EXHIBIT 10.12


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT
(the “Agreement”) is made as of the 1st day
of January, 2004, by and between INLAND COMMERCIAL PROPERTY MANAGEMENT, INC.,
an Illinois corporation (the “Company”), and
KRISTI A. RANKIN (the “Executive”).


 


RECITALS:


 


A.            The Company is a property management company
serving as the property manager for properties owned by its sole stockholder,
Inland Real Estate Corporation (“IREC”) a real
estate investment trust which owns, operates and acquires neighborhood retail
centers and community centers within approximately a 400 mile radius of its
headquarters in Oak Brook, Illinois (the “Business”).


 


B.            Executive has served as the Company’s Senior
Vice President since July, 1994.  While
serving as an employee, Executive has demonstrated certain unique and
particular talents and abilities with regard to the Company’s Business.


 


C.            The Company is desirous of assuring itself of
the availability of the talents and abilities of Executive, by entering into a
written employment agreement with Executive on the terms and conditions
contained herein.


 


D.            Executive is desirous of continuing to
provide services to the Company on the terms and conditions herein.


 


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 Executive, and
Executive hereby accepts employment, upon the terms and conditions set forth in
this Agreement.  Effective as of
January 1, 2004 (the “Effective Date”),
Executive shall serve as the Company’s Senior
Vice President, with duties commensurate with the 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 controlled by, the Company, IREC
or their respective affiliates (individually an “Affiliate” collectively the “Affiliates”),
as may be requested by the Company from time to time.


 


1.2           Activities
and Duties During Employment.  Executive represents and warrants to the
Company that she is free to enter into this agreement with the Company and to
perform her obligations hereunder.  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 legal rules and policies
which the Company, IREC and/or the Affiliates has or have adopted or may adopt
from time to time; and


 


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


 





















 


ARTICLE II


 


TERM


 


2.1           Term/Renewal.  The term of employment under this Agreement
shall commence on the Effective Date and shall last for a period of two (2)
years (the “Initial Term”).  This Agreement may be renewed for consecutive
one-year terms solely by written
notice of the Company not less than twenty (20) days prior to the expiration of
the then current term.  The term of
Executive’s employment hereunder may also be terminated as provided in Section 2.2
(the Initial Term, as it may be extended or terminated, is herein referred to
as the “Employment Term”).


 


2.2           Termination.  The Employment Term, Executive’s employment
and, except as provided herein, the obligations of each party may be terminated
as follows:


 


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


 


(b)           By the Company immediately without Cause.


 


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


 


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


 


(e)           Voluntarily by Executive.


 


(f)            By the Company, upon a “Change of Control” which follows a “Triggering Event” (as such
terms are hereinafter defined) that results in a termination of the Executive
within the remaining term of the Agreement or a one-year period after the
occurrence of the “Triggering Event”, whichever is less.


 


2.3                                 Definitions of “Cause,” “Total Disability,
“Triggering Event” and “Change of Control”.


 


(a)           For the purpose of this Agreement, “Cause” shall mean:


 


(i)            conduct amounting to fraud, embezzlement or illegal
misconduct in connection with Executive’s duties under this Agreement or 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 of Executive to perform her duties
hereunder as reasonably directed by the Company after the Company provides
written notice to the Executive of the failure to perform; provided that Executive
shall have ten (10) business days following receipt of the notice to cure the
failure to perform;


 


(iv)          Executive’s actions or omissions constitute gross
negligence or willful misconduct;


 


(v)           any other material breach of this Agreement
or any other agreement to which Executive and the Company are a party or any
material breach 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; or


 


(vi)          failure of Executive to comply with rules and
policies which the Company has adopted or may adopt from time to time, after
the Company provides written notice to the Executive of the failure to comply,
provided that the Executive shall have ten (10) business days following receipt
of the notice to cure the failure to comply.


 


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(b)           For purposes of this Agreement, “Total Disability” shall mean the Executive’s
failure or inability to substantially perform her duties hereunder due to
accident or illness for a period totaling six (6) months (whether or not
consecutive) during any period of twelve (12) months.  The determination of whether a Total
Disability has occurred shall be based on the determination of a physician
mutually acceptable to the Company and Executive.  If the Company and Executive do not agree on
the selection of a physician, then each party shall select a physician who
shall then collectively select a physician. 
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 her full
compensation (including base salary, after use of all sick, vacation and
personal time) and benefits.


 


(c)           for the purpose of this Agreement, a Triggering
Event shall mean a merger, a business combination, a sale of the Company or
substantially all (i.e., 90% or more) of the assets of the Company, or a
Transaction which is substantially similar to any of the foregoing if the
Company dies not survive the Consummation of such Transaction.


 


(d)           For the purpose of this Section 2.3, the
independent members and the non-independent members of the Company’s board of
directors shall be deemed to be fixed and determined on the date which is sixty
(60) calendar days prior to the date of a Triggering Event.


 


(e)           For purpose of this Agreement, “Good Reason” shall mean any of the
following events which the Company fails to cure within ten (10) days following
receipt of written notice from Executive detailing the basis of the alleged
breach:


 


(i)            the Company requires the Executive to relocate
her principal residence to a location outside of a 400 mile radius of its
headquarters in Oak Brook, Illinois, and


 


(ii)           a material failure by the Company to perform
its obligations under this Agreement.


 


(f)            For purposes of this Agreement, “Change of Control” during the term of this Agreement shall
mean:


 


(i)            (x) if a Triggering Event has occurred and more
than 50% of the independent members of IREC’s board of directors, as of the
date specified in Section 2.3(d) above, has changed within twelve months
following said Triggering Event, and  (y) if after the occurrence of said Triggering Event more
than 50% of the non-independent members of IREC’s board of directors, as of the
date specified in Section 2.3 (d) above, fail to constitute a majority of the non-independent
members of IREC’s board; provided, however, that any individual becoming a
member of IREC’s board, who at the time of his or her election to the board, is
an employee of any of The Inland Real Estate Group of Companies (“TIREGC”) shall be treated as if he or
she were a member of IREC’s board as of the date specified in Section 2.3 (d)
above.  The definition of The Inland Real
Estate Group of Companies is set forth
on Exhibit C attached hereto and
made a part hereof.  A person is considered to be “independent”
under IREC’s governing documents if he or she is deemed to be “independent” in
accordance with criteria established by the New York Stock Exchange corporate
governance rules and listing standards, and any other applicable laws, rules
and regulations regarding independence in effect from time to time.


 


ARTICLE III


 


COMPENSATION AND BENEFITS


 


3.1           Compensation.


 


(a)           Base Salary.  During the first year of the Initial
Term, the Company shall pay Executive a base salary of One Hundred Twenty Thousand
Dollars ($120,000.00).  During the second
year of the Initial Term, the Company shall pay Executive a base salary of One
Hundred Twenty-Five Thousand Dollars ($125,000.00) (the base salary paid during
the Initial Term is referred to hereinafter as the “Base Salary”).  At the
expiration of the Initial Term, and again at the expiration of each renewal
term, the Company shall 


 


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adjust Executive’s Base Salary on terms and conditions to be agreed to by
both parties with regards to salary.


 


(b)           Annual Incentive Bonus.  The
Company shall, in addition to Executive’s Base Salary for the relevant year,
pay Executive an incentive bonus payable within one hundred twenty (120) days
of the end of the relevant fiscal year, in accordance with the formula set
forth on Exhibit A, attached hereto and made a part hereof (the “Annual Incentive Bonus”).


 


(c)           Long Term Grant Restricted Shares.  So
long as the Employment Term has not been terminated for any reason, on each
anniversary of the Effective Date Executive shall receive shares of the common
stock of IREC subject to the restrictions and in accordance with the schedule
set forth on Exhibit B attached hereto and made a part hereof (“Long Term Grant Restricted Shares”).  The restrictions on the shares shall lapse in
accordance with the provisions of Exhibit B of this Agreement.


 


3.2           Payment.  All Base Salary due to Executive during the
relevant year hereunder shall be payable at such times and in such manner as
the Company pays its executive level employees; except that any payment
relating to the termination of Executive that is due hereunder, shall be paid as
a lump sum payment within fifteen (15) days of such termination.


 


3.3           Business
Expenses.


 


(a)           Reimbursement.  The
Company shall reimburse Executive for all ordinary and necessary business
expenses incurred by her in connection with performing her duties hereunder
pursuant to policies and procedures of the Company.


 


(b)           Accounting.  Executive shall provide the
Company with an accounting of her expenses, which accounting shall clearly
reflect which expenses were incurred for proper business purposes in accordance
with the policies adopted by the Company, IREC or the Affiliates, and as such
are reimbursable by the Company. 
Executive shall provide the Company with such other supporting
documentation and other substantiation of reimbursable expenses as will 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 therefore.


 


3.4           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 described in IREC’s Employee
Handbook.


 


3.5           Compensation
upon Termination.  If Executive’s
employment hereunder is terminated in accordance with the provisions of Article
II, the Company shall provide Executive with the compensation and benefits
described herein, in lieu of any severance under any severance plan that the
Company, IREC or the Affiliates may then have in effect, and subject to setoff
for any amounts owed by Executive to the Company, IREC or the Affiliates by
reason of any contract, agreement, promissory note, advance, loan document or failure
to return property, as follows:


 


(a)           Upon Termination for Death or Total
Disability.  If this Agreement and Executive’s employment
hereunder is terminated by reason of her death or Total Disability, under Sections
2.2 (c) or (d), then within fifteen (15) days of the date of termination
the Company will pay to Executive:


 


(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 her 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 her prior to the date
of termination that are subject to reimbursement pursuant to this Agreement
(the “Accrued Reimbursable Expenses”);


 


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(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 (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)           the prorated portion of the Annual Incentive
Bonus that Executive received for the fiscal year prior to termination;


 


(vi)          In addition, if Executive’s employment is terminated
under this Section 3.5(a), any Long Term Grant Restricted Shares issued
to Executive under this Agreement shall immediately vest and shall no longer be
subject to forfeiture by Executive.


 


(b)           Upon Termination by Company for Cause or
Voluntarily by Executive.  If Executive’s employment is terminated by
the Company for Cause or if Executive voluntarily terminates employment with
the Company under Sections 2.2 (a) or (e), within fifteen (15) days of
the date of such termination, the Company will pay Executive the:


 


(i)            Accrued Base Salary;


 


(ii)           Accrued Vacation Payment;


 


(iii)          Accrued Reimbursable Expenses; and


 


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


 


In addition, if Executive’s
employment is terminated under this Section 3.5(b), any Long Term Grant
Restricted Shares issued to Executive which have not yet vested shall
immediately be forfeited by Executive.


 


(c)           Upon Termination by the Company Without Cause
or by Executive for Good Reason,.  If Executive’s employment is
terminated by the Company without Cause under Section 2.2 (b) or (f), the
Company will pay Executive:


 


(i)            the Accrued Base Salary;


 


(ii)           the Accrued Vacation Payment;


 


(iii)          the Accrued Reimbursable Expenses;


 


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


 


(v)           an amount equal to 1.0 times the sum of: (A)
Executive’s then current Base Salary; plus (B) an amount equal to the Annual
Incentive Bonus which was paid to Executive for the fiscal year immediately
preceding the year of termination (or if the termination occurs in the first
year of the Initial Term, then the Annual Incentive Bonus as if the target
bonus had been received for that year); plus (C) the Long Term Grant Restricted
Shares granted to Executive for the fiscal year immediately preceding the year
of termination (or if the termination occurs in the first year of the Initial
Term, then the number of Long Term Grant Restricted Shares as if the target
share award had been received for that year); provided, however, that the
payment to Executive pursuant to this Section 3.5 (c)(vi) 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”); and


 


(vi)          the Accrued Bonus; and


 


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(vii)         In addition, if Executive’s employment is
terminated under this Section 3.5(c), any Long Term Grant Restricted
Shares issued to Executive under this Agreement shall immediately vest and
shall no longer be subject to forfeiture by Executive.


 


(d)           Upon Termination by Company Upon a Change of Control.  If Executive’s employment is
terminated by the Company within one year of a Change of Control under Section 2.2
(g), the Company will pay Executive:


 


(i)            the Accrued Base Salary;


 


(ii)           the Accrued Vacation Payment;


 


(iii)          the Accrued Reimbursable Expenses;


 


(iv)          the Accrued Benefits;


 


(v)           an amount equal to 1.5 times the sum of: (A)
Executive’s then current Base Salary; plus (B) an amount equal to the Annual
Incentive Bonus which was paid to Executive for the fiscal year immediately
preceding the year of termination (or if the termination occurs in the Initial
Term, then the Annual Incentive Bonus as if the target bonus was received for
that year); plus (C) the Long Term Grant Restricted Shares granted to Executive
for the fiscal year immediately preceding the year of termination (or if the
termination occurs in the Initial Term, then the Long Term Grant Restricted
Shares as if the target share award was received for that year); provided,
however, that the payment to Executive pursuant to this Section 3.5
(d)(vi) shall in no event exceed an amount which would cause Executive to
receive an “excess parachute payment” as defined in the Code; and


 


(vi)          In addition, if Executive’s employment is terminated
under this Section 3.5(d), any Long Term Grant Restricted Shares issued
to Executive under this Agreement shall immediately vest and shall no longer be
subject to forfeiture by Executive. 
Also, Executive’s benefits, including health, dental and life insurance,
will be extended at Company’s cost for a period of two years or until Executive
becomes employed by a third party.


 


3.6           Cessation
of Rights and Obligations: Survival of Certain Provisions.  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 said termination, and shall only survive as
expressly provided for herein on the date this Agreement expires or is
terminated for any reason.


 


3.7           Employment
Agreement; Release of Claims.  This
Agreement supersedes any prior agreements (oral or written) that may exist
between the parties and any prior agreements (oral or written) shall be void
and of no further effect.  In
consideration of the promises contained herein, and an inducement to the
Company to enter into this Agreement, Executive hereby releases and forever
discharges the Company and its officers, directors, employees, investors,
shareholders, affiliates, agents, successors and assigns from, and agrees not
to sue any of these parties concerning any and all actions, liabilities, and
other claims for relief and remuneration whatsoever, arising out of, or in any
way connected with Executive’s employment by the Company prior to the date of
this Agreement, including all matters in equity, contract, tort or pursuant to
statute, whether presently known or unknown, suspected or unsuspected that
Executive may possess, provided nothing herein shall be deemed to waive or
release any claim:


 


(a)           for indemnification that Executive may have
under IREC’s Third Amended and Restated Articles of Amendment or by-laws, as
same may have been subsequently amended; or


 


(b)           to enforce this Agreement.


 


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ARTICLE IV


 


CONFIDENTIALITY AND NON-COMPETE AGREEMENT


 


4.1           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 her 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, client lists, client profiles, prospective
customer or client lists, accounts receivable and payable ledgers, financial
and other records of the Company, IREC or the Affiliates, information regarding
its clients or principles, 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, IREC or the Affiliates.  Accordingly, Executive hereby agrees that:


 


(a)           Executive will not, during the Employment
Term or at any time thereafter, directly or indirectly, except in connection
with Executive’s performance of her duties under this Agreement, or as
otherwise authorized in writing by the Company for the benefit of the Company, IREC
or any Affiliate, divulge to any person, firm, corporation, limited liability
company or organization, (individually a “Third
Party” collectively the “Third
Parties”), or use or cause or authorize any Third Party to use, the
Confidential Information, except as required by law; and


 


(b)           Upon the termination of the Employment Term
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 or relating
to the Company, IREC or any Affiliate which is in Executive’s possession or
control, regardless of the medium upon which it is stored, and will deliver to
the Company upon such termination of employment any other property of the
Company, IREC or any Affiliate which is in Executive’s possession or control.


 


4.2           Non-Solicitation
and Covenant Not to Compete.


 


(a)           General.  Executive acknowledges that
the covenants set forth in this Section 4.2 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 covenant set forth in this Section 4.2 will not
preclude Executive from being gainfully employed in such manner and to the
extent as to provide a standard of living for herself, the members of her family
and the others dependent upon her of at least the level to which she and they
have become accustomed and may expect. 
In addition, Executive acknowledges that the Company, IREC and the Affiliates
have obtained an advantage over their competitors that is characterized by
relationships with clients, principals and other contacts.


 


(b)           Covenant.  Executive hereby covenants and
agrees that, during the term of employment hereunder and during a period of six
months following the voluntary termination of employment hereunder (which shall
not be deemed to include a termination resulting from the expiration of the
Initial Term or any subsequent renewal) or the termination of Executive’s
employment hereunder for Cause under Section 2.2 (a) hereunder (the
“Covenant Period”), Executive
shall not, directly or indirectly:


 


(i)            alone, together or in association with
others, either as a principal, agent, owner, shareholder, officer, director,
partner, employee, lender, investor or in 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, any business engaged in the Business or any new
businesses or lines of business which the Company may enter prior to the
termination of Executive’s employment under this Agreement in the greater
metropolitan area of Chicago, Illinois, and any suburb thereof, other than as
an employee of TIREGC or an
affiliate of TIREGC or otherwise
on behalf of the Company as an employee thereof or such other business as may
be permitted by the Company in writing.


 


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(ii)           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;


 


(iii)          directly or indirectly solicit, induce,
influence or attempt to solicit, induce or influence any employee or agent of
the Company to leave his or her 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; or


 


(iv)          in any manner slander, libel or by other means
take action which is or intended, or could reasonably be expected, to be
detrimental to the Company, IREC or any Affiliate or their respective employees
or operations.  As used herein, “customer”
and “prospective customer” shall include: (A) any tenant or any other person or
entity with whom the Company is negotiating for the leasing of real property
from the Company, IREC or any Affiliate at the time of the termination of
Executive’s employment or during the six month period immediately prior to such
termination; or (B) any owner of real property the purchase or sale of which is
being negotiated by the Company, IREC or any Affiliate at the time of the
termination of Executive’s employment or during the six month period
immediately prior to such termination. 
The restrictions imposed by this Section 4.2(b) shall not
apply to the ownership of one percent (1%) or less of all of the outstanding
securities of any entity whose securities are listed on a national securities
exchange.


 


4.3           Remedies.


 


(a)           Injunctive Relief. 
Executive expressly acknowledges and agrees that the business of the
Company is highly competitive and that a violation of Section 4.1
or Section 4.2 would cause immediate and irreparable harm, loss and
damage to the Company, IREC or any 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, IREC or the Affiliates, the enjoyment of the Confidential Information
and the goodwill of the Company, IREC or the Affiliates.  Without limiting any of the other remedies
available hereunder 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 Section 4.1 or Section 4.2
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) hours’ notice and without bond.  Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section shall survive the
termination of the Employment Term.


 


(b)           Enforcement.  The parties desire that the
provisions of Section 4.1 or Section 4.2 be 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 Section 4.1
or Section 4.2 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, delivered
and received:


 


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(a)           when delivered, if delivered personally;


 


(b)           four (4) days after mailing, when sent by
registered or certified mail, return receipt requested and postage prepaid;


 


(c)           one (1) business day after delivery to a
private courier service, when delivered to a private courier service providing
documented overnight service; and


 


(d)           on the date of delivery if delivered by
telecopy, receipt confirmed, provided that a confirmation copy is sent on the
next business day by first class mail, postage prepaid, in each case addressed
as follows:


 


	
  To Executive at:

  	
   

  	
   

  
	
  Ms. Kristi A. Rankin

  	
   

  	
   

  
	
  39W421 West Mallory Drive

  	
   

  	
   

  
	
  Geneva, IL 
  60134

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  To the Company at:

  	
   

  	
  With a copy to:

  
	
  Inland Commercial Property Management, Inc.

  	
   

  	
  David J. Kayner, Esq.

  
	
  2901 Butterfield Road

  	
   

  	
  General Counsel & Secretary

  
	
  Oak Brook, IL 60523

  	
   

  	
  Inland Real Estate Corporation

  
	
  Attention:

  	
  Robert D. Parks, President and

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Chief Executive Officer of IREC

  	
   

  	
  Oak Brook, IL 60523

  



 


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.


 


5.2           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.


 


5.3           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, IREC or the Affiliates.  This Agreement or any right or interest
hereunder may not be assigned by Executive.


 


5.4           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.


 


5.5           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 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.


 


5.6           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.


 


5.7           Governing
Law.  The parties agree that this
Agreement shall be governed by, interpreted and construed in accordance with
the laws of the State of Illinois, and the parties agree that any suit, action
or 


 


9





















 


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.


 


5.8           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.


 


5.9           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.


 


5.10         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.


 


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


 


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.


 


	
  COMPANY:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
  INLAND
  COMMERCIAL PROPERTY MANAGEMENT,

  	
   

  	
   

  
	
  INC.,
  an Illinois corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KRISTI
  A. RANKIN

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  



 


10





















 


EXHIBIT A


(formula for
determining Annual

Incentive Bonus)


 


1.                                       The Executive’s Annual Incentive Bonus
Opportunity (“AIBO”) shall be determined based
on whether IREC achieves a Threshold, Target, or High level of performance.


 


•                                          IREC will have achieved a Threshold level of
performance if IREC’s growth in FFO per share (as defined herein) from December
31 of the prior year to December 31 of the current year (the “Measuring Period”) is not less than 75% but not
greater than 100% of the median growth in FFO for the applicable year as
published by NAREIT for the Retail Property Sector.


 


•                                          IREC will have achieved a Target level of
performance if IREC’s growth in FFO per share during the Measuring Period is
not less than 100% but not greater than 130% of the median growth
rate in FFO for the applicable year as published by NAREIT for the Retail
Property Sector.


 


•                                          IREC will have achieved a High level of
performance if IREC’s growth in FFO per share during the Measuring Period is
not less than 130% of the median growth rate in FFO for the applicable
year as published by NAREIT for the Retail Property Sector.


 


•                                          If IREC achieves a Threshold level of
performance, the Executive’s AIBO will be equal to 10% of Executive’s
Base Salary for the applicable year.  If IREC
achieves a Target level of performance, the Executive’s AIBO will be equal to 20%
of Executive’s Base Salary for the applicable year.  If IREC achieves a High level of performance,
the Executive’s AIBO will be equal to 30% of Executive’s Base Salary for
the applicable year.


 


2.                                       The Executive’s Annual Incentive Bonus for
the applicable year shall be determined by adding two components:


 


A.                                   The first component shall be equal to 50%
of the Executive’s AIBO.


 


B.                                     The second component shall be determined
based on a subjective assessment of the Executive’s performance by either the
CEO or Chairman of the Board of IREC, and may be up to, but not in excess of, 50%
of the Executive’s AIBO.


 


3.                                       Definition for purposes of Exhibit A
and Exhibit B:


 


A.                                   “FFO” shall mean: 
IREC’s net income per share for the relevant period computed in
accordance with Generally Accepted Accounting Principles (“GAAP”),
excluding gains (or losses) from sales of property plus depreciation and
amortization and after adjustments for unconsolidated partnership and joint
ventures in which IREC holds an interest.


 


B.                                     “NAREIT” shall mean: 
The National Association of Real Estate Investment Trusts.


 


C.                                     “Retail Property Sector” shall mean: 
The retail property sector as identified by NAREIT.


 


A-1





















 


EXHIBIT B


(formula for
determining Annual Award of

Long Term Grant Restricted Shares)


 


1.                                       The Executive’s Annual Award of Long Term
Grant Restricted Shares shall be determined based on whether IREC achieves a
Threshold, Target, or High level of performance.


 


•                                          IREC will have achieved a Threshold level of
performance if IREC’s growth in FFO per share during the Measuring Period is
not less than 75% but not greater than 100% of the median growth rate in
FFO for the applicable year as published by NAREIT for the Retail Property
Sector.


 


•                                          IREC will have achieved a Target level of
performance if IREC’s growth in FFO per share during the Measuring Period is
not less than 100% but not greater than 130% of the median growth in FFO
for the applicable year as published by NAREIT for the Retail Property Sector.


 


•                                          IREC will have achieved a High level of performance
if IREC’s growth in FFO per share during the Measuring Period is not less than
130% of the median growth in FFO for the applicable year as published by NAREIT
for the Retail Property Sector.


 


•                                          If IREC achieves a Threshold level of
performance, the Executive will be awarded 910 Long Term Grant Restricted
Shares.  If IREC achieves a Target level
of performance, the Executive will be awarded 1820 Long Term Grant Restricted
Shares.  If IREC achieves a High level of
performance, the Executive will be awarded 2730 Long Term Grant Restricted
Shares.


 


2.                                       Upon award of the Long Term Grant Restricted
Shares provided that any such shares shall be held by IREC for the benefit of
Executive subject to forfeiture as provided below, and simultaneously with
issuance of such shares, Executive shall execute and deliver a blank stock
power allowing IREC to cancel any shares which are forfeited in accordance with
the following terms and conditions:


 


(A)                              If the Employment Term has not been
terminated pursuant to Sections 2.2(a) or (e) on or before the first
anniversary of the Effective Date, the forfeiture provisions shall expire and
be of no further effect to the extent of 20% of the Long Term Grant
Restricted Shares issued to Executive provided that if the Employment Term has
been terminated pursuant to Sections 2.2(a) or (e) prior to the first
anniversary of the Effective Date, then all Long Term Grant Restricted Shares
shall be forfeited by Executive and cancelled by IREC;


 


(B)                                If, on the first anniversary of the Effective
Date, the Company decides not to renew this Agreement, as provided in Section
2.1, then any Long Term Grant Restricted Shares required to be issued to
Executive under this Agreement for the year preceding such anniversary shall be
immediately issued free of any forfeiture provisions;


 


(C)                                If, after the first anniversary of the
Effective Date, but prior to the second anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or
(e), an additional 20% of the Long Term Grant Restricted Shares
issued to Executive shall, as of the second anniversary of the Effective Date,
will no longer be subject to any forfeiture provisions, provided that if the
Employment Term is terminated pursuant to Sections 2.2(a) or (e) on
any date which is after the first anniversary of the Effective Date, but prior
to the second anniversary of the Effective Date, the Long Term Grant Restricted
Shares remaining subject to forfeiture shall be forfeited by Executive and
cancelled by IREC;


 


(D)                               If, after the second anniversary of the
Effective Date, but prior to the third anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or
(e), an additional 20% of the Long Term Grant Restricted Shares
issued to Executive shall, as of the third anniversary of the Effective Date,
will no longer be subject to any forfeiture provisions; provided that if the
Employment Term is terminated pursuant to Sections 2.2(a) or (e) on any
date 


 


B-1





















 


which is on or after the second anniversary of the
Effective Date but prior to the third anniversary of the Effective Date, the
Long Term Grant Restricted Shares remaining subject to forfeiture shall be
forfeited by Executive and cancelled by IREC;


 


(E)                                 If, after the third anniversary of the
Effective Date, but prior to the fourth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
an additional 20% of the Long Term Grant Restricted Shares issued to
Executive shall, as of the fourth anniversary of the Effective Date, will no
longer be subject to any forfeiture provisions; provided that if the Employment
Term is terminated pursuant to Sections 2.2(a) or (e) on any date which
is on or after the third anniversary of and the Effective Date but prior to the
fourth anniversary of the Effective Date, the Long Term Grant Restricted Shares
remaining subject to forfeiture shall be forfeited by Executive and cancelled
by IREC;


 


(F)                                 If, after the fourth anniversary of the
Effective Date, but prior to the fifth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
the remaining Long Term Grant Restricted Shares issued to Executive, as of the
fifth anniversary of the Effective Date, will no longer be subject to any
forfeiture provisions; provided that if the Employment Term has been terminated
pursuant to Sections 2.2(a) or (e), on any date which is on or after the
fourth anniversary of the Effective Date, but prior to the fifth anniversary of
the Effective Date, the Long Term Grant Restricted Shares remaining subject to
forfeiture shall be forfeited by Executive and cancelled by IREC.


 


3.                                       Executive may not sell, transfer,
hypothecate, pledge or assign any Long Term Grant Restricted Shares which
remain subject to forfeiture as provided herein.


 


4.                                       Upon the occurrence of any forfeiture of Long
Term Grant Restricted Shares, Executive shall immediately take all actions requested
by IREC to cause IREC to immediately cancel any forfeited Long Term Grant
Restricted Shares.


 


5.                                       Executive may exercise all rights of a
stockholder, including the right to vote and receive dividends with respect to
any Long Term Grant Restricted Shares which have been issued to Executive but
not otherwise forfeited.


 


6.                                       Executive acknowledges and understands that
the Long Term Restricted Shares will be issued in accordance with the
registration provisions of federal and state securities law, or exemptions
therefrom.  As such, Executive agrees to
take all actions requested by IREC which, in its sole discretion, are necessary
to cause the issuance of the shares to be in accordance with the registration
provisions or exemptions, including but not limited to, completing and signing
investor questionnaires.


 


7.                                       If the Long Term Grant Restricted Shares have
not previously been registered under federal and state securities law and if IREC
shall file a registration statement (other than a registration statement on
Form S-4 or any successor form) with the Securities and Exchange Commission
while the Long Term Grant Restricted Shares are outstanding, IREC shall give
Executive at least 30 days’ prior written notice of the filing of such
registration statement.  If requested by
Executive in writing within 20 days after receipt of any such notice, IREC
shall, at IREC’s sole expense (other than the fees and disbursements of counsel
for Executive, and the underwriting discounts, if any, payable in respect of
the Long Term Grant Restricted Shares sold by Executive), register all or, at
Executive’s option, any portion of the Long Term Grant Restricted Shares
requested by Executive, concurrently with the registration of such other
securities, all to the extent requisite to permit the public offering and sale
of such other securities, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to become
effective as promptly as practicable. 
Notwithstanding the forgoing, if the managing underwriter of any such
offering shall advise a Company in writing that, in its opinion, the
distribution of all or a portion of the Long Term Grant Restricted Shares
requested to be included in the registration concurrently with the securities
being registered by IREC and the securities of other holders of Company
securities would 


 


B-2





















 


materially
adversely affect the distribution of such securities by IREC for its own
account, IREC will include in such registration first,
the securities that IREC proposes to sell, second, the
registerable securities requested to be included in such registration and other
securities requested be included in such registration by holders who have
registration rights, pro  rata among the holders of such
registerable securities and such other securities on the basis of the number of
shares which are owned by such holders, and third, other
securities requested to be included in such registration.


 


B-3





















 


EXHIBIT C


 


For
the purpose of this Agreement, The Inland Real Estate Group of Companies,
sometimes called The Inland Real Estate Group of Companies, Inc., is defined as
the marketing name for a group of separate legal entitles that are either
subsidiaries of the same entity, affiliates of each other, share some common
ownership or were previously sponsored by Inland Real Estate Investment
Corporation.


 


C-1