Document:

EXHIBIT 4.2

 

SHARE REPURCHASE
PROGRAM

 

The Board of Directors (the “Board”)
of Inland Diversified Real Estate Trust, Inc., a Maryland corporation (the
“Company”), has adopted this Share Repurchase Program (this “Repurchase
Program”) to permit and authorize the Company to repurchase shares of its
common stock, par value $0.001 per share (the “Shares”), from its
stockholders, in all cases subject to the terms, conditions and limitations set
forth herein.  The terms on which the
Company may repurchase Shares may differ between repurchases upon the death of
a stockholder (“Exceptional Repurchases”) and all other repurchases (“Ordinary
Repurchases”).  The effective date of
this Repurchase Program is [                      ],
2009.

 

1.             Repurchase
Price.

 

(a)           In the case of Ordinary Repurchases, the Company is
authorized to repurchase Shares from its stockholders at the following prices
per Share:

 

(i)            if the Shares are beneficially owned by the
requesting stockholder continuously for at least one (1) year, but less
than five (5) years, the repurchase price shall be equal to $9.00 per
Share; or

 

(ii)           if the Shares are beneficially owned by the
requesting stockholder continuously for at least five (5) years, the
repurchase price shall be equal to $9.50 per Share.

 

(b)           In the case of Exceptional Repurchases, the Company
is authorized to repurchase Shares at the following prices per Share:

 

(i)            if the Shares were beneficially owned by the
deceased stockholder continuously for less than five (5) years, the
repurchase price shall be equal to $9.00 per Share; or

 

(ii)           if the Shares are beneficially owned by the deceased
stockholder continuously for at least five (5) years, the repurchase price
shall be equal to $9.50 per Share.

 

(c)           Notwithstanding Sections 1(a) and 1(b) above,
during periods when the Company is engaged in a public offering of its Shares,
the repurchase price per Share under this Repurchase Program shall be less than
the per share price of the Shares offered in the public offering.  In the event that the Board or the Company’s
business manager makes a future determination regarding the estimated value of
the Shares, the Board, in its sole discretion, may change the per Share
repurchase prices set forth in Sections 1(a) and 1(b) above.  The Company shall report any new repurchase
prices in the annual report and the three quarterly reports that it publicly
files with the Securities and Exchange Commission.

 

 

2.             Terms for
Ordinary Repurchases.

 

(a)           General. The Company may repurchase
Shares, including fractional Shares, that have been beneficially owned by a
stockholder of the Company continuously for at least one (1) year (the “Holding
Period”).  A stockholder may elect to
participate in the Repurchase Program with respect to all or a designated
portion of that stockholder’s Shares.  In
the event that a stockholder is requesting the repurchase of all of his, her or
its Shares, the Company may waive the Holding Period for Shares purchased under
the Company’s Distribution Reinvestment Plan, as may be amended from time to
time (the “DRP”).

 

(b)           Funding.  In the case of Ordinary Repurchases, the
Company is authorized, for the purpose of repurchasing Shares under this
Repurchase Program in a particular calendar month, to use solely the proceeds
from the DRP during that particular month (the “Ordinary Funds”).  Notwithstanding anything to the contrary
herein, if, during any calendar month, the aggregate amount of Ordinary Funds
exceeds the aggregate amount needed to repurchase all Shares for which Ordinary
Repurchase Requests have been received by the Company, the Company may, but
shall not be obligated to, carry over the excess amount of Ordinary Funds to a
subsequent calendar month(s) for use in addition to the amount of Ordinary
Funds otherwise available for Ordinary Repurchases during that subsequent
calendar month(s).

 

(c)           Repurchase Limitations.  Notwithstanding anything to the contrary
herein, and excluding any Shares repurchased as Exceptional Repurchases, the
Company may not at any time repurchase a number of Shares that exceeds three
percent (3.0%) of the number of Shares outstanding on December 31 of the
last calendar year (the “3% Limit”). 
Further, in any given calendar month, funds used for the purpose of
Ordinary Repurchases may not exceed the Ordinary Funds, including any excess
amount carried over pursuant to Section 2(b) above (the “Funding
Limit” and, together with the 3% Limit, the “Repurchase Limitations”).

 

(d)           Pro Rata Repurchase.  The Company cannot guarantee that it will be
able to repurchase all Shares for which Ordinary Repurchase requests are
received.  In any calendar month, if the
Company determines not to repurchase all Shares presented for repurchase during
that month, including as a result of the Company having satisfied the
Repurchase Limitations, the Company shall, to the extent it decides to make
Ordinary Repurchases, repurchase Shares on a pro
rata basis up to, but not in excess of, the Repurchase
Limitations.  Any stockholder whose
Ordinary Repurchase request has been partially accepted by the Company in a
particular calendar month shall have the remainder of his, her or its request
included with all new Ordinary Repurchase requests received by the Company in
the immediately following calendar month. 
In the event a stockholder wishes to withdraw his, her or its repurchase
request in the following calendar month, he, she or it may provide the Company
with a written request of withdrawal pursuant to Section 4(c).

 

2

 

3.             Terms for
Exceptional Repurchases.

 

(a)           General. The Company may repurchase
Shares, including fractional Shares, upon the death of a stockholder who is a
natural person, including Shares held by the stockholder through a trust, or an
IRA or other retirement or profit-sharing plan, after receiving a written
request pursuant to Section 4(a) from (i) the estate of
the stockholder, (ii) the recipient of the Shares through bequest or
inheritance, even where the recipient has registered the Shares in his or her
own name or (iii) in the case of the death of a settlor of a trust, the
beneficiary of the trust, even where the beneficiary has registered the Shares
in his or her own name.  The Company
must, however, receive the written request within one year after the death of
the stockholder.  Any request not
received within the one-year period will not be eligible to be treated as an
Exceptional Repurchase, but instead will be treated as an Ordinary
Repurchase.  If spouses are joint
registered holders of Shares, the request to repurchase the Shares may be made
if either of the registered holders dies. 
If the stockholder is not a natural person, such as a partnership,
corporation or other similar entity, the right to an Exceptional Repurchase
upon death does not apply.

 

(b)           Funding.  In the case of Exceptional Repurchases, the
Company is authorized, for the purpose of repurchasing Shares under this
Repurchase Program, to use any funds that the Board in its sole discretion may
designate for this purpose.

 

(c)           No Repurchase Limitations.  The 3% Limit will not apply to Exceptional
Repurchases.

 

4.             General Terms
of Repurchase.

 

(a)           Repurchase Requests.  A stockholder, or, in the case of Exceptional
Repurchases, his or her estate, heir or beneficiary, may request that the
Company repurchase the stockholder’s Shares by submitting a repurchase request,
in the form provided by the Company, to the Company’s transfer agent, DST
Systems, Inc. (“DST”), at the address provided on the form.  The repurchase request must state the name of
the person/entity who beneficially owns the Shares and the number of Shares
requested to be repurchased.  To be
effective in a particular calendar month, DST must receive a repurchase request
at least five (5) days prior to the Repurchase Date (as defined
herein).  No repurchase request shall be
given preference over any other repurchase request.

 

(b)           No Encumbrances.  All Shares requested to be repurchased under
this Repurchase Program must be (i) beneficially owned by the stockholder(s) of
record making the presentment, or the party presenting the Shares must be
authorized to do so by the owner(s) of record of the Shares, and (ii) fully
transferable and not be subject to any liens or other encumbrances.  In certain cases, the Company may ask the
requesting stockholder, or, in the case of Exceptional Repurchases, his or her
estate, heir or beneficiary, to provide evidence satisfactory to the Company,
in its sole discretion, that the Shares requested for repurchase are free from
liens and other encumbrances.  If the
Company determines that a lien or other encumbrance exists against the Shares,
the Company shall have no obligation to repurchase, and shall not repurchase,
any of the Shares subject to the lien or other encumbrance.

 

3

 

(c)           Time of Repurchase.  The Company shall make repurchases of Shares
under this Repurchase Program on or about the last business day of each
calendar month or any other business day that may be established by the Board
(the “Repurchase Date”).  As soon as
reasonably practicable following the date of each monthly repurchase hereunder,
the Company shall send to the applicable stockholder, or, in the case of
Exceptional Repurchases, his or her estate, heir or beneficiary, all cash
proceeds resulting from the repurchase of his or her Shares.

 

(d)           Withdrawal of Repurchase Request.  In the event a stockholder, or, in the case
of Exceptional Repurchases, his or her estate, heir or beneficiary, wishes to
withdraw his, her or its repurchase request to have Shares repurchased under
this Repurchase Program, he, she or it shall provide the Company with a written
request of withdrawal.  The Company will
not repurchase Shares so long as the Company receives the written request of withdrawal
at least five (5) days prior to the Repurchase Date.

 

(e)           Ineffective Withdrawal.  In the event the Company receives a written
notice of withdrawal, as described in Section 4(d), from a
stockholder, or, in the case of Exceptional Repurchases, his or her estate,
heir or beneficiary, less than five (5) days prior to the Repurchase Date,
the notice of withdrawal shall not be effective with respect to the Shares
repurchased, but shall be effective with respect to any of the Shares not
repurchased.  The Company shall provide
the stockholder, or, in the case of Exceptional Repurchases, his or her estate,
heir or beneficiary, with prompt written notice of the ineffectiveness or
partial ineffectiveness of the written notice of withdrawal.

 

5.             Treatment of Repurchased Shares.  All Shares repurchased by the Company
pursuant to this Repurchase Program shall be cancelled and shall have the
status of authorized but unissued shares. 
The Company shall not reissue any Shares repurchased by it pursuant to
this Repurchase Program unless those Shares are first registered with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, and under appropriate state securities laws or otherwise issued in
compliance with these laws.

 

6.             Termination of
Repurchase Program.  This
Repurchase Program shall be suspended or terminated, as the case may be, and
the Company shall not accept Shares for repurchase upon the occurrence of any
of the following:

 

(a)           This Repurchase Program shall immediately terminate,
without further action by the Board or any notice to the Company’s
stockholders, in the event the Shares are listed on any national securities
exchange.

 

(b)           This Repurchase Program may be suspended (in whole
or in part) or terminated at any time by the Board, in its sole discretion,
without prior notice to the Company’s stockholders.

 

7.             Amendment; Rejection of
Requests. 
Notwithstanding anything to the contrary herein, this Repurchase Program
may be amended, in whole or in part, by the Board, in its sole discretion, at
any time or from time to time, without prior notice to the Company’s
stockholders.  

 

4

 

Further, the Board reserves the right in its
sole discretion at any time and from time to time to reject any requests for
repurchases.

 

8.             Miscellaneous.

 

(a)           Liability.  Subject to the limitations contained in the
Company’s articles of incorporation, as amended, neither the Company nor the
Repurchase Agent (as defined below) shall have any liability to any stockholder
for the value of the Shares presented for repurchase, the repurchase price of
the Shares or for any damages resulting from the presentation of Shares for
repurchase or the repurchase of Shares under this Repurchase Program or from the
Company’s determination not to repurchase Shares under the Repurchase
Program, except as a result of the Company’s or the Repurchase Agent’s
negligence, misconduct or violation of applicable law; provided, however,
that nothing contained herein shall constitute a waiver or limitation of any
rights or claims that a stockholder may have under federal or state securities
laws.

 

(b)           Taxes.  Stockholders shall have sole responsibility
and liability for the payment of all taxes, assessments and other applicable
obligations resulting from the repurchase of Shares pursuant to this Repurchase
Program and neither the Company nor the Repurchase Agent shall have any such
responsibility or liability.

 

(c)           Repurchase Agent.  The Company may appoint a repurchase agent as
the Company’s agent under this Repurchase Program (a “Repurchase
Agent”), to effect all repurchases of Shares and to disburse funds in
accordance with the terms, conditions and limitations set forth herein.

 

(d)           Administration and Costs.  The Repurchase Agent shall perform all
recordkeeping and other administrative functions involved in operating and
maintaining the Repurchase Program.  The Company shall bear all costs involved in
organizing, administering and maintaining the Repurchase Program.  No fees will be paid to the Company’s
sponsor, its business manager, its directors or any of their affiliates in
connection with the repurchase of shares by the Company pursuant to this
Repurchase Program.

 

5EXHIBIT
10.1

 

FORM OF

BUSINESS MANAGEMENT AGREEMENT

 

THIS BUSINESS MANAGEMENT
AGREEMENT (this “Agreement”), dated as of                     , 2009, is entered into by
and between INLAND DIVERSIFIED REAL ESTATE TRUST, INC., a Maryland corporation
(the “Company”), and INLAND DIVERSIFIED BUSINESS MANAGER & ADVISOR INC., an
Illinois corporation (the “Business Manager”).

 

WITNESSETH:

 

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

 

WHEREAS, the Company intends
to qualify to be taxed as a REIT (as defined in Section 1 below), and
intends to make investments permitted by the terms of the Articles of
Incorporation (as defined below) and Sections 856 through 860 of the Code (as
defined in Section 1 below);

 

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

 

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

 

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

 

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

 

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

 

“Acquisition Expenses” means any and all expenses incurred by
the Company, the Business Manager or any Affiliate of either in connection with
selecting, evaluating or acquiring any investment in Real Estate Assets,
including but not limited to legal fees and expenses, travel and communication,
appraisals and surveys, nonrefundable option payments regardless of whether the
Real Estate Asset is acquired, accounting fees and expenses, computer related
expenses, architectural and engineering reports, environmental and asbestos audits
and surveys, title insurance and escrow fees, and personal and miscellaneous
expenses.

 

 

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

 

(a)                                  any Person
directly or indirectly owning, controlling or holding, with the power to vote,
ten percent (10%) or more of the outstanding voting securities of such other
Person;

 

(b)                                 any Person ten
percent (10%) or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held, with the power to vote, by such other
Person;

 

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

 

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

 

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

 

“Affiliated
Directors” means those directors of the Company who are employed by
the Sponsor or one of its direct or indirect subsidiaries.

 

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

 

“Average
Invested Assets” means, for any period, the average of the aggregate
book value of the assets of the Company, including all intangibles and
goodwill, invested, directly or indirectly, in equity interests in, and loans
secured by, Real Estate Assets, as well as amounts invested in consolidated and
unconsolidated joint ventures or other partnerships, REITs and other Real
Estate Operating Companies, before reserves for amortization and depreciation
or bad debts or other similar non-cash reserves, computed by taking the average
of these values at the end of each month during the relevant calendar quarter.
For purposes of calculating the Management Fee pursuant to Section 8(a) of
the Agreement, Average Invested Assets shall not include any investments in
securities including any non-controlling interests in REITs or other Real
Estate Operating Companies, for which a separate investment advisor fee is
paid.

 

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

 

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

 

“Company
Fixed Assets” means the Real Property used by the Company in
conducting its business.

 

“Current
Return” means a non-cumulative, non-compounded return, equal to five
percent (5%) per annum on Invested Capital, paid on an aggregate basis from
distributions from all sources.

 

2

 

“Determination
Date” means the day on which Market Value is determined.

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           has not served, or is not serving, as a director for more
than three REITs organized by the Sponsor or advised by the Business Manager or
any of its Affiliates; and

 

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

 

For purposes of this
definition, a business or professional relationship will be considered material
if the gross revenue derived by the director exceeds five percent (5%) of
either the director’s annual gross revenue during either of the aforementioned
prior two years or the director’s net worth on a fair market value basis during
the aforementioned prior two years.  An
indirect relationship shall include circumstances in which a director’s spouse,
parents, children, siblings, mothers- or fathers-in-law, sons- or
daughters-in-law or brothers- or sisters-in-law is or has been associated with
the Company, the Sponsor, the Business Manager or any of their Affiliates
during the aforementioned two year period.

 

“Invested
Capital” means the aggregate original issue price paid for the
Shares reduced by prior distributions, identified as special distributions,
from the sale or financing of the Company’s Real Estate Assets.

 

“Liquidity
Event” means a Listing or any merger, reorganization, business
combination, share exchange, acquisition by any Person or related group of
Persons of beneficial ownership of all or substantially all of the Shares in
one or more related transactions, or another similar transaction involving the
Company, pursuant to which the Stockholders receive cash or 

 

3

 

the
securities of another issuer that are listed on a national securities exchange,
as full or partial consideration for their Shares.

 

“Listing”
means the filing of a Form 8-A (or any successor form) to register the Shares,
or the shares of common stock of any of the Company’s subsidiaries, on a
national securities exchange and the approval of an original listing
application related thereto by the applicable exchange; provided, that
the Shares, or the shares of common stock of any of the Company’s subsidiaries,
shall not be deemed to be Listed until trading in the Shares, or the shares of
common stock of any of the Company’s subsidiaries, shall have commenced on the
relevant national securities exchange. 
Upon a Listing, the Shares, or the shares of common stock of the Company’s
subsidiaries, shall be deemed “Listed.” 
A Listing shall also be deemed to occur on the effective date of a
merger in which the consideration received by the holders of the Shares is
securities of another issuer that are listed on a national securities exchange;
provided, however, that if the merger is effectuated through a
wholly owned subsidiary of the Company, the consideration received by the
Company shall be distributed to the holders of the Shares.

 

“Market Value”
means the value of the Company measured in connection with an applicable
Liquidity Event determined as follows: (1) in the case of the Listing of the
Shares, or the shares of the common stock of any of the Company’s subsidiaries,
on a national securities exchange, by taking the average closing price over the
period of thirty (30) consecutive trading days during which the Shares, or the
shares of the common stock of the Company’s subsidiary, as applicable, are
eligible for trading, beginning on the 180th day after Listing of the Shares,
or the shares of the common stock of the Company’s subsidiary, as applicable;
or (2) in the case of the receipt by Stockholders of securities of another
entity that are trading on a national securities exchange prior to, or that
become listed on a national securities exchange concurrent with, the
consummation of the Liquidity Event, as follows: (a) in the case of securities
of another entity that are trading on a national securities exchange prior to
the consummation of the Liquidity Event, the value ascribed to the securities
in the transaction giving rise to the Liquidity Event; and (b) in the case of
securities of another entity that become listed on a national securities
exchange concurrent with the consummation of the Liquidity Event, the average
closing price over a period of thirty (30) consecutive trading days during
which the securities are eligible for trading, beginning on the 180th day after
the listing of the securities.  In
addition, any cash consideration received by the Stockholders in connection
with any Liquidity Event shall be added to the Market Value determined in
accordance with clause (1) or (2).

 

“Marketing
Contribution” means any and all compensation payable to
underwriters, dealer managers or other broker-dealers in connection with
marketing the sale of Shares, including, without limitation, compensation
payable to Inland Securities Corporation, and which may, in the Company’s
discretion, include reimbursement for any out-of-pocket, itemized and detailed
due diligence expenses incurred in connection with investigating the Company or
any offering of Securities made by the Company.

 

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

 

“Net Income”
means, for any period, the aggregate amount of total revenues applicable to the
period less the expenses applicable to the same period other than
additions to 

 

4

 

reserves
for depreciation, bad debts or other similar noncash reserves and Acquisition
Expenses to the extent not capitalized, provided, however, that
Net Income shall not include any gain recognized upon the sale of the Company’s
assets.

 

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

 

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

 

“Offering
Expenses” means all expenses incurred by, and to be paid from, the
assets of the Company in connection with and in preparing the Company for
registration and offering its Shares to the public, including, but not limited
to, total underwriting and brokerage discounts and commissions (including fees
and expenses of underwriters’ attorneys paid by the Company), expenses for
printing, engraving and mailing, salaries of the employees of the Company, or
the Sponsor and its Affiliates, while engaged in sales activity, charges of
transfer agents, registrars, trustees, escrow holders, depositaries and
experts, expenses of qualifying the sale of the Shares under federal and state
laws, including taxes and fees and accountants’ and attorneys’ fees and
expenses, and which may, in the Company’s discretion, include reimbursement for
any out-of-pocket, itemized and detailed expenses incurred in connection with
investigating the Company or any offering of Securities made by the Company.

 

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

 

“Permitted Investment” means any investment
that the Company may acquire pursuant to the Articles of Incorporation or its bylaws,
including any investment in collateralized mortgage-backed securities and any
investment or purchase of interests in a Real Estate Operating Company or other
entity owning Properties or loans.

 

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

 

“Priority
Return” means a non-cumulative, non-compounded return, equal to six percent (6%)
per annum on Invested Capital, paid on an aggregate basis from distributions
from all sources.

 

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

 

5

 

“Property
Acquisition Agreement” means that certain Property Acquisition
Agreement, dated                     ,
2009, among the Company, the Business Manager and Acquisition Co.

 

“Prospectus”
has the meaning set forth in Section 2(10) of the Securities Act of 1933, as
amended (the “Securities Act”), including a preliminary prospectus, an offering
circular as described in Rule 253 of the General Rules and Regulations under
the Securities Act, or, in the case of an intrastate offering, any document by
whatever name known, utilized for the purpose of offering and selling the
Shares to the public.

 

“Real
Estate Assets” means any and all investments in: (i) Properties; (ii)
loans, or other evidence of indebtedness, secured, directly or indirectly, by
interests in Real Property; or (iii) other Permitted Investments (including all
rents, income profits and gains therefrom), in each case whether real, personal
or otherwise, tangible or intangible, that are transferred or conveyed to, or
owned or held by, or for the account of, the Company or any of its
subsidiaries.

 

“Real Estate
Manager” means any of Inland Diversified Real Estate Services LLC,
Inland Diversified Asset Services LLC, Inland Diversified Leasing Services LLC
and Inland Diversified Development Services LLC, each a Delaware limited
liability company, or any of their successors or assigns, or entities owned or
controlled by the Sponsor and engaged by the Company to manage a Property or
Properties.

 

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

 

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

 

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

 

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

 

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

 

Notwithstanding
the above, for these purposes, any joint venture or other partnership the
Company may form with a third party, in which the Company is a member, equity
holder or partner (whether the entity is consolidated or unconsolidated on the
Company’s financial statements) will not constitute a Real Estate Operating
Company.

 

6

 

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

 

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

 

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

 

“Selling
Commissions” means any and all commissions, not to exceed seven and
one-half percent (7.5%) of the gross offering price of any Shares, payable to
underwriters, dealer managers or other broker-dealers in connection with the
sale of Shares.

 

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

 

“Stockholders”
means holders of shares of Equity Stock.

 

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

 

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

 

(b)                                 property
expenses incurred on an individual Property level;

 

(c)                                  interest
payments;

 

(d)                                 taxes;

 

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

 

(f)                                    any incentive
fees payable pursuant to Section 8(b) hereof; and

 

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

 

2.             Duties of the
Business Manager. The Business Manager shall consult with the
Company and furnish advice and recommendations with respect to all aspects of
the business and affairs of the Company. 
The Business Manager shall inform the Board of Directors of factors that
come to the Business Manager’s attention that may, in its opinion, influence
the policies of the Company.  Subject to
the supervision of the Board of Directors and consistent with the 

 

7

 

provisions of the Articles of Incorporation,
the Business Manager shall use commercially reasonable efforts to:

 

(a)                                  subject to the
terms and conditions set forth in the Property Acquisition Agreement, identify
potential investment opportunities in Real Estate Assets located in the United
States and Canada, consistent with the Company’s investment objectives and
policies; including but not limited to:

 

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

 

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

 

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

 

(iv)                              overseeing leases and
service contracts, on the Company’s behalf, for Real Estate Assets.

 

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

 

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

 

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

 

(e)                                  investigate,
select and conduct relations with lenders, consultants, accountants, brokers,
real estate managers, attorneys, underwriters, appraisers, insurers, corporate
fiduciaries, banks, builders and developers, sellers and buyers of investments
and persons acting in any other capacity specified by the Company from time to
time, and enter into contracts in the Company’s name with, and retaining and
supervising services performed by, such parties in connection with investments
that have been or may be acquired or disposed of by the Company;

 

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

 

(g)                                 upon request of
the Company, act, or obtain the services of others to act, as attorney-in-fact
or agent of the Company in making, acquiring and disposing of 

 

8

 

investments, disbursing and collecting the
funds, paying the debts and fulfilling the obligations of the Company and
handling, prosecuting and settling any claims of the Company, including
foreclosing and otherwise enforcing mortgage and other liens and security
interests securing investments;

 

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

 

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

 

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

 

(k)                                  subject to the
reimbursement of costs associated therewith, provide office space, equipment
and personnel as required for the performance of the foregoing services as
Business Manager;

 

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

 

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

 

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

 

(o)                                 provide the
Company with, or arrange for, all necessary cash management services;

 

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

 

(q)                                 enter into
ancillary agreements with the Sponsor and its Affiliates to arrange for the
services and licenses to be provided by the Business Manager hereunder, as
summarized on Schedule 2(q) hereto.

 

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

 

9

 

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

 

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

 

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

 

7.             Information
Furnished to the Business Manager. The Board of Directors
will keep the Business Manager informed in writing concerning the investment
and financing policies of the Company. The Board of Directors shall notify the
Business Manager promptly in writing of the Board of Director’s intention to
make any investments or to sell or dispose of any existing investments.

 

8.             Compensation. Subject to
the provisions of Section 12 hereof, and in addition to any
compensation for additional services that may be paid pursuant to Section 10
hereof, for services rendered hereunder the Company shall pay to the Business
Manager the following:

 

(a)                                  Subject to
satisfying the criteria described herein, the Company shall pay the Business
Manager a quarterly Management Fee equal to a percentage of Average Invested
Assets calculated as follows: (i) if the Company has declared
distributions to the holders of its common stock during the prior calendar
quarter just ended, in an amount equal to or greater than an average seven
percent (7.0%) annualized distribution rate (assuming a share of common stock
was purchased for $10.00), the Company will pay a fee equal to one-fourth percent
(0.25%) of Average Invested Assets for that prior calendar quarter; (ii) if
the Company has declared distributions to the holders of its common stock
during the prior calendar quarter just ended, in an amount equal to or greater
than an average six percent (6.0%) annualized distribution rate but less than
an average seven percent (7.0%) annualized distribution rate (in each case,
assuming a share of common stock was purchased for $10.00), the Company will
pay a fee equal to three-sixteenths 

 

10

 

percent (0.1875%) of Average Invested Assets
for that prior calendar quarter; (iii) if
the Company has declared distributions to the holders of its common stock
during the prior calendar quarter just ended, in an amount equal to or greater
than an average five percent (5.0%) annualized distribution rate but less than
an average six percent (6.0%) annualized distribution rate (in each case,
assuming a share of common stock was purchased for $10.00), the Company will
pay a fee equal to one-eighth percent (0.125%) of Average Invested Assets for
that prior calendar quarter;
or (iv) if the Company does not satisfy the criteria in clauses (i), (ii) or
(iii) of this Section 8(a) in a particular calendar
quarter just ended, the Company will not, except as set forth below, pay a
Management Fee for that prior calendar quarter. 
In the event that clause (i), (ii) or (iii) of this Section 8(a) is
satisfied, the Business Manager may decide, in its sole discretion, to be paid
an amount less than the total amount that may be paid.  If the Business Manager decides to accept
less in any particular quarter, the excess amount that is not paid may, in the
Business Manager’s sole discretion, be waived permanently or accrued, without
interest, to be paid at a later point in time. 
The obligation to pay this fee will terminate if the Company acquires
the Business Manager.

 

(b)                                 The Company
shall pay the Business Manager an incentive fee equal to fifteen percent (15%)
of the Net Sales Proceeds; provided that in no event shall the Company
be obligated to pay an incentive fee unless and until all of its Stockholders
have first received, on an aggregate basis, a ten percent (10%) per annum
cumulative, non-compounded return on, plus return of, their Invested
Capital.  Any amount due under this Section 8(b) shall
be paid no later than five (5) days after the transaction generating Net
Sales Proceeds closes; provided, that any amount that may be payable shall be
reduced by all prior fees paid under this Section 8(b).  The obligation to pay this fee will terminate
if the Company acquires the Business Manager.

 

(c)                                  Upon a
Liquidity Event, the Company shall pay, within five (5) business days
after the Determination Date, the Business Manager a listing fee, in an amount
equal to fifteen percent (15%) of the amount by which (i) the Market Value
plus the total distributions paid to Stockholders from the Company’s inception
until the Determination Date exceeds (ii) the Invested Capital, less any
distributions of Net Sales Proceeds or financing proceeds, plus the total
distributions required to be made to the Stockholders in order to pay them the
Priority Return from inception through the Determination Date.  In the event that, at the Determination Date,
Stockholders have not received a return of their Invested Capital, less any
distributions of Net Sales Proceeds or financing proceeds, plus the total
distributions required to be made to the Stockholders in order to pay them the
Priority Return, the obligation of the Company to pay the aforesaid listing fee
shall continue and the listing fee shall be paid at the time that the Company
has paid the total distributions required to be made to the Stockholders in
order to pay them the Priority Return as herein calculated, provided, however,
that the fee shall be calculated as described in this Section 8(c),
as if the Priority Return would have been satisfied at the Determination
Date.  The obligation to pay this fee
will

 

11

 

terminate if the Company acquires the
Business Manager prior to a Liquidity Event.

 

9.                                       Expenses.

 

(a)                                  In addition to
the compensation paid to the Business Manager pursuant to Section 8
and Section 10 hereof, and subject to the limits herein, the
Company shall reimburse the Business Manager, the Sponsor and their respective
Affiliates for all direct expenses paid or incurred by the Business Manager,
the Sponsor or their respective Affiliates to provide certain services and
licenses hereunder, including all direct expenses and the costs of salaries and
benefits of persons employed by the Business Manager, the Sponsor and their
respective Affiliates and performing services for the Company, except for the
salaries and benefits of persons who also serve as one of the Company’s
executive officers or as an executive officer of the Business Manager or its
Affiliates.  For purposes of this Section 9(a),
secretary shall not be considered an “executive officer.”

 

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

 

(i)                                     any Offering Expenses;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)                                expenses associated with
listing or with issuing Shares and Securities, including advertising expenses,
taxes, legal and accounting fees, listing and registration fees and other
Organization Expenses except for Selling Commissions or other fees and expenses
paid by the Dealer Manager to any Soliciting Dealer (as those terms are defined
in the Dealer Manager Agreement) 

 

12

 

pursuant to that certain Dealer Manager Agreement dated
                    ,
2009 by and between the Company and Inland Securities Corporation;

 

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

 

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

 

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

 

(xiii)                          administrative service
expenses charged to, or for the benefit of, the Company by non-affiliated third
parties;

 

(xiv)                         audit, accounting and legal
fees charged to, or for the benefit of, the Company by non-affiliated third
parties;

 

(xv)                            transfer agent and registrar’s
fees and charges; and

 

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

 

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

 

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

 

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

 

13

 

(1)                                  the amount of all salaries,
bonuses and benefits paid to, or for, the employees of the Affiliate; and

 

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

 

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

 

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

 

(f)                                    Permitted
reimbursements shall include salaries and related salary expenses for services
that could be performed directly for the Company by independent, non-affiliated
third parties such as legal, accounting, transfer agent, data processing and
duplication, but that the Business Manager, Sponsor or their respective
Affiliates elect to perform. The Business Manager believes that the employees
of the Business Manager, the Sponsor and their respective Affiliates who may
perform services for the Company for which reimbursement is allowed, will have
the experience and educational background, in their respective fields of
expertise, appropriate for the performance of any such services.

 

10.                                 Compensation
for Additional Services, Certain Limitations.

 

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

 

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

 

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

 

14

 

(ii)                                  if at least ninety-five
percent (95%) of gross revenues attributable to the business of rendering such
services or selling or leasing such goods are derived from persons other than
Affiliates of the Business Manager, the compensation, price or fee charged by
an unaffiliated person who is rendering comparable services or selling or
leasing comparable goods must be on competitive terms in the same geographic
location. Extraordinary circumstances shall be presumed to exist only when
there is an emergency situation requiring immediate action by the Business
Manager or its Affiliates and the goods or services are not immediately
available from unaffiliated parties. Services that may be performed in
extraordinary circumstances include emergency maintenance of Real Estate
Assets, janitorial and other related services due to strikes or lockouts,
emergency tenant evictions and repair services that require immediate action,
as well as operating and releasing properties with respect to which the leases
are in default or have been terminated.

 

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

 

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

 

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

 

(i)                                     two percent (2%) of the
total of the Average Invested Assets for the just ended Fiscal Year; or

 

(ii)                                  twenty-five percent (25%) of
the Net Income for the just ended Fiscal Year;

 

provided, however,
that the Business Manager may satisfy any obligation under this Section 12(a) by
reducing the amount to be paid the Business Manager under Section 8
or Section 10 hereunder until the Business Manager has satisfied
its obligations under this Section 12(a); provided, further,
that the Board of Directors, including a majority of the Independent Directors
of the Company, may reduce the amount due under this Section 12(a) upon
a finding that the increased expenses were caused by unusual or nonrecurring
factors.

 

15

 

(b)                                 If the
aggregate of all Organization Expenses exceeds fifteen percent (15%) of the
Gross Offering Proceeds or all Offering Expenses (excluding any Selling
Commissions and the Marketing Contribution) exceed five percent (5.0%) of the
Gross Offering Proceeds, the Business Manager or its Affiliates shall reimburse
the Company for, or pay directly, any excess Organization Expenses or Offering
Expenses incurred by the Company above these limits.

 

13.                                 Other
Activities of the Business Manager.  Nothing contained herein shall prevent the
Business Manager or an Affiliate of the Business Manager from engaging in any
other business or activity including rendering services or advising on real
estate investment opportunities to any other person or entity.  Directors, officers, employees and agents of
the Business Manager or of Affiliates of the Business Manager may serve as
directors, trustees, officers, employees or agents of the Company, but shall
receive no compensation (other than reimbursement for expenses) from the
Company for this service.

 

14.                                 Term;
Termination of Agreement. This Agreement shall have an initial term
of one year and, thereafter, will continue in force for successive one year
renewals with the mutual consent of the parties including an affirmative vote
of a majority of the Independent Directors. 
It is the duty of the Board of Directors to evaluate the performance of
the Business Manager annually before renewing this Agreement, and each renewal
shall be for a term of no more than one year. 
Each extension shall be executed in writing by both parties hereto prior
to the expiration of this Agreement or of any extension thereof.

 

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

 

This Agreement shall also
terminate upon the closing of a business combination between the Company and
the Business Manager.

 

If this Agreement is
terminated pursuant to this Section 14, the parties shall have no
liability or obligation to each other including any obligations imposed by Section 2(a) hereof,
except as provided in Section 17.

 

15.                                 Assignments. The Business
Manager may not assign this Agreement except to a successor organization that
acquires substantially all of its property and carries on the affairs of the
Business Manager; provided that following the assignment, the persons
who controlled the operations of the Business Manager immediately prior
thereto, control the operations of the successor organization, including the
performance of duties under this Agreement; however, if at any time subsequent
to the assignment these persons cease to control the operations of the
successor organization, the Company may thereupon terminate this Agreement.  This Agreement shall not be assignable by the
Company without the consent of the Business Manager.  Any 

 

16

 

assignment of this Agreement shall bind the
assignee hereunder in the same manner as the assignor is bound hereunder.

 

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

 

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

 

(b)                                 a court of
competent jurisdiction enters a decree or order for relief in respect of the
Business Manager in any involuntary case under the applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoints a
receiver liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Business Manager or for any substantial part of its property
or orders the winding up or liquidation of the Business Manager’s affairs not
dismissed within ninety (90) days; or

 

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

 

The Business Manager agrees
that if any of the events specified in subsections (b) and (c) of
this Section 16 occur, it will give written notice thereof to the
Company within seven (7) days after the occurrence of such event.

 

17.                                 Action Upon
Termination. The Business Manager shall not be entitled to
compensation after the date of termination of this Agreement under Section 8
of this Agreement for further services hereunder, but shall be paid all
compensation accruing or accrued to the date of termination; provided,
that with respect to any Management Fee payable under Section 8(a) of
this Agreement for the calendar quarter in which the termination occurred, the
Business Manager shall be paid on a pro rata basis
through the date of termination, based on the number of days for which the
Business Manager served as such under this Agreement. Upon termination of this
Agreement, the Business Manager shall:

 

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

 

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

 

17

 

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

 

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

 

18.                                 Non-Solicitation.  During the period commencing on the date on
which this Agreement is entered into and ending one year following the
termination of this Agreement, the Company shall not, without the Business
Manager’s prior written consent, directly or indirectly, (i) solicit or
encourage any person to leave the employment or other service of the Business
Manager of its Affiliates or (ii) hire, on behalf of the Company or any
other person, firm, corporation or other business organization, any person who
has left the employment of the Business Manager of its Affiliates, within the
one year period following the termination of that person’s employment the
Business Manager or its Affiliates. 
During the period commencing on the date hereof through and ending one
year following the termination of this Agreement, the Company shall not,
whether for its own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with the
relationship of the Business Manager with, or endeavor to entice away from the
Business Manager, any person who during the term of the Agreement is, or during
the preceding one-year period, was a client of the Business Manager.

 

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

 

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

 

21.                                 Successors and
Assigns. This Agreement shall inure to the benefit of, and shall bind, any
successors or assigns of the parties hereto.

 

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

 

23.                                 Liability and
Indemnification.

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

(i)                                     there has been
a successful adjudication for the Indemnitee on the merits of each count
involving alleged Securities Claims as to such Indemnitee;

 

(ii)                                  the Securities
Claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to such Indemnitee; or

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

	
  If to the Company:

  	
   

  	
  Inland
  Diversified Real Estate Trust, Inc.

  2901
  Butterfield Road

  Oak
  Brook, IL 60523

  
	
   

  	
   

  	
  Attention:

  	
  Ms. Roberta
  S. Matlin

  
	
   

  	
   

  	
  Telephone:

  	
  (630)
  218-8000

  
	
   

  	
   

  	
  Facsimile:

  	
  (630)
  218-4955

  
	
   

  	
   

  	
   

  
	
  If to the Business Manager:

  	
   

  	
  Inland
  Diversified Business Manager & Advisor Inc.

  2901
  Butterfield Road

  Oak
  Brook, IL 60523

  
	
   

  	
   

  	
  Attention:

  	
  Mr. Barry
  L. Lazarus

  
	
   

  	
   

  	
  Telephone:

  	
  (630)
  218-8000

  
	
   

  	
   

  	
  Facsimile:

  	
  (630)
  218-4955

  

 

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

 

25.           Conflicts of Interest and Fiduciary Relationship to the
Company and to the Company’s Stockholders. The Company and the Business
Manager recognize that their relationship is subject to various conflicts of
interest. The Business Manager, on behalf of itself and its Affiliates,
acknowledges that the Business Manager and its Affiliates have a fiduciary
relationship to the Company and to the Stockholders. The Business Manager, on
behalf of itself and its Affiliates, shall endeavor to balance the interests of
the Company with the interests of the Business Manager and its Affiliates in
making any determination where a conflict of interest exists between the
Company and the Business Manager or its Affiliates.

 

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

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

20

 

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

 

	
  COMPANY:

  	
   

  	
  BUSINESS
  MANAGER:

  
	
   

  	
   

  	
   

  
	
  INLAND
  DIVERSIFIED REAL ESTATE TRUST, INC.

  	
   

  	
  INLAND
  DIVERSIFIED BUSINESS MANAGER & ADVISOR INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  

 

 

Schedule 2(q)

 

The Business Manager shall
enter into ancillary agreements with the Sponsor and its Affiliates to arrange
for the services and licenses to be provided by the Business Manager under the
Agreement, as summarized below.

 

·                                          Brokerage
Services.  An Affiliate of the Sponsor will facilitate
transactions in real-estate related loans and commercial mortgage backed
securities.  This service provider will
not be reimbursed for any expenses incurred in providing these services.

 

·                                          Communications
Services.  Inland
Communications, Inc. will provide marketing, communications and media
relations services, including designing and placing advertisements, editing
marketing materials, preparing and reviewing press releases, distributing certain
stockholder communications and maintaining branding standards.

 

·                                          Computer
Services.   Inland Computer Services, Inc. (“ICS”)
will provide data processing, computer equipment and support services and other
information technology services, including custom application, development and
programming, support and troubleshooting, data storage and backup, email
services, printing services and networking services, including Internet access.

 

·                                          Insurance
and Risk Management Services.  Inland Risk and
Insurance Management Services, Inc. will provide insurance and risk
management services, including negotiating and obtaining insurance policies,
managing sales contracts, leases and other real estate or corporate agreements
and documents and settling claims and reviewing and monitoring the Company’s
insurance policies.

 

·                                          Legal
Services.  The Inland Real
Estate Group, Inc. will provide legal services, including drafting and
negotiating real estate purchase and, performing due diligence and rendering
legal opinions.

 

·                                          Mortgage
Placement Services.  Inland Mortgage Brokerage Corporation (“IMBC”)
and Inland Commercial Mortgage Corporation (“ICMC”) will place mortgages.  IMBC and ICMC will not be reimbursed for any
expenses incurred in providing these services.

 

·                                          Mortgage
Servicing.  Inland
Mortgage Servicing Corporation (“IMSC”) will service mortgages.  IMSC will not be reimbursed for any expenses
incurred in providing these services.

 

·                                          Office
and Facilities Management Services.  Inland Office
Services, Inc. and Inland Facilities Management, Inc. will provide
office and facilities management services, including purchasing and maintaining
office supplies and furniture, installing telephones, maintaining security,
providing mailroom, courier and switchboard services and contracting with and
supervising housekeeping and other facilities maintenance service providers.

 

 

·                                          Personnel
Services.  Inland Human
Resource Services, Inc. will provide personnel services, including
pre-employment services, new hire services, human resources, benefit
administration and payroll and tax administration.

 

·                                          Property
Tax Services.  Investors
Property Tax Services, Inc. will provide property tax services, including
tax reduction, such as monitoring properties and seeking ways to lower assessed
valuations, and tax administration, such as coordinating payment of real estate
taxes.

 

·                                          Software
License.   ICS will grant the Business Manager a
non-exclusive and royalty-free right and license to use and copy software owned
by ICS and to use certain third party software according to the terms of the
applicable third party licenses to ICS, all in connection with the Business
Manager’s obligations under the Agreement. 
ICS will provide the Business Manager with all upgrades to the licensed
software.

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