Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of April 18,
2012, but shall be effective, nunc pro tunc, as of January 1, 2012, by and
between INLAND REAL ESTATE CORPORATION, a Maryland corporation (the “Company”),
and D. Scott Carr (the “Executive”).

 

RECITALS:

 

A.            The Company is a real estate investment trust which owns, operates
and acquires neighborhood retail centers and community centers within an
approximate 400 mile radius of its headquarters in Oak Brook, Illinois (the
“Business”).

 

B.            Executive has served as the Company’s Senior Vice President
pursuant to an employment agreement, effective as of January 1, 2008, by and
between the Company and Executive and during his employment hereunder, Executive
has demonstrated certain unique and particular talents and abilities with regard
to the Business.

 

C.            The Company desires to continue to assure itself of the
availability of the talents and abilities of Executive, by entering into a new
employment agreement to become effective as of January 1, 2012.

 

D.            Executive desires to continue to be employed by the Company,
subject to the terms, conditions and covenants hereinafter set forth.

 

E.            As a condition for the Company to enter into this Agreement,
Executive has agreed to restrict his ability to enter into competition with the
Company.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants
and conditions set forth herein, Executive and the Company hereby agree as
follows:

 

ARTICLE I
EMPLOYMENT

 

1.1          Employment.

 

(a)        The Company hereby employs and engages Executive, and Executive
hereby accepts employment, upon the terms and conditions set forth in this
Agreement.  Effective as of January 1, 2012 (the “Effective Date”), Executive
shall serve as Executive Vice President and Chief Investment Officer with duties
commensurate with such position and such other duties and responsibilities as
assigned from time to time by the Company.

 

(b)        In addition, Executive shall provide advice, consultation and
services to any other entities which control, are controlled by or are under
common control with the Company now or in the future (collectively,
“Affiliates”), as may be requested by the Company.

 

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1.2          Activities and Duties During Employment.  Executive represents and
warrants to the Company that he is free to engage in full-time employment with
the Company, and that he has no prior or other commitments or obligations of any
kind to anyone else which would hinder or interfere with his acceptance of his
obligations under this Agreement, or the exercise of his reasonable commercial
efforts as an employee of the Company.  During the Employment Term (as defined
below), Executive agrees:

 

(a)        to faithfully serve and further the interests of the Company in every
lawful way, giving honest, diligent, loyal and cooperative service to the
Company and its Affiliates;

 

(b)        to comply with all reasonable rules and policies which are consistent
with the terms of this Agreement and which, from time to time, may be adopted by
the Company or its Affiliates; and

 

(c)         to devote all of his business time, attention and efforts to the
faithful and diligent performance of his services to the Company and its
Affiliates.

 

ARTICLE II
TERM

 

2.1          Term.  The term of employment under this Agreement shall commence
on the Effective Date and shall last through and including December 31, 2012
(the “Employment Term”) except as this Agreement may be terminated as provided
in Section 2.2.

 

2.2          Termination.  The Employment Term and employment of Executive may
be terminated as follows:

 

(a)

By the Company immediately for Cause (as hereinafter defined).

 

 

(b)

By the Company immediately Without Cause.(as hereinafter defined).

 

 

(c)

By Executive, immediately for Good Reason (as hereinafter defined).

 

 

(d)

By Company, immediately for Good Reason (as hereinafter defined).

 

 

(e)

Upon a Change of Control (as hereinafter defined)

 

 

(f)

By either party upon a determination of Total Disability (as hereinafter
defined) of Executive.

 

 

(g)

Automatically, without the action of either party, upon the death of Executive.

 

 

(h)

Voluntarily by Executive.

 

 

(i)

On expiration of the Employment Term if not extended by the mutual consent of
the Company and Executive.

 

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2.3          Definitions of Termination Terms

 

(a)        For the purpose of this Agreement, “Cause” shall mean:  (i) conduct
amounting to fraud, embezzlement, disloyalty or illegal misconduct in connection
with Executive’s duties under this Agreement and as an employee of the Company;
(ii) conduct that the Company reasonably believes has brought the Company into
substantial public disgrace or disrepute; (iii) failure to perform his duties
hereunder as reasonably directed by the Company after providing written notice
of the failure to Executive and Executive has failed to cure within ten
(10) days of receiving notice; (iv) gross negligence or willful misconduct by
the Executive with respect to the Company, its clients, its employees and its
activities; or (v) material breach by the Executive of this Agreement or any
other agreement to which Executive and the Company are a party or any material
breach by the Executive of any written policy adopted by the Company concerning
conflicts of interest, standards of business conduct or fair employment
practices and any other similar matter, provided that the Company has provided
written notice of the breach to Executive and Executive has failed to cure the
breach within ten (10) days of receiving notice.

 

(b)        “Without Cause” shall mean any reason other than as defined as Cause
or as otherwise defined herein.

 

(c)         By Executive for “Good Reason” will mean any of the following events
which have not been cured within ten (10) days following the Company’s receipt
of Executive’s written notice specifying the events or factors constituting Good
Reason:

 

(i)               the Company requires Executive to relocate his principal
residence to a location outside the Greater Chicago Metropolitan Area in order
to perform his duties and responsibilities hereunder;

 

(ii)              the Executive’s base salary or other compensation and benefits
is reduced to less than the amount of the Base Salary and other compensation and
benefits as set forth in Section 3.1 below; or

 

(iii)             a material breach by the Company of the provisions of this
Agreement;

 

(d)        By Company for “Good Reason” shall mean the failure of Executive to
achieve personal goals and objectives as mutually agreed upon between the named
Executive and the Board of Directors .

 

(e)         “Change of Control” shall mean any of the following events:

 

(i)               the members of IRC’s board of directors as of the date of this
Agreement fail to constitute a majority of the members of the board; provided,
however, that any individual becoming a member of the board who is nominated or
appointed to the board seat on the recommendation and approval of IRC’s
Nominating and Corporate Governance Committee shall be treated as if he or she
were a member of the board as of the date of this Agreement;

 

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(ii)              the disposition by IRC of all, or substantially all, of the
assets of IRC; or

 

(iii)             the termination and liquidation of IRC; and

 

(iv)             following a Change of Control, the assignment to Executive of
duties which constitute a material reduction in Executive’s title or authority
and which are materially inconsistent with Executive’s position as contemplated
by this Agreement; or

 

(v)              following a Change of Control, the termination of Executive
within a one year period.

 

(f)            For purposes of this Agreement, Executive shall be determined to
have a “Total Disability” upon the determination of a physician, acceptable to
the Company and Executive that Executive is unable, by reason of accident or
illness, to substantially perform his duties or is expected to be in the
condition for periods totaling six (6) months (whether or not consecutive)
during any period of twelve (12) months.  Nothing herein shall limit Executive’s
right to receive any payments to which Executive may be entitled under any
disability or employee benefit plan of the Company or under any disability or
insurance policy or plan.  During a period of Total Disability prior to
termination hereunder, Executive shall continue to receive his full compensation
(including base salary) and benefits.

 

(g)         “Voluntarily by Executive” shall mean the Executive resigns of his
or his own volition.

 

(h)        “Expiration” of the Employment Term means this Agreement does not
automatically extend beyond the term set forth herein and may only be extended
by a mutually agreed upon written instrument between the parties.

 

ARTICLE III
COMPENSATION AND BENEFITS

 

3.1          Compensation.

 

(a)        Base Salary.  During the Employment Term, the Company shall pay
Executive a base salary (the “Base Salary”) of $360,000 per annum in cash and a
deferred compensation component in the amount of $15,000 of restricted shares of
IRC common stock which shall vest at a rate of twenty percent (20%) per year
over a five (5) year period.

 

(b)        Annual Incentive Bonus.  The Company shall, in addition to
Executive’s Base Salary, pay Executive an Annual Incentive Bonus, which shall be
payable within 120 days of the end of each fiscal year in accordance with the
formula set forth on Exhibit A, attached hereto and made a part hereof.

 

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(c)         Annual Long Term Share Award.  No later than June 30 of each fiscal
year during the Employment Term, the Company shall grant Executive an Annual
Long Term Share Award consisting of shares of the common stock of IRC (“Long
Term Shares”), subject to the conditions set forth below and in accordance with
Exhibit B, attached hereto and made a part hereof.  Twenty percent (20%) of any
Long Term Shares granted hereunder shall vest on each successive yearly
anniversary of the grant of the Long Term Shares.

 

3.2          General Compensation and Benefits Rules and Guidelines.

 

(a)           All Long Term Shares shall be issued under, and in accordance
with, IRC’s 2005 Equity Award Plan (the “2005 Equity Award Plan”); to the extent
the terms of any Long Term Shares granted pursuant to this Agreement conflict
with the terms of the 2005 Equity Award Plan, the terms of the 2005 Equity Award
Plan shall apply to the minimum extent necessary to eliminate the conflict. 
Executive shall be the record owner of any Long Term Shares granted hereunder;
provided that any Long Term Shares that have not yet vested shall be forfeited
and redeemed by the Company, without any further action on the part of the
Company or the Executive, if Executive is no longer employed by the Company for
any reason, other than in connection with a termination as expressly provided
for in Section 3.3 hereof, Executive may not sell, transfer, hypothecate, pledge
or assign any Long Term Shares which have not vested.

 

(i)               Upon the occurrence of any forfeiture of Long Term Shares,
Executive shall immediately take all actions necessary to permit the Company to
redeem any forfeited Long Term Shares.

 

(ii)              Unless forfeited, Executive may exercise all rights of a
stockholder, including the right to vote and receive dividends with respect to
any Long Term Shares granted Executive.

 

(iii)             All Long Term Shares which may be issuable hereunder shall be
issued in reliance upon the following representations, warranties and agreements
of Executive, each of which shall be true and correct as of the date of issuance
and each of which shall survive the termination of this Agreement.

 

(b)                   Executive acknowledges that the common stock underlying
any Long Term Shares has been registered under the Securities Act of 1933, as
amended (the “Securities Act”), pursuant to an effective registration statement
on Form S-8 (file no. 333-128624);

 

(c)                       Executive acknowledges that once the common stock
underlying any Long Term Shares has been issued to Executive, the common stock
may not be subsequently transferred or sold by Executive except in compliance
with the registration requirements of federal and state securities law or
exemptions therefrom;

 

(d)                    Executive acknowledges that an investment in the IRC’s
common stock is subject to significant risk, including the risks described, from
time to time, in IRC’s annual reports on Form 10-K.  Executive represents and
warrants that he has such knowledge

 

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and expertise in financial and business matters as to be capable of evaluating
the merits and risks of an investment in IRC’s common stock and the ability to
bear the economic risk of the investment; and

 

(e)           Executive represents and warrants that he has had the opportunity
to ask questions of the Company concerning its business and to obtain any
information which he considers necessary to verify the accuracy of or to amplify
upon the Company’s disclosures and that all questions which have been asked have
been answered by the Company to Executive’s satisfaction.

 

(f)            Payment.  All Base Salary due Executive hereunder shall be paid
in accordance with the general payroll payment practice of the Company for
executive level employees; except that any payment relating to the termination
of Executive shall be paid as a lump sum payment within thirty (30) days of
termination.

 

(g)           Business Expenses.

 

(i)            Reimbursement.  The Company shall reimburse Executive for all
ordinary and necessary business expenses incurred by him in connection with the
performance of his duties hereunder.  The reimbursement of business expenses
will be governed by the policies for the Company as they are in effect from time
to time during the term of this Agreement.

 

(ii)         Accounting.  Executive shall provide the Company with an accounting
of any expenses, for which reimbursement is sought including a description of
the purpose for which each expense was incurred.  Executive shall provide the
Company with such other supporting documentation and other substantiation of
reimbursable expenses as may be required by Company to conform to Internal
Revenue Service or other requirements.  All such reimbursements shall be payable
by the Company to Executive within a reasonable time after receipt by the
Company of appropriate documentation required by the Company.

 

(h)           Other Benefits. The Company shall provide Executive with such
retirement benefits and group health and other insurance coverage at such levels
and on such terms as the Company generally provides to its executive level
employees in accordance with its Company-sponsored benefit plans as they are in
effect from time to time during the term of the Agreement.

 

(i)            Compensation Upon Termination.  If Executive’s employment
hereunder and this Agreement is terminated in accordance with the provisions of
Article II, the Company will be obligated to provide to Executive compensation
and benefits, in lieu of any severance under any severance plan that the Company
may then have in effect, and subject to setoff for any amounts owed by Executive
to the Company or any affiliate of the Company by reason of any contract,
agreement, promissory note, advance, failure to return Company property or loan
document, as set forth in Section 3.3.

 

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3.3             Benefits Following Termination of Executive

 

(a)              Upon Termination by Company for Cause.  If Executive’s
employment hereunder and this Agreement is terminated under Section 2.2(a) ,
within thirty (30) days of the date of such termination, the Company will pay
Executive:

 

(iv)             any accrued base salary;

 

(v)              any accrued vacation payment;

 

(vi)             any accrued reimbursable expenses; and

 

(vii)            any accrued benefits, together with any benefits required to be
paid or provided under applicable law.

 

In addition, if Executive’s employment and this Agreement is terminated under
Section 2.2(a) , any Long Term Shares issued to Executive which have not yet
vested shall immediately be forfeited by Executive.

 

(b)        Upon Termination by Company Without Cause  If Executive’s employment
hereunder and this Agreement is terminated under Section 2.2(b), within thirty
(30) days of the date of such termination, the Company will pay Executive:

 

(i)               any accrued base salary;

 

(ii)              any accrued vacation payment;

 

(iii)             any accrued reimbursable expenses;

 

(iv)             any accrued benefits, together with any benefits required to be
paid or provided under applicable law;

 

(v)              any accrued bonus (which has been determined for the prior
year, but not yet paid);

 

(vi)             any accrued bonus for the current year prorated to the date of
termination; and

 

(vii)            an amount equal to the sum of: (A) Executive’s then current per
annum base salary; plus (B) an amount equal to the Annual Incentive Bonus which
was earned by Executive for the fiscal year immediately preceding the year of
termination; provided, however, that the payment to Executive pursuant to this
Section shall in no event exceed an amount which would cause Executive to
receive an “excess parachute payment” as defined in the Internal Revenue Code of
1986, as amended (the “Code”).

 

In addition, if Executive’s employment and this Agreement is terminated under
Section 2.2 (b)  any Long Term Shares issued to Executive which have not yet
vested shall immediately vest and shall no longer be subject to forfeiture by
Executive.

 

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(c)         Upon Termination by the Executive for Good Reason.  If Executive’s
employment hereunder and this Agreement is terminated under Section 2.2 (c),
within thirty (30) days of the date of such termination, the Company will pay
Executive:

 

(i)               any accrued base salary;

 

(ii)              any accrued vacation payment;

 

(iii)             any accrued reimbursable expenses;

 

(iv)             any accrued benefits, together with any benefits required to be
paid or provided under applicable law;

 

(v)              any accrued bonus (which has been determined for the prior
year, but not yet paid);

 

(vi)             any accrued bonus for the current year prorated to the date of
termination; and

 

(vii)            an amount equal to the sum of: (A) Executive’s then current per
annum base salary; plus (B) an amount equal to the Annual Incentive Bonus which
was earned by Executive for the fiscal year immediately preceding the year of
termination; provided, however, that the payment to Executive pursuant to this
Section shall in no event exceed an amount which would cause Executive to
receive an “excess parachute payment” as defined in the Internal Revenue Code of
1986, as amended (the “Code”).

 

In addition, if Executive’s employment and this Agreement is terminated under
Section 2.2 (c)  any Long Term Shares issued to Executive which have not yet
vested shall immediately vest and shall no longer be subject to forfeiture by
Executive.

 

(d)        Upon Termination by Company for Good Reason.  If Executive’s
employment hereunder and this Agreement is terminated under Section 2.2 (d),for
Executive’s failure to achieve personal goals and objectives that have been
mutually agreed upon between Company and Executive, within thirty (30) days of
the date of such termination, the Company will pay Executive:

 

(i)               any accrued base salary;

 

(ii)              any accrued vacation payment;

 

(iii)             any accrued reimbursable expenses;

 

(iv)             any accrued benefits, together with any benefits required to be
paid or provided under applicable law;

 

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(v)              any accrued bonus (which has been determined for the prior
year, but not yet paid);

 

(vi)             any accrued bonus for the current year prorated to the date of
termination; and

 

an amount equal to .50 times the sum of: (A) Executive’s then current per annum
base salary; plus (B) an amount equal to the Annual Incentive Bonus which was
earned by Executive for the fiscal year immediately preceding the year of
termination; provided, however, that the payment to Executive pursuant to this
Section shall in no event exceed an amount which would cause Executive to
receive an “excess parachute payment” as defined in the Internal Revenue Code of
1986, as amended (the “Code”).

 

In addition, if Executive’s employment and this Agreement is terminated under
Section 2.2 (d)  any Long Term Shares issued to Executive which have not yet
vested shall immediately be forfeited by Executive..

 

(e)         Upon Termination within one year of a Change of Control.  If
Executive’s employment hereunder and this Agreement is terminated under
Section 2.2(e), within thirty (30) days of the date of such termination the
Company will pay Executive:

 

(i)               any accrued base salary;

 

(ii)              any accrued vacation payment;

 

(iii)             any accrued reimbursable expenses;

 

(iv)             any accrued benefits, together with any benefits required to be
paid or provided under applicable law;

 

(v)              any accrued bonus (which has been determined for the prior
year, but not yet paid);

 

(vi)             any accrued bonus for the current year prorated to the date of
termination; and

 

(vii)            an amount equal to 2 times the sum of: (A) Executive’s then
current per annum base salary; plus (B) an amount equal to the Annual Incentive
Bonus which was earned by Executive for the fiscal year immediately preceding
the year of termination; plus (C) the aggregate dollar value of each of the
Annual Long Term Share Award that was granted to Executive for the fiscal year
immediately preceding the year of termination; provided, however, that the
payment to Executive pursuant to this Section shall in no event exceed an amount
which would cause Executive to receive an “excess parachute payment” as defined
in the Code.

 

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In addition, if Executive’s employment and this Agreement is terminated under
Section 2.2 (e) any Long Term Shares issued to Executive which have not yet
vested shall immediately vest and shall no longer be subject to forfeiture by
Executive

 

(f)         Upon Termination for Death or Total Disability.  If Executive’s
employment hereunder and this Agreement is terminated by reason of his death or
Total Disability, under Sections 2.2(f) or (g), then within thirty (30) days of
the date of termination the Company will pay Executive (or his estate or
beneficiaries):

 

(i)               any Base Salary that has been accrued but not paid as of the
date of termination (the “Accrued Base Salary”);

 

(ii)              any compensation for unused vacation days accrued as of the
termination date in an amount equal to Executive’s Base Salary multiplied by a
fraction, the numerator of which is the number of accrued unused vacation days
and the denominator of which is 360 (the “Accrued Vacation Payment”);

 

(iii)             any expenses incurred by Executive prior to the date of
termination that may be reimbursed pursuant to this Agreement (the “Accrued
Reimbursable Expenses”);

 

(iv)             any accrued and vested benefits required to be provided upon
death or Total Disability by the terms of any Company-sponsored benefit plans or
programs exclusive of any Long Term Shares or Annual Stock Options (the “Accrued
Benefits”), together with any benefits required to be paid or provided in the
event of Executive’s death or Total Disability under applicable law; and

 

(v)              an amount equal to either the prorated portion of the Annual
Incentive Bonus that Executive received for the last fiscal year completed prior
to termination equal to the relevant Annual Incentive Bonus multiplied by a
fraction, the numerator of which is the number of days in the year prior to the
date of death or Total Disability and the denominator of which is 360, or if the
termination occurs in the first year of the Employment Term, then the prorated
portion of the Annual Incentive Bonus as if the target bonus was received for
that year (the “Accrued Bonus”) calculated in the same fashion.

 

In addition, if Executive’s employment and this Agreement are terminated under
Sections 2.2(f) or (g), any Long Term Shares or Annual Stock Options issued to
Executive under this Agreement which have not yet vested shall immediately vest
and shall no longer be subject to forfeiture.

 

(h)              Upon Termination Voluntarily by Executive.  If Executive’s
employment hereunder and this Agreement is terminated under Section 2.2(h) ,
within thirty (30) days of the date of such termination, the Company will pay
Executive:

 

(vi)             any accrued base salary;

 

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(vii)                                   any accrued vacation payment;

 

(viii)                                any accrued reimbursable expenses; and

 

(ix)                                      any accrued benefits, together with
any benefits required to be paid or provided under applicable law.

 

In addition, if Executive’s employment and this Agreement are terminated under
Section 2.2(h), any Long Term Shares issued to Executive which have not yet
vested shall immediately be forfeited by Executive.

 

3.4                               Cessation of Rights and Obligations: Survival
of Certain Provisions.  On the date of expiration or earlier termination of the
Employment Term for any reason, all of the respective rights, duties,
obligations and covenants of the parties, as set forth herein, shall, except as
specifically provided herein to the contrary, cease and become of no further
force or effect as of the date of termination, and shall only survive as
expressly provided for herein.  Executive’s right to receive moneys earned but
not yet paid shall survive the termination of this Agreement.

 

ARTICLE IV

COVENANTS MADE BY EXECUTIVE

 

4.1                               General.  Executive acknowledges that the
covenants set forth in this Article IV are reasonable in scope and essential to
the preservation of the business and the goodwill of the Company, and are
consideration for the amounts to be paid to Executive hereunder.  Executive also
acknowledges that the enforcement of the covenants set forth in this Article IV
will not preclude Executive from being gainfully employed in a reasonably
comparable position.

 

4.2                               Non-Disclosure of Confidential Information. 
Executive hereby acknowledges and agrees that the duties and services to be
performed by Executive under this Agreement are special and unique and that as a
result of his employment by the Company hereunder Executive has developed over
time and will acquire, develop and use information of a special and unique
nature and value that is not generally known to the public or to the Company’s
industry, including but not limited to, certain records, secrets, documentation,
software programs, price lists, ledgers and general information, employee
records, mailing lists, shareholder lists, tenant lists and profiles,
prospective customer, acquisition candidate or tenant lists, accounts receivable
and payable ledgers, financial and other records of the Company or its
Affiliates, information regarding its shareholders, tenants or joint venture
partners, and other similar matters (all such information being hereinafter
referred to as “Confidential Information”).  Executive further acknowledges and
agrees that the Confidential Information is of great value to the Company and
that the restrictions and agreements contained in this Agreement are reasonably
necessary to protect the Confidential Information and the goodwill of the
Company and the Affiliates.  Accordingly, Executive hereby agrees that:

 

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(a)                         Executive will not, during the Employment Term or
for a period of two (2) years following the expiration, directly or indirectly,
except in connection with Executive’s performance of his duties under this
Agreement, or as otherwise authorized in writing by the Company for the benefit
of the Company or any Affiliate, divulge to any person, firm, corporation,
limited liability company, partnership or organization, or any affiliated entity
(hereinafter referred to as “Third Parties”), or use or cause or authorize any
Third Parties to divulge or use, the Confidential Information, except as
required by law; and

 

(b)                         Upon the termination of the Employment Term and this
Agreement for any reason whatsoever, Executive shall deliver or cause to be
delivered to the Company any and all Confidential Information, including
drawings, notebooks, keys, data and other documents and materials belonging to
the Company or its Affiliates which is in his possession or under his control
relating to the Company or its Affiliates, regardless of the medium upon which
it is stored, and will deliver to the Company upon termination, any other
property of the Company or its Affiliates which is in his possession or under
his control.

 

4.3                               Non-Solicitation. Executive hereby covenants
and agrees that, except as permitted by the Company, during the Employment Term,
and any extensions thereof, and for a period of one (1) year following the
expiration, termination or extension of this Agreement, Executive shall not,
(i) directly or indirectly divert, take away, solicit or interfere with or
attempt to divert, take away, solicit or interfere with any present or
prospective customer, except on behalf of the Company as an employee thereof;
(ii) directly or indirectly solicit, induce, influence or attempt to solicit,
induce or influence any employee or agent of the Company to leave his employment
or engagement with the Company, or offer employment or engagement to or employ
or engage any such employee of the Company, or assist or attempt to assist any
such employee of the Company in seeking other employment; (iii) knowingly make
or participate in any “solicitation” of “proxies” or “consents” (as such terms
are used in the proxy rules of the United States Securities and Exchange
Commission) or make proposals for approval of the Company’s stockholders;
(iv) knowingly form, join or participate in a “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to the Company’s securities;
(v) otherwise knowingly act to control or seek to control the management, board
of directors or policies of the Company (except with respect to actions taken
solely in Executive’s capacity as an officer of the Company in the exercise of
his fiduciary duties; or (vi) make any agreement to do any of the foregoing to
the extent restricted thereby.  As used in this Article IV the term “Company”
shall mean the Company or any Affiliate thereof.

 

4.4                               Non-hiring Agreement.  Executive hereby
covenants and agrees that for a period of one (1) year following the expiration,
termination or extension of this Agreement, Executive shall not directly or
indirectly divert, take away, solicit or interfere with or attempt to hire,
employ, solicit or interfere with any present or prospective employee of the
Company.

 

4.5                               Covenant Not to Compete.  Executive hereby
covenants and agrees that, except as permitted by the Company, during the
Employment Term, and any extensions thereof, and for a period of one (1) year
following the expiration, termination or extension of this Agreement, Executive
shall not, directly or indirectly alone, together or in association with others,
either as a principal, agent, owner, shareholder, officer, director, partner,
employee, lender, investor or in

 

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any other capacity, engage in, have any financial interest in or be in any way
connected or affiliated with, or render advice or services to, a real estate
investment trust focusing on retail real estate within a 400 mile radius of Oak
Brook, Illinois, other than as an employee of The Inland Group, Inc. (“TIGI”) or
an affiliate of TIGI or otherwise on behalf of the Company as an employee
thereof or such other business as may be permitted by the Company in writing. 
This limitation on competition shall only apply to real estate investment
trusts.

 

4.6.                            Non-disparagement.  Executive hereby covenants
and agrees that for a period of two (2) years following the expiration,
termination or extension of this Agreement, Executive shall not, directly or
indirectly in any manner disparage, demean or defame or by other means take
action which is or intended, or could reasonably be expected, to be detrimental
to the Company or an Affiliate or their respective employees or operations.

 

4.7                               Remedies.

 

(a)                         Injunctive Relief.  Executive expressly acknowledges
and agrees that the business of the Company is highly competitive and that a
violation of any of the provisions of Article IV would cause immediate and
irreparable harm, loss and damage to the Company or an Affiliate not adequately
compensable by a monetary award.  Executive further acknowledges and agrees that
the time periods and territorial areas provided for herein are the minimum
necessary to adequately protect the business of the Company, the enjoyment of
the Confidential Information and the goodwill of the Company.  Without limiting
any of the other remedies available to the Company at law or in equity, or the
Company’s right or ability to collect money damages, Executive agrees that any
actual or threatened violation of any of the provisions of Article IV may be
immediately restrained or enjoined by any court of competent jurisdiction, and
that a temporary restraining order or emergency, preliminary or final injunction
may be issued in any court of competent jurisdiction, upon twenty-four (24) hour
notice and without bond.

 

(b)                         Enforcement.  Executive expressly acknowledges and
agrees that the provisions of Article IV shall enforced to the fullest extent
permissible under the laws and public policies in each jurisdiction in which
enforcement might be sought.  Accordingly, if any particular portion of
Article IV shall ever be adjudicated as invalid or unenforceable, or if the
application thereof to any party or circumstance shall be adjudicated to be
prohibited by or invalidated by such laws or public policies, such section or
sections shall be: (i) deemed amended to delete therefrom such portions so
adjudicated; or (ii) modified as determined appropriate by such a court, such
deletions or modifications to apply only with respect to the operation of such
section or sections in the particular jurisdictions so adjudicating on the
parties and under the circumstances as to which so adjudicated.

 

ARTICLE V

MISCELLANEOUS

 

5.1                               Notices.  All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed given or
delivered: (i) when delivered personally or by commercial messenger; (ii) one
(1) business day following deposit with a recognized overnight

 

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courier service; provided such deposit occurs prior to the deadline imposed by
such service for overnight delivery; (iii) when transmitted, if sent by
facsimile copy, provided confirmation of receipt is received by sender and such
notice is sent by an additional method provided hereunder, in each case above
provided such communication is addressed to the intended recipient thereof as
set forth below:

 

5.2                               To Executive at his home address.

 

To the Company at:

 

Inland Real Estate Corporation

 

 

2901 Butterfield Road

 

 

Oak Brook, Illinois 60523

 

 

Attn: Mark Zalatoris, President and Chief Executive Officer

 

 

 

With a copy to:

 

Inland Real Estate Corporation

 

 

2901 Butterfield Road

 

 

Oak Brook, Illinois 60523

 

 

Attn: Beth Sprecher Brooks, Senior

 

 

Vice President and General Counsel

 

Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.

 

5.3                               Entire Agreement; Amendments, Etc.  This
Agreement contains the entire agreement and understanding of the parties hereto,
and supersedes all prior agreements and understandings relating to the subject
matter thereof.  No modification, amendment, waiver or alteration of this
Agreement or any provision or term hereof shall in any event be effective unless
the same shall be in writing, executed by both parties hereto, and any waiver so
given shall be effective only in the specific instance and for the specific
purpose for which given.

 

5.4                               Benefit.  This Agreement shall be binding
upon, and inure to the benefit of, and shall be enforceable by, the heirs,
successors and legal representatives of Executive and the successors, assignees
and transferees of the Company and its current or future Affiliates.  This
Agreement or any right or interest hereunder may not be assigned by Executive.

 

5.5                               No Waiver.  No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder or pursuant
hereto shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or pursuant thereto.

 

5.6                               Severability.  Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law but, if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.  If any part of any covenant or

 

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other provision in this Agreement is determined by a court of law to be overly
broad thereby making the covenant unenforceable, the parties hereto agree, and
it is their desire, that the court shall substitute a judicially enforceable
limitation in its place, and that as so modified the covenant shall be binding
upon the parties as if originally set forth herein.

 

5.7                               Compliance and Headings.  The headings in this
Agreement are intended to be for convenience and reference only, and shall not
define or limit the scope, extent or intent or otherwise affect the meaning of
any portion hereof.

 

5.8                               Governing Law.  The parties agree that this
Agreement shall be governed by, interpreted and construed in accordance with the
internal laws of the State of Illinois without regard to its conflicts of law
provisions, and the parties agree that any suit, action or proceeding with
respect to this Agreement shall be brought in the state courts in
Chicago, Illinois or in the U.S. District Court for the Northern District of
Illinois.  The parties hereto hereby accept the exclusive jurisdiction of those
courts for the purpose of any such suit, action or proceeding.  Venue for any
such action, in addition to any other venue permitted by statute, will be in
Chicago, Illinois.

 

5.9                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.

 

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

 

5.11                        Enforcement.  In the event either of the parties to
this Agreement shall bring an action against the other party with respect to the
enforcement or breach of any provision of this Agreement, the prevailing party
in such action shall recover from the non-prevailing party the costs incurred by
the prevailing party with respect to such action including court costs and
reasonable attorneys’ fees.

 

5.12                        Recitals.  The Recitals set forth above are hereby
incorporated in and made a part of this Agreement by this reference.

 

[The remainder of this page intentionally blank]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered as of the day and year first above written.

 

 

INLAND REAL ESTATE CORPORATION,

 

 

 

a Maryland corporation

 

 

 

By:

/s/ Mark Zalatoris

 

 

 

 

Name:

Mark Zalatoris

 

 

 

 

Its:

President and Chief Executive Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 

By:

/s/ D. Scott Carr

 

 

 

 

Name:

D. Scott Carr

 

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EXHIBIT A

 

(FORMULA FOR DETERMINING ANNUAL CASH INCENTIVE BONUS)

 

I.                                        The Executive’s Annual Cash Incentive
Bonus (“ACIB”) shall be determined in part by two different criteria (set forth
below) based on the performance of IRC when compared to the performance of a
peer group of companies measured to either a Target or High level of performance
and to a third criteria of individual performance (based on attainment of
personal goals) as evaluated by the Company’s Chief Executive Officer.

 

·                                          IRC will have achieved a Target level
of performance for FFO growth if IRC’s annual growth in FFO per fully-diluted
share for the completed fiscal year immediately preceding the year in which the
ACIB is calculated, when compared to FFO per fully-diluted share for the next
preceding completed fiscal year, is not less than 100% of the median FFO growth
rate for the applicable year as published by NAREIT for the Retail REIT Shopping
Center subsector of the NAREIT Equity REIT Total Return Index (or, if not then
in existence, a comparable retail REIT shopping center index mutually agreeable
to the Company and Executive).  IRC will have achieved a Target level of
performance for Total Shareholder Return if IRC’s Total Shareholder Return (as
defined below) per share for the completed fiscal year immediately preceding the
year in which the ACIB is calculated, is not less than 100% of the median Total
Shareholder Return for the applicable year as published by NAREIT for the Retail
REIT Shopping Center Index.

 

·                                          IRC will have achieved a High level
of performance for FFO growth if IRC’s annual growth in FFO per fully-diluted
share for the completed fiscal year immediately preceding the year in which the
ACIB is calculated, when compared to FFO per fully-diluted share for the next
preceding completed fiscal year, is not less than 130% of the median FFO growth
rate for the applicable year as published by NAREIT for the Retail REIT Shopping
Center subsector of the NAREIT Equity REIT Total Return Index (or, if not then
in existence, a comparable retail REIT shopping center index mutually agreeable
to the Company and Executive).  IRC will have achieved a High level of
performance for Total Shareholder Return if IRC’s Total Shareholder Return (as
defined below) per share for the completed fiscal year immediately preceding the
year in which the ACIB is calculated, is not less than 130% of the median Total
Shareholder Return for the applicable year as published by NAREIT for the Retail
REIT Shopping Center Index.

 

·                                          For purposes of calculating ACIB,
“FFO” shall have the same meaning ascribed to that term in IRC’s annual report
on Form 10-K as filed with the SEC for the year in which the bonus is to be
calculated.  “Total Shareholder Return” shall mean the sum of : 1) the change in
the IRC stock price from January 1, 2012 to December 31, 2012 (as expressed as a
percentage), plus 2) the dividend yield paid during 2012 (as expressed as a
percentage by dividing dividends paid in 2012 divided by the IRC stock price as
of January 1, 2012).

 

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Subject to Section II. below, if IRC achieves a Target level of performance in
each of the two named criteria, the Executive’s Company performance related ACIB
will equal a total of 12%  of Executive’s Base Salary for the applicable year
(or 6% for each of the criteria achieved).  If IRC achieves a High level of
performance in each of the two named criteria, the Executive’s company
performance related ACIB will equal a total of 18% of Executive’s Base Salary
for the applicable year (or 9% for each of the criteria achieved).

 

It is recognized that of the two criteria, both may not fall into the same level
of performance, but rather one may be at a Target level and the other at a High
level (or not achieve either level).  Executive is entitled to an award for each
of the three (3) performance level metric that may be achieved.

 

II.                               The Executive’s ACIB component related to
personal performance will be awarded up to a maximum of 9% of the Executive’s
Base Salary for the applicable year.  This third component shall be dependent
upon the Executive achieving personal goals and objectives with respect to his
individual performance, as agreed by the Executive and IRC’s chief executive
officer at the beginning of the applicable year.

 

The Executive’s Total Annual Cash Incentive Bonus for the applicable year shall
be determined by adding these three (3) components.

 

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EXHIBIT B

 

(FORMULA FOR DETERMINING ANNUAL AWARD OF LONG TERM SHARES)

 

I.                                        The Executive’s Annual Award of Long
Term Restricted Shares (“LTRS”) shall be determined in part by two different
criteria (set forth below) based on the performance of IRC when compared to the
performance of a peer group of companies measured to either a Target or High
level of performance and to a third criteria of individual performance (based on
the attainment of personal goals) as evaluated by the Company’s Chief Executive
Officer.

 

IRC will have achieved a Target level of performance for FFO growth if IRC’s
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the grant of Long Term Shares is
calculated, when compared to FFO per fully-diluted share for the next preceding
completed fiscal year, is not less than 100% of the median FFO growth rate for
the applicable year as published by NAREIT for the Retail REIT Shopping Center
subsector of the NAREIT Equity REIT Total Return Index (or, if not then in
existence, a comparable retail REIT shopping center index mutually agreeable to
the Company and Executive).  IRC will have achieved a Target level of
performance for Total Shareholder Return if IRC’s Total Shareholder Return (as
defined below) per share for the completed fiscal year immediately preceding the
year in which the LTRS is calculated, is not less than 100% of the median Total
Shareholder Return for the applicable year as published by NAREIT for the Retail
REIT Shopping Center Index.

 

IRC will have achieved a High level of performance for FFO growth if IRC’s
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the grant of Long Term Shares is
calculated, when compared to FFO per fully-diluted share for the next preceding
completed fiscal year, is not less than 130% of the median FFO growth rate for
the applicable year as published by NAREIT for the Retail REIT Shopping Center
subsector of the NAREIT Equity REIT Total Return Index (or, if not then in
existence, a comparable retail REIT shopping center index mutually agreeable to
the Company and Executive).  IRC will have achieved a High level of performance
for Total Shareholder Return if IRC’s Total Shareholder Return (as defined
below) per share for the completed fiscal year immediately preceding the year in
which the LTRS is calculated, is not less than 130% of the median Total
Shareholder Return for the applicable year as published by NAREIT for the Retail
REIT Shopping Center Index.

 

For purposes of calculating the LTRS grant, “FFO” shall have the same meaning
ascribed to that term in IRC’s annual report on Form 10-K as filed with the SEC
for the year in which the LTRS is to be calculated.  .  “Total Shareholder
Return” shall mean the sum of : 1) the change of the IRC stock price from
January 1, 2012 to December 31, 2012 (as expressed as a percentage), plus 2) the
dividend yield paid during 2012 (as expressed as a percentage of dividends paid
in 2012 divided by the IRC stock price as of January 1, 2012).

 

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Subject to Section II. below, if IRC achieves a Target level of performance in
each of the two named criteria, the Executive’s LTRS grant will equal the number
of shares equal to the quotient of (1) 24% (or 12% for each of the criteria
achieved) of the Executive’s Base Salary for the applicable year, divided by
(2) the average of the high and low trading price as reported by the New York
Stock Exchange on the date of grant.  If IRC achieves a High level of
performance in each of the two named criteria, the Executive’s LTRS grant will
equal the number of shares equal to the quotient of (1) 38% (or 19% for each of
the criteria achieved) of the Executive’s Base Salary for the applicable year,
divided by (2) the average of the high and low trading price as reported by the
New York Stock Exchange on the date of grant.

 

It is recognized that of the two criteria, both may not fall into the same level
of performance, but rather one may be at a Target level and the other at a High
level (or not achieve either level). Executive is entitled to an award for each
of the three (3) performance level metric that may be achieved.

 

II.                                   The Executive’s LTRS component related to
personal performance will be awarded up to a maximum of 20% of the Executive’s
Base Salary for the applicable year.  This third component shall be dependent
upon the Executive achieving personal goals and objectives with respect to his
individual performance, as agreed by the Executive and IRC’s chief executive
officer at the beginning of the applicable year.

 

The Executive’s Total Annual Award of Long Term Restricted Shares for the
applicable year shall be determined by adding these three components.

 

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