Document:

Exhibit 10.2.1

 

AMENDED
AND RESTATED

ADVISORY AGREEMENT

 

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

 

W I T
N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

j)                “Company
Fixed Assets” means the real estate, together with the buildings, leasehold
interests, improvements, equipment, furniture, fixtures and personal property
associated therewith, used by the Company in the conduct of its business.

 

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

 

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

 

m)          “Cumulative
Return” means a cumulative, non-compounded return, equal to 6% per annum on
Invested Capital commencing upon acceptance of the investor’s subscription.

 

n)             “Current
Return” means a noncumulative, noncompounded return, equal to 7% per annum on
Invested Capital.

 

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

 

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

 

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

 

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

 

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

 

t)                “Independent
Directors” means the Directors of the Company who: (i) are not affiliated and
have not been affiliated within the two years prior to their becoming an
Independent Director, directly or indirectly, with the Company, the Sponsor or
the Advisor, whether by ownership of, ownership interest in, employment by, any
material business or professional relationship with, or as an officer or
director of the Company, the Sponsor, the Advisor or any of their Affiliates;
(ii) do not serve as a director for more than two other REITs organized by the
Company or the Advisor or advised by the Advisor; and (iii) perform no other
services for the Company, except as Directors. For this purpose, an indirect
relationship shall include circumstances in which a member of the immediate
family of a Director has one of the foregoing relationships with the Company,
the Sponsor or the Advisor or any of their Affiliates. For purposes of
determining whether or not the business or professional relationship is
material, the aggregate gross revenue derived by the prospective Independent
Director from the Company, the Sponsor, the Advisor and their Affiliates shall
be deemed material PER SE if it exceeds five percent of the prospective
Independent Director’s: (i) annual gross revenue, derived from all sources,
during either of the last two years; or (ii) net worth, on a fair market value
basis.

 

u)             “Invested
Capital” means the original issue price paid for the Shares reduced by prior
distributions from the sale or financing of the Company’s Properties.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

cc)        “Primary
Geographical Area of Investment” of the Company means the states west of the
Mississippi River in the United States.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

mm) “Stockholders”
means holders of Shares.

 

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

 

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

 

ii)                        interest
payments;

 

iii)                    taxes;

 

iv)                       noncash
expenditures such as depreciation, amortization and bad debt reserves;

 

v)                           the
Incentive Advisory Fee payable to the Advisor; and

 

vi)                       Acquisition
Expenses, real estate commissions on resale of Real Property and other expenses
connected with the acquisition, disposition and ownership of real estate
interests, mortgage loans or other property (such as the costs of foreclosure,
insurance premiums, legal services, maintenance, repair and improvement of Real
Property).

 

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

 

a)              Present
to the Company a continuing and suitable real estate investment program and
opportunities to make investments in Real Properties consistent with the
investment policies of the Company and the investment program adopted by the
Board of Directors and in effect at the time and furnish the Company with
advice with respect to the making, acquisition, holding and disposition of
investments and commitments therefor. In presenting investment opportunities
hereunder, the Advisor shall comply with, and be subject to, the provisions of
that certain Property Acquisition Service Agreement, dated the date hereof,
among IWRREAI, the Advisor, and the Company (the “Property Acquisition Service
Agreement”), as the same may be amended from time to time. To the extent
possible, the resolution of conflicting investment opportunities between the
Company and other investment entities advised or managed by the Advisor and its
Affiliates for a prospective investment opportunity (a “Proposed Property”)
will be resolved by giving priority to the Company, provided that the Proposed
Property meets the acquisition criteria of the Company. The Property
Acquisition Service Agreement grants the Company the first opportunity to
purchase such Proposed Property which is placed under contract by IREAI, the
Advisor or its Affiliates, provided the Company is able to close the purchase
of the Proposed Property within 60 days. 
Other factors which may be considered in connection with evaluating the
suitability of the Proposed Property for investment include:

 

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

 

ii)                        cash
flow; and

 

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

 

b)              Manage
the Company’s day-to-day investment operations, subject to the final paragraph
of this Section 2, to effect the investment program adopted by the Board of
Directors and perform or supervise the performance of such other administrative
functions necessary in connection with the management of the Company as may be
agreed upon by the Advisor and the Company;

 

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c)              Serve
as the Company’s investment advisor, subject to the final paragraph of this
Section 2, in connection with policy decisions to be made by the Board of
Directors and, as requested, furnish reports to the Board of Directors and
provide research, economic and statistical data in connection with the Company’s
investments and investment policies;

 

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

 

e)              Cooperate
with the Management Agent in connection with property management services and
other activities relating to the Company’s assets as the Advisor shall deem
appropriate in the particular circumstances, subject to the requirement that
the Advisor or the Management Agent, as the case may be, qualifies as an “independent
contractor” as that phrase is used in connection with applicable laws, rules
and regulations affecting REITs that own Real Property;

 

f)                Upon
request of the Company, act, or obtain the services of others to act, as
attorney-in-fact or agent of the Company in making, acquiring and disposing of
investments, disbursing, and collecting the funds, paying the debts and
fulfilling the obligations of the Company and handling, prosecuting and
settling any claims of the Company, including foreclosing and otherwise
enforcing mortgage and other liens and security interests securing investments;

 

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

 

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

 

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

 

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

 

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

 

l)                Advise
the Company of the operating results of the Company properties, to cause the
Manager to prepare on a timely basis, and to review, for such properties
operating budgets, maintenance and improvement schedules, one, three and five
year projections of operating results and such other reports as may be
appropriate;

 

m)          As
requested by the Company, make reports to the Company of its performance of the
foregoing services and furnish advice and recommendations with respect to other
aspects of the business of the Company;

 

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

 

o)              Undertake
and perform all services or other activities necessary and proper to carry out
the investment objectives of the Company; and

 

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

 

3.                                      NO PARTNERSHIP OR JOINT
VENTURE.  The Company and the Advisor are
not, and shall not be deemed to be, partners or joint venturers with each
other.

 

4.                                      RECORDS.  The Advisor shall maintain appropriate books
of account and records relating to services performed hereunder, which shall be
accessible for inspection by the Company at any time during ordinary business
hours.

 

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

 

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

 

7.                                      FIDELITY BOND.  The Advisor shall not be required to obtain
or maintain a fidelity bond in connection with the performance of its services
hereunder.

 

8.                                      INFORMATION FURNISHED
ADVISOR.  The Board of Directors will
keep the Advisor informed in writing concerning the investment and financing
policies of the Company. The Board of Directors shall notify the Advisor
promptly in writing of its intention to make any investments or to sell or
dispose of any existing investments. The Company shall furnish the Advisor with
a certified copy of all financial statements, a signed copy of each report
prepared by independent certified public accountants, and such other
information with regard to its affairs as the Advisor may reasonably request.

 

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

 

a)              Acquisition
Expenses, for the expenses attendant to Property acquisitions, in an aggregate
amount not in excess of 0.5% of (i) the Gross Offering Proceeds, and (ii) the
gross proceeds from the sale of up to 20,000,000 Shares pursuant to the Company’s
Distribution Reinvestment Program, PROVIDED THAT the Acquisition Expenses
respecting any specific Property acquired by the Company shall not exceed 6% of
the gross purchase price of that Property;

 

b)              An
Advisor Asset Management Fee of not more than 1% of the Average Invested
Assets. This fee will be payable quarterly in an amount equal to one fourth of
1% of the Average Invested Assets of the Company as of the last day of the
immediately preceding quarter. For any year in which the Company qualifies as a
REIT, the Advisor may be required to reimburse the Company certain sums as
described in Section 14;

 

9

 

c)              Reimbursement
for the cost to the Advisor and its Affiliates for:

 

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

 

ii)                        administrative
services related thereto. “Administrative Services” include ministerial
services such as typing, record keeping, preparation and dissemination of
Company reports, preparation and maintenance of records regarding Stockholders,
record keeping and administration of the Company’s Distribution Reinvestment
and Share Repurchase Programs, preparation and dissemination of responses to
Stockholder inquiries and other communications with Stockholders and any other
record keeping required for Company purposes. Such reimbursements are subject to
limitations imposed by Sections 10(b) and (c) hereof;

 

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

 

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

 

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

 

10.                               COMPENSATION FOR
ADDITIONAL SERVICES, CERTAIN LIMITATIONS.

 

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

 

10

 

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

 

b)              In
extraordinary circumstances fully justified to the official or agency
administering the appropriate state securities laws, the Advisor and its
Affiliates may provide other goods and services to the Company if all of the
following criteria are met:

 

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

 

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

 

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

 

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

 

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

 

12.                               BUSINESS COMBINATION OF
THE COMPANY AND THE ADVISOR.

 

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

 

b)              The
number of Shares to be issued by the Company to the Advisor or its
shareholders, members or other equity holders as the case may be, shall be
determined as follows: The net income of the Advisor for the calendar month
immediately preceding the month in which the Merger Agreement is executed, as
determined by an independent audit conducted in accordance with generally
accepted auditing standards, shall be annualized (the “Annual Net Income”). The
Annual Net Income shall then be multiplied by ninety percent (90%) and then
divided by the “Funds from Operations per Weighted Average Share” of the
Company.  “Funds from Operations per
Weighted Average Share” shall be equal to the annualized Funds from Operations,
on the basis of four (4) times the Funds from Operations for the fiscal quarter
immediately preceding the

 

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

 

13.                               EXPENSES OF THE
COMPANY.  The Company shall pay all of its
expenses and shall reimburse the Advisor for its expenses as provided in
Sections 9 and 10 hereof and, without limiting the generality of the foregoing,
it is agreed that the following expenses of the Company shall be paid by the
Company:

 

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

 

b)              The
cost of borrowed moneys;

 

c)              All
taxes applicable to the Company;

 

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

 

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

 

f)                Expenses
in connection with the acquisition, disposition, leasing and ownership of
investments, including to the extent not paid by others, but not limited to,
legal fees and other expenses of professional services, maintenance, repair and
improvement of property and brokerage and sales commissions, expenses of
maintaining and managing Real Property equity interests (including the fees and
charges of the Management Agent);

 

g)             All
insurance costs incurred in connection with the Company;

 

13

 

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

 

i)                All
expenses connected with communications to holders of securities of the Company
and the other bookkeeping and clerical work necessary in maintaining relations
with holders of securities and in complying with the continuous reporting and
other requirements of governmental bodies or agencies, including the cost of
printing and mailing certificates for securities and proxy solicitation
materials and reports to holders of the Company’s securities;

 

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

 

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

 

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

 

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

 

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

 

14

 

should exceed 5.5% of the Gross Offering Proceeds, the
Advisor shall pay directly and/or cause its Affiliates to pay directly any such
excess Offering Expenses incurred by the Company and the Company will have no
liability for such excess expenses.

 

15.                               OTHER ACTIVITIES OF THE
ADVISOR.  Nothing herein contained shall
prevent the Advisor or an Affiliate of the Advisor from engaging in any other
business or activity including the rendering of services and investment advice
with respect to real estate investment opportunities to any other person or
entity and the management of other investments (including the investments of
the Advisor and its Affiliates).

 

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

 

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

 

Notwithstanding any other provision of the Agreement
to the contrary, either the Company or the Advisor may terminate this
Agreement, or any extension hereof, or the parties by mutual consent or a
majority of the Independent Directors may do so, in each case upon 60 days
written notice without cause or penalty. In the event of the termination of the
Agreement, the Advisor will cooperate with the Company and take all reasonable
steps requested to assist the Board of Directors in making an orderly
transition of the advisory function.

 

This Agreement shall terminate upon the consummation
of a business combination involving the Advisor and the Company as described in
Section 12.

 

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

 

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

 

15

 

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

 

18.                               DEFAULT, BANKRUPTCY,
ETC.  At the option solely of the
Company, this Agreement shall be terminated immediately upon written notice of
termination from the Board of Directors to the Advisor if any of the following
events occurs:

 

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

 

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

 

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

 

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

 

19.                               ACTION UPON
TERMINATION.  The Advisor shall not be
entitled to compensation after the date of termination of this Agreement for
further services hereunder, but shall be paid all compensation accruing to the
date of termination. Subject to the provisions of Section 12, the Advisor shall
forthwith upon a termination caused by factors other than the listing for
trading of the Shares on a national stock exchange or market:

 

16

 

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

 

b)              Deliver
to the Board of Directors a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board of
Directors;

 

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

 

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

 

20.                               CHANGE OF NAME.  The Company recognizes that the name and mark
“Inland” have established prestige and goodwill and have acquired valuable
secondary meanings in the real estate and related industries and in the mind of
the public. The Company desires to associate itself with and benefit from the “Inland”
name, and in consideration of the grant by the Advisor and its Affiliates of a
perpetual royalty free license to the Company (which license has been
authorized), subject to the conditions set forth in this Section 20, to use the
name and mark “Inland” in connection with a real estate investment trust
throughout the United States, its territories and possessions, the Company agrees
that:

 

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

 

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

 

c)              Nothing
contained in this Agreement shall be construed an assignment or grant to the
Company of any right, title or interest in or to the name or mark “Inland” or
any other trademarks, trade names or related service marks, insignias, logos,
designs and color schemes, it being understood that all rights relating thereto
are reserved by the Advisor and its Affiliates, except for the license
hereunder to the Company of the rights to use the name or mark as specifically
and expressly provided herein. The Company agrees to cooperate fully and in
good faith with the Advisor and its Affiliates, at the expense of the Advisor
and its Affiliates, in

 

17

 

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

 

d)              At
such time as the Advisor is no longer providing services to the Company
pursuant to this Agreement for some reason other than the consummation of a
business combination described in Section 12, the Board of Directors will upon
the request of the Advisor and its Affiliates, promptly cause the name of the
Company to be changed in perpetuity to a name which does not include any
reference to the name “Inland” or any successor thereof. Without limiting the
generality of the foregoing, upon termination of this Agreement by either party
for some reason other than the consummation of a business combination described
in Section 12, the Board of Directors will promptly cause the name of the
Company to be changed in perpetuity to a name which does not include any
references to the name “Inland” or any successor thereof.

 

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

 

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

 

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

 

24.                               LIABILITY AND
INDEMNIFICATION.

 

a)              The
Company shall, to the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and, without limiting the generality
of the foregoing, in accordance with Section 2418 of the General Corporation
Law of Maryland, indemnify and pay or reimburse reasonable expenses to the
Advisor and its Affiliates, provided, that: (i) the Advisor or other party
seeking indemnification has determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Advisor or other person seeking indemnification was acting on
behalf of or performing services on the part of the Company; (iii) such
liability or loss was not the result of negligence or misconduct on the part of
the indemnified party; and (iv) such indemnification or agreement to be held
harmless is recoverable only out of the assets of the Company and not from the
Stockholders thereof.

 

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

 

18

 

conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee; (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee; or (iii) a court of competent jurisdiction
approves a settlement of the claims and finds that indemnification of the
settlement and related costs should be made and the court considering the
request has been advised of the position of the Securities and Exchange
Commission and the published opinions of any state securities regulatory
authority in which securities of the Company were offered and sold with respect
to the availability or propriety of indemnification for securities law
violations.

 

c)              The
Company may advance amounts to persons entitled to indemnification hereunder
for legal and other expenses and costs incurred as a result of any legal action
for which indemnification is being sought only if all of the following
conditions are satisfied: (i) the legal action relates to acts or omissions
with respect to the performance of duties or services by the indemnified part
for or on behalf of the Company; (ii) the legal action is initiated by a third
party and a court of competent jurisdiction specifically approves such
advancement; and  (iii) the indemnified
party receiving such advances undertakes to repay the advanced funds to the
Company, together with the applicable legal rate of interest thereon, in any
case(s) in which such party is found not to be entitled to indemnification.

 

25.                               NOTICES.  Any notice, report or other communication
required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report or other communication is accepted
by the party to whom it is given and shall be given by being delivered at the
following addresses of the parties hereto:

 

The
Company and/or the Board of Directors:

 

Inland
Western Retail Real Estate Trust, Inc.

2901
Butterfield Road

Oak
Brook, Illinois 60523

Attention:
Ms. Roberta S. Matlin, Vice President

 

The
Advisor:

 

Inland
Western Retail Real Estate Advisory Services, Inc.

2901
Butterfield Road

Oak
Brook, Illinois 60523

Attention:
President

 

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

 

19

 

26.                               CONFLICTS OF INTEREST AND
FIDUCIARY DUTIES TO THE COMPANY AND TO THE COMPANY’S STOCKHOLDERS.  The Company and the Advisor recognize that
their relationship is subject to various conflicts of interest as set forth in
the Prospectus. The Advisor, on behalf of itself and its Affiliates, acknowledges
that the Advisor and its Affiliates have fiduciary duties to the Company and to
the Company’s Stockholders. The Advisor, on behalf of itself and its
Affiliates, represents and agrees (i) that the Advisor and its Affiliates will
endeavor to balance the interests of the Company with the interests of the
Advisor and its Affiliates in making any determination where a conflict of
interest exists between the Company and the Advisor or its Affiliates; and (ii)
that the actions and decisions of the Advisor and its Affiliates under this
Agreement (including but not limited to actions and decisions in connection
with the purchase of Properties for the Company) will be made in the manner
most favorable to the Company and to the Company’s Stockholders, so as not to
breach their respective fiduciary duties to the Company and to the Company’s
Stockholders.

 

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

 

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

20

 

IN WITNESS
WHEREOF, the undersigned have executed this First Amended and Restated Advisory
Agreement as of the date first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  INLAND WESTERN RETAIL REAL ESTATE TRUST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: /s/ Roberta S. Matlin

  	
   

  
	
   

  	
  Title: Vice President - Administration

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADVISOR:

  
	
   

  	
   

  
	
   

  	
  INLAND WESTERN RETAIL REAL ESTATE ADVISORY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: /s/ Robert D. Parks

  	
   

  
	
   

  	
  Title: President

  

 

21Exhibit 10.2.2

 

SECOND AMENDED AND RESTATED

ADVISORY AGREEMENT

 

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

 

W
I T N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

j)     “Company Fixed Assets” means the real estate, together with the
buildings, leasehold interests, improvements, equipment, furniture, fixtures
and personal property associated therewith, used by the Company in the conduct
of its business.

 

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

 

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

 

m)   “Cumulative Return” means a cumulative, non-compounded return, equal to
10% per annum on Invested Capital commencing upon acceptance of the investor’s
subscription.

 

n)    “Current Return” means a noncumulative, non-compounded return, equal to
6% per annum on Invested Capital.

 

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

 

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

 

2

 

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

 

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

 

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

 

t)     “Independent Directors” means the Directors of the Company who: (i) are
not affiliated and have not been affiliated within the two years prior to their
becoming an Independent Director, directly or indirectly, with the Company, the
Sponsor or the Advisor, whether by ownership of, ownership interest in,
employment by, any material business or professional relationship with, or as
an officer or director of the Company, the Sponsor, the Advisor or any of their
Affiliates; (ii) do not serve as a director for more than two other REITs
organized by the Company or the Advisor or advised by the Advisor; and (in)
perform no other services for the Company, except as Directors. For this
purpose, an indirect relationship shall include circumstances in which a member
of the immediate family of a Director has one of the foregoing relationships
with the Company, the Sponsor or the Advisor or any of their Affiliates. For
purposes of determining whether or not the business or professional
relationship is material, the aggregate gross revenue derived by the
prospective Independent Director from the Company, the Sponsor, the Advisor and
their Affiliates shall be deemed material PER SE if it exceeds five percent of
the prospective Independent Director’s; (i) annual gross revenue, derived from
all sources, during either of the last two years; or (ii) net worth, on a fair
market value basis.

 

u)    “Invested Capital” means the original issue price paid for the Shares
reduced by prior distributions from the sale or financing of the Company’s
Properties.

 

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

 

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

 

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

 

3

 

collectively, Inland US
Management LLC, Inland Southwest Property Management LLC and Inland Pacific
Property Management LLC, each an Affiliate of the Advisor, or anyone which
succeeds any of them in such capacity.

 

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

 

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

 

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

 

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

 

cc)   “Primary Geographical Area of Investment” of
the Company means the states west of the Mississippi River in the United
States.

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

mm) “Stockholders” means holders of Shares.

 

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

 

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

 

ii) interest payments;

 

iii) taxes;

 

iv) noncash expenditures such as
depreciation, amortization and bad debt reserves;

 

v) the incentive Advisory Fee payable to
the Advisor; and

 

vi) Acquisition Expenses, real estate
commissions on resale of Real Property and other expenses connected with the
acquisition, disposition and ownership of real estate interests, mortgage loans
or other property (such as the costs of foreclosure, insurance premiums, legal
services, maintenance, repair and improvement of Real Property).

 

5

 

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

 

a)     Present to the Company a continuing and suitable real estate investment
program and opportunities to make investments in Real Properties consistent with
the investment policies of the Company and the investment program adopted by
the Board of Directors and in effect at the time and furnish the Company with
advice with respect to the making, acquisition, holding and disposition of
investments and commitments therefor. In presenting investment opportunities
hereunder, the Advisor shall comply with, and be subject to, the provisions of that
certain Property Acquisition Service Agreement, dated the date hereof, among
IWRREAI, the Advisor, and the Company (the “Property Acquisition Service
Agreement”), as the same may be amended from time to time. To the extent possible,
the resolution of conflicting investment opportunities between the Company and
other investment entities advised or managed by the Advisor and its Affiliates
for a prospective investment opportunity (a “Proposed Property”) will be resolved
by giving priority to the Company, provided that the Proposed Property meets
the acquisition criteria of the Company. The Property Acquisition Service Agreement
grants the Company the first opportunity to purchase such Proposed Property
which is placed under contract by IREAI, the Advisor or its Affiliates,
provided the Company is able to close the purchase of the Proposed Property
within 60 days. Other factors which may be considered in connection with
evaluating the suitability of the Proposed Property for investment include:

 

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

 

ii)   cash flow; and

 

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

 

b)     Manage the Company’s day-to-day investment operations, subject to the
final paragraph of this Section 2, to effect the investment program adopted by
the Board of Directors and perform or supervise the performance of such other administrative
functions necessary in connection with the management of the Company as may be
agreed upon by the Advisor and the Company;

 

6

 

c)     Serve as the Company’s investment advisor, subject to the final
paragraph of this Section 2, in connection with policy decisions to be made by
the Board of Directors and, as requested, furnish reports to the Board of
Directors and provide research, economic and statistical data in connection
with the Company’s investments and investment policies;

 

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

 

e)     Cooperate with the Management Agent in connection with property management
services and other activities relating to the Company’s assets as the Advisor
shall deem appropriate in the particular circumstances, subject to the requirement
that the Advisor or the Management Agent, as the case may be, qualifies as an “independent
contractor” as that phrase is used in connection with applicable laws, rules
and regulations affecting REITs that own Real Property;

 

f)     Upon request of the Company, act, or obtain the services of others to
act, as attorney-in-fact or agent of the Company in making, acquiring and
disposing of investments, disbursing, and collecting the funds, paying the
debts and fulfilling the obligations of the Company and handling, prosecuting
and settling any claims of the Company, including foreclosing and otherwise
enforcing mortgage and other liens and security interests securing investments;

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

m)   As requested by the Company, make reports to the Company of its
performance of the foregoing services and furnish advice and recommendations
with respect to other aspects of the business of the Company;

 

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

 

o)     Undertake and perform all services or other
activities necessary and proper to carry out the investment objectives of the
Company; and

 

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

 

3.             NO PARTNERSHIP OR JOINT VENTURE. The Company
and the Advisor are not, and shall not be deemed to be, partners or joint
venturers with each other.

 

4.             RECORDS. The Advisor shall maintain
appropriate books of account and records relating to services performed
hereunder, which shall be accessible for inspection by the Company at any time
during ordinary business hours.

 

8

 

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

 

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

 

7.             FIDELITY BOND. The Advisor shall not be
required to obtain or maintain a fidelity bond in connection with the
performance of its services hereunder.

 

8.             INFORMATION FURNISHED ADVISOR. The Board of
Directors will keep the Advisor informed in writing concerning the investment
and financing policies of the Company. The Board of Directors shall notify the
Advisor promptly in writing of its intention to make any investments or to sell
or dispose of any existing investments. The Company shall furnish the Advisor
with a certified copy of all financial statements, a signed copy of each report
prepared by independent certified public accountants, and such other
information with regard to its affairs as the Advisor may reasonably request.

 

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

 

a)     Acquisition Expenses, for the expenses attendant to Property
acquisitions, in an aggregate amount not in excess of 0.5% of (i) the Gross
Offering Proceeds, and (ii) the gross proceeds from the sale of up to
20,000,000 Shares pursuant to the Company’s Distribution Reinvestment Program, PROVIDED
THAT the Acquisition Expenses respecting any specific Property acquired by the Company
shall not exceed 6% of the gross purchase price of that Property;

 

b)     An Advisor Asset Management Fee of not more than 1% of the Average Invested
Assets. This fee will be payable quarterly in an amount equal to one fourth of
1 % of the Average Invested Assets of the Company as of the last day of the
immediately preceding quarter. For any year in which the Company qualifies as a
REIT, the Advisor may be required to reimburse the Company certain sums as
described in Section 14;

 

9

 

c)     Reimbursement for the cost to the Advisor and its Affiliates for:

 

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

 

ii)    administrative services related thereto. “Administrative Services”
include ministerial services such as typing, record keeping, preparation and
dissemination of Company reports, preparation and maintenance of records
regarding Stockholders, record keeping and administration of the Company’s
Distribution Reinvestment and Share Repurchase Programs, preparation and
dissemination of responses to Stockholder inquiries and other communications with
Stockholders and any other record keeping required for Company purposes. Such
reimbursements are subject to limitations imposed by Sections 10(b) and (c)
hereof;

 

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

 

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

 

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

 

10.          COMPENSATION FOR ADDITIONAL SERVICES, CERTAIN LIMITATIONS.

 

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

 

10

 

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

 

b)     In extraordinary circumstances fully justified to the official or
agency administering the appropriate state securities laws, the Advisor and its
Affiliates may provide other goods and services to the Company if all of the
following criteria are met:

 

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

 

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

 

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

 

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

 

11

 

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

 

12.          BUSINESS COMBINATION OF THE COMPANY AND THE ADVISOR.

 

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

 

b)     The number of Shares to be issued by the Company to the Advisor or its
shareholders, members or other equity holders as the case may be, shall be
determined as follows: The net income of the Advisor for the calendar month
immediately preceding the month in which the Merger Agreement is executed, as
determined by an independent audit conducted in accordance with generally
accepted auditing standards, shall be annualized (the “Annual Net Income”). The
Annual Net Income shall then be multiplied by ninety percent (90%) and then
divided by the “Funds from Operations per Weighted Average Share” of the
Company. “Funds from Operations per Weighted Average Share” shall be equal to
the annualized Funds from Operations, on the basis of four (4) times the Funds
from Operations for the fiscal quarter immediately preceding the

 

12

 

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

 

13.          EXPENSES OF THE COMPANY. The Company shall
pay all of its expenses and shall reimburse the Advisor for its expenses as
provided in Sections 9 and 10 hereof and, without limiting the generality of
the foregoing, it is agreed that the following expenses of the Company shall be
paid by the Company:

 

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

 

b)     The cost of borrowed moneys;

 

c)     All taxes applicable to the Company;

 

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

 

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

 

f)     Expenses in connection with the acquisition, disposition, leasing and
ownership of investments, including to the extent not paid by others, but not
limited to, legal fees and other expenses of professional services,
maintenance, repair and improvement of property and brokerage and sales
commissions, expenses of maintaining and managing Real Property equity
interests (including the fees and charges of the Management Agent);

 

g)    All insurance costs incurred in connection
with the Company;

 

13

 

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

 

i)     All expenses connected with communications to holders of securities of
the Company and the other bookkeeping and clerical work necessary in maintaining
relations with holders of securities and in complying with the continuous
reporting and other requirements of governmental bodies or agencies, including
the cost of printing and mailing certificates for securities and proxy
solicitation materials and reports to holders of the Company’s securities;

 

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

 

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

 

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

 

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

 

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

 

14

 

should exceed 5.5% of the Gross Offering Proceeds, the Advisor
shall pay directly and/or cause its Affiliates to pay directly any such excess
Offering Expenses incurred by the Company and the Company will have no
liability for such excess expenses.

 

15.          OTHER ACTIVITIES OF THE ADVISOR. Nothing
herein contained shall prevent the Advisor or an Affiliate of the Advisor from
engaging in any other business or activity including the rendering of services
and investment advice with respect to real estate investment opportunities to
any other person or entity and the management of other investments (including the
investments of the Advisor and its Affiliates).

 

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

 

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

 

Notwithstanding
any other provision of the Agreement to the contrary, either the Company or the
Advisor may terminate this Agreement, or any extension hereof, or the parties
by mutual consent or a majority of the Independent Directors may do so, in each
case upon 60 days written notice without cause or penalty. In the event of the
termination of the Agreement, the Advisor will cooperate with the Company and
take all reasonable steps requested to assist the Board of Directors in making
an orderly transition of the advisory function.

 

This Agreement shall
terminate upon the consummation of a business combination involving the Advisor
and the Company as described in Section 12.

 

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

 

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

 

15

 

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

 

18.          DEFAULT, BANKRUPTCY, ETC. At the option solely of the Company, this Agreement
shall be terminated immediately upon written notice of termination from the
Board of Directors to the Advisor if any of the following events occurs:

 

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

 

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

 

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

 

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

 

19.          ACTION UPON TERMINATION. The Advisor shall not be entitled to
compensation after the date of termination of this Agreement for further
services hereunder, but shall be paid all compensation accruing to the date of
termination. Subject to the provisions of Section 12, the Advisor shall
forthwith upon a termination caused by factors other than the listing for
trading of the Shares on a national stock exchange or market:

 

16

 

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

 

b)     Deliver to the Board of Directors a full accounting, including a
statement, showing all payments collected by it and a statement of all money
held by it, covering the period following the date of the last accounting
furnished to the Board of Directors;

 

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

 

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

 

20.          CHANGE OF NAME. The Company recognizes that the name and mark “Inland”
have established prestige and goodwill and have acquired valuable secondary
meanings in the real estate and related industries and in the mind of the
public. The Company desires to associate itself with and benefit from the “Inland”
name, and in consideration of the grant by the Advisor and its Affiliates of a
perpetual royalty free license to the Company (which license has been
authorized), subject to the conditions set forth in this Section 20, to use the
name and mark “Inland” in connection with a real estate investment trust
throughout the United States, its territories and possessions, the Company
agrees that:

 

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

 

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

 

c)     Nothing contained in this Agreement shall be construed an assignment or
grant to the Company of any right, title or interest in or to the name or mark “Inland”
or any other trademarks, trade names or related service marks, insignias,
logos, designs and color schemes, it being understood that all rights relating
thereto are reserved by the Advisor and its Affiliates, except for the license
hereunder to the Company of the rights to use the name or mark as specifically
and expressly provided herein. The Company agrees to cooperate fully and in
good faith with the Advisor and its Affiliates, at the expense of the Advisor
and its Affiliates, in

 

17

 

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

 

d)     At such time as the Advisor is no longer providing services to the
Company pursuant to this Agreement for some reason other than the consummation
of a business combination described in Section 12, the Board of Directors will
upon the request of the Advisor and its Affiliates, promptly cause the name of
the Company to be changed in perpetuity to a name which does not include any
reference to the name “Inland” or any successor thereof. Without limiting the
generality of the foregoing, upon termination of this Agreement by either party
for some reason other than the consummation of a business combination described
in Section 12, the Board of Directors will promptly cause the name of the
Company to be changed in perpetuity to a name which does not include any
references to the name ‘‘Inland” or any successor thereof.

 

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

 

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

 

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

 

24.          LIABILITY AND INDEMNIFICATION.

 

a)     The Company shall, to the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, and, without limiting
the generality of the foregoing, in accordance with Section 2418 of the General
Corporation Law of Maryland, indemnify and pay or reimburse reasonable expenses
to the Advisor and its Affiliates, provided, that: (i) the Advisor or other
party seeking indemnification has determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Advisor or other person seeking indemnification was acting on
behalf of or performing services on the part of the Company; (iii) such
liability or loss was not the result of negligence or misconduct on the part of
the indemnified party; and (iv) such indemnification or agreement to be held
harmless is recoverable only out of the assets of the Company and not from the
Stockholders thereof.

 

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

 

18

 

conditions
are met: (i) there has been a successful adjudication on the merits of each
count involving alleged securities law violations as to the particular
indemnitee; (ii) such claims have been dismissed with prejudice on the merits
by a court of competent jurisdiction as to the particular indemnitee; or (iii)
a court of competent jurisdiction approves a settlement of the claims and finds
that indemnification of the settlement and related costs should be made and the
court considering the request has been advised of the position of the
Securities and Exchange Commission and the published opinions of any state
securities regulatory authority in which securities of the Company were offered
and sold with respect to the availability or propriety of indemnification for
securities law violations.

 

c)     The Company may advance amounts to persons
entitled to indemnification hereunder for legal and other expenses and costs
incurred as a result of any legal action for which indemnification is being
sought only if all of the following conditions are satisfied: (i) the legal
action relates to acts or omissions with respect to the performance of duties
or services by the indemnified part for or on behalf of the Company; (ii) the
legal action is initiated by a third party and a court of competent
jurisdiction specifically approves such advancement; and (iii) the indemnified
party receiving such advances undertakes to repay the advanced funds to the
Company, together with the applicable legal rate of interest thereon, in any
case(s) in which such party is found not to be entitled to indemnification.

 

25.          NOTICES. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given and shall be given by being delivered at the following
addresses of the parties hereto:

 

The
Company and/or the Board of Directors:

 

Inland Western Retail Real
Estate Trust, Inc.

2901
Butterfield Road

Oak
Brook, Illinois 60523

Attention:
Ms. Roberta S. Matlin, Vice President

 

The
Advisor:

 

Inland Western Retail Real
Estate Advisory Services, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attention: President

 

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

 

26.          CONFLICTS OF INTEREST AND FIDUCIARY DUTIES TO
THE COMPANY

 

19

 

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

 

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

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

20

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  INLAND WESTERN RETAIL REAL
  ESTATE TRUST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  /s/ Roberta S. Matlin, Vice President

  	
   

  
	
   

  	
  Title: Vice President - Administration

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADVISOR:

  
	
   

  	
   

  
	
   

  	
  INLAND WESTERN RETAIL REAL
  ESTATE ADVISORY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Title: President

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