Document:

Exhibit 10.2

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is entered into as of April 21, 2008, but shall be
effective, nunc pro tunc, as of January 1,
2008, 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,
effective 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, 2008.

 

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 her
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, 2008 (the “Effective Date”), Executive
shall serve as Chief Financial Officer and Vice 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 she is free to
engage in full-time employment with the Company, and that she has no prior or
other commitments or obligations of any kind to anyone else which would hinder
or interfere with her acceptance of her obligations under this Agreement, or
the exercise of her 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 her
business time, attention and efforts to the faithful and diligent performance
of her 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,
2009 (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 her 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
her 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
her 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 her
principal residence to a location outside the Greater Chicago Metropolitan Area
in order to perform her 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 $300,000 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 she
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 she has had
the opportunity to ask questions of the Company concerning its business and to
obtain any information which she 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 she
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 she has had
the opportunity to ask questions of the Company concerning its business and to
obtain any information which she 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 her in connection with the
performance of her 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
her 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 her 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 2.0 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; 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 her 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 her 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 her possession
or under her 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
her possession or under her 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 her
family and the others dependent upon her 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 her 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 her
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 her home
address.

 

	
  To
  the Company at:

  	
   

  	
  Inland
  Real Estate Corporation

  2901 Butterfield Road

  Oak Brook, Illinois 60523

  Attn: Mark Zalatoris, President and Chief

  Executive Officer

  
	
   

  	
   

  	
   

  
	
  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/ Mark Zalatoris

  
	
   

  	
   

  
	
   

  	
  Name: 

  	
    Mark Zalatoris

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
    President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Brett A. Brown

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   Brett A. Brown

  
							

 

41957

 

 

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 15% 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 25% 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 35%
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 her 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 10% 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 her 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.Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is entered into as of April 21, 2008, but shall be
effective, nunc pro tunc, as of January 1,
2008, by and between INLAND REAL ESTATE CORPORATION, a Maryland corporation
(the “Company”), and D. Scott Carr (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 President of its wholly owned subsidiary, Inland
Commercial Property Management, Inc., 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, 2008.

 

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
isr 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, 2008 (the
“Effective Date”), Executive shall serve as President of Inland Commercial
Property Management, Inc., the Company’s wholly owned subsidiary, 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 she is free to
engage in full-time employment with the Company, and that she has no prior or other
commitments or obligations of any kind to anyone else which would hinder or
interfere with her acceptance of her obligations under this Agreement, or the
exercise of her 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 her business time, attention and efforts to the faithful and diligent performance
of her 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,
2009 (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 her 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
her 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
her 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 her principal residence to a location outside
the Greater Chicago Metropolitan Area in order to perform her 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 $300,000 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 she 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 she has had the opportunity to ask questions of
the Company concerning its business and to obtain any information which she
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 she 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 she has had the opportunity to ask questions of
the Company concerning its business and to obtain any information which she
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 her in connection with the
performance of her 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 her 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 her 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 2.0 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; 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 her 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 her 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 her possession or under her 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 her possession or under her 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 her
family and the others dependent upon her 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 her 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 her 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 her home
address.

 

	
  To
  the Company at:

  	
  Inland
  Real Estate Corporation

  2901
  Butterfield Road

  Oak
  Brook, Illinois 60523

  Attn:
  Mark Zalatoris, President and Chief 

  Executive Officer 

  
	
   

  	
   

  
	
  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/ Mark Zalatoris

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mark Zalatoris

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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 15% 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 25% 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 35%
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 her 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 10% 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 her 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-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]