Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 14th day
of December, 2000, by and between INLAND REAL ESTATE CORPORATION, a Maryland
corporation (the "Company"), and Samuel A. Orticelli (the "Executive").

                                    RECITALS:

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

         B. Executive has served as the Company's General Counsel and Secretary
pursuant to an employment agreement, dated as of July 1, 2000, by and between
the Company and Executive (the "Prior Agreement") and during his employment
thereunder, Executive has demonstrated certain unique and particular talents and
abilities with regard to the Business.

         C. The Company desires to continue to assure itself of the availability
of the talents and abilities of Executive, by entering into a new employment
agreement compensating Executive at a level commensurate with compensation
provided to executives of companies similarly situated to the Company.

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

         E. The Company and Executive desire to terminate the Prior Agreement
and all pre-existing employment agreements, whether written or oral, and all
other agreements, if any, regarding Executive's employment with the Company, and
intend to have this Agreement govern instead.

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

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

                                    ARTICLE I

                                   EMPLOYMENT

         1.1 Employment.

         (a) The Company hereby employs, engages and hires Executive, and
Executive hereby accepts employment, upon the terms and conditions set forth in
this Agreement. Effective as of January 1, 2001 (the "Effective Date"),
Executive shall serve as Senior Vice

                                       1
<PAGE>   2
President, General Counsel and Secretary with duties commensurate with such
position and such other duties and responsibilities as assigned from time to
time by the Company.

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

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

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

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

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

                                   ARTICLE II

                                      TERM

         2.1 Term. The term of employment under this Agreement shall commence on
the Effective Date and shall last for a period of three (3) years (the "Initial
Term"). Such term shall automatically be renewed for successive one-year periods
thereafter unless terminated by either party by written notice not less than 30
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 and employment of Executive may be
terminated as follows:

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

         (b) By the Company immediately without Cause.

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

                                       2
<PAGE>   3
         (d) By either party upon a determination of Total Disability (as
hereinafter defined) of Executive.

         (e) Voluntarily by Executive.

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

         (g) By Executive, upon a "Change of Control " and for "Good Reason" (as
such terms are hereinafter defined) upon written notice to the Company.

         2.3 Definitions of "Cause," "Total Disability," Good Reason" 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 and as an employee of the Company; (II)
conduct that the Company reasonably believes has brought the Company into
substantial public disgrace or disrepute; (III) failure to perform his duties
hereunder as reasonably directed by the Company after providing written notice
of such failure to Executive and Executive has failed to cure such
non-performance within ten days of receiving such notice; (IV) gross negligence
or willful misconduct with respect to the Company, its clients, its employees
and its activities; or (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 such notice.

         (b) Executive shall be determined to have a "TOTAL DISABILITY" for
purposes of this Agreement if he is unable by reason of accident or illness to
substantially perform his employment duties, and is expected to be in such
condition for periods 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. Nothing herein shall limit
Executive's right to receive any payments to which Executive may be entitled
under any disability or employee benefit plan of the Company or under any
disability or insurance policy or plan. During a period of Total Disability
prior to termination hereunder, Executive shall continue to receive his full
compensation (including base salary) and benefits.

         (c) "GOOD REASON" will mean any of the following events which have not
been cured within ten (10) days following the Company's receipt of Executive's
written notice specifying the events or factors constituting such Good Reason:

         (I) the assignment to Executive of duties which constitute a material
reduction in Executive's title or authority and which is materially inconsistent
with respect to Executive's position as contemplated by this Agreement;

                                       3
<PAGE>   4
         (II) the Company requiring Executive to relocate his principal
residence to a location outside the Greater Chicago Metropolitan Area in order
to perform his duties and responsibilities hereunder;

         (III) the reduction of Executive's base salary or other compensation
and benefits during the Employment Term to less than the amount of the Base
Salary and other compensation and benefits as set forth in Section 3.1 below;
and

         (IV) a material breach by the Company of the provisions of this
Agreement.

         (d) "Change of Control" shall mean:

         (I) that the members of the Company's board of directors as of the date
of this Agreement fail to constitute a majority of the members of the board
provided, however, that any individual becoming a member of the board who is
nominated by the board shall be treated as if he or she were a member of the
board as of the date of this Agreement;

         (II) the disposition of all, or substantially all, of the assets of the
Company;

         (III) the merger or consolidation of the Company with an unaffiliated
third party and the Company is not the surviving entity of such transaction;

         (IV) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934, not affiliated with The Inland Group,
Inc., becomes a "beneficial owner," as such term is used in Rule 13d-3
promulgated under that Act, of 25% or more of the voting shares of the Company;
and

         (V) the termination and liquidation of the Company.

                                   ARTICLE III

                           COMPENSATION AND BENEFITS

         3.1 Compensation.

         (a) Base Salary. During the Initial Term, the Company shall pay
Executive a base salary of Two Hundred Thousand Dollars ($200,000) per year (the
"Base Salary"). At the expiration of the Initial Term, and again at the
expiration of each renewal of the Initial Term, the Company shall review
Executive's Base Salary to determine an appropriate Base Salary to be effective
at the beginning of the renewal of the Initial Term or any subsequent renewal.

         (b) Annual Incentive Bonus. The Company shall, in addition to
Executive's Base Salary, pay Executive an Annual Incentive Bonus which shall be
payable within 90 days of the end of each fiscal year, in accordance with the
formula set forth on Exhibit A, attached hereto and made a part hereof.

                                       4
<PAGE>   5
         (c) Initial Stock Grant. On the Effective Date, Executive shall receive
27,273 shares of common stock of the Company (the "Initial Restricted Shares"),
subject to the following restrictions and conditions:

         (I) Executive shall be record owner of the Initial Restricted Shares,
but all Initial Restricted Shares shall be held by the Company for the benefit
of Executive subject to forfeiture in the amounts and conditions provided below,
and simultaneously with issuance of such Initial Restricted Shares, Executive
shall execute and deliver a blank stock power allowing the Company to transfer
such Initial Restricted Shares in accordance with the terms and conditions set
forth below:

         (A) If, prior to the first anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the first anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 27,273
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e) prior to the first anniversary of the Effective Date;

         (B) If, prior to the second anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,454 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the second anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 21,818
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e), on any date which is on or after the first anniversary of the
Effective Date and prior to the second anniversary of the Effective Date;

         (C) If, prior to the third anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the third anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 16,364
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e) on any date which is on or after the second anniversary of the
Effective Date and prior to the third anniversary of the Effective Date;

         (D) On the third anniversary of the Effective Date should the Company
exercise its right not to renew this Agreement, as provided in Section 2.1, any
Initial Restricted Shares issued to Executive under this Agreement shall
immediately vest and shall no longer be subject to forfeiture by Executive;

         (E) If, prior to the fourth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,454 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the fourth anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of

                                       5
<PAGE>   6
10,909 Initial Restricted Shares shall be forfeited by Executive and transferred
to the Company only if the Employment Term has been terminated pursuant to
Sections 2.2(a) or (e), on any date which is on or after the third anniversary
of the Effective Date and prior to the fourth anniversary of the Effective Date;
and

         (F) If, prior to the fifth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the fifth anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 5,455 Initial
Restricted Shares shall be forfeited by Executive and transferred to the Company
only 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 and prior to the fifth anniversary of the Effective Date.

         (II) Executive may not sell, transfer, hypothecate, pledge or assign
any Initial Restricted Shares which remain subject to forfeiture pursuant to
clauses (A), (B), (C), (D), (E) or (F) immediately above.

         (III) Upon the occurrence of any forfeiture of Initial Restricted
Shares, Executive shall immediately take all actions necessary to cause the
Company to be immediately vested with full and complete ownership of such
forfeited Initial Restricted Shares.

         (IV) Prior to any forfeiture, Executive may exercise all rights of a
stockholder, including the right to vote and receive dividends.

         (V) Executive acknowledges that the Company's common stock is publicly
held and is subject to various federal and state securities laws and that the
Initial Restricted Shares are being issued pursuant to such laws and agrees that
he will comply with any and all applicable laws and regulations governing the
Initial Restricted Shares.

         (VI) If the Company 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 Initial Restricted Shares are outstanding, the
Company 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, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for
Executive, and the underwriting discounts, if any, payable in respect of the
Initial Restricted Shares sold by Executive), register all or, at Executive's
option, any portion of the Initial 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 Initial Restricted Shares requested to
be included in the registration concurrently with the securities being
registered by the Company and the securities of other holders of Company
securities would materially adversely affect the distribution of such securities
by the Company

                                       6
<PAGE>   7
for its own account, the Company will include in such registration first, the
securities that the Company 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. (d) Annual Long-Term Share Award. So long as the Employment Term
has not been terminated for any reason, on each anniversary of the Effective
Date, Executive shall receive additional shares of the common stock of the
Company ("Long Term Grant Restricted Shares"), subject to the same restrictions
as applicable to the Initial Restricted Shares, in accordance with the schedule
set forth on Exhibit B, attached hereto and made a part hereof. Notwithstanding
the restrictions applicable to the Initial Restricted Shares, twenty percent
(20%) of the Long Term Grant Restricted Shares shall vest on each successive
yearly anniversary of the date such Long Term Grant Restricted Shares were
granted to Executive. Except as provided in the immediately preceding sentence,
the Long Term Grant Restricted Shares granted pursuant to this Section 3.2(d)
shall be subject to the rights and forfeiture provisions set forth in Section
3.2(c) herein.

         3.2 Payment. Base Salary shall be payable in intervals in accordance
with the general payroll payment practice of the Company for executive level
employees; except that any payment relating to the termination of Executive
shall be paid as a lump sum payment within 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 him in connection with the
performance of his duties hereunder. The reimbursement of business expenses will
be governed by the policies for the Company.

         (b) Accounting. Executive shall provide the Company with an accounting
of his expenses, which accounting shall clearly reflect which expenses were
incurred for proper business purposes in accordance with the policies adopted by
the Company and/or its 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 the Company generally provides to its executive level
employees in accordance with its Company-sponsored benefit plans.

                                       7
<PAGE>   8
         3.5 Compensation Upon Termination. If Executive's employment hereunder
is terminated in accordance with the provisions of Article II, the Company will
be obligated to provide to Executive compensation and benefits, in lieu of any
severance under any severance plan that the Company may then have in effect, and
subject to setoff for any amounts owed by Executive to the Company or any
affiliate of the Company by reason of any contract, agreement, promissory note,
advance, failure to return Company property or loan document, as follows:

         (a) Upon Termination for Death or Total Disability. If Executive's
employment hereunder is terminated by reason of his death or Total Disability,
under Sections 2.2 (c) or (d), then within 15 days of the date of termination
the Company will provide to Executive (or his estate or beneficiaries):

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

         (ii) any compensation for unused vacation days accrued as of the
termination date in an amount equal to his 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) reimbursement for expenses incurred by him prior to the date of
termination that are subject to reimbursement pursuant to this Agreement (the
"Accrued Reimbursable Expenses");

         (iv) any accrued and vested benefits required to be provided upon death
or Total Disability by the terms of any Company-sponsored benefit plans or
programs (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) either the prorated portion of his Annual Incentive Bonus that he
received for the fiscal year prior to termination or if the termination occurs
in the first year of the Initial Term, then the prorated portion of the Annual
Incentive Bonus as if the target bonus was received for that year (the "Accrued
Bonus").

         In addition, if Executive's employment is terminated under this Section
3.5(a), any Initial Restricted Shares and 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 his employment with the Company under Sections 2.2 (a) or
(e), within 15 days of the date of such termination, the Company will:

         (i) pay Executive the Accrued Base Salary;

         (ii) pay Executive the Accrued Vacation Payment;

                                       8
<PAGE>   9
         (iii) pay Executive the Accrued Reimbursable Expenses; and

         (iv) pay Executive the Accrued 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 Initial Restricted Shares and 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 or by Executive for Good Reason under Sections 2.2 (b) or (f), the Company
will:

         (i) pay Executive the Accrued Base Salary;

         (ii) pay Executive the Accrued Vacation Payment;

         (iii) pay Executive the Accrued Reimbursable Expenses;

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

         (v) pay Executive the Accrued Bonus; and

         (vi) pay Executive 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 first
year of the Initial Term, then the Annual Incentive Bonus as if the target bonus
was received for that year); plus (C) the Annual Long-Term Share Award which was
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 Annual Long-Term Share Award as if the target share award was 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").

         In addition, if Executive's employment is terminated under this Section
3.5(c), any Initial Restricted Shares and 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 or Executive Upon a Change of Control.
If Executive's employment is terminated by Company or Executive for Good Reason
within three years of a Change of Control under Section 2.2 (g), the Company
will:

         (i) pay Executive the Accrued Base Salary;

                                       9
<PAGE>   10
         (ii) pay Executive the Accrued Vacation Payment;

         (iii) pay Executive the Accrued Reimbursable Expenses;

         (iv) pay Executive the Accrued Benefits;

         (v) pay Executive the Accrued Bonus; and

         (vi) pay Executive an amount equal to 2.99 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
was received for that year); plus (C) the Annual Long-Term Share Award which was
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 Annual Long-Term Share Award 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.

         In addition, if Executive's employment is terminated under this Section
3.5(d), any Initial Restricted Shares and 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 welfare
benefits, including health, dental and life, will be extended at Company's cost
for a period of two years or until Executive is reemployed.

         3.6 Cessation of Rights and Obligations: Survival of Certain
Provisions. On the date of expiration or earlier termination of the Employment
Term for any reason, all of the respective rights, duties, obligations and
covenants of the parties, as set forth herein, shall, except as specifically
provided herein to the contrary, cease and become of no further force or effect
as of the date of said termination, and shall only survive as expressly provided
for herein.

         3.7 Employment Agreement; Release of Claims. On the Effective Date,
this Agreement shall supersede the Prior Agreement which shall be void and of no
further effect. In consideration of the promises contained herein, and as a
natural 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 and agents 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 under the Prior
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 the
Company's Second Amended and Restated Articles of Amendment or by-laws; or (b)
to enforce this Agreement.

                                       10
<PAGE>   11
                                   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
his employment by the Company hereunder Executive has developed over time and
will acquire, develop and use information of a special and unique nature and
value that is not generally known to the public or to the Company's industry,
including but not limited to, certain records, secrets, documentation, software
programs, price lists, ledgers and general information, employee records,
mailing lists, client lists, client profiles, prospective customer or client
lists, accounts receivable and payable ledgers, financial and other records of
the Company or its 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 and 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 his duties under this Agreement, or as otherwise authorized in
writing by the Company for the benefit of the Company or any Affiliate, divulge
to any person, firm, corporation, limited liability company or organization,
other than the Company or any affiliated entity (hereinafter referred to as
"THIRD PARTIES"), or use or cause or authorize any Third Parties 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 to the Company or its Affiliates which
is in his possession or under his control relating to the Company or its
Affiliates, regardless of the medium upon which it is stored, and will deliver
to the Company upon such termination of employment any other property of the
Company or its Affiliates which is in his possession or under his 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 himself, the members of his family and the
others dependent upon him of at least the level to which he and they have become
accustomed and may expect. In addition, Executive acknowledges that the Company
and its Affiliates have obtained an

                                       11
<PAGE>   12
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 his employment hereunder and during a period of six months following the
voluntary termination of his 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 The Inland Group, Inc. ("TIGI") or an affiliate of TIGI or otherwise
on behalf of the Company as an employee thereof or such other business as may be
permitted by the Company in writing, or as set forth on Exhibit C attached
hereto and made a part hereof; (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 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 or
an Affiliate or their respective employees or operations. As used in this
Section 4.2, the term "Company" shall mean the Company or an Affiliate. As used
herein, "customer" and "prospective customer" shall include: (i) any tenant or
any other person or entity with whom the Company is negotiating for the leasing
of real property from the Company or an Affiliate at the time of the termination
of Executive's employment or during the six month period immediately prior to
such termination; or (ii) any owner of real property the purchase or sale of
which is being negotiated by the Company 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 subparagraph 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 any of
the provisions of Sections 4.1 or 4.2 would cause immediate and irreparable
harm, loss and damage to the Company or an Affiliate not adequately compensable
by a monetary award. Executive further acknowledges and agrees that the time
periods and territorial areas provided for herein are the minimum necessary to
adequately protect the business of the Company, the enjoyment of the
Confidential Information and the goodwill of the Company. Without limiting any
of the other remedies

                                       12
<PAGE>   13
available to the Company at law or in equity, or the Company's right or ability
to collect money damages, Executive agrees that any actual or threatened
violation of any of the provisions of Sections 4.1 or 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) hour 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. It is the desire of the parties that the provisions of
Sections 4.1 or 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 Sections 4.1 or 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:
(a) when delivered, if delivered personally; (b) four days after mailing, when
sent by registered or certified mail, return receipt requested and postage
prepaid; (c) one 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 his home address.

         To the Company at:         Inland Real Estate Corporation
                                    2901 Butterfield Road
                                    Oak Brook, Illinois 60523
                                    Attn: Norm Treonis

         With a copy to:            Shefsky & Froelich Ltd.
                                    444 North Michigan Avenue
                                    Suite 2500
                                    Chicago, Illinois 60611
                                    Attn: Michael J. Choate
                                    Telephone: (312) 836-4066
                                    Facsimile: (312) 527-5921

                                       13
<PAGE>   14
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 and its current or future 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 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.

                                       14
<PAGE>   15
         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.

                                        INLAND REAL ESTATE CORPORATION,
                                        a Maryland corporation

                                        By: /s/ Norbert Treonis
                                           -------------------------------------
                                        Name:     Norbert Treonis
                                        Its:      President

                                        EXECUTIVE

                                        /s/ Samuel A. Orticelli
                                        ----------------------------------------
                                        SAMUEL A. ORTICELLI

                                       15
<PAGE>   16
                                   EXHIBIT A
                        (formula for determining Annual
                                Incentive Bonus)

I.   The Executive's Annual Incentive Bonus Opportunity ("AIBO") shall be
     determined based on performance of the Company, measured to either a
     Threshold, Target, or High level of performance.

          -    The Company will have achieved a Threshold level of performance
               if the Company's growth in FFO per share during the year for
               which the bonus is calculated is not less than 70% of the median
               FFO growth rate for the applicable year as published by NAREIT
               for the Retail Property Sector.

          -    The Company will have achieved a Target level of performance if
               the Company's growth in FFO per share during the year for which
               the bonus is calculated is not less than 100% of the median FFO
               growth rate for the applicable year as published by NAREIT for
               the Retail Property Sector.

          -    The Company will have achieved a High level of performance if the
               Company's growth in FFO per share during the year for which the
               bonus is calculated is not less than 130% of the median FFO
               growth rate for the applicable year as published by NAREIT for
               the Retail Property Sector.

     If the Company achieves a Threshold level of performance, the Executive's
     AIBO will be equal to 20% of Executive's Base Salary for the applicable
     year. If the Company achieves a Target level of performance, the
     Executive's AIBO will be equal to 30% of Executive's Base Salary for the
     applicable year. If the Company achieves a High level of performance, the
     Executive's AIBO will be equal to 60% of Executive's Base Salary for the
     applicable year.

II.  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 80% of the Executive's AIBO.

          B.   The second component shall be determined by the Company's CEO
               based on a subjective assessment of the Executive's performance,
               and may be up to but not in excess of 20% of the Executive's
               AIBO.

                                       16
<PAGE>   17
                                   EXHIBIT B
                    (formula for determining Annual Award of
                       Long Term Grant Restricted Shares)

 I.  The Executive's Annual Award of Long Term Grant Restricted Shares shall be
     determined based on performance of the Company, measured to either a
     Threshold, Target, or High level of performance.

          -    The Company will have achieved a Threshold level of performance
               if the Company's growth in FFO per share during the year for
               which the grant of Long Term Grant Restricted Shares is
               calculated is not less than 70% of the median FFO growth rate for
               the applicable year as published by NAREIT for the Retail
               Property Sector.

          -    The Company will have achieved a Target level of performance if
               the Company's growth in FFO per share during the year for which
               the grant of Long Term Grant Restricted Shares is calculated is
               not less than 100% of the median FFO growth rate for the
               applicable year as published by NAREIT for the Retail Property
               Sector.

          -    The Company will have achieved a High level of performance if the
               Company's growth in FFO per share during the year for which the
               grant of Long Term Grant Restricted Shares is calculated is not
               less than 130% of the median FFO growth rate for the applicable
               year as published by NAREIT for the Retail Property Sector.

     If the Company achieves a Threshold level of performance, the Executive's
     award of Long Term Grant Restricted Shares will be 4545.45 shares. If the
     Company achieves a Target level of performance, the Executive's award of
     Long Term Grant Restricted Shares will be 9090.91 shares. If the Company
     achieves a High level of performance, the Executive's award of Long Term
     Grant Restricted Shares will be 18,181.82 shares.

                                       17
<PAGE>   18

                                   EXHIBIT C
                        to Employment Agreement between
             Inland Real Estate Corporation and Samuel A. Orticelli

                                  Affiliations

     Inland Retail Real Estate Trust, Inc.           Secretary

                                  Investments

     Mid-America Management Corp.                    Shareholder
     Midwest Real Estate Equities, Inc.              Shareholder<PAGE>   1
                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 14th day
of December, 2000, by and between INLAND REAL ESTATE CORPORATION, a Maryland
corporation (the "Company"), and Mark Zalatoris (the "Executive").

                                    RECITALS:

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

         B. Executive has served as the Company's Chief Financial Officer and
Treasurer pursuant to an employment agreement, dated as of July 1, 2000, by and
between the Company and Executive (the "Prior Agreement") and during his
employment thereunder, Executive has demonstrated certain unique and particular
talents and abilities with regard to the Business.

         C. The Company desires to continue to assure itself of the availability
of the talents and abilities of Executive, by entering into a new employment
agreement compensating Executive at a level commensurate with compensation
provided to executives of companies similarly situated to the Company.

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

         E. The Company and Executive desire to terminate the Prior Agreement
and all pre-existing employment agreements, whether written or oral, and all
other agreements, if any, regarding Executive's employment with the Company, and
intend to have this Agreement govern instead.

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

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

                                    ARTICLE I

                                   EMPLOYMENT

         1.1 Employment.

         (a) The Company hereby employs, engages and hires Executive, and
Executive hereby accepts employment, upon the terms and conditions set forth in
this Agreement. Effective as of

                                       1
<PAGE>   2

January 1, 2001 (the "Effective Date"), Executive shall serve as Senior Vice
President, Chief Financial Officer and Treasurer, with duties commensurate with
such position and such other duties and responsibilities as assigned from time
to time by the Company. (b) In addition, Executive shall provide advice,
consultation and services to any other entities which control, are controlled by
or are under common control with the Company now or in the future (together
"Affiliates"), as may be requested by the Company.

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

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

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

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

                                   ARTICLE II

                                      TERM

         2.1 Term. The term of employment under this Agreement shall commence on
the Effective Date and shall last for a period of three (3) years (the "Initial
Term"). Such term shall automatically be renewed for successive one-year periods
thereafter unless terminated by either party by written notice not less than 30
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 and employment of Executive may be
terminated as follows:

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

         (b) By the Company immediately without Cause.

                                       2
<PAGE>   3

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

         (g) By Executive, upon a "Change of Control" and for "Good Reason" (as
such terms are hereinafter defined) upon written notice to the Company.

         2.3 Definitions of "Cause," "Total Disability," Good Reason" 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 and as an employee of the Company; (II)
conduct that the Company reasonably believes has brought the Company into
substantial public disgrace or disrepute; (III) failure to perform his duties
hereunder as reasonably directed by the Company after providing written notice
of such failure to Executive and Executive has failed to cure such
non-performance within ten days of receiving such notice; (IV) gross negligence
or willful misconduct with respect to the Company, its clients, its employees
and its activities; or (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 such notice.

         (b) Executive shall be determined to have a "TOTAL DISABILITY" for
purposes of this Agreement if he is unable by reason of accident or illness to
substantially perform his employment duties, and is expected to be in such
condition for periods 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. Nothing herein shall limit
Executive's right to receive any payments to which Executive may be entitled
under any disability or employee benefit plan of the Company or under any
disability or insurance policy or plan. During a period of Total Disability
prior to termination hereunder, Executive shall continue to receive his full
compensation (including base salary) and benefits.

         (c) "GOOD REASON" will mean any of the following events which have not
been cured within ten (10) days following the Company's receipt of Executive's
written notice specifying the events or factors constituting such Good Reason:

                                       3
<PAGE>   4

         (I) the assignment to Executive of duties which constitute a material
reduction in Executive's title or authority and which is materially inconsistent
with respect to Executive's position as contemplated by this Agreement;

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

         (III) the reduction of Executive's base salary or other compensation
and benefits during the Employment Term to less than the amount of the Base
Salary and other compensation and benefits as set forth in Section 3.1 below;
and

         (IV) a material breach by the Company of the provisions of this
Agreement.

         (d) "CHANGE OF CONTROL" shall mean:

         (I) that the members of the Company's board of directors as of the date
of this Agreement fail to constitute a majority of the members of the board
provided, however, that any individual becoming a member of the board who is
nominated by the board shall be treated as if he or she were a member of the
board as of the date of this Agreement;

         (II) the disposition of all, or substantially all, of the assets of the
Company;

         (III) the merger or consolidation of the Company with an unaffiliated
third party and the Company is not the surviving entity of such transaction;

         (IV) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934, not affiliated with The Inland Group,
Inc., becomes a "beneficial owner," as such term is used in Rule 13d-3
promulgated under that Act, of 25% or more of the voting shares of the Company;
and

         (V) the termination and liquidation of the Company.

                                   ARTICLE III

                            COMPENSATION AND BENEFITS

         3.1 Compensation.

         (a) Base Salary. During the Initial Term, the Company shall pay
Executive a base salary of Two Hundred Thousand Dollars ($200,000) per year (the
"Base Salary"). At the expiration of the Initial Term, and again at the
expiration of each renewal of the Initial Term, the

                                       4
<PAGE>   5

Company shall review Executive's Base Salary to determine an appropriate Base
Salary to be effective at the beginning of the renewal of the Initial Term or
any subsequent renewal.

         (b) Annual Incentive Bonus. The Company shall, in addition to
Executive's Base Salary, pay Executive an Annual Incentive Bonus which shall be
payable within 90 days of the end of each fiscal year, in accordance with the
formula set forth on Exhibit A, attached hereto and made a part hereof.

         (c) Initial Stock Grant. On the Effective Date, Executive shall receive
27,273 shares of common stock of the Company (the "Initial Restricted Shares"),
subject to the following restrictions and conditions:

         (I) Executive shall be record owner of the Initial Restricted Shares,
but all Initial Restricted Shares shall be held by the Company for the benefit
of Executive subject to forfeiture in the amounts and conditions provided below,
and simultaneously with issuance of such Initial Restricted Shares, Executive
shall execute and deliver a blank stock power allowing the Company to transfer
such Initial Restricted Shares in accordance with the terms and conditions set
forth below:

         (A) If, prior to the first anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the first anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 27,273
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e) prior to the first anniversary of the Effective Date;

         (B) If, prior to the second anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,454 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the second anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 21,818
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e), on any date which is on or after the first anniversary of the
Effective Date and prior to the second anniversary of the Effective Date;

         (C) If, prior to the third anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the third anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 16,364
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e) on any date which is on or after the second anniversary of the
Effective Date and prior to the third anniversary of the Effective Date;

                                       5
<PAGE>   6

         (D) On the third anniversary of the Effective Date should the Company
exercise its right not to renew this Agreement, as provided in Section 2.1, any
Initial Restricted Shares issued to Executive under this Agreement shall
immediately vest and shall no longer be subject to forfeiture by Executive;

         (E) If, prior to the fourth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,454 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the fourth anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 10,909
Initial Restricted Shares shall be forfeited by Executive and transferred to the
Company only if the Employment Term has been terminated pursuant to Sections
2.2(a) or (e), on any date which is on or after the third anniversary of the
Effective Date and prior to the fourth anniversary of the Effective Date; and

         (F) If, prior to the fifth anniversary of the Effective Date, the
Employment Term has not been terminated pursuant to Sections 2.2(a) or (e),
5,455 of the Initial Restricted Shares then being held by the Company shall be
released to Executive on the fifth anniversary of the Effective Date and shall
no longer be subject to forfeiture by Executive, but the amount of 5,455 Initial
Restricted Shares shall be forfeited by Executive and transferred to the Company
only 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 and prior to the fifth anniversary of the Effective Date.

         (II) Executive may not sell, transfer, hypothecate, pledge or assign
any Initial Restricted Shares which remain subject to forfeiture pursuant to
clauses (A), (B), (C), (D), (E) or (F) immediately above.

         (III) Upon the occurrence of any forfeiture of Initial Restricted
Shares, Executive shall immediately take all actions necessary to cause the
Company to be immediately vested with full and complete ownership of such
forfeited Initial Restricted Shares.

         (IV) Prior to any forfeiture, Executive may exercise all rights of a
stockholder, including the right to vote and receive dividends.

         (V) Executive acknowledges that the Company's common stock is publicly
held and is subject to various federal and state securities laws and that the
Initial Restricted Shares are being issued pursuant to such laws and agrees that
he will comply with any and all applicable laws and regulations governing the
Initial Restricted Shares.

         (VI) If the Company 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 Initial Restricted Shares are outstanding, the
Company 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, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for
Executive, and the underwriting discounts,

                                       6
<PAGE>   7

if any, payable in respect of the Initial Restricted Shares sold by Executive),
register all or, at Executive's option, any portion of the Initial 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 Initial
Restricted Shares requested to be included in the registration concurrently with
the securities being registered by the Company and the securities of other
holders of Company securities would materially adversely affect the distribution
of such securities by the Company for its own account, the Company will include
in such registration first, the securities that the Company 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.

         (d) Annual Long-Term Share Award. So long as the Employment Term has
not been terminated for any reason, on each anniversary of the Effective Date,
Executive shall receive additional shares of the common stock of the Company
("Long Term Grant Restricted Shares"), subject to the same restrictions as
applicable to the Initial Restricted Shares, in accordance with the schedule set
forth on Exhibit B, attached hereto and made a part hereof. Notwithstanding the
restrictions applicable to the Initial Restricted Shares, twenty percent (20%)
of the Long Term Grant Restricted Shares shall vest on each successive yearly
anniversary of the date such Long Term Grant Restricted Shares were granted to
Executive. Except as provided in the immediately preceding sentence, the Long
Term Grant Restricted Shares granted pursuant to this Section 3.2(d) shall be
subject to the rights and forfeiture provisions set forth in Section 3.2(c)
herein.

         3.2 Payment. Base Salary shall be payable in intervals in accordance
with the general payroll payment practice of the Company for executive level
employees; except that any payment relating to the termination of Executive
shall be paid as a lump sum payment within 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 him in connection with the
performance of his duties hereunder. The reimbursement of business expenses will
be governed by the policies for the Company.

         (b) Accounting. Executive shall provide the Company with an accounting
of his expenses, which accounting shall clearly reflect which expenses were
incurred for proper business purposes in accordance with the policies adopted by
the Company and/or its 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

                                       7
<PAGE>   8

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 the Company generally provides to its executive level
employees in accordance with its Company-sponsored benefit plans.

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

         (a) Upon Termination for Death or Total Disability. If Executive's
employment hereunder is terminated by reason of his death or Total Disability,
under Sections 2.2 (c) or (d), then within 15 days of the date of termination
the Company will provide to Executive (or his estate or beneficiaries):

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

         (ii) any compensation for unused vacation days accrued as of the
termination date in an amount equal to his 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) reimbursement for expenses incurred by him prior to the date of
termination that are subject to reimbursement pursuant to this Agreement (the
"Accrued Reimbursable Expenses");

         (iv) any accrued and vested benefits required to be provided upon death
or Total Disability by the terms of any Company-sponsored benefit plans or
programs (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) either the prorated portion of his Annual Incentive Bonus that he
received for the fiscal year prior to termination or if the termination occurs
in the first year of the Initial Term, then the prorated portion of the Annual
Incentive Bonus as if the target bonus was received for that year (the "Accrued
Bonus").

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

                                       8
<PAGE>   9

         (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 his employment with the Company under Sections 2.2 (a) or
(e), within 15 days of the date of such termination, the Company will:

         (i) pay Executive the Accrued Base Salary;

         (ii) pay Executive the Accrued Vacation Payment;

         (iii) pay Executive the Accrued Reimbursable Expenses; and

         (iv) pay Executive the Accrued 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 Initial Restricted Shares and 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 or by Executive for Good Reason under Sections 2.2 (b) or (f), the Company
will:

         (i) pay Executive the Accrued Base Salary;

         (ii) pay Executive the Accrued Vacation Payment;

         (iii) pay Executive the Accrued Reimbursable Expenses;

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

         (v) pay Executive the Accrued Bonus; and

         (vi) pay Executive 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 first
year of the Initial Term, then the Annual Incentive Bonus as if the target bonus
was received for that year); plus (C) the Annual Long-Term Share Award which was
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 Annual Long-Term Share Award as if the target share award was 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").

                                       9
<PAGE>   10

         In addition, if Executive's employment is terminated under this Section
3.5(c), any Initial Restricted Shares and 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 or Executive Upon a Change of Control.
If Executive's employment is terminated by Company or Executive for Good Reason
within three years of a Change of Control under Section 2.2 (g), the Company
will:

         (i) pay Executive the Accrued Base Salary;

         (ii) pay Executive the Accrued Vacation Payment;

         (iii) pay Executive the Accrued Reimbursable Expenses;

         (iv) pay Executive the Accrued Benefits;

         (v) pay Executive the Accrued Bonus; and

         (vi) pay Executive an amount equal to 2.99 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
was received for that year); plus (C) the Annual Long-Term Share Award which was
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 Annual Long-Term Share Award 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.

         In addition, if Executive's employment is terminated under this Section
3.5(d), any Initial Restricted Shares and 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 welfare
benefits, including health, dental and life, will be extended at Company's cost
for a period of two years or until Executive is reemployed.

         3.6 Cessation of Rights and Obligations: Survival of Certain
Provisions. On the date of expiration or earlier termination of the Employment
Term for any reason, all of the respective rights, duties, obligations and
covenants of the parties, as set forth herein, shall, except as specifically
provided herein to the contrary, cease and become of no further force or effect
as of the date of said termination, and shall only survive as expressly provided
for herein.

         3.7 Employment Agreement; Release of Claims. On the Effective Date,
this Agreement shall supersede the Prior Agreement which shall be void and of no
further effect. In consideration of the promises contained herein, and as a
natural inducement to the Company to enter into this Agreement, Executive hereby
releases and forever discharges the Company and its officers,

                                       10
<PAGE>   11

directors, employees, investors, shareholders, affiliates and agents 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 under
the Prior 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 the
Company's Second Amended and Restated Articles of Amendment or by-laws; or (b)
to enforce this Agreement.

                                       11
<PAGE>   12

                                   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
his employment by the Company hereunder Executive has developed over time and
will acquire, develop and use information of a special and unique nature and
value that is not generally known to the public or to the Company's industry,
including but not limited to, certain records, secrets, documentation, software
programs, price lists, ledgers and general information, employee records,
mailing lists, client lists, client profiles, prospective customer or client
lists, accounts receivable and payable ledgers, financial and other records of
the Company or its 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 and 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 his duties under this Agreement, or as otherwise authorized in
writing by the Company for the benefit of the Company or any Affiliate, divulge
to any person, firm, corporation, limited liability company or organization,
other than the Company or any affiliated entity (hereinafter referred to as
"THIRD PARTIES"), or use or cause or authorize any Third Parties 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 to the Company or its Affiliates which
is in his possession or under his control relating to the Company or its
Affiliates, regardless of the medium upon which it is stored, and will deliver
to the Company upon such termination of employment any other property of the
Company or its Affiliates which is in his possession or under his 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 himself, the members of his family and the
others dependent upon him of at least the level to which he and they have become
accustomed and may expect. In addition,

                                       12
<PAGE>   13
Executive acknowledges that the Company and its 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 his employment hereunder and during a period of six months following the
voluntary termination of his 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 The Inland Group, Inc. ("TIGI") or an affiliate of TIGI or otherwise
on behalf of the Company as an employee thereof or such other business as may be
permitted by the Company in writing, or as set forth on Exhibit C attached
hereto and made a part hereof; (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 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 or
an Affiliate or their respective employees or operations. As used in this
Section 4.2, the term "Company" shall mean the Company or an Affiliate. As used
herein, "customer" and "prospective customer" shall include: (i) any tenant or
any other person or entity with whom the Company is negotiating for the leasing
of real property from the Company or an Affiliate at the time of the termination
of Executive's employment or during the six month period immediately prior to
such termination; or (ii) any owner of real property the purchase or sale of
which is being negotiated by the Company 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 subparagraph 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 any of
the provisions of Sections 4.1 or 4.2 would cause immediate and irreparable
harm, loss and damage to the Company or an Affiliate not adequately compensable
by a monetary award. Executive further acknowledges and agrees that the time
periods and territorial areas provided for herein are the minimum necessary to
adequately protect the business of the Company, the enjoyment of the
Confidential Information

                                       13
<PAGE>   14

and the goodwill of the Company. Without limiting any of the other remedies
available to the Company at law or in equity, or the Company's right or ability
to collect money damages, Executive agrees that any actual or threatened
violation of any of the provisions of Sections 4.1 or 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) hour 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. It is the desire of the parties that the provisions of
Sections 4.1 or 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 Sections 4.1 or 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:
(a) when delivered, if delivered personally; (b) four days after mailing, when
sent by registered or certified mail, return receipt requested and postage
prepaid; (c) one 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 his home address.

         To the Company at:    Inland Real Estate Corporation
                               2901 Butterfield Road
                               Oak Brook, Illinois 60523
                               Attn: Samuel A. Orticelli, Esq.

         With a copy to:       Shefsky & Froelich Ltd.
                               444 North Michigan Avenue
                               Suite 2500
                               Chicago, Illinois 60611
                               Attn: Michael J. Choate
                               Telephone: (312) 836-4066
                               Facsimile: (312) 527-5921

                                       14
<PAGE>   15

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 and its current or future 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 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

                                       15
<PAGE>   16

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.

                                        INLAND REAL ESTATE CORPORATION,
                                        a Maryland corporation

                                        By:       /s/ Norbert Treonis
                                                  ------------------------------
                                        Name:     Norbert Treonis
                                        Its:      President

                                        EXECUTIVE

                                        /s/ Mark Zalatoris
                                        ----------------------------------------
                                        MARK ZALATORIS

                                       16
<PAGE>   17
                                    EXHIBIT A
                         (formula for determining Annual
                                Incentive Bonus)

 I.  The Executive's Annual Incentive Bonus Opportunity ("AIBO") shall be
     determined based on performance of the Company, measured to either a
     Threshold, Target, or High level of performance.

          -    The Company will have achieved a Threshold level of performance
               if the Company's growth in FFO per share during the year for
               which the bonus is calculated is not less than 70% of the median
               FFO growth rate for the applicable year as published by NAREIT
               for the Retail Property Sector.

          -    The Company will have achieved a Target level of performance if
               the Company's growth in FFO per share during the year for which
               the bonus is calculated is not less than 100% of the median FFO
               growth rate for the applicable year as published by NAREIT for
               the Retail Property Sector.

          -    The Company will have achieved a High level of performance if the
               Company's growth in FFO per share during the year for which the
               bonus is calculated is not less than 130% of the median FFO
               growth rate for the applicable year as published by NAREIT for
               the Retail Property Sector.

     If the Company achieves a Threshold level of performance, the Executive's
     AIBO will be equal to 20% of Executive's Base Salary for the applicable
     year. If the Company achieves a Target level of performance, the
     Executive's AIBO will be equal to 30% of Executive's Base Salary for the
     applicable year. If the Company achieves a High level of performance, the
     Executive's AIBO will be equal to 60% of Executive's Base Salary for the
     applicable year.

II.  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 80% of the Executive's AIBO.

          B. The second component shall be determined by the Company's CEO based
             on a subjective assessment of the Executive's performance, and may
             be up to but not in excess of 20% of the Executive's AIBO.

                                       17

<PAGE>   18
                                    EXHIBIT B
                    (formula for determining Annual Award of
                       Long Term Grant Restricted Shares)

 I.  The Executive's Annual Award of Long Term Grant Restricted Shares shall be
     determined based on performance of the Company, measured to either a
     Threshold, Target, or High level of performance.

          -    The Company will have achieved a Threshold level of performance
               if the Company's growth in FFO per share during the year for
               which the grant of Long Term Grant Restricted Shares is
               calculated is not less than 70% of the median FFO growth rate for
               the applicable year as published by NAREIT for the Retail
               Property Sector.

          -    The Company will have achieved a Target level of performance if
               the Company's growth in FFO per share during the year for which
               the grant of Long Term Grant Restricted Shares is calculated is
               not less than 100% of the median FFO growth rate for the
               applicable year as published by NAREIT for the Retail Property
               Sector.

          -    The Company will have achieved a High level of performance if the
               Company's growth in FFO per share during the year for which the
               grant of Long Term Grant Restricted Shares is calculated is not
               less than 130% of the median FFO growth rate for the applicable
               year as published by NAREIT for the Retail Property Sector.

     If the Company achieves a Threshold level of performance, the Executive's
     award of Long Term Grant Restricted Shares will be 4545.45 shares. If the
     Company achieves a Target level of performance, the Executive's award of
     Long Term Grant Restricted Shares will be 9090.91 shares. If the Company
     achieves a High level of performance, the Executive's award of Long Term
     Grant Restricted Shares will be 18,181.82 shares.

                                       18
<PAGE>   19
                                    EXHIBIT C
                         to Employment Agreement between
                Inland Real Estate Corporation and Mark Zalatoris

                                  Affiliations

<TABLE>
<S>                                                        <C>
IGL Real Estate, Inc.                                                                  Director
Inland Real Estate Investment Corporation                                        Vice President
Partnership Ownership Corporation                                           President, Director
Inland Securities Corporation                               Vice President, Secretary, Director
PCGPI Corporation                                                                      Director
Intervest Southern Real Estate Corporation                              Director/Vice President
</TABLE>

                         Investments/Financial Interests

     2000 Shares               Prime Retail Trust, Inc.
       30 Shares               Mid America Management Corp.
          Shares               Midwest Real Estate Equities, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]