EXHIBIT 10.3


 


INVESTMENT ADVISORY AGREEMENT FOR
DISCRETIONARY ACCOUNTS


 


This
INVESTMENT ADVISORY AGREEMENT (the “Agreement”) is made and entered into as of
this [      ] day of [                            ],
2009 by and between Inland Diversified Real Estate Trust, Inc. (“Client”)
and Inland Investment Advisors, Inc., an Illinois corporation (“Adviser”),
an investment adviser registered under the Investment Advisers Act of 1940, as
amended (the “Advisers Act”), for the purpose of setting forth the terms and
conditions pursuant to which Adviser will manage Client’s assets designed for
management hereunder.


 


NOW,
THEREFORE, in consideration of the promises and the mutual covenants contained
herein, the parties hereto agree as follows:


 


1.             APPOINTMENT AS INVESTMENT
ADVISER.


 


Client hereby
appoints and retains Adviser as investment adviser and attorney-in-fact on the
terms and conditions set forth in this Agreement for those assets which Client
may from time to time place with Adviser, and any appreciation, income or
proceeds thereon (the “Account”). 
Adviser accepts the appointment as investment adviser and agrees to
manage and direct the investments of the Account, subject to any Investment
Guidelines (defined in Section 9 below) communicated to Adviser in advance
and in writing.  Adviser assumes
responsibility for the investment management of, and all trading decisions for,
the Account as of the date assets are placed in the Account.


 


2.             AUTHORITY OF ADVISER.


 


Adviser has
full discretionary authority with respect to the investment and reinvestment of
the assets of the Account, subject to the Investment Guidelines.  Adviser, when it deems appropriate, without
prior consultation with or notification of Client, may, (a) purchase,
sell, exchange, convert and otherwise trade in securities, including but not
limited to money market instruments, mutual funds, stocks, options and
warrants, on margin or otherwise, (collectively, “Investments”), for such
prices, at such times and on such terms as Adviser, in its sole discretion,
deems advisable; (b) place orders for the execution of transactions with
or through brokers, dealers or issuers Adviser selects in its sole discretion,
including broker-dealer with whom Adviser is related; (c) render, furnish
and provide advice, analyses and other information concerning the retention,
monitoring, performance or termination of other investment advisers or asset
managers; (d) negotiate, on Client’s behalf, the terms and conditions, and
execute and deliver all agreements and ancillary documents incidental thereto,
necessary to open accounts in the name, or for the benefit, of Client with such
brokers, dealers, advisers, managers, issuers or custodians as Adviser may
select with respect to the Account; and (e) act on Client’s behalf in all
matters necessary or incidental to servicing the Account, including all
transactions for the Account.  Client
will furnish Adviser with all additional powers of attorney and other
documentation, if any, necessary to appoint Adviser as agent and attorney-in-fact
with respect to the Account, but such powers shall not be construed to
authorize Adviser to take any action not authorized by this Agreement.


 


The foregoing
authority shall remain in full force and effect until; (a) revoked by
Client pursuant to written notice to Adviser, or (b) the termination of
this Agreement pursuant to the 


 

















 


terms of Section 14 below. 
Revocation shall not affect transactions entered into prior to such
revocation.


 


3.             CUSTODIANSHIP.


 


The assets of
the Account will be held by the clearinghouse, broker-dealer, bank, trust
company or other entity designed and appointed by Adviser, and acceptable to
Client, as custodian of the Account (“Custodian”).  All Investments held in the Account may be
registered in the name of Client or its nominee or held in street name.  Custodian is responsible for the physical
custody of the assets of the Account; for the collection of any interest,
dividends or other income attributable to the assets of the Account; and for
the exercise of rights and tenders on assets of the Account.  Adviser is not responsible for any loss
incurred by reason of any act or omission of Custodian; provided, however, that
Adviser will make reasonable efforts to require that Custodian perform its
obligations with respect to the Account.


 


4.             BROKERAGE/RESEARCH.


 


A.            Selection of
Broker-dealer.


 


Adviser may
allocate the execution of transactions for the Account to any broker-dealer at
prices and commission rates as Adviser, in its good faith judgment, believes
are in the best interest of the Account. 
Client understands that other brokerage entities may be willing to
execute transactions at prices and commission rates that are lower than or
different from those charged by the entity selected by Adviser.  Client further understands and acknowledges
that Adviser has a relationship with Inland Securities Corporation, a
broker-dealer registered with the Securities and Exchange Commission, and that
certain transactions on behalf of the Account may be executed through Inland
Securities Corporation, and as a result, Adviser as a part of the Inland Group
of companies, may benefit from the brokerage commissions from these
transactions.  Although Adviser intends
to treat Client fairly and act in the best interests of Client and the Account
in accordance with Adviser’s fiduciary duty, Client understands that Adviser
has an incentive to execute transactions through Inland Securities Corporation
to generate brokerage commissions.


 


B.            Research Services.


 


In determining
what is in the Account’s best interest, Adviser will consider the available
prices and rates of brokerage commissions, and other relevant factors
including, without limitation, execution capabilities, the value of ongoing
relationships Adviser may have with various broker-dealer and research and
other services, as defined in Section 28(e)(3) of the Securities
Exchange Act of 1934.  In addition,
Adviser may receive equipment, subscriptions and reimbursement for professional
memberships from broker-dealer, and may purchase research and other services
directly from vendors, obtaining reimbursement from broker-dealer.  Adviser need not demonstrate that the
research and other services are of a direct benefit to the Account.  The 


 


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commissions paid to the
broker-dealer may exceed the amount of commissions another broker-dealer would
charge for the same transaction. Such research and other services, moreover,
may be available to Adviser on a cash basis. 
Adviser will be required to determine, in good faith, that the amount of
commissions paid is reasonable in relation to the value of the brokerage,
research and other services provided by the broker-dealer, viewed in terms of
either the particular transaction or Adviser’s overall responsibilities to all
of its clients.  The research and other
services provided may relate to a specific transaction placed with the
broker-dealer, but for the most part will consist of a wide variety of
information useful to the Account, Adviser and Adviser’s other clients.  Adviser’s ability to obtain research and
other services is an integral factor in establishing the fees charged by
Adviser under this Agreement.


 


C.                                     Execution
of Transactions by Broker-Dealer.


 


In effecting
transactions at the direction of Adviser, broker-dealer selected by Adviser may
effect similar transactions in the same Investment Account and for the accounts
of other clients of Adviser. 
Broker-dealer may bunch transaction orders and will allocate the
Investments so purchased or sold in a bunched order among the participating
accounts (including the Account) as Adviser determines to be reasonable.  Adviser may be charged a lesser per unit
commission on bunched orders than would otherwise be charged for a non-bunched
order, with the savings allocated to Client and Adviser’s other clients whose
orders are bunched.  In the case of
bunched orders, the brokerage commission paid by Client will be equal to a pro
rata portion of the entire commission charged, determined by multiplying the entire
commission by a fraction, the numerator of which is the number of shares
allocated to the Account and the denominator of which is the total number of
shares purchased or sold in the bunched transaction.


 


5.             SERVICES TO OTHERS.


 


Client
understands that Adviser performs investment advisory services for various
clients.  Adviser will allocate
investment opportunities over a period of time on a fair and equitable basis
relative to all clients.  These
allocations will be made on a basis determined by Adviser to be reasonable,
including a determination that some clients may not purchase or sell the same
Investments at the same time as others. 
Client acknowledges that Adviser and its principals, employees and
affiliates may purchase or sell Investments for their own accounts and that
Adviser shall not have any obligation to purchase or sell, or to recommend for
purchase or sale, for the Account, any Investments that Adviser, its
principals, employees or affiliates may purchase or sell for its or their own
accounts or for the account of any other client.


 


6.             PROXIES AND RELATED
MATTERS.


 


In connection
with the services to be rendered by Adviser under this Agreement, Adviser
hereby is granted the power as Client’s proxy and attorney-in-fact to vote,
tender or direct the voting or tendering of all Investments held in the Account
and to take actions on behalf of Client with respect to Investments including,
but not limited to, executing on behalf of Client, any 


 


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consent, request, direction, approval, waiver, objection, appointment
or other instrument required or permitted to be signed or executed by the
holder of Investments.


 


7.             REPRESENTATIONS AND
WARRANTIES.


 


A.            Client’s
Representations and Warranties.


 


Client hereby
represents and warrants to Adviser that: (i) Client has the requisite
legal capacity and authority to execute, deliver and to perform its obligations
under this Agreement; (ii) this Agreement has been duly authorized,
executed and delivered by Client and is the legal, valid and binding agreement
of Client, enforceable against Client in accordance with its terms; (iii) Client’s
execution of this Agreement and the performance of its obligations hereunder do
not conflict with or violate any provisions of the governing documents of
Client or any obligations by which Client is bound, whether arising by
contract, operation of law or otherwise; (iv) Client will deliver to
Adviser evidence of Client’s authority in compliance with such governing
documents upon Adviser’s request; and (v) the Client is the owner of all
cash, Investments and other assets in the Account, and there are no
restrictions on the pledge, hypothecation, transfer, sale or public
distribution of such cash, securities or assets.


 


B.            Adviser’s Representations
and Warranties.


 


Adviser hereby
represents and warrants to Client that: (i) Adviser is a corporation, duly
organized under the laws of the State of Illinois; (ii) this Agreement has
been duly authorized, executed and delivered by Client and is the legal, valid
and binding agreement of Adviser, enforceable against Adviser in accordance
with its terms; (iii) Adviser is an investment adviser registered with the
appropriate state and federal regulatory authorities pursuant to the Advisers
Act; (iv) Adviser will notify Client of any material change in Adviser’s
investment adviser registration within a reasonable time after such change; and
(v) Adviser will not engage in any principal or agency cross transactions
with respect to the Account without obtaining the prior consent of Client.


 


8.             VALUATION OF ASSETS.


 


In computing
the market value of any Investments in the Account, each Investment listed on
any exchange shall be valued at the last quoted sale price on the valuation
date on the principal exchange on which the Investment is listed or included
for quotation.  Any other Investment or
assets shall be valued in a manner determined in good faith by Adviser to
reflect its or their fair market value.


 


9.             INVESTMENT
GUIDELINES.


 


Client is
responsible for informing Adviser, in advance and in writing, of any investment
or other guidelines, objectives, restrictions, conditions, limitations or
directions applicable to, as well as any cash needs of, the Account, from time
to time (“Investment Guidelines”), and of any changes or modifications to any
such Investment Guidelines; provided, that any change or 


 


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modification to the Investment Guidelines shall become effective only
after at least fifteen (15) days’ advance notice to Adviser (unless Adviser
expressly consents to a shorter time period). 
Client must give Adviser prompt written notice if Client deems any
Investments made or actions taken on behalf of the Account to be in violation
of the Investment Guidelines.  Compliance
with the Investment Guidelines shall be determined on the date of purchase for
an Investment, based upon the price and characteristics of the Investment on
the date of purchase compared to the value of the Account as of the most recent
valuation date; the Investment Guidelines shall not be deemed breached as a
result of changes in value or status of an Investment following purchase.  Client agrees to furnish promptly, or to
cause Client’s Custodian or agent to furnish, to Adviser, all data and
information furnished to Adviser hereunder. 
Adviser shall have no responsibility with respect to the prudence of the
Investment Guidelines relative to the Client’s investment portfolio, the
overall diversification of Client’s assets or with respect to any assets of
Client other than those in the Account.


 


10.           CLIENT REPORTS AND
MEETINGS.


 


Adviser will
be responsible for ensuring that Custodian sends to Client a report, as
promptly as practical after the end of each calendar month, reflecting: (i) all
transactions for the Account during such month; (ii) the aggregate market
value of all assets for the Account on the last day of such month; and (iii) such
other information relating to the Account as reasonably agreed to by Adviser
and Client.  Adviser is not responsible
for the content of reports furnished to Client by the Custodian or any
broker-dealer for the Account.


 


Adviser will
meet with Client and such other persons as Client may designate, on reasonable
notice and at reasonable locations, as requested by Client, for the purpose of
discussing general economic conditions, portfolio performance, investment
strategy and other matters relating to the Account.


 


11.           FEES AND EXPENSES.


 


Client will
pay Adviser for the services to be rendered by Adviser under this Agreement in
accordance with the fee schedule attached hereto as Schedule A, which
may be amended by Adviser from time to time as agreed by Adviser and
Client.  All expenses relating to the
investment of the assets of the Account, including without limitation,
brokerage commissions, transfer taxes and other fees and expenses in the
purchase, sale or other disposition of such assets, shall be the sole
responsibility of Client and will be payable from the Account.


 


12.           ADVISER’S DUTY OF CARE.


 


Neither Adviser
nor any of its principals, employees or affiliates will be responsible
hereunder for any action, performed or omitted to be performed in good faith or
at the direction of Client, or for any errors in judgment in managing the
Account.  Adviser and its principals,
employees and affiliates will not be responsible for any loss incurred by
reason of any act or omission of any broker-dealer or Custodian; provided,
however, that Adviser shall make reasonable efforts to require that
broker-dealer and Custodians perform their respective obligations.  Adviser, in maintaining its records, does not
assume responsibility for the accuracy of information furnished by the Client,
Custodian or any other third-party over which Adviser 


 


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does not have control.  Except as
expressly set forth in this Agreement, Adviser shall have no discretion, duty
or responsibility whatsoever with respect to the control, management or
administration of the Account.  Nothing
herein in any way constitutes a waiver or limitation of any of the obligations
that Adviser may have under federal and state securities laws.


 


13.           CONFIDENTIAL
RELATIONSHIP.


 


Adviser agrees
not to disclose any “confidential information” provided to it by the Client. The
term “confidential information” shall not include information which:  (a) was in the public domain prior to
disclosure by publication or otherwise through no action of Adviser; (b) was
already known to Adviser; or (c) was received by Adviser through a source
other than Client which is or was not under an obligation of confidentiality to
Client.  Further, notwithstanding
anything to the contrary herein, Adviser may disclose “confidential information”
to its agents and advisors whenever Adviser determines that disclosure is
necessary or advisable to provide the services contemplated hereunder. Adviser
shall inform all parties who receive disclosure of “confidential information”
or who have access to such information of the confidentiality obligations set
forth herein, and shall inform the Client of disclosure of “confidential
information” to any party other than Adviser’s independent public accountants
or attorneys.


 


14.           TERMINATION


 


This Agreement
may be terminated by Client or Adviser at any time on thirty (30) days’ prior
written notice.  Furthermore, Client may
terminate this Agreement within five (5) business days after execution
without penalty.  Except with respect to
termination by Client during the five (5) business days after execution,
termination of this Agreement will not, in any case, affect or prevent the
consummation of any transaction initiated prior to such notice of
termination.  All fees will be prorated
to the date of termination.


 


15.           ASSIGNMENT.


 


No assignment
of this Agreement will be made by Adviser without the prior written consent of
Client.


 


16.           AMENDMENT.


 


This Agreement
may be amended from time to time with the mutual written consent of the parties
hereto.


 


17.           GOVERNANCE.


 


This Agreement
amends and is in substitution of all prior agreements, if any, between the
parties with respect to the Account. 
This Agreement will be governed by the internal laws of the State of
Illinois without regard it choice of law rules.


 


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18.           NOTICES.


 


If to Adviser:


 


Inland
Investment Advisors, Inc.

2901 Butterfield Road

Oak Brook, Illinois  60523

Telephone:  (630) 218-8000

Fax:  (630) 218-4955

Attn: Roberta S. Matlin


 


If to Client:


 


Inland
Diversified Real Estate Trust, Inc


2901
Butterfield Road


Oak Brook, IL
60523


Telephone:  (630) 218-8000


FAX:   (630) 218-4955


Attn:  Barry L. Lazarus


 


19.           RECEIPT OF FORM ADV.


 


Client
acknowledges receipt of Part II of Form ADV completed by Adviser, a
disclosure statement containing the equivalent information or the information
required by Schedule H of Form ADV if the Client is entering into a wrap
fee program sponsored by the Adviser.  If
the appropriate disclosure statement was not delivered to the Client at least
48 hours prior to the Client entering into any written or oral advisory
contract, then the Client has the right to terminate the contract without
penalty within five business days after entering into this Agreement.  For the purposes of this provision, a
contract is considered entered into when all parties to the contract have
signed the contract, or in the case of an oral contract, have otherwise
signified their acceptance, any other provisions of this contract
notwithstanding.


 


20.           SUCCESSORS.


 


This Agreement
inures to the benefit of Adviser and Client and their respective successors and
assigns and binds Client and any permitted assignees or successors in interest
with respect to all transactions, trades, dealings and actions by Adviser after
Client’s insolvency, dissolution or liquidation until such time as Client (or
its legal representatives) notifies Adviser, in the manner set forth herein, of
its intention to terminate this Agreement.


 


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IN WITNESS
WHEREOF, the parties hereof have executed this Agreement on the date first
written above.


 


	
  CLIENT:

  	
   

  	
  ADVISER:

  
	
   

  	
   

  	
   

  
	
  INLAND
  DIVERSIFIED REAL ESTATE TRUST, INC.

  	
   

  	
  INLAND
  INVESTMENT ADVISORS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  



 


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SCHEDULE A


DATED [              ]
[       ], 2009


TO INVESTMENT
ADVISORY AGREEMENT


DATED [                 ]
[      ], 2009


BETWEEN


INLAND
INVESTMENT ADVISORS, INC (“Adviser”)


AND


INLAND
DIVERSIFIED REAL ESTATE TRUST, INC. (“Client”)


 


1.                                       Fee
Schedule as of [                               ]
[                ],
2009:


 


Client shall pay, or cause to
be paid, to the Adviser a fee as remuneration for its services under this
Agreement.  The fee, shall be paid on a
monthly basis based on a per annum rate. 
The fee will be based on the amount of marketable securities under
management each month which for purposes of this agreement will be equal to the
aggregate carrying value of each marketable security at the end of the relevant
month as reported on the monthly statement or report prepared by the broker
holding the marketable securities:  The
monthly fee will be equal to:


 


(a) From $0 - $5,000,000
of marketable securities, 1 percent (1.0%) on a per annum basis


 


(b) From $5,000,001 -
$10,000,000 of marketable securities, 85 basis points (.85%) on a per annum
basis


 


(c) From $10,000,001 -
$25,000,000 of marketable securities, 75 basis points (.75%) on a per annum
basis


 


(d) From $25,000,001 -
$50,000,000 of marketable securities, 65 basis points (.65%) on a per annum
basis


 


(e) From $50,000,001 -
$100,000,000 of marketable securities, 60 basis points (.60%) on a per annum
basis


 


(5) Over $100,000,001 of
marketable securities, 50 basis points (.50%) on a per annum basis.