EXHIBIT
10.1.1


FIRST AMENDED AND RESTATED


BUSINESS MANAGEMENT AGREEMENT


THIS BUSINESS MANAGEMENT
AGREEMENT (this “Agreement”), dated as of July 30, 2007, is entered into by and
between INLAND AMERICAN REAL ESTATE
TRUST, INC., a Maryland corporation (the “Company”), and INLAND AMERICAN BUSINESS MANAGER & ADVISOR
INC., an Illinois corporation (the “Business Manager”).


WITNESSETH:


WHEREAS, the Company has
registered with the Securities and Exchange Commission to issue Shares (as
defined in Section 1 below) in a public offering and may subsequently
issue securities other than these Shares (“Securities”);


WHEREAS, the Company and
the Business Manager previously entered into that certain Business Management
Agreement, dated August 31, 2005 (as amended, supplemented or restated from
time to time, the “Original Business Management Agreement”), and it is intended
that this Agreement amend and restate the Original Business Management
Agreement effective as of and for all periods after the date hereof;


WHEREAS, the Company has
been qualified to be taxed as a REIT (as defined in Section 1 below)
commencing with the tax year ending December 31, 2005 and has made, and intends
to continue to make, investments permitted by the terms of the Articles of
Incorporation (as defined below) and Sections 856 through 860 of the Code (as
defined in Section 1 below);


WHEREAS, the Company
desires to continue to avail itself of the experience, sources of information,
advice, assistance and facilities available to the Business Manager and to have
the Business Manager undertake the duties and responsibilities hereinafter set
forth, on behalf of, and subject to the supervision of, the Board of Directors
(as defined in Section 1 below), all as provided herein; and


WHEREAS, the Business
Manager is willing to undertake to render these services, subject to the
supervision of the Board of Directors, on the terms and conditions hereinafter
set forth.


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


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


“Acquisition
Co.” means Inland Real Estate Acquisitions, Inc., an Illinois
Corporation.


“Acquisition Expenses” means any and all expenses incurred by
the Company, the Business Manager or any Affiliate of either in connection with
selecting, evaluating or acquiring 













any investment in
Real Estate Assets, including but not limited to legal fees and expenses,
travel and communication, appraisals and surveys, nonrefundable option payments
regardless of whether the Real Estate Asset is acquired, accounting fees and
expenses, computer related expenses, architectural and engineering reports,
environmental and asbestos audits and surveys, title insurance and escrow fees,
and personal and miscellaneous expenses.


“Acquisition Fees” means the total of all fees and
commissions, excluding Acquisition Expenses, paid by any Person to any other
Person (including any fees or commissions paid by or to the Company, the
Business Manager or any Affiliate of either) in connection with an investment
in Real Estate Assets or purchasing, developing or constructing a property by
the Company.  For these purposes, the
fees or commissions shall include any real estate commission, selection fee,
development fee, construction fee, nonrecurring management fee, loan fee,
including points, or any fee of a similar nature, however designated, except
for development fees and construction fees paid to any Person not Affiliated
with the Sponsor or Business Manager in connection with the actual development
and construction of a project, or fees in connection with temporary short-term
investments acquired for purposes of cash management.


“Acquisition
of a Real Estate Operating Company” means the acquisition of a Real
Estate Operating Company by the Company or a wholly-owned subsidiary of the
Company: (i) by purchasing at least fifty and one-tenth percent (50.1%) of the
capital stock or other equity interest in a Real Estate Operating Company, or
by merger or other business combination, reorganization or tender offer or (ii)
by acquiring all or substantially all of a Real Estate Operating Company’s
assets in a single purchase or series of purchases.


“Affiliate”
means, with respect to any other Person:


(a)           any Person directly or indirectly owning,
controlling or holding, with the power to vote, ten percent (10.0%) or more of
the outstanding voting securities of such other Person;


(b)           any Person ten percent (10.0%) or more of
whose outstanding voting securities are directly or indirectly owned,
controlled or held, with the power to vote, by such other Person;


(c)           any Person directly or indirectly
controlling, controlled by or under common control with such other Person;


(d)           any executive officer, director, trustee,
general partner or manager of such other Person; and


(e)           any legal entity for which such Person acts
as an executive officer, director, trustee, general partner or manager.


“Affiliated
Directors” means those directors of the Company who are Affiliated
with the Sponsor.



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“Articles of
Incorporation” means the articles of incorporation of the Company,
as amended or restated from time to time.


“Average
Invested Assets” means, for any period, the average of the aggregate
Book Value of the assets of the Company, including lease intangibles, invested,
directly or indirectly, in financial instruments, debt and equity securities
and equity interests in and loans secured by Real Estate Assets including
amounts invested in Real Estate Operating Companies, before reserves for
depreciation or bad debts or other similar non-cash reserves, computed by
taking the average of these values at the end of each month during the period.


“Board of
Directors” means the persons holding the office of director of the
Company as of any particular time under the Articles of Incorporation.


“Book Value”
means the value of the particular asset on the books and records of the
Company, before any allowance for depreciation or amortization.


“Code”
means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder or corresponding provisions of subsequent revenue laws.


“Company
Fixed Assets” means the Real Property, together with the buildings,
leasehold interests, improvements, equipment, furniture, fixtures and personal
property associated therewith, used by the Company in conducting its business.


“Current
Return” means a non-cumulative, non-compounded return, equal to five
percent (5.0%) per annum on Invested Capital.


“Due
Diligence Expense Allowance” means any and all bona fide
amounts reimbursed for expenses incurred by any underwriters, dealer managers
or other broker-dealers in connection with investigating the Company or any
offering of Securities made by the Company.


“Equity Stock”
means all classes or series of capital stock of the Company, including, without
limit, its common stock, $.001 par value per share, and preferred stock, $.001
par value per share.


“Fiscal Year”
means the calendar year ending December 31.


“GAAP” means
United States generally accepted accounting principles as in effect from time
to time, consistently applied.


“Gross
Offering Proceeds” means the total proceeds from the sale of
500,000,000 Shares in the Offering before deducting Offering Expenses. For
purposes of calculating Gross Offering Proceeds, the selling price for all
Shares, including those for which volume discounts apply, shall be deemed to be
$10.00 per Share. Unless specifically included in a given calculation, Gross
Offering Proceeds does not include any proceeds from the sale of Shares under
the Company’s distribution reinvestment plan.



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“Independent
Director” means any director of the Company who:


(a)           is not associated and
has not been associated within the two years prior to becoming an Independent
Director, directly or indirectly, with the Company, the Sponsor or the Business
Manager, whether by ownership of, ownership interest in, employment by, any
material business or professional relationship with, or as an officer or
director of the Company, the Sponsor, the Business Manager or any of their
Affiliates;


(b)           does not serve as a
director for more than two other REITs organized by the Sponsor or advised by
the Business Manager or any of its Affiliates; and


(c)           performs no other
services for the Company, except as a director.


For purposes of this
definition, a business or professional relationship will be considered material
if the gross revenue derived by the director exceeds five percent (5.0%) of
either the director’s annual gross revenue during either of the last two years
or the director’s net worth on a fair market value basis.  An indirect relationship shall include
circumstances in which a director’s spouse, parents, children, siblings,
mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or
sisters-in-law is or has been associated with the Company, the Sponsor, the
Business Manager or any of their Affiliates during the last two years.


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


“Marketing
Contribution” means any and all compensation payable to
underwriters, dealer managers or other broker-dealers for expenses in
connection with marketing the sale of Shares, including, without limitation,
compensation payable to Inland Securities Corporation.


“Management
Fee” means any fees payable to the Business Manager under Section
8(a) or Section 10 of this Agreement.


“Net Income”
means, for any period, the aggregate amount of total revenues applicable to the
period less the expenses applicable to the same period other than
additions to, or allowances for, reserves for depreciation, amortization or bad
debts or other similar noncash reserves all calculated in accordance with GAAP;
provided, however, that Net Income shall not include any gain
recognized upon the sale of the Company’s assets.


“Net Sales Proceeds”
means the proceeds from the sale, grant or conveyance of any Real Estate
Assets, including assets owned by a Real Estate Operating Company that is
acquired by the Company and operated as one of its subsidiaries, less
any costs incurred in selling the asset including, but not limited to, legal
fees and selling commissions and further reduced by the amount of any
indebtedness encumbering the asset and any amounts reinvested in one or more
Real Estate Assets or set aside as a reserve within one hundred eighty (180)
days of closing of sale, grant or conveyance.


“Offering”
means the first follow-on public offering of Shares on a “best efforts” basis
pursuant to the Prospectus, as amended and supplemented from time to time.



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


“Organization Expenses” means the aggregate of all Offering
Expenses, including Selling Commissions, the Marketing Contribution and the Due
Diligence Expense Allowance.


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


“Primary
Geographical Area of Investment” means, with respect to the Company,
the United States and Canada.


“Property”
or “Properties” means interests in (i) Real
Property or (ii) any buildings, structures, improvements, furnishings, fixtures
and equipment, whether or not located on the Real Property, in each case owned
or to be owned by the Company either directly or indirectly through one or more
Affiliates, joint ventures, partnerships or other legal entities.


“Property
Manager” means any of Inland American Retail Management LLC, Inland
American Office Management LLC, Inland American Industrial Management LLC or
Inland American Apartment Management LLC, each a Delaware limited liability
company, and any of their successors and assigns.


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


“Real Estate Assets”
means any and all investments in: (i) Real Property whether directly or
indirectly through owned or controlled subsidiaries or a Real Estate Operating
Company and including amounts invested in joint ventures; (ii) loans, or other
evidence of indebtedness secured, directly or indirectly, by interests in Real
Property; (iii) mortgage backed securities; and (iv) “Real Estate Assets” as
that term is defined in the Articles of Incorporation.


“Real Estate Operating Company”
means: (i) any entity that has equity securities registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
(ii) any entity that files periodic reports under Sections 13 or 15(d) of the
Exchange Act; or (iii) any entity that, either itself or through its
subsidiaries:


(a) owns and operates
interests in real estate on a going concern basis rather than as a conduit
vehicle for investors to participate in the ownership of assets for a limited
period of time;



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(b) has a policy or
purpose of reinvesting sale, financing or refinancing proceeds or cash from
operations;


(c) has its own
directors, managers or managing general partners, as applicable; and


(d) either (1) has its
own officers and employees that, on a daily basis, actively operate the entity
and its subsidiaries and businesses, or (2) has retained the services of an
affiliate or sponsor of, or advisor to, the entity to, on a daily basis,
actively operate the entity and its subsidiaries and businesses.


“Real
Property” means land, rights or interests in land (including, but
not limited to, leasehold interests), and any buildings, structures,
improvements, furnishings, fixtures and equipment located on, or used in
connection with, land and rights or interest in land.


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


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


“Selling
Commissions” means any and all commissions, not to exceed seven and
one-half percent (7.5%) of the gross offering price of any Shares, payable to
underwriters, dealer managers or other broker-dealers in connection with the
sale of Shares, including, without limitation, commissions payable to Inland
Securities Corporation.


“Sponsor”
means Inland Real Estate Investment Corporation, a Delaware corporation.


“Stockholders”
means holders of shares of Equity Stock.


“Total
Operating Expenses” means the aggregate expenses of every character
paid or incurred by the Company as determined under GAAP, including the
Management Fee and other fees payable hereunder, but excluding:


(a)           the expenses of raising
capital such as Offering Expenses, Organization Expenses, legal, audit,
accounting, underwriting, brokerage, listing, registration and other fees,
printing and other expenses and taxes incurred in connection with the issuance,
distribution, transfer, registration and listing of any shares of the Equity
Stock;


(b)           property expenses;


(c)           interest payments;


(d)           taxes;


(e)           non-cash charges such
as depreciation, amortization and bad debt reserves;



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(f)            any incentive fees
payable hereunder; and


(g)           Acquisition Fees,
Acquisition Expenses, real estate commissions on resale of property and other
expenses connected with acquiring, disposing and owning real estate interests,
mortgage loans, or other property (such as the costs of foreclosure, insurance
premiums, legal services, maintenance, repair and property improvements).


2.             Duties
of the Business Manager. The Business Manager shall consult with the
Company and shall, at the request of the Board of Directors or the officers of
the Company, furnish advice and recommendations with respect to all aspects of
the business and affairs of the Company. 
The Business Manager shall inform the Board of Directors of factors that
come to the Business Manager’s attention that may, in its opinion, influence the
policies of the Company.  Subject to the
supervision of the Board of Directors and consistent with the provisions of the
Articles of Incorporation, the Business Manager shall use its best efforts to:


(a)           subject to the terms and conditions set
forth in that certain Property Acquisition Agreement by and between the Company
and Acquisition Co., of even date herewith, use commercially reasonable efforts
to identify potential investment opportunities in Real Estate Assets located in
the Primary Geographical Area of Investment and consistent with the Company’s
investment objectives and policies; including but not limited to:


(i)            locating, analyzing and selecting potential
investments in Real Estate Assets;


(ii)           structuring and negotiating the terms and
conditions of acquisition and disposition transactions;


(iii)          arranging for financing and refinancing and
making other changes in the asset or capital structure of the Company and
disposing of and reinvesting the proceeds from the sale of, or otherwise deal
with the investments in, Real Estate Assets; and


(iv)          entering into leases and service contracts,
on the Company’s behalf, for Real Estate Assets and, to the extent necessary,
performing all functions necessary to maintain and administer the Company’s
assets.


(b)           assist the Board of Directors in evaluating
these investment opportunities;


(c)           provide the Board of Directors with research
and other statistical data and analysis in connection with the Company’s
assets, operations and investment policies;


(d)           manage the Company’s day-to-day operations,
consistent with the investment objectives and policies established by the Board
of Directors from time to time;


(e)           investigate, select and conduct relations
with lenders, consultants, accountants, brokers, property managers, attorneys,
underwriters, appraisers, insurers, 



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corporate fiduciaries, banks, builders and developers, sellers and
buyers of investments and persons acting in any other capacity specified by the
Company from time to time, and enter into contracts in the Company’s name with,
and retaining and supervising services performed by, such parties in connection
with investments that have been or may be acquired or disposed of by the
Company;


(f)            cooperate with the Property Managers in
connection with property management services and other activities relating to
the Company’s assets, subject to the requirement that the Business Manager or
the applicable Property Manager, as the case may be, qualifies as an “independent
contractor” as that phrase is used in connection with applicable laws, rules
and regulations affecting REITs that own Real Property;


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


(h)           assist in negotiations on behalf of the
Company with investment banking firms and other institutions or investors for
public or private sales of Securities of the Company or for other financing on
behalf of the Company, provided that in no event may the Business Manager act
as a broker, dealer, underwriter or investment advisor of, or for, the Company;


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


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


(k)           provide office space, equipment and
personnel as required for the performance of the foregoing services as Business
Manager;


(l)            advise the Board of Directors, from time to
time, of the Company’s operating results and coordinating preparation, with
each property manager, of an operating budget including one, three and five
year projections of operating results and such other reports as may be
appropriate for each Real Estate Asset;


(m)          prepare, on behalf of the Company, all
reports and returns required by the Securities and Exchange Commission,
Internal Revenue Service and other state or federal governmental agencies
relating to the Company and its operations;


(n)           undertake and perform all services or other
activities necessary and proper to carry out the Company’s investment
objectives;



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(o)           provide the Company with all necessary cash
management services;


(p)           maintain the Company’s books and records
including, but not limited to, appraisals or fairness opinions obtained in
connection with acquiring or disposing Real Estate Assets; and


(q)           enter into ancillary agreements with the
Sponsor and its Affiliates to arrange for the services and licenses to be
provided by the Business Manager hereunder.


3.             No
Partnership or Joint Venture. The Company and the Business Manager are not,
and shall not be deemed to be, partners or joint venturers with each other.


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


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


6.             Fidelity
Bond. The Business Manager shall not be required to obtain or maintain a
fidelity bond in connection with performing its services hereunder.


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


8.             Compensation.
Subject to the provisions of Section 13 hereof, for services rendered
hereunder the Company shall pay to the Business Manager or its designee the
following:



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(a)           A Management Fee of not more than one
percent (1.0%) of the Average Invested Assets, payable quarterly in an amount
equal to one-quarter of one percent (0.25%) of the Average Invested Assets of
the Company as of the last day of the immediately preceding quarter; provided
that in no event shall the Company be obligated to pay a Management Fee unless
and until all of its Stockholders have received the Current Return.  This fee terminates if the Company acquires
the Business Manager.


(b)           An Acquisition Fee, equal to two and one-half
percent (2.5%) of the aggregate purchase price paid upon Acquisition of a Real
Estate Operating Company; provided, however, that Acquisition
Fees shall not be paid for acquisitions solely of a fee interest in
Property.  The Company shall pay
Acquisition Fees either in cash or by issuing Shares valued per share at the
greater of (i) the per share offering price of common stock in the Company’s
most recent public offering; (ii) if applicable, the per share price ascribed
to shares of common stock used in the Company’s most recent Acquisition of a
Real Estate Operating Company; and (iii) $10.00 per share.  Any Shares issued will be subject to
restrictions on transfer.  If the
issuance of Shares to pay an Acquisition Fee would result in more than 9.8% of
the Company’s common stock being held by The Inland Group, Inc., a Delaware
corporation, and its Affiliates including the Business Manager, the Board of
Directors may waive the ownership restrictions set forth in the Articles of
Incorporation to permit the issuance of the additional Shares and the payment
of the Acquisition Fee in that instance. 
Any waiver by the Board of Directors shall, as a consequence, reduce the
aggregate number of Shares of the Company’s common stock that may be held by
individuals and entities other than the Business Manager.  If the Board of Directors does not waive the
ownership restrictions, the Company shall pay any excess fee in cash.  This fee terminates if the Company acquires
the Business Manager.


(c)            An incentive fee equal to fifteen percent
(15.0%) of the Net Sales Proceeds; provided that in no event shall the
Company be obligated to pay an incentive fee unless and until all of its
Stockholders have first received a ten percent (10.0%) cumulative,
non-compounded return on, plus return of, their Invested Capital.  This fee terminates if the Company acquires
the Business Manager.


9.             Expenses.


(a)           In addition to the compensation paid to the
Business Manager pursuant to Section 8 or Section 10 hereof, and
subject to the limits herein, the Company shall reimburse the Business Manager,
the Sponsor and its Affiliates for all expenses paid or incurred by the
Business Manager, the Sponsor or its Affiliates to provide certain services and
licenses hereunder, including all direct expenses and the costs of salaries and
benefits of persons employed by the Business Manager, the Sponsor and its
Affiliates and performing services for the Company.


(b)           Direct expenses that the Company shall
reimburse pursuant to Section 9(a) hereof include, but are not limited
to:


(i)            any Offering Expenses;



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(ii)           Acquisition Expenses incurred in connection
with selecting and acquiring Real Estate Assets;


(iii)          the actual cost of goods and services
purchased for and used by the Company and obtained from entities not affiliated
with the Business Manager;


(iv)          interest and other costs for borrowed money,
including points and other similar fees;


(v)           taxes and assessments on income or Real
Property and taxes;


(vi)          premiums and other associated fees for
insurance policies including director and officer liability insurance;


(vii)         expenses of managing and operating Real Estate
Assets owned by the Company, whether payable to an Affiliate of the Company or
a non-affiliated Person;


(viii)        all fees and expenses paid to members of the
Board of Directors and the fees and costs of any meetings of the Board of
Directors or Stockholders;


(ix)           expenses associated with listing or with
issuing Shares and Securities, including Selling Commissions, advertising
expenses, taxes, legal and accounting fees, listing and registration fees and
other Organization Expenses and Offering Expenses except for Selling
Commissions or other fees and expenses paid by the Dealer Manager to any
Soliciting Dealer (as those terms are defined in the Dealer Manager Agreement)
pursuant to that certain Dealer Manager Agreement dated July 30, 2007 by and
between the Company and Inland Securities Corporation;


(x)            expenses associated with dividends or
distributions paid in cash or otherwise made or caused to be made by the
Company to Stockholders;


(xi)           expenses of organizing the Company and
filing, revising, amending, converting or modifying the Articles of
Incorporation or the bylaws;


(xii)          all expenses associated with Stockholder
communications including the cost of preparing, printing and mailing annual
reports, proxy statements and other reports required by governmental entities;


(xiii)         administrative service expenses including
personnel costs; provided, however, that no reimbursement shall
be made for costs of personnel to the extent that such personnel perform
services in transactions for which the Business Manager receives a separate
fee;


(xiv)        audit, accounting and legal fees paid to third
parties;



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(xv)         transfer agent and registrar’s fees and
charges paid to third parties; and


(xvi)        expenses relating to any offices or office
facilities maintained solely for the benefit of the Company that are separate
and distinct from the Company’s executive offices.


(c)           The Company shall also reimburse the
Business Manager, the Sponsor and its Affiliates pursuant to Section 9(a)
hereof for the salaries and benefits of persons employed by the Business
Manager, the Sponsor or its Affiliates and performing services for the Company.


(i)            In the case of the Sponsor, whose employees
also provide services for other entities sponsored by, or affiliated with, the
Sponsor, the Company shall reimburse only a pro rata
portion of the salary and benefits of these persons based on the amount of time
spent by that person on matters for the Company compared to the time spent by
that same person on all matters including the Company’s matters.


(ii)           Except as otherwise agreed in writing by the
Company or the Business Manager, the Company shall also reimburse Affiliates of
the Sponsor for the salaries and benefits of persons employed by these Affiliates.  The salary and benefit costs for each
Affiliate shall be determined by multiplying (A) the number of hours spent by
all employees of the Affiliate in providing services for the Company by (B)
that Affiliate’s “hourly billing rate.” 
For these purposes, the “hourly billing rate” will approximate the
hourly cost to the Affiliate to provide services to the Company based on:


(1)                                  the average amount of
all salaries and bonuses paid to the employees of the Affiliate; and


(2)                                  an allocation for
overhead including employee benefits, rent, materials, fees, taxes, and other
operating expenses incurred by the Affiliate in operating its business except
for direct expenses reimbursed by the Company pursuant to Section 9(b)
hereof.


(d)           The Business Manager shall prepare a
statement documenting the expenses paid or incurred by the Business Manager,
the Sponsor and its Affiliates for the Company on a quarterly basis.  The Company shall reimburse the Business
Manager, the Sponsor and its Affiliates for these expenses within forty-five
(45) days after the end of each calendar quarter.


(e)           The Business Manager shall direct its
employees, and shall cause the Sponsor and its Affiliates to direct their
employees, who perform services for the Company to keep time sheets or other
appropriate billing records and receipts in connection with any reimbursement
of expenses made by the Company pursuant to this Section 9.  All time sheets or other appropriate billing
records or receipts shall be made available to the Company upon reasonable
request to the Business Manager.



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10.           Compensation
for Additional Services, Certain Limitations.


(a)           The Company and the Business Manager will
separately negotiate and agree on the fees for any additional services that the
Company asks the Business Manager or its Affiliates to render in addition to
those set forth in Section 2 hereof. 
Any additional fees or reimbursements to be paid by the Company in
connection with the additional services must be fair and reasonable and shall
be approved by a majority of the Board of Directors, including a majority of
the Independent Directors.


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


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


(ii)           the compensation, price or fee must be equal
to the lesser of ninety percent (90.0%) of the compensation, price or fee the
Company would be required to pay to independent, non-affiliated third parties
who are rendering comparable services or selling or leasing comparable goods on
competitive terms in the same geographic location, or ninety percent (90.0%) of
the compensation, price or fee charged by the Business Manager or its
Affiliates for rendering comparable services or selling or leasing comparable
goods on competitive terms; and


(iii)          if at least ninety-five percent (95.0%) of
gross revenues attributable to the business of rendering such services or
selling or leasing such goods are derived from persons other than Affiliates,
the compensation, price or fee charged by an unaffiliated person who is
rendering comparable services or selling or leasing comparable goods must be on
competitive terms in the same geographic location. Extraordinary circumstances
shall be presumed to exist only when there is an emergency situation requiring
immediate action by the Business Manager or its Affiliates and the goods or
services are not immediately available from unaffiliated parties. Services that
may be performed in extraordinary circumstances include emergency maintenance
of Company properties, janitorial and other related services due to strikes or
lockouts, emergency tenant evictions and repair services that require immediate
action, as well as operating and releasing properties with respect to which the
leases are in default or have been terminated.


(c)           Permitted reimbursements shall include
salaries and related salary expenses for nonsupervisory services that could be
performed directly for the Company by independent, non-affiliated third parties
such as legal, accounting, transfer agent, data processing and duplication. The
Business Manager believes that the employees of the Business Manager, the
Sponsor and its Affiliates who may perform services for the Company for which
reimbursement is allowed, will have the experience and educational 



 13
 









background, in their respective fields of
expertise, appropriate for the performance of any such services.


11.           Statements.  The Business Manager shall furnish to the
Company, not later than the tenth (10th)
day of each calendar quarter, beginning with the second calendar quarter of the
term of this Agreement, a statement computing any Management Fee, Acquisition
Fee or incentive fee payable hereunder. The Business Manager shall also furnish
to the Company, not later than the thirtieth (30th) day following the end of each Fiscal Year, a statement
computing the fees payable to the Business Manager, the Sponsor or its
Affiliates for the just completed Fiscal Year; provided that any
compensation payable hereunder shall be subject to adjustments in accordance
with, and upon completion of, the annual audit of the Company’s financial
statements.


12.           Business
Combination.


(a)           Business
Combinations.  The Company shall consider becoming a
self-administered REIT once the Company’s assets and income are, in the view of
the Board of Directors, of sufficient size such that internalizing the
management functions performed by the Business Manager and the Property
Managers is in the best interests of the Stockholders.


If the Board of Directors should make this
determination in the future, the Company shall pay one-half of the costs, and
the Business Manager and the Property Managers shall pay the other half, of an
investment banking firm.  This firm shall
jointly advise the Company and the Sponsor on the value of the Business Manager
and the Property Managers.  After the
investment banking firm completes its analyses, the Company shall require it to
prepare a written report and make a formal presentation to the Board of
Directors.


Following the presentation by the investment
banking firm, the Board of Directors shall form a special committee comprised
entirely of Independent Directors to consider a possible business combination
with the Business Manager and the Property Managers.  The Board of Directors shall, subject to
applicable law, delegate all of its decision-making power and authority to the
special committee with respect to these matters.  The special committee also shall be
authorized to retain its own financial advisors and legal counsel to, among
other things, negotiate with representatives of the Business Manager and the
Property Managers regarding a possible business combination.


(b)           Conditions
to Completion of Business Combination.  Before the Company may
complete any business combination with either the Business Manager or any
Property Manager in accordance with this Section 12, the following two
conditions shall be satisfied:


(i)            the special committee formed in accordance
with Section 12(a) hereof receives an opinion from a recognized
investment banking firm, separate and distinct from the firm jointly retained
to provide a valuation analysis in accordance with Section 12(a) hereof,
concluding that the consideration to be paid 



 14
 









to acquire the Business Manager or the Property Manager, as the case
may be, is fair to the Stockholders from a financial point of view; and


(ii)           the holders of a majority of the votes cast
at a meeting of the Stockholders called for such purpose (if a quorum is
present at the meeting) approves the acquisition; provided that, for
these purposes only, any shares held by The Inland Group, Inc., the Sponsor or
any of their Affiliates will be counted for purposes of determining the
presence of quorum but will not, however, initially constitute a vote cast for
purposes of determining the number of votes necessary to approve the
acquisition.  If the proposal receives
the necessary votes to approve the acquisition, all shares held by The Inland
Group, Inc., the Sponsor or any of their Affiliates may then be voted in favor
of the transaction.


13.           Reimbursement
by Business Manager. The Business Manager shall be obligated to reimburse
the Company in the following circumstances:


(a)           On or before the fifteenth (15th) day after the completion of the
annual audit of the Company’s financial statements for each Fiscal Year, the
Business Manager shall reimburse the Company for the amounts, if any by which
the Total Operating Expenses (including the Management Fee and other fees
payable hereunder) of the Company for the Fiscal Year just ended exceeded the
greater of:


(i)            two percent (2.0%) of the total of the
Average Invested Assets for the just ended Fiscal Year; or


(ii)           twenty-five percent (25.0%) of the Net
Income for the just ended Fiscal Year;


provided,
however, that the Business Manager may satisfy any obligation under this
Section 13(a) by reducing the amount to be paid the Business Manager
under Section 8 or Section 10 hereunder until the Business
Manager has satisfied its obligations under this Section 13(a); provided,
further, that the Board of Directors, including a majority of the
Independent Directors of the Company, may reduce the amount due under this Section
13(a) upon a finding that the increased expenses were caused by unusual or
nonrecurring factors.


(b)           If the aggregate of all Organization
Expenses exceeds fifteen percent (15.0%) of the Gross Offering Proceeds or the
aggregate of all Offering Expenses (excluding any Selling Commissions, the
Marketing Contribution and the Due Diligence Expense Allowance) exceed four and
one-half percent (4.5%) of the Gross Offering Proceeds, the Business Manager or
its Affiliates shall reimburse the Company for, or pay directly, any excess
Organization Expenses or Offering Expenses incurred by the Company above the
greater of these limits.


14.           Other
Activities of the Business Manager. 
Nothing contained herein shall prevent the Business Manager or an
Affiliate of the Business Manager from engaging in any other business or
activity including rendering services or advising on real estate investment
opportunities to any other person or entity. 
Directors, officers, employees and agents of the 



 15
 









Business Manager
or of Affiliates of the Business Manager may serve as directors, trustees,
officers, employees or agents of the Company, but shall receive no compensation
(other than reimbursement for expenses) from the Company for this service.


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


Notwithstanding any other
provision of the Agreement to the contrary, this Agreement may be terminated at
the mutual consent of the parties.  The
Company may terminate this Agreement without cause or penalty upon a vote of a
majority of the Independent Directors by providing no less than sixty (60) days’
written notice to the Business Manager. In the event of the termination of the
Agreement, the Business Manager will cooperate with the Company and take all
reasonable steps requested to assist the Board of Directors in making an
orderly transition of the functions performed hereunder by the Business
Manager.


This Agreement shall also
terminate upon the closing of a business combination between the Company and
the Business Manager as described in Section 12 or as otherwise
provided in Section 17 hereof.


If this Agreement is
terminated pursuant to this Section 15, the parties shall have no
liability or obligation to each other including any obligations imposed by Section
2(a) hereof, except as provided in Section 18.


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


17.           Default,
Bankruptcy, etc. At the sole option of the Company, this Agreement shall be
terminated immediately upon written notice of termination from the Board of
Directors to the Business Manager if any of the following events occurs:


(a)           the Business Manager violates any provisions
of this Agreement and after notice of such violation shall not cure such
default within thirty (30) days; or


(b)           a court of competent jurisdiction enters a
decree or order for relief in respect of the Business Manager in any
involuntary case under the applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appoints a receiver 



 16
 









liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Business Manager or for any substantial part of its property
or orders the winding up or liquidation of the Business Manager’s affairs; or


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


The Business Manager
agrees that if any of the events specified in subsections (b) and (c) of this Section 17
occur, it will give written notice thereof to the Company within seven (7) days
after the occurrence of such event.


18.           Action
Upon Termination. The Business Manager shall not be entitled to
compensation after the date of termination of this Agreement for further
services hereunder, but shall be paid all compensation accruing to the date of
termination. Upon termination of this Agreement, the Business Manager shall:


(a)           pay over to the Company all moneys collected
and held for the account of the Company pursuant to this Agreement, after
deducting any accrued compensation and reimbursement for expenses to which the
Business Manager is entitled;


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


(c)           deliver to the Board of Directors all
property and documents of the Company then in the custody of the Business
Manager; and


(d)           cooperate with the Company and take all
reasonable steps requested by the Company to assist the Board of Directors in
making an orderly transition of the functions performed by the Business
Manager.


19.           Tradename
and Marks.  Concurrent with executing
this Agreement, the Company will enter into an agreement granting the Company
the right, subject to the terms and conditions of license agreement, to use the
“Inland” name and marks.


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


21.           Successors
and Assigns. This Agreement shall bind any successors or assigns of the
parties hereto as herein provided.



 17
 









22.           Governing
Law. The provisions of this Agreement shall be governed, construed and
interpreted in accordance with the internal laws of the State of Illinois
without regard to its conflicts of law principles.


23.           Liability
and Indemnification.


(a)           The Company shall indemnify the Business
Manager and its officers, directors, employees and agents (individually an “Indemnitee”,
collectively the “Indemnitees”) to the same extent as the Company may indemnify
its officers, directors, employees and agents under its Articles of
Incorporation and bylaws so long as:


(i)            the Indemnitee has determined, in good
faith, that the course of conduct that caused the loss, liability or expense
was in the best interests of the Company;


(ii)           the Indemnitee was acting on behalf of, or
performing services for, the Company;


(iii)          the liability or loss was not the result of
negligence or misconduct on the part of the Indemnitee; and


(iv)          any amounts payable to the Indemnitee are
paid only out of the Company’s net assets and not from any personal assets of
any Stockholder.


(b)           The Company shall not indemnify any person
or entity for losses, liabilities or expenses arising from, or out of, an
alleged violation of federal or state securities laws by any party seeking
indemnity unless one or more of the following conditions are met:


(i)            there has been a successful adjudication on
the merits of each count involving alleged securities law violations as to the
particular person or entity;


(ii)           the claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular person or entity; or


(iii)          a court of competent jurisdiction approves a
settlement of the claims and finds that indemnification of the settlement and
related costs should be made and the court considering the request has been
advised of the position of the Securities and Exchange Commission and the
published opinions of any state securities regulatory authority in which
securities of the Company were offered and sold with respect to the
availability or propriety of indemnification for securities law violations.


(c)           The Company shall advance amounts to persons
entitled to indemnification hereunder for legal and other expenses and costs
incurred as a result of any legal action for which indemnification is being
sought only if all of the following conditions are satisfied:



 18
 









(i)            the legal action relates to acts or
omissions with respect to the performance of duties or services by the
Indemnitee for or on behalf of the Company;


(ii)           the legal action is initiated by a third
party and a court of competent jurisdiction specifically approves the advance;
and


(iii)          the Indemnitee receiving the advances
undertakes to repay any monies advanced by the Company, together with the
applicable legal rate of interest thereon, in any case(s) in which a court of
competent jurisdiction finds that the party is not entitled to be indemnified.


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


	
  If to the Company:

  	
   

  	
  Inland American Real Estate Trust, Inc. 

  
	
   

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
   

  	
  Attention:

  	
  Ms. Roberta S. Matlin

  
	
   

  	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
   

  	
  Facsimile:

  	
  (630) 218-4955

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to the Business Manager:

  	
   

  	
  Inland American Business Manager & Advisor Inc.

  
	
   

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
   

  	
  Attention:

  	
  Ms. Brenda Gujral

  
	
   

  	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
   

  	
  Facsimile:

  	
  (630) 218-4955

  



 


Either party may at any
time give notice in writing to the other party of a change of its address for
the purpose of this Section 24.


25.           Conflicts
of Interest and Fiduciary Duties to the Company and to the Company’s
Stockholders. The Company and the Business Manager recognize that their
relationship is subject to various conflicts of interest such as set forth in
the Prospectus. The Business Manager, on behalf of itself and its Affiliates,
acknowledges that the Business Manager and its Affiliates have fiduciary duties
to the Company and to the Stockholders. The Business Manager, on behalf of
itself and its Affiliates, agrees, on the one hand, that the Business Manager
and its Affiliates will endeavor to balance the interests of the Company with
the interests of the Business Manager and its Affiliates in making any
determination where a conflict of interest exists between the Company and the
Business Manager or its Affiliates.


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



 19














IN WITNESS WHEREOF, the undersigned have executed this
Business Management Agreement as of the date first above written.


	
  COMPANY:

  	
   

  	
  BUSINESS MANAGER:

  
	
   

  	
   

  	
   

  
	
  INLAND AMERICAN REAL ESTATE TRUST, 

  INC.

  	
   

  	
  INLAND AMERICAN BUSINESS MANAGER & 

  ADVISOR INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Brenda Gail Gujral

  	
   

  	
  By:

  	
  /s/ Roberta S. Matlin

  
	
  Name:

  	
  Brenda Gail Gujral

  	
   

  	
  Name:

  	
  Roberta S. Matlin

  
	
  Its:

  	
  President

  	
   

  	
  Its:

  	
  President