Joint Development Agreement

AMENDMENT NO. 1 TO LIMITED LIABILITY COMPANY
AGREEMENT OF INLAND-SAU RETAIL FUND, L.L.C.

This Amendment No. 1 (the " Amendment" ) to the Limited Liability Company Agreement of Inland-SAU Retail Fund, L.L.C. (the " Company" ) dated May 13, 2005 (the " Agreement" ) is made and entered into this ___ day of ________, 2006 (the " Amendment Effective Date" ) by and among the following Persons: Inland Retail Real Estate Limited Partnership, an Illinois limited partnership (" Inland" ), Special Account-U, L.P., a Delaware limited partnership (" SAU" ), by and through its designated advisor, Henderson Global Investors (North America) Inc. (" Henderson" ), and Inland Southeast Retail Real Estate Manager, L.L.C., a Delaware limited liability company (" Manager" ). Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.

WHEREAS, the Members entered into the Agreement in order to provide for the operation, management and governance of the Company; and

WHEREAS, the Members now desire to modify certain terms of the Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties, the parties agree to amend the Agreement as follows:

1.

Section 5.1(b) of the Agreement is hereby deleted in its entirety and replaced by the following:

" (b)

SAU Additional Capital Commitments . SAU hereby increases its Capital Commitment by an additional $50 million (the " SAU Additional Capital Commitment" ), for an aggregate Capital Commitment by SAU of $150 million."

2.

Section 5.1(c) of the Agreement is hereby deleted in its entirety and replaced by the following:

" (c)

Inland Additional Capital Commitments . Inland hereby increases its Capital Commitment by an additional $12.5 million (the " Inland Additional Capital Commitment ," and together with the SAU Additional Capital Commitment, the " Additional Capital Commitments" ), for an aggregate Capital Commitment by Inland of $37.5 million."

3.

Section 5.2 of the Agreement is amended to include a new subparagraphs (h) and (i) as follows:

" (h)

Optional Advance by Inland . In the event that SAU fails to make any Capital Contribution within the time period prescribed in Section 5.2(g) and Inland has made its corresponding Capital Contribution, then notwithstanding anything to the contrary elsewhere in this Agreement and without waiving any rights that Inland may have under other provisions of this Agreement or otherwise, Inland may elect in its sole discretion to make a short term loan to the Company in the amount of SAU' s Capital Contribution on SAU' s behalf (an " Optional Contribution" ). In the event that Inland so elects to make SAU' s Capital Contribution to the Company, the Company shall issue a demand promissory note to Inland in a principal amount equal to the Optional Contribution plus all costs of funds incurred by Inland in connection with making the Optional Contribution, including without limitation interest accrued during the time period between Inland' s receipt of funds from its funding source for purposes of assuring the availability of the Optional Contribution and the date upon which the funding source will accept repayment.


(i)

Allocation of Initial Capital Commitments and Additional Capital Commitments . If at any time hereafter a Capital Call is made pursuant to this Section, and based upon the amount requested in the Capital Call and the aggregate amount of Initial Capital Commitments which have previously been contributed by the parties to the Company, the entirety of the Capital Call can only be fulfilled by contributions of amounts from both the Initial Capital Commitments and Additional Capital Commitments hereunder, then, if a majority of the amount contributed pursuant to the Capital Call is from Initial Capital Commitments, the entire contributed amount (including any funds provided from the Additional Capital Commitments) shall be deemed to constitute a contribution from Initial Capital Commitments for all purposes under this Agreement, or if a majority of the amount contributed pursuant to the Capi tal Call is from Additional Capital Commitments, then the entire contributed amount (including any funds provided from the Initial Capital Commitments) shall be deemed to constitute a contribution from Additional Capital Commitments for all purposes under this Agreement. If the amount of the Initial Capital Commitments and Additional Capital Commitments to be contributed are equal, all such contributed amounts shall be deemed to be made from Additional Capital Commitments. For example, if a Capital Call is made for $100, and $20 of aggregate Initial Capital Commitments remain uncontributed, then the Members shall contribute $20 from Initial Capital Commitments and $80 from Additional Capital Contributions, and because the majority of the contribution is made from Additional Capital Commitments, the entire contribution shall be deemed to constitute a contribution from Additional Capital Commitments pursuant to the Agreement."

4.

The following sentence is added to the end of Section 6.1 (a):

" When not referred to herein collectively as the Properties, Properties which are acquired with Capital Contributions from the Initial Capital Commitments shall be referred to herein as the " Initial Properties" or an " Initial Property" , and Properties which are acquired with Capital Contributions from the Additional Capital Commitments shall be referred to herein as the " Additional Properties" or as an " Additional Property" .

5.

Section 6.3(a) of the Agreement is hereby deleted in its entirety and replaced by the following:

" (a)

Property Senior Financing . Upon or near the acquisition date for any Property acquired by the Company or at any time thereafter, and provided that the Executive Committee determines that it is economic and expeditious to do so, the Company shall seek non-recourse debt financing from a third party institutional lender or lenders for the total acquisition costs of each Property acquired by the Company or the total acquisition costs of all of the Properties acquired by the Company, in an amount which is no greater than 60% or 65% of such costs, as set forth in the Investment Guidelines in Exhibit 3-A to the Agreement, as determined by the Executive Committee (the " Property Senior Financing" )."

6.

Section 7.4 of the Agreement is hereby deleted in its entirety and replaced by the following:

" 7.4

Distributions of Cash Flow .

(a)

Definitions. The following terms shall have the meanings ascribed to them below.

" Expenses" . For a given period of time, a sum equal to the aggregate of the expenditures, charges and costs actually paid or required to be paid during such period of time in accordance with the terms of this Agreement or in accordance with any Annual Plan approved pursuant to this Agreement or otherwise in connection with the business of the Company or its Subsidiaries, including, without limitation:

(A)

expenses, costs and charges in connection with the acquisition, ownership, operation, management or leasing of all or any portion of any Property;


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(B)

expenses, costs and charges in connection with the repair, maintenance, replacement, alteration of or addition or capital improvement to any portion of any Property, including any casualty or condemnation losses, to the extent that the losses are not reimbursed during such period by any third party responsible therefor or through insurance maintained by the Company;

(C)

payments of all outstanding principal and interest due with respect to and Senior Property Financings and Company Loans, if any;

(D)

all sales, payroll, real estate, personal property, occupancy and other excise, property, privilege or similar taxes and assessments imposed upon the Company or any Property;

(E)

utility costs and deposits and other costs and deposits required to obtain or lease any service or equipment relating to any Property;

(F)

management fees, asset management fees and other fees and reimbursements payable to the Property Manager pursuant to the Property Management Agreement;

(G)

expenditures required to be made in connection with any lease covering space in or at any Property, including tenant improvements, tenant allowances and payments, costs incurred in connection with the Company (or any Subsidiary) assuming a tenant' s lease obligations with respect to other real property and costs incurred in connection with the Company' s (or any Subsidiary' s) exercise of a right, or entering into an agreement, to " takeback" space in any Property;

(H)

the net increase, if any, in the Reserves during such period of time;

(I)

the fees and expenses of attorneys, accountants, architects, engineers, appraisers, and other professionals retained by or on behalf of the Company in accordance with the terms hereof; and

(J)

all other customary and necessary direct out-of-pocket costs and expenses of the Company reasonably incurred in accordance with this Agreement;

provided, however, all Expenses, including but not limited to those generally related to the expenses, costs and charges of the Company, shall be allocated in whole or in part to either the Initial Properties or the Additional Properties as reasonably determined by the Manager.

Notwithstanding the foregoing, there shall, however, be excluded from Expenses:

(i)

all noncash items such as depreciation;

(ii)

Distributions;

(iii)

all payments, deposits, expenses and reserves deducted from the proceeds of a Major Capital Event to determine the Net Extraordinary Cash Flow from Initial Properties or the Net Extraordinary Cash Flow from Additional Properties (as such terms are defined below);

(iv)

any expense, cost or charge enumerated above, to the extent such expense, cost or charge was paid from Reserves; and

(v)

expenditures that would be capitalized pursuant to generally accepted accounting principles consistently applied, to the extent that (x) the Company has Reserves available to pay such expenditures; (y) the Company has obtained a credit facility which is available to pay such expenditures; or (z) the Members agreed, prior to acquiring the Property to which said expenditures relate, to contribute additional capital when needed to pay such expenditures.


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" Expenses from Additional Properties" . Expenses relating to the Additional Properties or reasonably allocated to the Additional Properties by the Manager.

" Expenses from Initial Properties" . Expenses relating to the Initial Properties or reasonably allocated to the Initial Properties by the Manager.

" Major Capital Event" . Any transaction with respect to any Property which generates cash receipts other than ordinary operating income, including, without limitation, sales of real or personal property (other than sales of personal property in the ordinary course of business), condemnations (and conveyances in lieu thereof) (but only to the extent not required to be paid to mortgagees, tenants or other third parties and not applied to the restoration of the Property), damage recoveries (but only to the extent not required to be paid to mortgagees, tenants or other third parties and not applied to the restoration of the Property), receipts of insurance proceeds (other than rent or insurance proceeds) (but only to the extent not required to be paid to mortgagees, tenants or other third parties and not applied to the restoration of the Property), borrowings, and other transfer s or dispositions of all or a significant part of (i) any Property or (ii) the aggregate assets of the Company.

" Net Extraordinary Cash Flow from Additional Properties" . The amount remaining, if any, after subtracting from cash receipts arising from a Major Capital Event relating to an Ad ...