers from the definition of Affiliate for these purposes.

(c)   In
the event that the Receiving Party, any of its Representatives or anyone to
whom the Receiving Party or its Representatives supply the Confidential Material
is requested or required by law, rule, regulation, statute or legal or judicial
process, by court order, administrative order or by any government or agency or
department thereof (including, without limitation, by oral questions,
interrogatories, requests for information or documents, subpoena, civil or
criminal investigative demand, any informal or formal investigation by any
Governmental Authority or otherwise in connection with any legal process) to disclose
any Confidential Material, the Receiving Party agrees, provided such is legally
permissible: (i) to promptly
notify the Providing Party of the existence, terms and circumstances
surrounding a request; (ii) to consult with the Providing Party on the
advisability of taking available legal steps to resist or narrow the request; and (iii) if
disclosure of the information
is required, to furnish only that
portion of the
Confidential Material which, in the reasonable opinion of the Receiving
Party’s counsel, the Receiving Party is legally compelled to disclose and to
cooperate with any action by the Providing Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will
be accorded to the Confidential Material; provided that the Providing Party
shall reimburse the Receiving Party for all reasonable out-of-pocket expenses
incurred by the Receiving Party in connection with cooperating with the request.

(d)   In the event of the termination of
this Agreement, promptly upon request from the Providing Party, the Receiving
Party shall, except to the extent prohibited by applicable Law, deliver to the
Providing Party, or destroy, all tangible Confidential Material as directed by
the Providing Party without retaining any copies, extracts or other
reproductions thereof in whole or in part. Any destruction shall be certified
in writing to the Providing Party by an authorized officer of the Receiving
Party. Notwithstanding the foregoing, the Receiving Party and one
Representative designated by the Receiving Party shall be permitted to retain
one permanent file copy of each document constituting Confidential Material,
which shall remain subject to the terms of this Section 6.7, except
that: (i) the one-year limitation in Section 6.7(b) will not apply; and
(ii) the Confidential Material may be used only in connection with litigation
arising from the transactions contemplated by this Agreement or any Ancillary
Agreement.

 

 50

SECTION 6.8                          Employee Matters.

(a)   The Service Providers have provided to IWEST a true
and correct list as of the date hereof setting forth those
individuals who are (i) currently employees of the Service Providers or (ii)
employees of IREIC who are intended to become employees of IWEST or a Surviving
Entity upon Closing.  Except as set forth
on Schedule 6.8(a), all of the individuals on such list are intended to
become employees of IWEST or a Surviving Entity upon Closing (the “Service Employees”) and IWEST or a Surviving
Entity will offer to employ each such individual commencing as of the Closing
Date.  Prior to the Closing, each Service
Provider will take appropriate actions with respect to each of its employees
that is not a Service Employee to (i) transfer such employee to an entity other
than a Service Provider or IWEST or (ii) terminate such employee’s employment.

(b)   Immediately following the Closing, TIGI or
one or more of its Affiliates shall make available to Service Employees the
opportunity to participate in employee benefit plans or programs substantially
similar to those set forth in Schedule 4.11(a).  Such participation will be subject to the
terms and conditions set forth in the employee benefit plan or program made
available and TIGI (or its Affiliate, as appropriate) reserves the right to
modify, amend or terminate any of these plans or programs at any time, with or
without notice.

(c)   Notwithstanding anything contained in this
Agreement or the Ancillary Agreements, IWEST and its Affiliates shall be solely
responsible for any and all wages, commissions, salaries, bonus, compensation,
retention payments, taxes, retirement plan contributions, deferred
compensation, awards, vacation pay, paid time off, sick pay, holiday pay,
severance pay, disability benefits, tuition reimbursement and benefit plan or
program contributions, premium payments and related expenses approved,
incurred, earned or accrued by any Service Employee and their eligible
dependents and beneficiaries and all other like obligations and payments (the “Employment
Obligations”) to Service Employees in connection with any individual’s
employment (or termination or constructive termination of employment) with
IWEST or one of its Affiliates after the Closing.  Each of IREIC and the Stockholders, jointly
and severally, shall be solely responsible for any and all Employment
Obligations to Service Employees (provided that an accrual on the Closing
Balance Sheet shall satisfy any such Employment Obligation to the extent such
Employment Obligation has been so accrued) in connection with any individual’s
employment (or termination or constructive termination of employment) with the
Service Providers on or before the Closing.

SECTION 6.9                          Tax Matters.

(a)   Any Tax sharing agreement or similar arrangement,
agreement or practice between or among TIGI or IREIC, on the one hand, and any
Service Provider, on the other hand, or
the Service Providers and any other Person will be terminated prior to the
Effective Time and shall have no further effect for any taxable year.

(b)   The following provisions govern the Tax
Return and TIGI Combined Return filing responsibility of IREIC and the Agent
with respect to Pre-Closing Tax Periods:

 51
 

(i)            IREIC
and the Agent and, as applicable, TIGI shall prepare or cause to be prepared
and timely file or cause to be timely filed all Tax Returns of the Service
Providers and all TIGI Combined Returns (in each case, taking into account
extensions thereto) for all Pre-Closing Tax Periods that are not part of a
Straddle Period, and TIGI and the Agent or other appropriate parties will pay
or cause to be paid any Taxes with respect thereto as and when due.  The parties agree that they will treat the
Advisor as if it ceased to be a member of the affiliated group (within the
meaning of Code Section 1504) having TIGI as parent and any comparable or
similar group of state, local or foreign laws or regulations, as of the close
of business on the Closing Date.

(ii)           Except
for any TIGI Combined Returns, IREIC and the Agent will allow IWEST a reasonable
opportunity to review such Tax Returns other than any individual Schedule K-1s
(including any amended return) five (5) business days prior to their being
filed to the extent that they relate to any Service Provider and shall consider
in good faith making any changes reasonably requested by IWEST.  With respect to TIGI Combined Returns, IREIC
will provide Tax information with respect thereto that is relevant to IWEST in
preparing the Advisor’s Tax Returns (including, for example, Tax basis information).  Except as required due to a change in law,
without the consent of IWEST (as authorized by the IWEST Special Committee),
which consent shall not be unreasonably withheld, IREIC and the Agent will take
no position on any Tax Return or TIGI Combined Return that relates to any
Service Provider that would be inconsistent with prior positions taken by such
Service Provider and which could affect a Post-Closing return of a Service
Provider.

(c)   IWEST shall prepare or cause to be prepared
and timely file or cause to be timely filed all Tax Returns of the Service
Providers that relate to Post-Closing Tax Periods and Straddle Periods.  All
Tax Returns prepared pursuant to this Section 6.9(c)
that relate to Straddle Periods shall be prepared on a basis consistent with
past practice unless (i) otherwise required by law or (ii) consented to by
IREIC or the Agent, as the case may be. 
IWEST shall permit IREIC and the Agent or their advisors, as the case
may be, to review each such Tax Return that relates to a Straddle Period prior
to filing and shall consider in good faith making any changes reasonably
requested by IREIC or the Agent, as the case may be.  IREIC or the Agent, as applicable, shall pay,
pursuant to Section 9.5, IWEST the excess of (i) any Taxes payable by or
with respect to any Service Provider to the extent attributable to a
Pre-Closing Tax Period over (ii) the sum of (A) the amount of such Taxes
previously paid by IREIC or the Agent, as applicable plus (B) the amount of
such Taxes otherwise paid by the Service Providers on or prior to the Closing
Date plus (C) any such Taxes accrued or reserved for on the Service Providers’
closing balance sheets and which are specifically included in the calculation
of Net Working Capital (collectively, the “Paid Taxes”).  IREIC or the Agent, as applicable, shall pay,
pursuant to Section 9.5, such excess to IWEST within twenty (20) days
after written demand thereof is made by IWEST (but in any case not earlier than
five (5) days before the date on which the Taxes for the relevant Tax Period
are required to be paid to the relevant taxing or other Governmental
Authority).  If the amount of any Paid
Taxes exceeds the 

 52
 

amount of such Taxes actually paid with
respect to a Pre-Closing Tax Period, IWEST shall pay to IREIC or the Agent, as
applicable, the amount of such excess within twenty (20) days after the Tax
Return reporting to the final liability for such Taxes is required to be filed
with the relevant Taxing authority.  In
the case of a Tax that is contested in accordance with the provisions of Section 6.9(e) payment of the Tax to the
appropriate Governmental Authority shall not be considered to be due earlier
than the date a final determination to such effect is made by the appropriate
Governmental Authority or court.

(d)   For purposes of this Agreement, in the case
of any Taxes that are imposed on a periodic basis over a Straddle Period, the
portion of such Tax that relates to the Pre-Closing Tax Period shall be deemed
to be the amount of such Tax for the entire Straddle Period multiplied by a
fraction the numerator of which is the number of days in the Tax Period ending
on the Closing Date and the denominator of which is the number of days in the
entire Straddle Period; provided, that in the case of any Tax based upon
income or receipts, the portion allocable to the Pre-Closing Tax Period shall
include operations through the Closing Date (i.e.,
with respect to operations, based on an interim closing of the books on the
Closing Date).

(e)   If a claim shall be made by any Governmental
Authority or any third party with respect to Taxes, which, if successful, might
result in an indemnity payment to an Indemnified Party pursuant to Section 9.5,
the Indemnified Party or the Indemnifying Party, as the case may be, shall
promptly and in any event no more than twenty (20) days following receipt of
such claim, give written notice to the Indemnifying Party or the Indemnified
Party, as the case may be, of such claim (a “Tax Claim”);
provided, however,
that the failure of the Indemnified Party to give such notices shall only
relieve the Indemnifying Party from its indemnification obligations hereunder
to the extent it is actually prejudiced by such failure.  With respect to any Tax Claim relating to a
Tax Period ending on or prior to the Closing Date, IREIC or Agent shall control
all proceedings and may make all decisions in connection with such Tax Claim
(including selection of counsel) at its own expense if IREIC or the Agent, as
applicable, acknowledge in writing without qualification their indemnification
obligations hereunder.  However, if the
resolution of any portion of such Tax Claim would increase the Taxes of IWEST
or of the Service Providers for a Tax Period after the Closing Date by more than
$100,000 in the aggregate, IREIC or the Agent must obtain the consent of IWEST
(as authorized by the IWEST Special Committee). 
IREIC or the Agent, as applicable, and IWEST shall jointly control all
proceedings in connection with any Tax Claim relating to Taxes of the Service
Providers for a Straddle Period.  IWEST
shall control all proceedings and make all decisions in connection with any Tax
Claim relating to a Tax Period beginning after the Closing Date.  Except as otherwise provided, a party shall
promptly notify the other party if it decides not to control the defense or
settlement of any Tax Claim which it is entitled to control pursuant to this
Agreement, and the other party shall thereupon be permitted to defend and
settle such proceeding without prejudice.

(f)    IREIC and the Agent, on the one hand, and
IWEST, on the other hand, shall cooperate fully, as and to the extent
reasonably requested by the other, in connection with the filing of Tax Returns
and TIGI Combined Returns pursuant to this Section 6.9
and any audit, litigation or other proceeding with respect to Taxes.  Such cooperation shall include, without
limitation, the furnishing or making available of records, books of account or
other 

 53
 

materials of the Service Providers necessary
or helpful for the defense against assertions of any taxing or other
Governmental Authority as to any Tax Returns and any TIGI Combined
Returns.  IWEST and IREIC and the Agent
shall, at their own expense, maintain such Tax information or Tax records
relating to the Service Providers as are regularly maintained by such party or
as may be required by law to be maintained. 
Such Tax records or Tax information shall be made available upon written
request within ten (10) Business Days of such request.  If the requesting party, in its reasonable
judgment, shall determine that it is necessary that any such Tax records or Tax
information be made available before ten (10) Business Days from such request,
the other party shall use commercially reasonable efforts to make such Tax
records or Tax information available (or cause such Tax records or Tax
information to be made available) within such shorter period, but in no event
upon less than two (2) Business Days’ prior written notice from the requesting
party.  The non-requesting party shall,
upon request by the requesting party, promptly furnish the requesting party
with a copy of such Tax records or Tax information.

(g)   Any income tax refunds that are received by
IWEST or the Service Providers, and any amounts credited against Taxes to which
IWEST or the Service Providers become entitled, that relate to Pre-Closing Tax
Periods shall be for the account of the stockholders of the Service Providers,
and IWEST shall pay over to IREIC with respect to the Advisor and the Agent on
behalf of any Managers any such refund or the amount of any such credit within
fifteen (15) days after receipt of such refund or use of such credit.  Notwithstanding the foregoing, any cash
refunds less any associated costs from the carryback of losses of the Service
Providers shall be for the account of IWEST to the extent that such losses are
attributable to a Tax Period beginning after the Closing Date (or the portion
of any Straddle Period that begins after the Closing Date).

(h)   IREIC and the Agent shall deliver to IWEST at
closing a certificate certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code.

(i)    Each Service Provider, IREIC and the Agent
shall, promptly upon IWEST’s request,
make available to IWEST all data and information in the possession of the
Service Providers, IREIC or the
Agent or any of its assets, which is determined to be necessary or helpful for
diligence purposes or to monitor its compliance with real estate investment
trust income and asset tests and other requirements relating to the status of
the real estate investment trust as a real estate investment trust under the
Code.

SECTION 6.10       Intercompany Accounts and Arrangements.

(a)   Other than those receivables
and payables reflected on the Closing Balance Sheet, as of the Closing, no
intercompany receivables and payables (whether or not then due) shall exist
between any Service Provider, on the one hand, and any of TIGI, IREIC, the
Stockholders, the Agent or any Affiliates of any of them, but excluding the
Service Providers from the definition of Affiliate for these purposes, on the
other hand.

(b)   Other than the Service Agreements and any
other agreements entered into or amended in connection with the Mergers and the
transactions contemplated thereby, all 

 54
 

other agreements or arrangements between any
Service Provider, on the one hand, and any of TIGI, IREIC, the Stockholders or
any Affiliates of any of them, on the other hand, including any oral agreements
or course of business practices or understandings, if any, will terminate as of
the Closing Date and be of no further force and effect, with no further
liabilities on the part of any party thereto, other than any liabilities
reflected on the Closing Balance Sheet.

SECTION 6.11                    Restrictive Legends and Stop Transfer Orders.

(a)   Each certificate representing the IWEST
Shares delivered pursuant to this Agreement shall bear the following legend,
together with any other legends that may be required by state or federal
securities law:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE.  THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM OR UPON DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT.

(b)   Stop Transfer Instructions. 
In order to ensure compliance with the restrictions referred to herein,
IWEST may, subject to the terms of the Registration Rights Agreement, issue
appropriate “stop-transfer” instructions to its transfer agent with respect to
the IWEST Shares delivered pursuant to this Agreement.

(c)   Refusal to Transfer. 
IWEST will not be required: (i) to transfer on its books any IWEST
Shares that have been sold or otherwise transferred in violation of any of the
provisions of this Agreement or applicable Law, or (ii) to treat as owner of
such IWEST Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such IWEST Shares have been so
transferred.

(d)   Removal of Legend and Transfer Restrictions.  Any legend endorsed on a certificate pursuant
to Section 6.11(a) and the stop transfer
instructions with respect to such IWEST Shares shall be removed and IWEST shall
cause such certificate to be cancelled and shall issue a certificate without
such legend to the holder thereof (i) if such IWEST Shares are registered under
the Securities Act and if the proposed transfer thereof is consistent with the
plan of distribution in the prospectus with respect to such registration or
(ii) if such holder provides IWEST with an opinion of counsel for such holder,
reasonably satisfactory to legal counsel for IWEST, to the effect that a sale,
transfer or assignment of such IWEST Shares is in compliance with the
Securities Act.

SECTION 6.12                    Post-Closing Access.

In connection with any financial or tax audit, lawsuit
or similar proceeding involving IREIC, any Service Provider, any Stockholder or
any of their respective Affiliates or other 

 55
 

investigation of IREIC,
any Service Provider or any Stockholder, or any of their respective Affiliates
for any matter relating to any period prior to the Closing Date, IWEST shall,
upon request, permit IREIC and the Agent and their representatives to have
reasonable access to the books and records of the respective Surviving
Entity.  IWEST shall not dispose of such
books and records during the  ten
(10) year period beginning with the Closing Date or any longer period as
mandated by applicable Law without consent of either IREIC, with respect to the
Advisor Surviving Corporation, or the Agent,  with
respect to each respective Manager Surviving Corporation, which consent shall
not be unreasonably withheld.  Following
the expiration of such ten year period, IWEST may dispose of such books and
records at any time upon giving sixty (60) days prior written notice to either
IREIC or the Agent; provided, however, that if either IREIC or
the Agent informs IWEST in writing during such sixty (60) day period of its desire
to maintain such books and records, then IWEST shall transfer such books and
records to either IREIC or the Agent, as applicable.

SECTION 6.13                    Non-Solicitation.

(a)   In consideration of the benefits of this
Agreement to IREIC and its Affiliates and to the Stockholders and in order to
induce IWEST to enter into this Agreement, IREIC and the Agent (on behalf of
the Stockholders) hereby covenants and agrees that, from and after the Closing
Date and until the second anniversary of the Closing Date, without the prior
consent of IWEST, it shall not, and shall cause its Affiliates not to, directly
or indirectly, as an officer, director, employee, partner, stockholder, member,
proprietor, consultant, joint venturer, investor or in any other capacity, hire
or solicit to perform services (as an officer, employee, consultant or
otherwise) or take any actions which are intended to persuade any termination
of association of any Service Employee with any of IWEST or the Surviving
Entities; provided, however, that general solicitations of
employment published in a journal, newspaper or other publication of general
circulation or listed on any internet job site and not specifically directed
towards a Service Employee shall not be deemed to constitute solicitation for
purposes of this Section 6.13.

(b)   Each of IREIC and its Affiliates and the
Agent (on behalf of the Stockholders) specifically acknowledges and agrees that
the time and activity restrictions set forth in Section
6.13(a) are reasonable and properly required for the protection of
IWEST and the businesses being acquired.

(c)   In consideration of the benefits of this
Agreement to IWEST and in order to induce IREIC and the  Agent to enter into this Agreement, IWEST
hereby covenants and agrees that, from and after the Closing Date and until the
second anniversary of the Closing Date, without the prior consent of IREIC, it
shall not, and shall cause its Affiliates not to, directly or indirectly, as an
officer, director, employee, partner, stockholder, member, proprietor, consultant,
joint venturer, investor or in any other capacity, hire or solicit to perform
services (as an officer, employee, consultant or otherwise) or take any actions
which are intended to persuade any termination of association of any employee
of (i) IREIC or (ii) any Affiliates of IREIC; provided, however,
that general solicitations of employment published in a journal, newspaper or
other publication of general circulation or listed on any internet job site and
not specifically directed towards such employees shall not be deemed to
constitute solicitation for purposes of this Section 6.13.

 

 56

(d)   IWEST specifically acknowledges and agrees
that the time and activity restrictions set forth in Section
6.13(c) are reasonable and properly required for the protection of
the TIGI and its Affiliates.

(e)   Each of IREIC, the Agent and their Affiliates
and IWEST further agrees that if any of the provisions of this Section 6.13 is found by any court of competent
jurisdiction (or legally empowered agency) to be in violation of applicable Law
or unenforceable for any reason whatsoever, then it is the intention of IREIC,
the Agent and each of their Affiliates and IWEST that such provision or
provisions be deemed to be automatically amended to the extent necessary to
comply with applicable Law and permit enforcement.  If any of the provisions of this Section 6.13 shall be deemed by any court of
competent jurisdiction (or legally empowered agency) to be wholly or partially
invalid, such determination shall not affect the binding effect of the other
provisions of this Section 6.13.  IWEST and IREIC, the Agent and each of their
Affiliates agree that a monetary remedy for breach under this Section 6.13 shall be inadequate, and will be
impracticable and extremely difficult to prove, and further agree (i) that a
breach of Section 6.13(a) will cause IWEST
irreparable harm, and that, in addition to any other rights or remedies
available to IWEST, IWEST is entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages, with a bond or other
form of security not being required and specifically waived hereby; and (ii)
that a breach of Section 6.13(c) will cause
IREIC and its Affiliates irreparable harm, and that, in addition to any other
rights or remedies available to IREIC and the Agent, IREIC and the Agent are
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damages, with a bond or other form of security not being
required and specifically waived hereby.

SECTION 6.14                    Delivery of Financial Statements.

(a)   For each fiscal quarter ending on or after
June 30, 2007 and on or before the Closing Date, IREIC and the Agent shall
cause the Service Providers to deliver to IWEST, within forty-five (45) days
after the last day of such fiscal quarter(s) balance sheets for the Service
Providers as at the last day of such fiscal quarter(s) and unaudited
consolidated statements of income, changes in owners’ equity and cash flows for
such quarter(s) and the year-to-date period then ended (each, an “Unaudited Supplemental Financial Statement”).

(b)   If necessary or required to permit IWEST to
comply with applicable Law in connection with obtaining the IWEST Stockholders’
Ratification or otherwise, and to the extent not previously provided by the
Service Providers pursuant to this Agreement, IREIC and the Agent shall cause
each Service Provider to deliver to IWEST, at such Service Provider’s expense,
audited and unaudited balance sheets and audited statements of income, changes
in owners’ equity, and cash flows for the periods required by applicable Law
(the “Required Supplemental Financial Statements”;
and, together with the Unaudited Supplemental Financial Statements, the “Supplemental Financial Statements”), together
with a report without qualification or exception with respect thereto in the
case of audited financial statements.

 57
 

SECTION 6.15                    Director and Officer Liability.

(a)   From and after the Closing, and subject to
IWEST’s right to indemnification pursuant to Article IX, IWEST will
indemnify and hold harmless, as and to the extent set forth in the applicable
charter, bylaws and indemnity agreements in effect on the date of this
Agreement each individual who is now, or who becomes prior to the Closing, a
director or officer of any of the Service Providers (the “Director and
Officer Indemnified Parties”) against any Damages to which such Director
and Officer Indemnified Party is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to
(i) the fact that such individual is or was a director or officer of any of the
Service Providers or (ii) this Agreement or any of the transactions
contemplated by this Agreement, whether asserted or arising before or after the
Closing; provided, however, that IWEST shall not be obligated to
indemnify or hold harmless any such Director and Officer Indemnified Party
pursuant hereto in respect of any claim by any Service Provider, IWEST or any
of IWEST’s Affiliates.

(b)   The provisions of this Section 6.15
will survive the Closing and are intended to be for the benefit of, and will be
enforceable by, each Director and Officer Indemnified Party and his or her
heirs and representatives.

SECTION 6.16                    Estimated Service Payment.

(a)   On the second Business Day
immediately preceding the Closing Date, IWEST shall pay or cause to be paid (by
wire transfer of immediately available funds) to each Service Provider an
amount equal to the total fees, expenses and other amounts payable (but not
previously paid) to such Service Provider pursuant to the IWEST/Service
Provider Agreements (as estimated in good faith by IWEST) through and including
the Closing Date (the “Estimated Service Payment”).

(b)   To the extent that the
Advisor receives an Estimated Service Payment more than ten (10) days in
advance of the date that such amount would have normally been paid by IWEST in
the ordinary course of business in accordance with past practice, IREIC will
pay simple interest to IWEST at a rate of five percent (5%) per annum on such
Estimated Service Payment for the period during which such Estimated Service
Payment has been so paid in advance. 
Such interest payment shall be made by IREIC within five (5) business
days after the date such payment would have otherwise been paid by IWEST.

ARTICLE VII

CONDITIONS

SECTION 7.1                          Conditions to Each Party’s Obligations.

The respective obligations of each party to effect the
Mergers and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver, at or prior to the Closing, of the following conditions:

(a)   No order, statute, rule, regulation, injunction or decree shall
have been enacted, entered or promulgated by any court of competent jurisdiction or Governmental 

 58
 

Authority that is in
effect and restrains, enjoins or otherwise prohibits or makes illegal the
consummation of any of the Mergers or any of the other transactions contemplated hereby;

(b)   No Action by any Governmental
Authority shall have been initiated or threatened to restrain, prohibit or
invalidate any of the Mergers;

(c)   All
Required Statutory Approvals shall have been obtained or satisfied; and

(d)   IWEST  shall have received an opinion of Duane
Morris LLP  or other
nationally recognized tax counsel (in substantially the form attached as Exhibit  G hereto) that
the Mergers will not adversely affect the status of IWEST as a “real estate
investment trust” under the Code.

SECTION 7.2                          Conditions to Obligations of IWEST and the
Acquisition Entities.

The obligations of IWEST and the Acquisition Entities
to effect the Mergers and the other transactions contemplated hereby shall be
subject to the satisfaction or waiver by IWEST (as authorized in writing by the
IWEST Special Committee in its sole and absolute discretion), at or prior to
the Closing, of the following additional conditions:

(a)   The
representations and warranties of IREIC, each Service Provider and the Agent
contained in this Agreement shall be true and correct in all material respects
(except for such representations and warranties as are qualified by materiality
or Service Provider Material Adverse Effect, which representations and
warranties shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing Date (other than such representations and
warranties that are expressly made as of an earlier date which need only be
true and correct in all material respects or true and correct, as the case may
be, as of such earlier date).

(b)   Each
of IREIC, each Service Provider and the Agent shall have performed and complied
in all material respects  with
all agreements and covenants required to be performed and complied with by it
under this Agreement at or prior to Closing;

(c)   IWEST
shall have received from each of IREIC, each Service Provider and the Agent a
certificate signed by such Person or an officer of such Person in his capacity
as such, dated the Closing Date, certifying as to such Person, that the
conditions set forth in paragraphs (a) and (b) of this Section
7.2 have been satisfied;

(d)   IWEST
shall have obtained the IWEST Stockholders’ Ratification;

(e)   The
opinion of William Blair & Company received as of the date of this
Agreement by the IWEST Special Committee and by the Board of Directors of the
Company (that the consideration to be paid by IWEST for the Service Providers
pursuant to this Agreement is fair, from a financial point of view) shall not
have been withdrawn or revoked;

 59
 

(f)    Since
the date of this Agreement, there has not been any change or any event which
would, individually or in the aggregate, reasonably be expected to have a
Service Provider Material Adverse Effect;

(g)   IREIC
shall have executed and delivered the Sublease Agreement, substantially in the
form attached as Exhibit B hereto
(the “Sublease Agreement”);

(h)   One
or more Affiliates of TIGI shall have executed and delivered the Transition
Property Due Diligence Services Agreement, the Amendment to Office and
Facilities Management Services Agreement, the Amendment to Insurance and Risk
Management Services Agreement, the Amendment to Computer Services Agreement,
the Amendment to Personnel Services Agreement, the Amendment to Property Tax
Services Agreement, the Amendment to Communications Services Agreement, the
Amendment to the Loan Services Agreement, the Second Amendment to the Mortgage
Brokerage Services Agreement, the Institutional Investor Relationships Services
Agreement, and the the Legal Services Agreement each substantially in the forms
attached as Exhibits C-1 through C-11 hereto, respectively;

(i)    Each
of IREIC, the Agent and the Escrow Agent shall have executed and delivered a
counterpart signature page to the Escrow Agreement, substantially in the form
attached as Exhibit D
hereto (the “Escrow Agreement”);

(j)    TIGI
shall have executed and delivered to IWEST the signature page to a letter
agreement, substantially in the form attached as Exhibit  I hereto (the “TIGI
Letter Agreement”) concurrent with the execution of this Agreement and the
TIGI Letter Agreement shall remain in full force and effect;

(k)   IWEST
shall have received certificates issued by the secretaries of state of the
respective states of incorporation or formation, as applicable, of IREIC and
each Service Provider, certifying the good standing of such Persons in such
states as of a date within five (5) days of the Closing Date;

(l)    IWEST
shall have received certificates executed by the respective secretaries or by
assistant secretaries of IREIC and the Manager Parents certifying as of the
Closing Date (i) all board and stockholder resolutions, as applicable, fully
and properly executed, evidencing such Person’s authorization to execute,
deliver and perform this Agreement and the Ancillary Agreements to which it is
a party and (ii) a true and complete copy of the organizational documents of
the applicable Service Provider;

(m)  All
Required Consents set forth on Schedule 4.3(c)
shall have been obtained;

(n)   Each
of IREIC and the Agent shall deliver to IWEST a certificate certifying that the
transactions contemplated hereby are exempt from withholding under Section 1445
of the Code;

(o)   IWEST shall have received an
opinion of Jenner & Block LLP regarding the Service Providers substantially
in the form attached as Exhibit E
hereto;

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(p)   Each of IREIC and the Agent (on
behalf of the Stockholders) shall have executed and delivered to IWEST a counterpart signature page to
the Registration Rights Agreement, substantially in the form attached as Exhibit F hereto (the “Registration
Rights Agreement”);

(q)   TIREG shall have executed and delivered the
Amendment to the License Agreement, substantially in the form attached as Exhibit J-1 hereto (the “Amendment to
License Agreement”) and the Manager License Agreements, substantially in
the forms attached as Exhibits J-2 through
J-4 hereto (the “Manager License Agreements” and with the
Amendment to License Agreement, collectively the “License Agreements”);
and

(r)    The irrevocable Written Consents executed by
each of IREIC and the Principal Stockholders concurrent with the execution of
this Agreement shall remain in full force and effect.

SECTION 7.3                          Conditions to Obligations of the Service Providers.

The obligations of the Service Providers to effect the
Mergers and the other transactions contemplated hereby shall be subject to the
satisfaction or waiver by IREIC or the Agent, as applicable (in their sole and
absolute discretion), at or prior to the Closing of the following additional
conditions:

(a)   The representations and warranties of IWEST
contained in this Agreement shall be true and correct in all material respects
(except for such representations and warranties as are qualified by materiality
or IWEST Material Adverse Effect, which representations and warranties so
qualified shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing Date (other than such representations and
warranties that are expressly made as of an earlier date which need only be
true and correct in all material respects or true and correct, as the case may
be, as of such earlier date), provided that
this condition shall not be deemed to be unsatisfied if such representation or
warranty under this Agreement becomes incorrect as a result in whole or in
part, (i) of any act (other than any act taken at the written direction of the
Board of Directors of IWEST or mandated by this Agreement) or omission by
IREIC, the Agent or any Service Provider or (ii) of any statements or omissions
in the representations and warranties of IWEST which, to the Knowledge of the
Service Providers as of the date of this Agreement, was untrue;

(b)   IWEST shall have performed and complied in
all material respects with all agreements and covenants contained in this
Agreement required to be performed by it at or prior to the Closing, provided that this condition shall not be deemed
to be unsatisfied if such failure to perform or comply with any covenant or
agreement under this Agreement is caused, in whole or in part, by (i) any
action or omission by IREIC, the Agent or any Service Provider or (ii) by any
action or inaction by any member of management of IWEST (unless such action by
management was at the written direction of the IWEST Special Committee);

(c)   The Service Providers shall have received from IWEST a
certificate, signed by an officer of IWEST certifying that the conditions set forth in paragraphs (a) and
(b) of this Section 7.3 have been satisfied;

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(d)   The Service
Providers shall have received certificates issued by the secretaries of state
of the respective states of incorporation of IWEST and the Acquisition
Entities, certifying the good standing of such Persons in such states as of a
date within five (5) days of the Closing Date;

(e)   The Service Providers shall have
received certificates executed by the respective secretaries or by assistant
secretaries of IWEST and the Acquisition Entities certifying as of the Closing
Date: (a) all board and stockholder resolutions, as applicable, fully and
properly executed, evidencing each Person’s authorization to execute, deliver
and perform this Agreement and (b) a true and complete copy of the
organizational documents of each Person;

(f)    Each of IWEST and the Escrow Agent shall have
executed and delivered to IREIC and the Agent a counterpart signature page to
the Escrow Agreement;

(g)   IWEST shall have executed and delivered
to IREIC and the Agent a counterpart signature page to the Registration Rights
Agreement; and

(h)   IWEST and the Acquisition Entities, as
applicable, shall have executed and delivered each Ancillary Agreement to which
it is a party.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.1                          Termination.

This Agreement may be terminated, and the Mergers
contemplated hereby may be abandoned, at any time prior to the Closing, by
action taken by the IWEST Special Committee (in the case of IWEST and the
Acquisition Entities) or by IREIC and the Agent (in the case of the Service
Providers), before or after IWEST Stockholders’ Ratification:

(a)   By mutual consent of (i) IREIC and the Agent
(acting jointly) and (ii) IWEST;

(b)   By either (i) IREIC and the Agent (acting
jointly) or (ii) IWEST if:

(i)            the
Mergers have not been consummated on or before January 31, 2008 or such later
date as may be mutually agreed in writing to by (i) IREIC and the Agent (acting
jointly) and (ii) IWEST (the “Outside Date”);
provided, however,
that the right to terminate this Agreement under this Section
8.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before the Outside Date; or

(ii)           there
shall be any Law that makes consummation of the Mergers illegal or otherwise
prohibited or any judgment, injunction, order or decree of any Governmental
Authority having competent jurisdiction enjoining the parties hereto from
consummating the Mergers shall have been entered 

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and shall have become final and
nonappealable; provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(ii)
shall not be available to any party who fails to use commercially reasonable
efforts to resist, resolve or lift, as applicable, such Law, judgment,
injunction, order or decree;

(c)   Unilaterally by IWEST, if there has been a
breach of any representation, warranty, covenant or other agreement made by
IREIC, the Service Providers or the Agent or any such representation, warranty,
covenant or other agreement contained herein shall have become untrue after the
date of this Agreement and such breach or inaccuracy is not curable, or if
curable, is not cured within twenty (20) days after written notice thereof is
given by IWEST; provided, however, that if the breach is generally
capable of being cured, but cannot reasonably be cured within twenty (20) days
of notice, IWEST’s right to terminate will be delayed as long as reasonably
necessary to effect the cure, but not longer than the Outside Date, so long as
the breaching party diligently pursues a cure to the breach; and

(d)   Unilaterally by IREIC and the Agent, acting
jointly, if there has been a breach of any representation, warranty, covenant
or other agreement made by IWEST or any of the Acquisition Entities or any such
representation, warranty, covenant or other agreement contained herein shall
have become untrue after the date of this Agreement and such breach or
inaccuracy is not curable, or if curable, is not cured within twenty (20) days
after written notice thereof is given by IREIC and the Agent; provided, however, that if the breach is generally
capable of being cured, but cannot reasonably be cured within twenty (20) days
of notice, IREIC’s and the Agent’s joint right to terminate will be delayed as
long as reasonably necessary to effect the cure, but not longer than the
Outside Date, so long as the breaching party diligently pursues a cure to the
breach; and provided, further, there shall be no right to terminate if
such breach or inaccuracy was the result in whole or in part, (i) of any act
(other than any act taken at the written direction of the Board of Directors of
IWEST or mandated by this Agreement) or omission by TIGI, IREIC, the Agent or
any Service Provider or (ii) of any statements or omissions in the
representations and warranties of IWEST which, to the Knowledge of the Service
Providers as of the date of this Agreement, was untrue.

SECTION 8.2                          Effect of Termination.

No termination of this Agreement pursuant to Section 8.1 shall be effective until written
notice thereof is given to the non-terminating party hereto specifying the
provision hereof pursuant to which such termination is made.  If validly terminated pursuant to Section 8.1, this Agreement shall forthwith
become void, and there shall be no further obligation on the part of any party
hereto or their respective officers, directors, stockholders or representatives
(except as set forth in this Section 8.2
and Sections 6.3 (Expenses), Section 6.6 (Public Statements), Section 6.7
(Confidentiality) and Article IX (Survival
and Remedy; Indemnification)); provided, however, that nothing in this Section 8.2 shall relieve any party to this
Agreement from liability for any willful breach of this Agreement (it being
understood and agreed that in determining whether IWEST has willfully breached
this Agreement only such actions or inactions taken pursuant to instruction of
the IWEST Special Committee shall be considered).

 

 63

SECTION 8.3                          Amendment.

This Agreement may not be amended except by an
instrument in writing signed on behalf of IWEST (as authorized by the IWEST
Special Committee) and each of IREIC and the Agent and in compliance with
applicable Law; provided, however, this Agreement may not be amended in any
material respect following the IWEST Stockholders’ Ratification.

SECTION 8.4                          Waiver.

(a)   At any time prior to the Closing, IWEST (as
authorized by the IWEST Special Committee in its sole and absolute discretion)
may (i) extend the time for the performance of any of the obligations or other
acts of IREIC, the Agent or the Service Providers hereunder, (ii) waive any
inaccuracies in the representations and warranties of such Persons contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein to be complied with
or satisfied by such Persons.  Any
agreement on the part of IWEST to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of IWEST.

(b)   At any time prior to the Closing, IREIC and
the Agent acting jointly may (i) extend the time for the performance of any of
the obligations or other acts of IWEST and the Acquisition Entities hereunder,
(ii) waive any inaccuracies in the representations and warranties of such
Persons contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions contained herein to
be complied with or satisfied by such Persons. 
Any agreement on the part of IREIC or the Agent to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of IREIC and the Agent.

ARTICLE IX

SURVIVAL AND REMEDY; INDEMNIFICATION

SECTION 9.1                          Survival.

(a)   The covenants and agreements to be performed
prior to or at the Closing contained in this Agreement shall expire at the
Closing. The covenants and agreements to be performed after the Closing
(including, without limitation, this Article IX)
shall not expire until all obligations have been fully discharged with respect
thereto.

(b)   The representations and warranties of IWEST
contained in this Agreement shall survive until the earlier of (i) thirty (30)
days after the receipt by IWEST (and written notice thereof to IREIC and the
Agent) of the audit opinion of IWEST’s independent registered public accounting
firm covering the financial statements of IWEST for the year ending December
31, 2008 or (ii) the second anniversary of the Closing Date; provided,
that the representations and warranties contained in Section 3.1
(Organization and Qualification), Section 3.2 (Capitalization) and Section
3.4(a) (Authority) shall survive in perpetuity.

(c)   The representations and warranties of IREIC,
the Agent (on behalf of the Stockholders) and the Service Providers contained
in this Agreement shall survive until the earlier of (i) thirty (30) days after
the receipt by IWEST of the audit opinion of IWEST’s 

 64
 

independent registered public accounting firm
covering the financial statements of IWEST for the year ending December 31,
2008 or (ii) the second anniversary of the Closing Date; provided,
that (i) the representations and warranties contained in Section
4.6 (Taxes), Section 4.11
(Employment Matters - Benefit Plans), Section 4.12
(Employee Arrangements; Labor Matters), Section 4.8
(Litigation),  Section 4.9 (Compliance with Laws and Permits) (but
only to the extent such representations relate to Environmental Claims,
Environmental Laws and Environmental Permits) and Section 4.17
(Investment in Securities) shall survive until the expiration of the applicable
statute of limitations (with extensions), and (ii) the representations and
warranties contained in Section 4.1
(Organization and Qualification), Section 4.2
(Capitalization), Section 4.3(a)
(Authority) and Section 4.18(a) (Title to Assets) shall survive in
perpetuity.

(d)   If written notice of a claim has been given
in accordance with this Agreement prior to the expiration of the applicable representations,
warranties, covenants or agreements, then the applicable representations,
warranties, covenants or agreements shall survive as to such claim, until such
claim has been finally resolved.

SECTION 9.2                          Indemnification.

(a)   By IREIC,
the Agent and the Stockholders. Except for any items related to
Taxes, which shall be governed
by Section 9.5, from and after Closing and
subject to the limitations set forth in this Article IX, IREIC, the
Agent and the Stockholders shall jointly and severally indemnify, save and hold
harmless IWEST and the Acquisition Entities and (without duplication) their
Affiliates, successors (including the Surviving Entities) and assigns and each
of the respective officers, directors, employees and agents of the foregoing
(collectively, the “IWEST Indemnified Parties”)
from and against any and all Damages which arise out of, result from or are
incident to (and without regard to any materiality qualifications contained
therein, including, without limitation, a Service Provider Material Adverse
Effect):

(i)            the
breach or inaccuracy of any representation or warranty made by IREIC, the
Service Providers, the Agent or the Stockholders in or pursuant to this
Agreement (including in or pursuant to any certificate);

(ii)           the
breach of any covenant or agreement contained in or made pursuant to this
Agreement by IREIC, the Service Providers, the Agent or the Stockholders
(including the Principal Stockholders);

(iii)          any
claims arising out of or relating to (x) the Mergers or the other transactions
contemplated hereby with respect to or in connection with the allocation or
distribution of the IWEST Shares among IREIC and the Stockholders pursuant to
the Mergers, (y) the purchase, directly or indirectly, prior to the Closing, by
a Stockholder or any other Person of any equity interest in any Manager Parent
from another stockholder or (z) any untrue statement or omission, or alleged
untrue statement or omission, of any fact in connection with the solicitation
of votes or consents from the holders of equity of the Service Providers
(except for the items provided in writing by IWEST set forth on Schedule
3.5(a)); and

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(iv)          any
fraud, intentional misrepresentation or criminal acts committed by IREIC, the
Service Providers, the Agent or the Stockholders (including the Principal
Stockholders) on or prior to the Closing.

(b)   By IWEST.  From and after Closing, and subject to the
limitations set forth in this Article IX, IWEST shall indemnify, save and hold harmless, IREIC and the
Stockholders and (without duplication) their Affiliates, successors and assigns
and each of the respective officers, directors, employees and agents of the
foregoing (collectively, the “Stockholder Indemnified
Parties”) against any and all Damages which arise out of, result
from or are incident to (and without regard to any materiality qualifications
contained therein, including, without limitation, an IWEST Material Adverse
Effect):

(i)            the
breach or inaccuracy of any representation or warranty by the IWEST in or
pursuant to this Agreement (including in or pursuant to any certificate);

(ii)           the
breach of any covenant or agreement contained in or made pursuant to this
Agreement by (x) IWEST (acting at the direction of its Board of Directors) on
or prior to the Effective Time, (y) IWEST after the Effective Time or (z) the
Surviving Entities; and

(iii)          any
fraud, intentional misrepresentation or criminal acts committed by the Board of
Directors of IWEST or the Surviving Entities.

(c)   Procedures.

(i)            Except
as otherwise provided in this Agreement, any Party seeking any indemnification
under this Section 9.2 (an “Indemnified Party”) shall give the party from
whom indemnification is being sought (an “Indemnifying
Party”) notice (and also to the Agent in the case of claims by an
IWEST Indemnified Party) of any matter which such Indemnified Party has
determined has given or could give rise to a right of indemnification under
this Agreement as soon as reasonably practicable after the party potentially
entitled to indemnification becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under this Section 9.2. 
With respect to any claims for indemnification under this Section 9.2
by a Stockholder Indemnified Party, IREIC or the Agent as applicable shall have
sole and exclusive authority to act for and in the name of the Indemnified
Party. With respect to any claims for indemnification under this Section 9.2
by an IWEST Indemnified Party, IWEST shall have sole and exclusive authority to
act for and in the name of the Indemnified Party.

(ii)           The
liability of an Indemnifying Party under this Section
9.2 with respect to Damages arising from claims of any third party
which are subject to the indemnification provided for in this Section 9.2 (“Third
Party Claims”) shall be governed by and contingent upon the
following 

 66
 

additional terms and conditions.  If an Indemnified Party shall receive notice
of any Third Party Claim, the Indemnified Party shall give the Indemnifying
Party notice of such Third Party Claim within twenty (20) days after the
receipt by the Indemnified Party of such notice; provided,
however, that the failure to provide such
notice shall not release the Indemnifying Party from any of its obligations
under this Section 9.2 except to the extent
the Indemnifying Party is materially and irreparably prejudiced by such
failure.  The Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it acknowledges, without
qualification, its indemnification obligations hereunder and gives notice of
its intention to do so to the Indemnified Party within thirty (30) days after
the receipt of such notice from the Indemnified Party; provided,
however, that if there exists a material
conflict of interest (other than one that is of a monetary nature) that would
make it inappropriate for the same counsel to represent both the Indemnified
Party and the Indemnifying Party, then the Indemnified Party shall be entitled
to retain its own counsel, at the expense of the Indemnifying Party, provided that the Indemnifying Party shall not be
obligated to pay the reasonable fees and expenses of more than one separate
counsel for all Indemnified Parties, taken together (except to the extent that
local counsel are necessary or advisable for the conduct of such action or
proceeding, in which case the Indemnifying Party shall also pay the reasonable
fees and expenses of any local counsel). 
If the Indemnifying Party shall not assume the defense of any Third
Party Claim or litigation resulting therefrom, the Indemnified Party may defend
against the claim or litigation in any manner as it deems appropriate at the
expense of the Indemnifying Party and may settle the claim or litigation on any
reasonable terms as it deems appropriate at the expense of the Indemnifying
Party; provided, however,
that in settling any action in respect of which indemnification is payable
under this Article IX, it shall act reasonably and in good faith and
shall not settle any action with an Affiliate or related party without
providing fifteen (15) days advance written notice of the Third Party Claim to
the Indemnifying Party.  In the event the
Indemnifying Party exercises the right to undertake the defense against any
Third Party Claim as provided above, the Indemnified Party shall cooperate with
the Indemnifying Party and make available to the Indemnifying Party all
witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control relating thereto as
is reasonably required by the Indemnifying Party.  Similarly, in the event the Indemnified Party
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party all witnesses,
records, materials and information in the Indemnifying Party’s possession or
under the Indemnifying Party’s control relating thereto as is reasonably
required by the Indemnified Party.

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(iii)          The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, (a) settle or compromise any Third Party Claim or consent to
the entry of any judgment which does not include an unconditional, duly
authorized, fully executed and acknowledged (by a duly registered notary
public) written release by the claimant or plaintiff of the Indemnified Party
from all liability in respect of the Third Party Claim, (b) settle or compromise
any Third Party Claim if the settlement imposes equitable remedies or material
obligations on the Indemnified Party other than financial obligations for which
such Indemnified Party will be indemnified hereunder, subject to the limits set
forth in Section 9.3; or (c) settle or compromise any Third Party Claim
if the result is to admit civil or criminal liability or culpability on the
part of the Indemnified Party or that gives rise to criminal liability with
respect to the Indemnified Party.  No Third
Party Claim which is being defended in good faith by the Indemnifying Party in
accordance with the terms of this Agreement shall be settled or compromised by
the Indemnified Party without the prior written consent of the Indemnifying
Party.

SECTION 9.3                          Limitations.

Except as otherwise provided herein:

(a)   No amount of Damages shall be payable
pursuant to Section 9.2(a) until, and then
only to the extent that, the aggregate amount of Damages that are indemnifiable
under Section 9.2(a) exceeds $2,000,000 (the “Service
Provider Deductible”); provided, however,
that the Service Provider Deductible shall not apply to Damages arising out of,
resulting from or incident to breaches of the representations, warranties or
covenants set forth in Section 4.1 (Organization
and Qualification), Section 4.2 (Capitalization),
Section 4.3(a) (Authority) and Section 4.14 (Brokers and Finders), Section
9.2(a)(ii), Section 9.2(a)(iii), and Section 9.2(a)(iv).  For the avoidance of doubt, it is
acknowledged and agreed that the Service Provider Deductible shall be
calculated in the aggregate with respect to all claims for indemnification
pursuant to Section 9.2(a)(i).

(b)   No amount of Damages shall be payable
pursuant to Section 9.2(b) until, and then
only to the extent that, the aggregate amount of Damages that are indemnifiable
under Section 9.2(b) exceeds $2,000,000 (the “IWEST
Deductible”); provided, however,
that the IWEST Deductible shall not apply to Damages arising out of, resulting
from or incident to breaches of the representations, warranties or covenants
set forth in Section 3.1 (Organization and
Qualification), Section 3.2  (Capitalization),
Section 3.3 (Issuance of Securities), Section
3.4(a) (Authority), Section 3.7
(Brokers and Finders), Section 9.2(b)(ii) and Section 9.2(b)(iii).  For the avoidance of doubt, it is
acknowledged and agreed that the IWEST Deductible shall be calculated in the
aggregate with respect to all claims for indemnification pursuant to Section 9.2(b)(i).

(c)   The maximum aggregate amount of Damages for
which indemnity may be recovered pursuant to Section 9.2(a) shall be (i)
in the case of a breach or inaccuracy of any representation or warranty
contained in Section 4.1 (Organization and Qualifications),

 

 68

Section 4.2
(Capitalization), Section 4.3(a) (Authority), Section 4.17
(Investment in Securities) and Section 4.18(a) (Title to Assets), or in
the case of Damages pursuant to Section 9.2(a)(ii), Section
9.2(a)(iii) and Section 9.2(a)(iv), an amount equal to the aggregate
value of the IWEST Shares issued in connection with this Agreement, and (ii) in
all other cases of a breach or inaccuracy of a representation or warranty
contained in Section 9.2(a)(i), an amount equal to fifty-five percent
(55%) of the aggregate value of the IWEST Shares issued in connection with this
Agreement.  In addition, notwithstanding
anything in this Agreement to the contrary, the maximum amount of Damages for
which indemnity may be recovered by any IWEST Indemnified Party from any Stockholder
(other than the Principal Stockholders) shall be an amount equal to the
aggregate value of the IWEST Shares which such Stockholder has received in
connection with the transactions contemplated by this Agreement, except in the
case of fraud or intentional misrepresentation by such Stockholder in
connection with the transactions contemplated hereby.

(d)   The maximum aggregate amount of Damages for
which indemnity may be recovered pursuant to Section 9.2(b) shall be (i)
in the case of a breach or inaccuracy of any representation or warranty
contained in Section 3.1 (Organization and Qualification), Section
3.2 (Capitalization), and Section 3.4(a) (Authority), or in the case
of Damages pursuant to Section 9.2(b)(ii) or Section 9.2(b)(iii),
an amount equal to the aggregate value of the IWEST Shares issued in connection
with this Agreement, and (ii) in all other cases of a breach or inaccuracy of a
representation or warranty contained in Section 9.2(b)(i), an amount
equal to fifty-five percent (55%) of the aggregate value of the IWEST Shares
issued in connection with this Agreement.

(e)   To the extent an IWEST Indemnified Party is
entitled to indemnification pursuant to Section 9.2(a), such IWEST
Indemnified Party shall be required first to seek indemnification from the
Escrow Fund, to the extent of the contents of the Escrow Fund available for
distribution, and only after the distribution or allocation of the entire
contents of the Escrow Fund available for distribution in accordance with the
Escrow Agreement shall such IWEST Indemnified Party be entitled to seek
indemnification directly from IREIC and the Stockholders.

(f)    To the extent a Service Provider Indemnified
Party is entitled to indemnification pursuant to Section 9.2(b), IWEST
shall be required to satisfy its indemnification obligations hereunder solely
by payment in cash.  IREIC and each of
the Stockholders shall be entitled to satisfy their indemnification obligations
hereunder by payment in cash, in IWEST Shares or in a combination thereof, in their
sole discretion.  For purposes of this Article
IX, IWEST Shares shall be deemed to have a fair market value of $10.00 per
IWEST Share; provided that if the IWEST Shares are listed on a national
securities exchange, each IWEST Share shall be deemed to have a fair market
value equal to the average of the closing sale prices of an IWEST Share on such
exchange for the twenty (20) trading days prior to delivery thereof to IWEST as
payment hereunder.

(g)   If an Indemnified Party recovers Damages from
an Indemnifying Party under Section 9.2,
the Indemnifying Party shall be subrogated, to the extent of such recovery, to
the Indemnified Party’s rights against any third party, other than a third
party with whom the Indemnified Party has a material business agreement or
arrangement, with respect to such 

 69
 

recovered Damages subject to the subrogation
rights of any insurer providing insurance coverage under one of the Indemnified
Party’s policies and except to the extent that the grant of subrogation rights
to the Indemnifying Party is prohibited by the terms of the applicable
insurance policy.

(h)   The amount of any Damages owed to any
Indemnified Party hereunder shall be net of any insurance, indemnity,
contribution or other payments or recoveries of a like nature with respect
thereto actually recovered (it being agreed that, promptly after the
realization of any such reductions of Damages pursuant hereto, such party shall
reimburse the Indemnifying Party for such reduction in Damages for which such
party was indemnified prior to the realization of such reductions of Damages).

(i)    The amount of Damages for which
indemnification is provided under this Article IX shall take account of
any after Tax effect realized by the Indemnified Party arising from the payment
of such Damages when and as such Tax cost or benefit is actually realized
through a reduction or increase in Taxes otherwise due.

SECTION 9.4                          Exclusive Remedy.

Each party hereby acknowledges and agrees that, from
and after the Closing and except for claims seeking equitable relief, its sole
remedy relating to the Mergers or the other transactions contemplated by this
Agreement shall be pursuant to the indemnification provisions of this Article
IX.  In furtherance of the foregoing,
each party hereby waives, from and after the Closing, to the fullest extent
permitted by applicable Law, any and all other rights, claims, and causes of
action it may have against the other Parties or their respective
Representatives and Affiliates relating to the Mergers or the other transactions
contemplated by this Agreement, other than in connection with the performance
of the Services Agreements, the Employment Agreements and the Consulting
Agreements, and other than claims seeking equitable relief; provided, however,
that nothing in this Section 9.4 shall constitute a waiver of any remedy
a Party may have with respect to any right, claim, or cause of action arising
out of fraud, intentional misrepresentations or omissions or any other matter
that cannot be waived as a matter of law.

SECTION 9.5                          Tax Indemnification.

Notwithstanding anything in this Agreement to the
contrary:

(a)   To the extent of aggregate value of the IWEST
Shares issued in connection with this Agreement, from and after the Closing,
IREIC and the Agent shall jointly and severally indemnify, save and hold
harmless the IWEST Indemnified Parties from and against any and all Damages
that arise out of, result from, or are incident to: (i) Taxes of the Service
Providers with respect to all Pre-Closing Tax Periods, (ii) Taxes of any person
with whom any of the Service Providers, or their Affiliates or any predecessor
or affiliate thereof joins or has ever joined in filing any affiliated,
consolidated, combined or unitary Tax Return (or any TIGI Combined Return) for
any Pre-Closing Tax Period, (iii) any real property transfer or gains Tax, use
Tax, stamp Tax, stock transfer Tax or other similar Tax imposed on the
transactions contemplated by this Agreement and (iv) the breaches of
representations and 

 70
 

warranties set forth in Section 4.6 and the
covenants set forth in Sections 5.1(c)(ii), 5.1(m), and 6.9,
in each case without regard to any materiality qualifications.

(b)   After the Closing Date, IWEST shall
indemnify, save and hold harmless the Stockholder Indemnified Parties from and
against: (i) all liability for Taxes of any Surviving Corporation for any
Post-Closing Tax Period; and (ii) any and all Damages arising out of, resulting
from or incident to the breach by IWEST of any covenant contained in Section
6.9, without regard to any materiality qualifications.

(c)   The Indemnified Parties shall not have any
right to indemnification pursuant to this Section 9.5 to the extent that
the Indemnifying Parties’ liability for Taxes or Damages is less than $100,000
in the aggregate.  For avoidance of
doubt, the limitations set forth in Section 9.3 shall not apply to
indemnification under this Section 9.5.

ARTICLE X

GENERAL PROVISIONS

SECTION 10.1                    Notices.

All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered:
(i) when delivered personally; (ii) one business day following deposit with a
recognized overnight courier service that obtains a receipt, provided such
deposit occurs prior to the deadline imposed by such service for overnight
delivery; (iii) when transmitted, if sent by facsimile copy, provided
confirmation of receipt is received by sender and such notice is sent by an
additional method provided hereunder, in each case above provided such
communication is addressed to the intended recipient thereof as set forth
below:

	
  

  	
  If to IWEST, to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Inland Western Retail Real Estate Trust, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Special Committee of the Board of Directors

  	
   

  	
   

  
	
   

  	
   

  	
  2901 Butterfield Road

  	
   

  	
   

  
	
   

  	
   

  	
  Oak Brook, Illinois
  60523 

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Paul R.
  Gauvreau

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copies (which shall not constitute notice) to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Sidley Austin LLP

  	
   

  	
   

  
	
   

  	
   

  	
  One South Dearborn Street

  	
   

  	
   

  
	
   

  	
   

  	
  Chicago, Illinois 60603

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Thomas A. Cole

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Paul L. Choi

  	
   

  
	
   

  	
   

  	
  Fax: (312) 853-7036

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  and:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Duane Morris LLP

  	
   

  	
   

  
	
   

  	
   

  	
  227 West Monroe, Suite 3400

  	
   

  	
   

  
						

 

 71
 

 

	
  

  	
   

  	
  Chicago, Illinois 60606

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: David J. Kaufman

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: (312) 499-6701

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to IREIC, the Service Providers or the Agent:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o The Inland Real Estate Group, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  2901 Butterfield Road

  	
   

  	
   

  
	
   

  	
   

  	
  Oak Brook, Illinois 60523

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Robert H. Baum

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: (630) 218-8034

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copies (which shall not constitute notice) to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Inland Real Estate Group, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  2901 Butterfield Road

  	
   

  	
   

  
	
   

  	
   

  	
  Oak Brook, Illinois 
  60523

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: 
  Elliot B. Kamenear

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: (630) 218-4900

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  and:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jenner & Block LLP

  	
   

  	
   

  
	
   

  	
   

  	
  330 North Wabash Avenue

  	
   

  	
   

  
	
   

  	
   

  	
  Chicago, Illinois 60611

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Arnold S. 
  Harrison

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Donald E. Batterson

  	
   

  
	
   

  	
   

  	
  Fax: (312) 923-2702

  	
   

  	
   

  
						

 

SECTION 10.2                    Interpretation.

(a)   For purposes of this Agreement, (i) the words
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation,” (ii) the word “or” is not exclusive and (iii) the
words “herein”, “hereof”, “here by”, “hereto” and “hereunder” refer to this
Agreement as a whole.  Unless the context
otherwise requires, references herein: 
(i) to Articles, Sections, Exhibits and Schedules mean the Articles
and Sections of, and the Exhibits and Schedules attached to, this Agreement;
(ii) to an agreement, instrument or other document means such agreement,
instrument or other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and by this Agreement;
and (iii) to a statute means such statute as amended from time to time and
includes any successor legislation thereto and any regulations promulgated
thereunder.

(b)   The Schedules and Exhibits referred to herein
shall be construed with and as an integral part of this Agreement to the same
extent as if they were set forth verbatim herein.  Titles to Articles and headings of Sections
are inserted for convenience of reference 

 72
 

only and shall not be deemed a part of or to
affect the meaning or interpretation of this Agreement.

(c)   The
IWEST disclosure schedule (the “IWEST Disclosure Schedule”) to this
Agreement shall be arranged in sections and subsections corresponding to the
numbered and lettered sections contained in Article III.  The disclosures in any section or subsection
of the IWEST Disclosure Schedule shall qualify other sections and subsections
in Article III only to the extent it is clear from a reading of the
disclosure that such disclosure is applicable to such other sections and
subsections.

(d)   The
disclosure schedule of the Service Providers, IREIC and the Agent (the “Service
Provider Disclosure Schedule”) to this Agreement shall be arranged in
sections and subsections corresponding to the numbered and lettered sections
contained in Article IV.  The disclosures in any section or
subsection of the Service Provider Disclosure Schedule shall qualify other
sections and subsections in Article IV only to the extent it is clear
from a reading of the disclosure that such disclosure is applicable to such
other sections and subsections.

SECTION 10.3       Applicable Law.

Except as to corporation law matters concerning the
Acquisition 2 Merger, the Acquisition 3 Merger and the Acquisition 4 Merger,
which are governed by the Laws of Delaware, this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Illinois, without regard to its conflict of laws principles.

SECTION 10.4                    Arbitration.

All disputes under this Agreement among the parties to
this Agreement and claims pursuant to Article IX
of this Agreement which are not resolved within thirty (30) days of an
Indemnified Party’s sending of a notice of claim with respect thereto (each an “Arbitrated Claim”), shall be resolved by binding
arbitration, and each party hereto hereby waives any right it may otherwise
have to such a resolution of any Arbitrated Claim by any means other than
arbitration pursuant to this Section 10.4.  As a minimum set of rules in the arbitration,
the parties agree as follows:

(a)   The
place of the arbitration shall be Chicago, Illinois.  The arbitration must be held in the English
language in accordance with the Streamlined Arbitration Rules and Procedures of
JAMS in effect on the date hereof, except as modified by this Agreement.  The arbitration shall be governed by the
Illinois Code of Civil Procedure.

(b)   The
arbitration will be held before a single arbitrator selected by the
(i) IWEST Special Committee and (ii) IREIC and/or the Agent, as
applicable.  If the respective parties in
interest cannot agree on an arbitrator within fourteen (14) days of the
delivery of an Arbitration Demand, JAMS will appoint such arbitrator.  The arbitrator will be knowledgeable regarding
commercial transactions similar in nature to the transactions contemplated by
this Agreement.

(c)   Any
party or parties initiating arbitration (the “Arbitration
Claimants”) will give to the other party or parties (the “Arbitration Respondents”) notice of their
intention 

 73
 

to arbitrate (the “Arbitration Demand”).  The Arbitration Demand will contain a notice
regarding the nature of the claim.  The
Arbitration Respondents will file an answering statement (the “Arbitration Answer”) within fourteen (14) days
after the Arbitration Demand.  The
Arbitration Answer will contain a statement setting forth in reasonable detail
the Arbitration Respondents’ responses and defenses to the Arbitrated
Claim.  If the Arbitration Respondents
assert a counterclaim, (i) the Arbitration Respondents shall send it with the
Arbitration Answer and such counterclaim must include a statement setting forth
in reasonable detail the nature of the counterclaim, the amount involved, if
any, and the remedy sought, and (ii) the Arbitration Claimants will file a
reply statement (the “Arbitration Reply”)
as soon as is reasonably practicable, but in no event later than fourteen (14)
days, after the counterclaim.  The
Arbitration Reply will contain a statement setting forth in reasonable detail
the Arbitration Claimants’ responses and defenses to the counterclaim.  If no Arbitration Answer or Arbitration Reply
is given within the stated time, the claim or the counterclaim will be assumed
to be denied.  Failure to file an
Arbitration Answer or Arbitration Reply will not operate to delay the
arbitration.

(d)   Unless
the parties to the arbitration agree otherwise, the arbitrator may order
depositions only for good cause and each party to the Arbitrated Claim may make
such document requests and other discovery (other than depositions) as
permitted in accordance with the Streamlined Arbitration Rules and Procedures
of JAMS in effect on the date hereof.

(e)   The
arbitration hearings will be conducted over a period not to exceed thirty (30)
days commencing as of the date of the first hearing.  The arbitrator shall make a final decision on
the Arbitrated Claim within thirty (30) days of the final hearing.  The arbitrator may make such orders with
regard to scheduling, allocation of hearing time, or otherwise as he or she
deems appropriate to achieve compliance with these time limitations.  The parties have included the foregoing
provisions limiting the scope and extent of the arbitration with the intention
of providing for prompt, economic and fair resolution of any dispute submitted
to arbitration.

(f)    The
Arbitration Claimants, on the one hand, and the Arbitration Respondents, on the
other, will, as an initial matter, equally bear the costs and fees of the
arbitration, if applicable, but the arbitrator shall award such costs in
inverse proportion as the Arbitration Claimants, on the one hand, and the
Arbitration Respondents, on the other, may prevail on the matters resolved by
the arbitrator (based on the variance of their respective proposed Arbitration
Demand, Arbitration Answer and/or Arbitration Reply, as applicable, from the
determination of the arbitrator), which proportionate allocations shall be
determined by the arbitrator at the time the determination of the arbitrator is
rendered on the merits of the matters submitted.

(g)   The
arbitrator shall enter a written award specifying the basis for his or her
decision, including findings of fact and conclusions of law, the basis for the
Damages award and a breakdown of the Damages awarded, and the basis for any
other remedy.  Any Party dissatisfied
with the award may invoke the JAMS Optional Arbitration Appeal Procedure (based
on the rules therefor in effect at the time of this Agreement).  Such JAMS Optional Arbitration Appeal shall
be limited to whether there are any erroneous conclusions of law, or any
findings of fact not supported by substantial evidence.  The appellate arbitral panel may 

 74
 

vacate, modify, correct, or affirm the award in whole or in any
part.  The award (as modified, corrected,
or affirmed by the appellate arbitral panel, or if no such JAMS appeal is
taken, as originally rendered by the arbitrator) will be considered as a final
and binding resolution of the disagreement.

(h)   Any
arbitration proceeding will be conducted on a confidential basis, and any
confidential material disclosed during any such proceeding will be kept
confidential by the parties to such proceeding and by the arbitrator.

(i)    The
arbitrator’s discretion to fashion remedies hereunder will be no broader or
narrower than the legal and equitable remedies available to a court before
which such Arbitrated Claim may have been brought but for this Section 10.4, unless the parties expressly state
elsewhere in this Agreement that parties will be subject to broader or narrower
legal and equitable remedies than would be available under the law governing
this Agreement.

(j)    The
arbitral award will be the exclusive remedy of the parties for all claims,
counterclaims, issues or accountings presented or pleaded to the
arbitrator.  The award will include
interest from the date of the Arbitrated Claim until the award is fully paid,
computed at the then-prevailing U.S. prime rate, plus five percent (5%).  Any additional costs, fees or expenses
incurred in enforcing the arbitral award (or successfully resisting it) will be
borne by the party against which enforcement is sought if such award is
successfully enforced (or borne by the party seeking to enforce such award if
the resisting party successfully resists its enforcement).  Any party may enforce an arbitral award in
any court of competent jurisdiction.

SECTION 10.5                    Entire Agreement.

This Agreement and the Exhibits referred to herein and
the documents delivered pursuant hereto and the Disclosure Schedules, contain
the entire understanding of the parties hereto with regard to the subject
matter contained herein or therein, and supersede all other prior agreements,
understandings or letters of intent between or among the parties hereto.

SECTION 10.6                    Severability.

In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such provision or provisions shall be ineffective only to the
extent of such invalidity, illegality or unenforceability, without invalidating
the remainder of such provision or provisions or the remaining provisions of
this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been contained
herein, unless such a construction would be unreasonable.

SECTION 10.7                    Further Assurances.

The parties hereto shall use their commercially
reasonable efforts to do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other agreements,
certificates, instruments or documents as any other party may reasonably 

 75
 

request in order to carry
out the intent and purposes of this Agreement and the consummation of the
transactions contemplated hereby.

SECTION 10.8                    Enforcement of this Agreement.

The parties hereto agree that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement by them and that in addition to
all other remedies available to them, each of them shall be entitled to the
fullest extent permitted by law to an injunction restraining such breach,
violation or default and to other equitable relief, including, without
limitation, specific performance, with a bond or other form of security not
being required and specifically waived by the parties.

SECTION 10.9                    Parties in Interest.

This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.

SECTION 10.10              Successors and Assigns.

This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties hereto and their
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests and obligations hereunder shall be assigned by any Party
hereto without the prior written consent of the other Parties hereto.

SECTION 10.11              No Presumption Against Drafter.

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

SECTION 10.12              Counterparts.

This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

SECTION 10.13              Facsimile Signatures.

A facsimile signature on the signature pages hereto
shall for all purposes be deemed an original and shall bind the signor as if
such facsimile were an original.

[Signature Page
Follows]

 

 76

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement and Plan of Merger to be signed by their respective officers or
agents thereunto duly authorized as of the date first written above.

	
  INLAND WESTERN RETAIL REAL ESTATE

  TRUST, INC.

  	
   

  	
  INLAND WESTERN MANAGEMENT CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Steven
  P. Grimes

  	
   

  	
  By:

  	
    /s/ Thomas
  P. McGuinness

  	
   

  
	
  Its: 

  	
     Principal
  Financial Officer

  	
   

  	
  Its:

  	
     President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INLAND WESTERN RETAIL REAL ESTATE

  ADVISORY SERVICES, INC.

  	
   

  	
   

  	
  IWEST MERGER AGENT, LLC, as Agent for the

  Stockholders

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Brenda
  G. Gujral

  	
   

  	
  By:

  	
    /s/ Daniel
  L. Goodwin

  	
   

  
	
  Its: 

  	
    Vice
  President

  	
   

  	
  Its: 

  	
     President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INLAND SOUTHWEST MANAGEMENT CORP.

  	
   

  	
  INLAND REAL ESTATE INVESTMENT

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Thomas
  P. McGuinness

  	
   

  	
  By:

  	
    /s/ Roberta
  S. Matlin

  	
   

  
	
  Its: 

  	
     President

  	
   

  	
  Its: 

  	
     Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INLAND NORTHWEST MANAGEMENT CORP.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Thomas
  P. McGuinness

  	
   

  	
   

  	
   

  	
   

  
	
  Its: 

  	
     President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IWEST ACQUISITION 1, INC.

  	
   

  	
   

  	
  IWEST ACQUISITION 3, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Steven
  P. Grimes

  	
   

  	
  By:

  	
    /s/ Steven
  P. Grimes

  	
   

  
	
  Its: 

  	
     Vice
  President

  	
   

  	
  Its: 

  	
     Vice
  President

  	
   

  

 

 

SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER

 

 

	
  IWEST
  ACQUISITION 2, INC.

  	
   

  	
  IWEST ACQUISITION 4, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Steven
  P. Grimes

  	
   

  	
  By:

  	
    /s/ Steven
  P. Grimes

  	
   

  
	
  Its: 

  	
     Vice
  President

  	
   

  	
  Its: 

  	
     Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER

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