Document:

Exhibit 10.1

EMPLOYMENT
AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered
into as of April 28, 2006, but shall be effective, nunc pro
tunc, as of January 1, 2006, by and between INLAND REAL ESTATE
CORPORATION, a Maryland corporation (the “Company”), and Brett A. Brown (the “Executive”).

RECITALS:

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

B.            Executive
has served as the Company’s Chief Financial Officer pursuant to an employment
agreement, dated as of May 17, 2004, by and between the Company and
Executive 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 to become
effective as of January 1, 2006.

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

E.             As
a condition for 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 and
engages Executive, and Executive hereby accepts employment, upon the terms and
conditions set forth in this Agreement. Effective as of January 1, 2006
(the “Effective Date”), Executive shall serve as Chief Financial Officer and
Vice President, with duties commensurate with such positions 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
(collectively, “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 engage in 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 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 through and including December 31, 2007 (the “Employment
Term”) except as this Agreement may be terminated as provided in Section 2.2.

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.

(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)           On expiration of the Employment Term
if not extended by the mutual consent of the Company and Executive.

 2
 

 

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, disloyalty 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 the failure to Executive and Executive has failed to cure within ten (10) days
of receiving notice; (iv) gross negligence or willful misconduct by the
Executive with respect to the Company, its clients, its employees and its
activities; or (v) material breach by the Executive of this Agreement or
any other agreement to which Executive and the Company are a party or any
material breach by the Executive of any written policy adopted by the Company
concerning conflicts of interest, standards of business conduct or fair
employment practices and any other similar matter, provided that the Company
has provided written notice of the breach to Executive and Executive has failed
to cure the breach within ten (10) days of receiving notice.

(b)           For purposes of this Agreement,
Executive shall be determined to have a “Total Disability” upon the
determination of a physician, acceptable to the Company and Executive that
Executive is unable, by reason of accident or illness, to substantially perform
his duties or is expected to be in the condition for periods totaling six (6) months
(whether or not consecutive) during any period of twelve (12) months. 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 Good Reason:

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

(ii)           the Executive’s base salary or other
compensation and benefits is reduced to less than the amount of the Base Salary
and other compensation and benefits as set forth in Section 3.1
below;

(iii)          a material breach by the Company of
the provisions of this Agreement; or

(iv)          following a Change of Control, the
assignment to Executive of duties which constitute a material reduction in
Executive’s title or authority and 

 3
 

 

which are materially inconsistent with
Executive’s position as contemplated by this Agreement.

(d)           “Change of Control” shall mean any of
the following events:

(i)            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 or appointed to the board seat
on the recommendation and approval of the Company’s Nominating and Corporate
Governance Committee shall be treated as if he or she were a member of the
board as of the date of this Agreement;

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

(iii)          the termination and liquidation of the
Company.

ARTICLE III

COMPENSATION AND BENEFITS

3.1           Compensation.

(a)           Base Salary. During the
Employment Term, the Company shall pay Executive a base salary (the “Base
Salary”) of $225,000 per annum.

(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 120 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)           Annual Long Term Share Award. No
later than June 30 of each fiscal year during the Employment Term, the
Company shall grant Executive an Annual Long Term Share Award consisting of
shares of the common stock of the Company (“Long Term Shares”), subject to the
conditions set forth below and in accordance with the schedule set forth on Exhibit B,
attached hereto and made a part hereof. Twenty percent (20%) of any Long Term
Shares granted hereunder shall vest on each successive yearly anniversary of
the grant of the Long Term Shares.

(i)            All Long Term Shares shall be issued
under, and in accordance with, the Company’s 2005 Equity Award Plan (the “2005
Equity Award Plan”); to the extent the terms of any Long Term Shares granted
pursuant to this Agreement conflict with the terms of the 2005 Equity Award
Plan, the terms of the 2005 Equity Award Plan shall apply to the minimum extent
necessary to eliminate the conflict. Executive shall be the record owner of any
Long Term Shares granted hereunder; provided that any Long Term Shares
that have not yet vested shall be forfeited and redeemed by the Company,
without any further action on the part of the Company or the Executive, if
Executive is no longer 

 4
 

 

employed by the Company for any reason, other
than in connection with a termination as described in Sections 2.2(b), (c) or
(d). Executive may not sell, transfer, hypothecate, pledge or assign any
Long Term Shares which have not vested.

(ii)           Upon the occurrence of any forfeiture
of Long Term Shares, Executive shall immediately take all actions necessary to
permit the Company to redeem any forfeited Long Term Shares.

(iii)          Unless forfeited, Executive may
exercise all rights of a stockholder, including the right to vote and receive
dividends with respect to any Long Term Shares granted Executive.

(iv)          All Long Term Shares which may be
issuable hereunder shall be issued in reliance upon the following
representations, warranties and agreements of Executive, each of which shall be
true and correct as of the date of issuance and each of which shall survive the
termination of this Agreement.

(A)          Executive acknowledges that the common
stock underlying any Long Term Shares has been registered under the Securities
Act of 1933, as amended (the “Securities Act”), pursuant to an effective
registration statement on Form S-8 (file no. 333-128624);

(B)           Executive acknowledges that once the
common stock underlying any Long Term Shares has been issued to Executive, the
common stock may not be subsequently transferred or sold by Executive except in
compliance with the registration requirements of federal and state securities
law or exemptions therefrom;

(C)           Executive acknowledges that an
investment in the Company’s common stock is subject to significant risk,
including the risks described, from time to time, in the Company’s annual
reports on Form 10-K. Executive represents and warrants that he has
such knowledge and expertise in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the Company’s common
stock and the ability to bear the economic risk of the investment; and

(D)          Executive represents and warrants that
he has had the opportunity to ask questions of the Company concerning its
business and to obtain any information which he considers necessary to verify
the accuracy of or to amplify upon the Company’s disclosures and that all
questions which have been asked have been answered by the Company to Executive’s
satisfaction.

(d)           Annual Stock Option Award. No
later than June 30 of each fiscal year during the Employment Term, the
Company shall grant Executive an Annual Stock Option Award to purchase shares
of the common stock of the Company (“Annual Stock Options”), subject to the
conditions set forth below and in accordance with the schedule 

 5
 

 

set forth on Exhibit C,
attached hereto and made a part hereof. Twenty percent (20%) of any Annual
Stock Options granted hereunder shall vest on each successive yearly
anniversary of the grant of the Annual Stock Options.

(i)            All Annual Stock Options shall be
issued under, and in accordance with, the 2005 Equity Award Plan; to the extent
the terms of any Annual Stock Options awarded pursuant to this Agreement conflict
with the terms of the 2005 Equity Award Plan, the terms of the 2005 Equity
Award Plan shall apply to the minimum extent necessary to eliminate the
conflict. Any Annual Stock Options that have not yet vested shall be forfeited
and redeemed by the Company, without any further action on the part of the
Company or the Executive, if Executive is no longer employed by the Company for
any reason, other than in connection with a termination as described in Sections
2.2(b), (c) or (d). Executive may not sell, transfer, hypothecate,
pledge or assign any Annual Stock Options which have not vested.

(ii)           Upon the occurrence of any forfeiture
of Annual Stock Options, Executive shall immediately take all actions necessary
to permit the Company to redeem any forfeited Annual Stock Options.

(iii)          All Annual Stock Options which may be
issuable hereunder shall be issued in reliance upon the following
representations, warranties and agreements of Executive, each of which shall be
true and correct as of the date of issuance and each of which shall survive the
termination of this Agreement.

(A)          Executive acknowledges that the common
stock underlying any Annual Stock Options has been registered under the
Securities Act pursuant to an effective registration statement on Form S-8
(file no. 333-128624);

(B)           Executive acknowledges that once the
common stock underlying any Annual Stock Options has been issued to Executive,
the common stock may not be subsequently transferred or sold by Executive
except in compliance with the registration requirements of federal and state
securities law or exemptions therefrom;

(C)           Executive acknowledges that an
investment in the Company’s common stock is subject to significant risk,
including the risks described, from time to time, in the Company’s annual
reports on Form 10-K. Executive represents and warrants that he has
such knowledge and expertise in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the Company’s common
stock and the ability to bear the economic risk of the investment; and

(D)          Executive represents and warrants that
he has had the opportunity to ask questions of the Company concerning its
business and to obtain any information which he considers necessary to verify
the 

 6
 

 

accuracy of or to amplify upon the Company’s
disclosures and that all questions which have been asked have been answered by
the Company to Executive’s satisfaction.

3.2           Payment. All
Base Salary due Executive hereunder shall be paid 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 fifteen
(15) days of 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 as they are in effect from time to time during the term of this
Agreement.

(b)           Accounting. Executive shall
provide the Company with an accounting of any expenses, for which reimbursement
is sought including a description of the purpose for which each expense was
incurred. Executive shall provide the Company with such other supporting
documentation and other substantiation of reimbursable expenses as may be
required by Company to 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 required by the Company.

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 as they are in effect from time to time
during the term of the Agreement.

3.5           Compensation Upon
Termination. If Executive’s employment hereunder and this Agreement 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 and this Agreement is
terminated by reason of his death or Total Disability, under Sections 2.2(c) or
(d), then within thirty (30) days of the date of termination the Company
will pay 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”);

 7
 

 

(ii)           any compensation for unused vacation
days accrued as of the termination date in an amount equal to Executive’s Base
Salary multiplied by a fraction, the numerator of which is the number of
accrued unused vacation days and the denominator of which is 360 (the “Accrued
Vacation Payment”);

(iii)          any expenses incurred by Executive
prior to the date of termination that may be reimbursed 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 exclusive of any Long Term Shares
or Annual Stock Options (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)           an amount equal to either the
prorated portion of the Annual Incentive Bonus that Executive received for the
last fiscal year completed prior to termination equal to the relevant Annual
Incentive Bonus multiplied by a fraction, the numerator of which is the number
of days in the year prior to the date of death or Total Disability and the
denominator of which is 360, or if the termination occurs in the first year of
the Employment Term, then the prorated portion of the Annual Incentive Bonus as
if the target bonus was received for that year (the “Accrued Bonus”) calculated
in the same fashion.

In addition, if Executive’s employment and this
Agreement is terminated under Sections 2.2(c) or (d), any Long Term
Shares or Annual Stock Options issued to Executive under this Agreement which
have not yet vested shall immediately vest and shall no longer be subject to
forfeiture.

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

(i)            any Accrued Base Salary;

(ii)           any Accrued Vacation Payment;

(iii)          any Accrued Reimbursable Expenses; and

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

In addition, if Executive’s employment and this
Agreement is terminated under Sections 2.2(a) or (e), any Long Term
Shares or Stock Option Awards issued to Executive which have not yet vested
shall immediately be forfeited by Executive.

 8

 

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

(i)            any Accrued Base Salary;

(ii)           any Accrued Vacation Payment;

(iii)          any Accrued Reimbursable Expenses;

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

(v)           any Accrued Bonus; and

(vi)          an amount equal to 1.0 times the sum
of: (A) Executive’s then current per annum 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; 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”); provided, however that if the termination occurs
within one year of a Change of Control, then in addition to the amounts
described in clauses (i) through (v) above, the Company will
pay Executive an amount equal to 1.5 times the sum of: (A) Executive’s
then current per annum 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; plus (C) the aggregate dollar value of
each of the Annual Long Term Share Award and Annual Stock Option Award that was
granted to Executive for the fiscal year immediately preceding the year of
termination; 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 Code.

In addition, if Executive’s employment hereunder and
this Agreement is terminated under Section 2.2(b), any Long Term
Shares or Annual Stock Options issued to Executive which have not yet vested
shall immediately vest and shall no longer be subject to forfeiture by
Executive. If Executive’s employment hereunder is terminated under Section 2.2(f),
any Long Term Shares or Annual Stock Options issued to Executive which have not
vested shall immediately be forfeited by Executive; provided that if
this Agreement is terminated under Section 2.2(f) within one
year of a Change of Control, then any Long Term Shares or Annual Stock Options
issued to Executive under this Agreement shall immediately vest and shall no
longer be subject to forfeiture by Executive.

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 

 9
 

 

specifically
provided herein to the contrary, cease and become of no further force or effect
as of the date of termination, and shall only survive as expressly provided for
herein.

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, shareholder
lists, tenant lists and profiles, prospective customer, acquisition candidate
or tenant lists, accounts receivable and payable ledgers, financial and other
records of the Company or its Affiliates, information regarding its
shareholders, tenants or joint venture partners, 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, partnership or organization, or any affiliated entity (hereinafter
referred to as “Third Parties”), or
use or cause or authorize any Third Parties to divulge or use, the Confidential
Information, except as required by law; and

(b)           Upon the termination of the
Employment Term and this Agreement 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
termination, 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
covenants 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, 

 10
 

 

the members of
his family and the others dependent upon him of at least the level provided by
this Agreement. In addition, Executive acknowledges that the Company and its
Affiliates have obtained an advantage over their competitors that is
characterized by relationships with clients, principals, tenants and other
contacts.

(b)           Covenants. Executive hereby
covenants and agrees that, except as permitted by the Company, during the
Employment Term, and any extensions thereof, and for a period of one (1) year
following the expiration, termination or extension of this Agreement, 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 purchasing, selling, financing, managing, leasing, brokering or
providing services for retail shopping centers or any new business or lines of
business which the Company may enter prior which business or businesses are
conducted in the greater metropolitan area of Chicago, Illinois, 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; (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; (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; (v) knowingly make or
participate in any “solicitation” of “proxies” or “consents” (as such terms are
used in the proxy rules of the United States Securities and Exchange
Commission) or make proposals for approval of the Company’s stockholders; (vi) knowingly
form, join or participate in a “group” (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to the Company’s securities; (vii) otherwise
knowingly act to control or seek to control the management, board of directors
or policies of the Company (except with respect to actions taken solely in
Executive’s capacity as an officer of the Company in the exercise of his
fiduciary duties; or (viii) make any agreement to do any of the foregoing
to the extent restricted thereby. As used in this Section 4.2, the
term “Company” shall mean the Company or any Affiliate thereof. As used in this
Section 4.2(b), “customer” and “prospective customer” shall
include: (i) any tenant of the Company’s properties 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 this
Agreement or during the six month period immediately prior to such termination;
(ii) any owner or prospective owner of real property the purchase or sale
of which is being negotiated by the Company at the time of the termination of
this Agreement or during the six month period immediately prior to such
termination; or (iii) any joint venture partner of the Company. 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 

 11
 

 

whose
securities are listed on a national securities exchange, or included for
quotation on any interdealer quotation system.

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 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.

(b)           Enforcement. Executive
expressly acknowledges and agrees that the provisions of Sections 4.1 or 4.2
shall 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 or delivered: (i) when delivered
personally or by commercial messenger; (ii) one (1) business day
following deposit with a recognized overnight courier service; provided
such deposit occurs prior to the deadline imposed by such service for overnight
delivery; (iii) when transmitted, if sent by facsimile copy, provided
confirmation of receipt is received by sender and such notice is sent by an
additional method provided hereunder, in each case above provided such
communication is addressed to the intended recipient thereof as set forth
below:

 12
 

 

To Executive at his home address.

	
  

  	
  To the Company at:

  	
  Inland Real Estate Corporation

  2901 Butterfield Road

  Oak Brook, Illinois 60523

  Attn: Robert D. Parks

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Shefsky & Froelich Ltd.

  111 East Wacker Drive, Suite 2800

  Chicago, Illinois 60601

  Attn: Michael J. Choate

  Telephone: (312) 836-4066

  Facsimile: (312) 527-5921

  

 

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.

 13
 

 

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 internal laws of the State of Illinois without
regard to its conflicts of law provisions, 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.

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.

[The remainder of this page intentionally blank]

 14

 

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/ ROBERT D. PARKS

  
	
   

  	
  Name:

  	
   Robert D.
  Parks

  
	
   

  	
  Its:

  	
   President and
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ BRETT A. BROWN

  
	
   

  	
  Name:

  	
   Brett A.
  Brown

  

 

 

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
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the AIBO is calculated, when compared
to FFO per fully-diluted share for the next preceding completed fiscal year, is
not less than 80% of the median FFO growth rate for the applicable year as
published by NAREIT for the Retail REIT Shopping Center subsector of the NAREIT
Equity REIT Total Return Index (or, if not then in existence, a comparable
retail REIT shopping center index mutually agreeable to the Company and
Executive).

·                                          The
Company will have achieved a Target level of performance if the Company’s
annual growth in FFO per fully-diluted share for the completed fiscal year
immediately preceding the year in which the AIBO is calculated, when compared
to FFO per fully-diluted share for the next preceding completed fiscal year, is
not less than 100% of the median FFO growth rate for the applicable year as
published by NAREIT for the Retail REIT Shopping Center subsector of the NAREIT
Equity REIT Total Return Index (or, if not then in existence, a comparable
retail REIT shopping center index mutually agreeable to the Company and
Executive).

·                                          The
Company will have achieved a High level of performance if the Company’s annual
growth in FFO per fully-diluted share for the completed fiscal year immediately
preceding the year in which the AIBO is calculated, when compared to FFO per
fully-diluted share for the next preceding completed fiscal year, is not less
than 130% of the median FFO growth rate for the applicable year as published by
NAREIT for the Retail REIT Shopping Center subsector of the NAREIT Equity REIT
Total Return Index (or, if not then in existence, a comparable retail REIT
shopping center index mutually agreeable to the Company and Executive).

For purposes of calculating AIBO, “FFO” shall have the
same meaning ascribed to that term in the Company’s annual report on Form 10-K
as filed with the SEC for the year in which the bonus is to be calculated.

Subject to Section II. below, if the
Company achieves a Threshold level of performance, the Executive’s AIBO will be
equal to 10% of Executive’s Base Salary for the applicable year. If the Company
achieves a Target level of performance, the Executive’s AIBO will be equal to
20% of Executive’s Base Salary for the applicable year. If the Company achieves
a High level 

 

of performance, the Executive’s AIBO will be equal to
30% 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 three (3) components:

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

B.            The
second component shall be determined by the Company’s chief executive officer,
as recommended to and approved by the board of directors’ compensation
committee, based on a subjective assessment of the Executive’s performance, and
may be up to but not in excess of 25% of the Executive’s AIBO.

C.            The
third component shall be dependent upon the Executive achieving a personal goal
with respect to his individual performance, as agreed by the Executive and the
Company’s chief executive officer at the beginning of the applicable year, and
may be up to but not in excess of 25% of the Executive’s AIBO.

III.                                 Notwithstanding
anything to the contrary in this Exhibit A, in the event that the
Company fails to achieve a Threshold level of performance in any given year,
the Executive’s Annual Incentive Bonus shall be equal to 5% of the Executive’s
Base Salary for the applicable year. The amount of any Annual Incentive Bonus
determined pursuant to this Section III. shall be non-discretionary
on the part of the Company, and shall be paid to the Executive in accordance
with the provisions of Section 3.1(b) of the Agreement.

 

EXHIBIT
B

(FORMULA
FOR DETERMINING ANNUAL AWARD OF LONG TERM SHARES)

I.                                         The
Executive’s Annual Award of Long Term Shares (“LTS”) 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 annual
growth in FFO per fully-diluted share for the completed fiscal year immediately
preceding the year in which the grant of Long Term Shares is calculated, when
compared to FFO per fully-diluted share for the next preceding completed fiscal
year, is not less than 80% of the median FFO growth rate for the applicable
year as published by NAREIT for the Retail REIT Shopping Center subsector of
the NAREIT Equity REIT Total Return Index (or, if not then in existence, a
comparable retail REIT shopping center index mutually agreeable to the Company
and Executive).

·                                          The Company
will have achieved a Target level of performance if the Company’s annual growth
in FFO per fully-diluted share for the completed fiscal year immediately
preceding the year in which the grant of Long Term Shares is calculated, when
compared to FFO per fully-diluted share for the next preceding completed fiscal
year, is not less than 100% of the median FFO growth rate for the applicable
year as published by NAREIT for the Retail REIT Shopping Center subsector of
the NAREIT Equity REIT Total Return Index (or, if not then in existence, a
comparable retail REIT shopping center index mutually agreeable to the Company
and Executive).

·                                          The Company
will have achieved a High level of performance if the Company’s annual growth
in FFO per fully-diluted share for the completed fiscal year immediately
preceding the year in which the grant of Long Term Shares is calculated, when
compared to FFO per fully-diluted share for the next preceding completed fiscal
year, is not less than 130% of the median FFO growth rate for the applicable
year as published by NAREIT for the Retail REIT Shopping Center subsector of
the NAREIT Equity REIT Total Return Index (or, if not then in existence, a
comparable retail REIT shopping center index mutually agreeable to the Company
and Executive).

For purposes of calculating the LTS grant, “FFO” shall
have the same meaning ascribed to that term in the Company’s annual report on Form 10-K
as filed with the SEC for the year in which the bonus is to be calculated.

Subject to Section II. below, if the
Company achieves a Threshold level of performance, the Executive’s LTS grant
will be the number of shares equal to the quotient of (1) 10% of the
Executive’s Base Salary for the applicable year, divided by (2) the
average of the high and low trading price as reported by the New York Stock
Exchange on the date of grant. If the Company achieves a Target level of
performance, the Executive’s LTS grant will be the number of shares equal to
the quotient of (1) 20% of the Executive’s Base Salary for the applicable
year, divided by (2) the average of the high and low trading price as
reported by the New York Stock Exchange on the date of grant. If the Company
achieves a High level of performance, the Executive’s LTS grant will be the
number of shares 

 

equal to the quotient of (1) 30% of the Executive’s
Base Salary for the applicable year, divided by (2) the average of the
high and low trading price as reported by the New York Stock Exchange on the
date of grant.

II.                                     The
Executive’s Annual Award of Long Term Shares for the applicable year shall be
determined by adding three components:

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

B.            The
second component shall be determined by the Company’s chief executive officer,
as recommended to and approved by the board of director’s compensation
committee, based on a subjective assessment of the Executive’s performance, and
may be up to but not in excess of 25% of the Executive’s LTS grant.

C.            The
third component shall be dependent upon the Executive achieving a personal goal
with respect to his individual performance, as agreed by the Executive and the
Company’s chief executive officer, and may be up to but not in excess of 25% of
the Executive’s LTS grant.

III.                                 Notwithstanding
anything to the contrary in this Exhibit B, in the event that the
Company fails to achieve a Threshold level of performance in a given year, the
Executive’s Annual Award of Long Term Shares shall be equal to the quotient of (1) 5%
of the Executive’s Base Salary for the applicable year, divided by (2) the
average of the high and low trading price as reported by the New York Stock
Exchange on the date of grant. Any Annual Award of Long Term Shares determined
pursuant to this Section III. shall be non-discretionary on the
part of the Company, and shall be awarded to the Executive in accordance with
the provisions of Section 3.1(c) of the Agreement.

 

EXHIBIT C

(FORMULA
FOR DETERMINING ANNUAL STOCK OPTION AWARD)

I.                                         The
Executive will be awarded an Annual Stock Option Award only if the Company
shall have achieved a Threshold level of performance in the completed fiscal
year immediately preceding the award. For these purposes, the Company will have
achieved a Threshold level of performance if the Company’s annual growth in FFO
per fully-diluted share for the completed fiscal year immediately preceding the
year in which the award of Annual Stock Options is calculated, when compared to
FFO per fully-diluted share for the next preceding completed fiscal year, is
not less than 80% of the median FFO growth rate for the applicable year as published
by NAREIT for the Retail REIT Shopping Center subsector of the NAREIT Equity
REIT Total Return Index (or, if not then in existence, a comparable retail REIT
shopping center index mutually agreeable to the Company and Executive).

II.                                     If
the Company achieves a Threshold level of performance, the Executive’s Annual
Stock Option Award will authorize the Executive to purchase the number of
shares equal to the quotient of (1) 5% of the Executive’s Base Salary for
the applicable year, divided by (2) the closing price per share on the day
immediately preceding the date of grant (or, if not a trading day, on the next
preceding trading day during which a sale occurred), in each case as reported
by the New York Stock Exchange. The strike price for each share underlying each
Annual Stock Option Award will be equal to the closing price per share on the
day immediately preceding the date of grant (or, if not a trading day, on the
next preceding trading day during which a sale occurred), in each case as
reported by the New York Stock Exchange.Exhibit 10.2

EMPLOYMENT
AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered
into as of April 28, 2006, but shall be effective, nunc pro
tunc, as of January 1, 2006, by and between INLAND COMMERCIAL
PROPERTY MANAGEMENT, INC., an Illinois corporation (the “Company”), and D.
Scott Carr (the “Executive”).

RECITALS:

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

B.            Executive
has served as the Company’s President pursuant to an employment agreement,
effective as of January 1, 2004, by and between the Company and Executive
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 to
become effective as of January 1, 2006.

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

E.             As
a condition for 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 and
engages Executive, and Executive hereby accepts employment, upon the terms and
conditions set forth in this Agreement. Effective as of January 1, 2006
(the “Effective Date”), Executive shall serve as President, 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
(collectively, “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 engage in 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 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 through and including December 31, 2007 (the “Employment
Term”) except as this Agreement may be terminated as provided in Section 2.2.

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.

(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)           On expiration of the Employment Term
if not extended by the mutual consent of the Company and Executive.

 2
 

 

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, disloyalty 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 the failure to Executive and Executive has failed to cure within ten (10) days
of receiving notice; (iv) gross negligence or willful misconduct by the
Executive with respect to the Company, its clients, its employees and its
activities; or (v) material breach by the Executive of this Agreement or
any other agreement to which Executive and the Company are a party or any
material breach by the Executive of any written policy adopted by the Company
concerning conflicts of interest, standards of business conduct or fair
employment practices and any other similar matter, provided that the Company
has provided written notice of the breach to Executive and Executive has failed
to cure the breach within ten (10) days of receiving notice.

(b)           For purposes of this Agreement,
Executive shall be determined to have a “Total Disability” upon the determination
of a physician, acceptable to the Company and Executive that Executive is
unable, by reason of accident or illness, to substantially perform his duties
or is expected to be in the condition for periods totaling six (6) months
(whether or not consecutive) during any period of twelve (12) months. 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 Good Reason:

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

(ii)           the Executive’s base salary or other
compensation and benefits is reduced to less than the amount of the Base Salary
and other compensation and benefits as set forth in Section 3.1
below;

(iii)          a material breach by the Company of
the provisions of this Agreement; or

(iv)          following a Change of Control, the
assignment to Executive of duties which constitute a material reduction in
Executive’s title or authority and 

 3
 

 

which are materially inconsistent with
Executive’s position as contemplated by this Agreement.

(d)           “Change of Control” shall mean any of
the following events:

(i)            the members of IREC’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 or appointed to the board seat
on the recommendation and approval of IREC’s Nominating and Corporate
Governance Committee shall be treated as if he or she were a member of the
board as of the date of this Agreement;

(ii)           the disposition by IREC of all, or
substantially all, of the assets of IREC; or

(iii)          the termination and liquidation of
IREC.

ARTICLE III

COMPENSATION AND BENEFITS

3.1           Compensation.

(a)           Base Salary. During the
Employment Term, the Company shall pay Executive a base salary (the “Base
Salary”) of $225,000 per annum.

(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 120 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)           Annual Long Term Share Award. No
later than June 30 of each fiscal year during the Employment Term, the
Company shall grant Executive an Annual Long Term Share Award consisting of
shares of the common stock of IREC (“Long Term Shares”), subject to the
conditions set forth below and in accordance with the schedule set forth on Exhibit B,
attached hereto and made a part hereof. Twenty percent (20%) of any Long Term
Shares granted hereunder shall vest on each successive yearly anniversary of
the grant of the Long Term Shares.

(i)            All Long Term Shares shall be issued
under, and in accordance with, IREC’s 2005 Equity Award Plan (the “2005 Equity
Award Plan”); to the extent the terms of any Long Term Shares granted pursuant
to this Agreement conflict with the terms of the 2005 Equity Award Plan, the
terms of the 2005 Equity Award Plan shall apply to the minimum extent necessary
to eliminate the conflict. Executive shall be the record owner of any Long Term
Shares granted hereunder; provided that any Long Term Shares that have
not yet vested shall be forfeited and redeemed by the Company, without any
further action on the part of the Company or the Executive, if Executive is no
longer employed by the Company for any reason, other than in connection with a
termination as described 

 4
 

 

in Sections 2.2(b), (c) or (d). Executive
may not sell, transfer, hypothecate, pledge or assign any Long Term Shares
which have not vested.

(ii)           Upon the occurrence of any forfeiture
of Long Term Shares, Executive shall immediately take all actions necessary to
permit the Company to redeem any forfeited Long Term Shares.

(iii)          Unless forfeited, Executive may
exercise all rights of a stockholder, including the right to vote and receive
dividends with respect to any Long Term Shares granted Executive.

(iv)          All Long Term Shares which may be
issuable hereunder shall be issued in reliance upon the following
representations, warranties and agreements of Executive, each of which shall be
true and correct as of the date of issuance and each of which shall survive the
termination of this Agreement.

(A)          Executive acknowledges that the common
stock underlying any Long Term Shares has been registered under the Securities
Act of 1933, as amended (the “Securities Act”), pursuant to an effective
registration statement on Form S-8 (file no. 333-128624);

(B)           Executive acknowledges that once the
common stock underlying any Long Term Shares has been issued to Executive, the
common stock may not be subsequently transferred or sold by Executive except in
compliance with the registration requirements of federal and state securities
law or exemptions therefrom;

(C)           Executive acknowledges that an
investment in the IREC’s common stock is subject to significant risk, including
the risks described, from time to time, in IREC’s annual reports on Form 10-K.
Executive represents and warrants that he has such knowledge and expertise in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in IREC’s common stock and the ability to bear the
economic risk of the investment; and

(D)          Executive represents and warrants that
he has had the opportunity to ask questions of the Company concerning its
business and to obtain any information which he considers necessary to verify
the accuracy of or to amplify upon the Company’s disclosures and that all
questions which have been asked have been answered by the Company to Executive’s
satisfaction.

(d)           Annual Stock Option Award. No
later than June 30 of each fiscal year during the Employment Term, the
Company shall grant Executive an Annual Stock Option Award to purchase shares
of the common stock of IREC (“Annual Stock Options”), subject to the conditions
set forth below and in accordance with the schedule set forth on Exhibit C,
attached hereto and made a part hereof. Twenty percent (20%) of 

 5
 

 

any Annual
Stock Options granted hereunder shall vest on each successive yearly
anniversary of the grant of the Annual Stock Options.

(i)            All Annual Stock Options shall be
issued under, and in accordance with, the 2005 Equity Award Plan; to the extent
the terms of any Annual Stock Options awarded pursuant to this Agreement
conflict with the terms of the 2005 Equity Award Plan, the terms of the 2005
Equity Award Plan shall apply to the minimum extent necessary to eliminate the
conflict. Any Annual Stock Options that have not yet vested shall be forfeited
and redeemed by the Company, without any further action on the part of the
Company or the Executive, if Executive is no longer employed by the Company for
any reason, other than in connection with a termination as described in Sections
2.2(b), (c) or (d). Executive may not sell, transfer, hypothecate,
pledge or assign any Annual Stock Options which have not vested.

(ii)           Upon the occurrence of any forfeiture
of Annual Stock Options, Executive shall immediately take all actions necessary
to permit the Company to redeem any forfeited Annual Stock Options.

(iii)          All Annual Stock Options which may be
issuable hereunder shall be issued in reliance upon the following
representations, warranties and agreements of Executive, each of which shall be
true and correct as of the date of issuance and each of which shall survive the
termination of this Agreement.

(A)          Executive acknowledges that the common
stock underlying any Annual Stock Options has been registered under the
Securities Act pursuant to an effective registration statement on Form S-8
(file no. 333-128624);

(B)           Executive acknowledges that once the
common stock underlying any Annual Stock Options has been issued to Executive,
the common stock may not be subsequently transferred or sold by Executive
except in compliance with the registration requirements of federal and state
securities law or exemptions therefrom;

(C)           Executive acknowledges that an
investment in IREC’s common stock is subject to significant risk, including the
risks described, from time to time, in IREC’s annual reports on Form 10-K.
Executive represents and warrants that he has such knowledge and expertise in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in IREC’s common stock and the ability to bear the
economic risk of the investment; and

(D)          Executive represents and warrants that
he has had the opportunity to ask questions of the Company concerning its
business and to obtain any information which he considers necessary to verify
the accuracy of or to amplify upon the Company’s disclosures and that all 

 6
 

 

questions which have been asked have been
answered by the Company to Executive’s satisfaction.

3.2           Payment. All
Base Salary due Executive hereunder shall be paid 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 fifteen
(15) days of 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 as they are in effect from time to time during the term of this
Agreement.

(b)           Accounting. Executive shall
provide the Company with an accounting of any expenses, for which reimbursement
is sought including a description of the purpose for which each expense was
incurred. Executive shall provide the Company with such other supporting
documentation and other substantiation of reimbursable expenses as may be
required by Company to 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 required by the Company.

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 as they are in effect from time to time
during the term of the Agreement.

3.5           Compensation Upon
Termination. If Executive’s employment hereunder and this Agreement 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 and this Agreement is
terminated by reason of his death or Total Disability, under Sections 2.2(c) or
(d), then within thirty (30) days of the date of termination the Company
will pay 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 Executive’s Base
Salary multiplied by a 

 7
 

 

fraction, the numerator of which is the
number of accrued unused vacation days and the denominator of which is 360 (the
“Accrued Vacation Payment”);

(iii)          any expenses incurred by Executive
prior to the date of termination that may be reimbursed 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 exclusive of any Long Term Shares
or Annual Stock Options (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)           an amount equal to either the
prorated portion of the Annual Incentive Bonus that Executive received for the
last fiscal year completed prior to termination equal to the relevant Annual
Incentive Bonus multiplied by a fraction, the numerator of which is the number
of days in the year prior to the date of death or Total Disability and the
denominator of which is 360, or if the termination occurs in the first year of
the Employment Term, then the prorated portion of the Annual Incentive Bonus as
if the target bonus was received for that year (the “Accrued Bonus”) calculated
in the same fashion.

In addition, if Executive’s employment and this
Agreement is terminated under Sections 2.2(c) or (d), any Long Term
Shares or Annual Stock Options issued to Executive under this Agreement which
have not yet vested shall immediately vest and shall no longer be subject to
forfeiture.

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

(i)            any Accrued Base Salary;

(ii)           any Accrued Vacation Payment;

(iii)          any Accrued Reimbursable Expenses; and

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

In addition, if Executive’s employment and this
Agreement is terminated under Sections 2.2(a) or (e), any Long Term
Shares or Stock Option Awards 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
hereunder and this Agreement is terminated under Sections 2.2(b) or (f),
the Company will pay Executive:

 8
 

 

(i)            any Accrued Base Salary;

(ii)           any Accrued Vacation Payment;

(iii)          any Accrued Reimbursable Expenses;

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

(v)           any Accrued Bonus; and

(vi)          an amount equal to 1.0 times the sum
of: (A) Executive’s then current per annum 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; 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”); provided, however that if the termination occurs
within one year of a Change of Control, then in addition to the amounts
described in clauses (i) through (v) above, the Company will
pay Executive an amount equal to 1.5 times the sum of: (A) Executive’s
then current per annum 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; plus (C) the aggregate dollar value of
each of the Annual Long Term Share Award and Annual Stock Option Award that was
granted to Executive for the fiscal year immediately preceding the year of
termination; 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 Code.

In addition, if Executive’s employment hereunder and
this Agreement is terminated under Section 2.2(b), any Long Term
Shares or Annual Stock Options issued to Executive which have not yet vested
shall immediately vest and shall no longer be subject to forfeiture by
Executive. If Executive’s employment hereunder is terminated under Section 2.2(f),
any Long Term Shares or Annual Stock Options issued to Executive which have not
vested shall immediately be forfeited by Executive; provided that if
this Agreement is terminated under Section 2.2(f) within one
year of a Change of Control, then any Long Term Shares or Annual Stock Options
issued to Executive under this Agreement shall immediately vest and shall no
longer be subject to forfeiture by Executive.

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 termination,
and shall only survive as expressly provided for herein.

 9

 

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, shareholder
lists, tenant lists and profiles, prospective customer, acquisition candidate
or tenant lists, accounts receivable and payable ledgers, financial and other
records of the Company or its Affiliates, information regarding its
shareholders, tenants or joint venture partners, 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, partnership or organization, or any affiliated entity
(hereinafter referred to as “Third Parties”), or use or cause or authorize any Third Parties to divulge or use,
the Confidential Information, except as required by law; and

(b)           Upon the termination of the
Employment Term and this Agreement 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
termination, 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
covenants 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 provided by this Agreement. In
addition, Executive acknowledges that the Company and 

 10
 

 

its Affiliates
have obtained an advantage over their competitors that is characterized by
relationships with clients, principals, tenants and other contacts.

(b)           Covenants. Executive hereby
covenants and agrees that, except as permitted by the Company, during the Employment
Term, and any extensions thereof, and for a period of one (1) year
following the expiration, termination or extension of this Agreement, 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 purchasing, selling, financing, managing, leasing, brokering or
providing services for retail shopping centers or any new business or lines of
business which the Company may enter prior which business or businesses are
conducted in the greater metropolitan area of Chicago, Illinois, 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; (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; (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; (v) knowingly make or
participate in any “solicitation” of “proxies” or “consents” (as such terms are
used in the proxy rules of the United States Securities and Exchange
Commission) or make proposals for approval of the Company’s stockholders; (vi) knowingly
form, join or participate in a “group” (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to the Company’s securities; (vii) otherwise
knowingly act to control or seek to control the management, board of directors
or policies of the Company (except with respect to actions taken solely in
Executive’s capacity as an officer of the Company in the exercise of his
fiduciary duties; or (viii) make any agreement to do any of the foregoing
to the extent restricted thereby. As used in this Section 4.2, the
term “Company” shall mean the Company or any Affiliate thereof. As used in this
Section 4.2(b), “customer” and “prospective customer” shall
include: (i) any tenant of the Company’s properties 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 this
Agreement or during the six month period immediately prior to such termination;
(ii) any owner or prospective owner of real property the purchase or sale
of which is being negotiated by the Company at the time of the termination of
this Agreement or during the six month period immediately prior to such
termination; or (iii) any joint venture partner of the Company. 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, or
included for quotation on any interdealer quotation system.

 11
 

 

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 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.

(b)           Enforcement. Executive
expressly acknowledges and agrees that the provisions of Sections 4.1 or 4.2
shall 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 or delivered: (i) when delivered
personally or by commercial messenger; (ii) one (1) business day
following deposit with a recognized overnight courier service; provided
such deposit occurs prior to the deadline imposed by such service for overnight
delivery; (iii) when transmitted, if sent by facsimile copy, provided confirmation
of receipt is received by sender and such notice is sent by an additional
method provided hereunder, in each case above provided such communication is
addressed to the intended recipient thereof as set forth below:

 12
 

 

To Executive at his home address.

	
  

  	
  To the Company at:

  	
  Inland Commercial Property Management, Inc.

  2901 Butterfield Road

  Oak Brook, Illinois 60523

  Attn: Robert D. Parks, President and Chief Executive Officer of IREC

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Shefsky & Froelich Ltd.

  111 East Wacker Drive, Suite 2800

  Chicago, Illinois 60601

  Attn: Michael J. Choate

  Telephone: (312) 836-4066

  Facsimile: (312) 527-5921

  

 

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.

 13
 

 

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 internal laws of the State of Illinois without
regard to its conflicts of law provisions, 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.

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.

[The remainder of this page intentionally blank]

 14

 

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 COMMERCIAL PROPERTY

  MANAGEMENT, INC.,

  
	
   

  	
   

  
	
   

  	
  an Illinois corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kristi A. Rankin

  
	
   

  	
  Name:

  	
  Kristi A. Rankin

  
	
   

  	
  Its:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. SCOTT CARR

  
	
   

  	
  Name:

  	
  D. Scott Carr

  

 

 

EXHIBIT
A

(FORMULA
FOR DETERMINING ANNUAL INCENTIVE BONUS)

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

·                                          IREC
will have achieved a Threshold level of performance if IREC’s annual growth in
FFO per fully-diluted share for the completed fiscal year immediately preceding
the year in which the AIBO is calculated, when compared to FFO per
fully-diluted share for the next preceding completed fiscal year, is not less
than 80% of the median FFO growth rate for the applicable year as published by
NAREIT for the Retail REIT Shopping Center subsector of the NAREIT Equity REIT
Total Return Index (or, if not then in existence, a comparable retail REIT
shopping center index mutually agreeable to the Company and Executive).

·                                          IREC
will have achieved a Target level of performance if IREC’s annual growth in FFO
per fully-diluted share for the completed fiscal year immediately preceding the
year in which the AIBO is calculated, when compared to FFO per fully-diluted
share for the next preceding completed fiscal year, is not less than 100% of
the median FFO growth rate for the applicable year as published by NAREIT for
the Retail REIT Shopping Center subsector of the NAREIT Equity REIT Total
Return Index (or, if not then in existence, a comparable retail REIT shopping
center index mutually agreeable to the Company and Executive).

·                                          IREC
will have achieved a High level of performance if IREC’s annual growth in FFO
per fully-diluted share for the completed fiscal year immediately preceding the
year in which the AIBO is calculated, when compared to FFO per fully-diluted
share for the next preceding completed fiscal year, is not less than 130% of the
median FFO growth rate for the applicable year as published by NAREIT for the
Retail REIT Shopping Center subsector of the NAREIT Equity REIT Total Return
Index (or, if not then in existence, a comparable retail REIT shopping center
index mutually agreeable to the Company and Executive).

For purposes of calculating AIBO, “FFO” shall have the
same meaning ascribed to that term in IREC’s annual report on Form 10-K
as filed with the SEC for the year in which the bonus is to be calculated.

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

II.                                     The
Executive’s Annual Incentive Bonus for the applicable year shall be determined
by adding three (3) components:

 

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

B.            The
second component shall be determined by IREC’s chief executive officer, as
recommended to and approved by its board of directors’ compensation committee,
based on a subjective assessment of the Executive’s performance, and may be up
to but not in excess of 25% of the Executive’s AIBO.

C.            The
third component shall be dependent upon the Executive achieving a personal goal
with respect to his individual performance, as agreed by the Executive and IREC’s
chief executive officer at the beginning of the applicable year, and may be up
to but not in excess of 25% of the Executive’s AIBO.

III.                                 Notwithstanding
anything to the contrary in this Exhibit A, in the event that IREC
fails to achieve a Threshold level of performance in any given year, the
Executive’s Annual Incentive Bonus shall be equal to 5% of the Executive’s Base
Salary for the applicable year. The amount of any Annual Incentive Bonus
determined pursuant to this Section III. shall be non-discretionary
on the part of the Company, and shall be paid to the Executive in accordance
with the provisions of Section 3.1(b) of the Agreement.

 

EXHIBIT
B

(FORMULA
FOR DETERMINING ANNUAL AWARD OF LONG TERM SHARES)

I.                                         The
Executive’s Annual Award of Long Term Shares (“LTS”) shall be determined based
on performance of IREC, measured to either a Threshold, Target, or High level
of performance.

·                                          IREC will
have achieved a Threshold level of performance if IREC’s annual growth in FFO
per fully-diluted share for the completed fiscal year immediately preceding the
year in which the grant of Long Term Shares is calculated, when compared to FFO
per fully-diluted share for the next preceding completed fiscal year, is not
less than 80% of the median FFO growth rate for the applicable year as
published by NAREIT for the Retail REIT Shopping Center subsector of the NAREIT
Equity REIT Total Return Index (or, if not then in existence, a comparable
retail REIT shopping center index mutually agreeable to the Company and
Executive).

·                                          IREC will
have achieved a Target level of performance if IREC’s annual growth in FFO per
fully-diluted share for the completed fiscal year immediately preceding the
year in which the grant of Long Term Shares is calculated, when compared to FFO
per fully-diluted share for the next preceding completed fiscal year, is not
less than 100% of the median FFO growth rate for the applicable year as
published by NAREIT for the Retail REIT Shopping Center subsector of the NAREIT
Equity REIT Total Return Index (or, if not then in existence, a comparable
retail REIT shopping center index mutually agreeable to the Company and
Executive).

·                                          IREC will
have achieved a High level of performance if IREC’s annual growth in FFO per
fully-diluted share for the completed fiscal year immediately preceding the
year in which the grant of Long Term Shares is calculated, when compared to FFO
per fully-diluted share for the next preceding completed fiscal year, is not less
than 130% of the median FFO growth rate for the applicable year as published by
NAREIT for the Retail REIT Shopping Center subsector of the NAREIT Equity REIT
Total Return Index (or, if not then in existence, a comparable retail REIT
shopping center index mutually agreeable to the Company and Executive).

For purposes of calculating the LTS grant, “FFO” shall
have the same meaning ascribed to that term in IREC’s annual report on Form 10-K
as filed with the SEC for the year in which the bonus is to be calculated.

Subject to Section II. below, if IREC
achieves a Threshold level of performance, the Executive’s LTS grant will be
the number of shares equal to the quotient of (1) 10% of the Executive’s
Base Salary for the applicable year, divided by (2) the average of the
high and low trading price as reported by the New York Stock Exchange on the
date of grant. If IREC achieves a Target level of performance, the Executive’s
LTS grant will be the number of shares equal to the quotient of 

 

(1) 20% of the Executive’s Base Salary for the
applicable year, divided by (2) the average of the high and low trading
price as reported by the New York Stock Exchange on the date of grant. If IREC
achieves a High level of performance, the Executive’s LTS grant will be the
number of shares equal to the quotient of (1) 30% of the Executive’s Base
Salary for the applicable year, divided by (2) the average of the high and
low trading price as reported by the New York Stock Exchange on the date of
grant.

II.                                     The
Executive’s Annual Award of Long Term Shares for the applicable year shall be
determined by adding three components:

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

B.            The
second component shall be determined by IREC’s chief executive officer, as
recommended to and approved by its board of director’s compensation committee,
based on a subjective assessment of the Executive’s performance, and may be up
to but not in excess of 25% of the Executive’s LTS grant.

C.            The
third component shall be dependent upon the Executive achieving a personal goal
with respect to his individual performance, as agreed by the Executive and IREC’s
chief executive officer, and may be up to but not in excess of 25% of the
Executive’s LTS grant.

III.                                 Notwithstanding
anything to the contrary in this Exhibit B, in the event that IREC
fails to achieve a Threshold level of performance in a given year, the
Executive’s Annual Award of Long Term Shares shall be equal to the quotient of (1) 5%
of the Executive’s Base Salary for the applicable year, divided by (2) the
average of the high and low trading price as reported by the New York Stock
Exchange on the date of grant. Any Annual Award of Long Term Shares determined
pursuant to this Section III. shall be non-discretionary on the
part of the Company, and shall be awarded to the Executive in accordance with
the provisions of Section 3.1(c) of the Agreement.

 

EXHIBIT C

(FORMULA
FOR DETERMINING ANNUAL STOCK OPTION AWARD)

I.                                         The
Executive will be awarded an Annual Stock Option Award only if IREC shall have
achieved a Threshold level of performance in the completed fiscal year
immediately preceding the award. For these purposes, IREC will have achieved a
Threshold level of performance if IREC’s annual growth in FFO per fully-diluted
share for the completed fiscal year immediately preceding the year in which the
award of Annual Stock Options is calculated, when compared to FFO per
fully-diluted share for the next preceding completed fiscal year, is not less
than 80% of the median FFO growth rate for the applicable year as published by
NAREIT for the Retail REIT Shopping Center subsector of the NAREIT Equity REIT
Total Return Index (or, if not then in existence, a comparable retail REIT
shopping center index mutually agreeable to the Company and Executive).

II.                                     If
IREC achieves a Threshold level of performance, the Executive’s Annual Stock
Option Award will authorize the Executive to purchase the number of shares
equal to the quotient of (1) 5% of the Executive’s Base Salary for the
applicable year, divided by (2) the closing price per share on the day
immediately preceding the date of grant (or, if not a trading day, on the next
preceding trading day during which a sale occurred), in each case as reported
by the New York Stock Exchange. The strike price for each share underlying each
Annual Stock Option Award will be equal to the closing price per share on the
day immediately preceding the date of grant (or, if not a trading day, on the
next preceding trading day during which a sale occurred), in each case as
reported by the New York Stock Exchange.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]