Document:

EXHIBIT
10.1

 

FORM OF

BUSINESS MANAGEMENT AGREEMENT

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Book Value”
means the value of the particular asset on the books and records of the
Company, before any allowance for depreciation or amortization.

 

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

 

“Company
Fixed Assets” means the Real Property, together with the buildings,
leasehold interests, improvements, equipment, furniture, fixtures and personal
property associated therewith, used by the Company in conducting its business.

 

2

 

“Controlling
Interest” means an interest equal to or greater than fifty
and one-tenth percent (50.1%) of the capital stock or other equity of an
entity.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           does not serve as a director
for more than three REITs organized by the Sponsor or advised by the Business
Manager or any of its Affiliates; and

 

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

 

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

 

3

 

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

 

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

 

“Market Value”
means the aggregate market value of all of the Shares, or all of the shares of
common stock of any of the Company’s subsidiaries, outstanding at the date of
Listing, measured by taking the average closing price or average of bid and
asked price, as the case may be, over a period of thirty days during which the
Shares are traded, with that period commencing 180 days after Listing.

 

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

 

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

 

“Net Income”
means, for any period, the aggregate amount of total revenues applicable to the
period less the expenses applicable to the same period other than
additions to reserves for depreciation, bad debts or other similar noncash
reserves and Acquisition Expenses to the extent not capitalized, provided,
however, that Net Income shall not include any gain recognized upon the
sale of the Company’s assets.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Stockholders”
means holders of shares of Equity Stock.

 

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

 

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

 

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

 

(c)           interest payments;

 

(d)           taxes;

 

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

 

(f)            any incentive fees payable
hereunder; and

 

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

 

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

 

(a)           subject to the terms and
conditions set forth in any acquisition agreement by and between the Company
and Acquisition Co., identify potential investment opportunities in Real Estate
Assets located both in and outside of the United States, and consistent with
the Company’s investment objectives and policies; including but not limited to:

 

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

 

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

 

(iii)          arranging for financing and
refinancing and making other changes in the asset or capital structure of the
Company and disposing of and reinvesting 

 

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the proceeds from the sale of, or otherwise deal with the investments
in, Real Estate Assets; and

 

(iv)          entering into leases and
service contracts, on the Company’s behalf, for Real Estate Assets and, to the
extent necessary, performing all functions necessary to maintain and administer
the Company’s assets.

 

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

 

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

 

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

 

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

 

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

 

(g)           upon request of the Company,
act, or obtain the services of others to act, as attorney-in-fact or agent of
the Company in making, acquiring and disposing of investments, disbursing and
collecting the funds, paying the debts and fulfilling the obligations of the
Company and handling, prosecuting and settling any claims of the Company,
including foreclosing and otherwise enforcing mortgage and other liens and
security interests securing investments;

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.             Bank Accounts. At the
direction of the Board of Directors or the officers of the Company, the
Business Manager shall establish and maintain bank accounts in the name of the 

 

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

 

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

 

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

 

8.             Compensation. Subject to
the provisions of Section 12 hereof, for services rendered
hereunder the Company shall pay to the Business Manager or its Affiliate or
designee the following:

 

(a)           Subject to satisfying the
criteria described herein, the Company will pay the Business Manager a
quarterly Management Fee equal to a percentage of Average Invested Assets
calculated as follows: (i) if the Company has declared distributions to
the holders of its common stock during the prior calendar quarter just ended,
in an amount equal to or greater than an average seven percent (7.0%)
annualized distribution rate (assuming a share of common stock was purchased
for $10.00), the Company will pay a fee equal to one-fourth percent (0.25%) of
Average Invested Assets for that quarter; (ii) if the Company has declared
distributions to the holders of its common stock during the prior calendar
quarter just ended, in an amount equal to or greater than an average six
percent (6.0%) annualized distribution rate but less than an average seven
percent (7.0%) annualized distribution rate (in each case, assuming a share of
common stock was purchased for $10.00), the Company will pay a fee equal to
three-sixteenths percent (0.1875%) of Average Invested Assets for that quarter;
(iii) if the Company has declared
distributions to the holders of its common stock during the prior calendar
quarter just ended, in an amount equal to or greater than an average five
percent (5.0%) annualized distribution rate but less than an average six
percent (6.0%) annualized distribution rate (in each case, assuming a share of
common stock was purchased for $10.00), the Company will pay a fee equal to
one-eighth percent (0.125%) of Average Invested Assets for that quarter; or (iv) if
the Company does not satisfy the criteria in clauses (i), (ii) or (iii) of
this Section 8(a) in a particular calendar quarter just ended,
the Company will not, except as set forth below, pay a Management Fee for that
prior calendar quarter.  In the event
that clause (i), (ii) or (iii) of this Section 8(a) is
satisfied, the Business Manager may decide, in its sole discretion, to be paid
an amount less than the total amount that may be paid.  If the Business Manager decides to accept
less in any particular quarter, the excess amount that is not paid may, in the
Business Manager’s sole discretion, be waived permanently or deferred, without
interest, to be paid at a later point in time. 
The obligation to pay this fee will terminate if the Company acquires
the Business Manager.

 

10

 

(b)           An incentive fee equal to
fifteen percent (15%) of the Net Sales Proceeds; provided that in no
event shall the Company be obligated to pay an incentive fee unless and until
all of its Stockholders have first received, on an aggregate basis, a ten percent
(10%) per annum cumulative, non-compounded return on, plus return of, their
Invested Capital.  The obligation to pay
this fee will terminate if the Company acquires the Business Manager.

 

(c)           Upon a Listing the Company
shall pay the Business Manager a listing fee equal to fifteen percent (15%) of
the amount by which (i) the Market Value plus the total distributions paid
to Stockholders in excess of the Priority Return from inception until the
Determination Date exceeds (ii) the Invested Capital, less any
distributions of Net Sales Proceeds, plus the total distributions required to
be made to the Stockholders in order to pay them the Priority Return from
inception through the Determination Date. 
In the event that, at the time of Listing, Stockholders have not
received a return of capital plus the Priority Return, the fee may be paid at
the time that the Company has paid the total distributions required to be made
to the Stockholders in order to pay them the Priority Return, provided, however,
that the fee shall be calculated as described in this Section 8(c),
as if the return would have been satisfied at the time of Listing.  The obligation to pay this fee will terminate
if the Company acquires the Business Manager.

 

9.             Expenses.

 

(a)           In addition to the compensation
paid to the Business Manager pursuant to Section 8 or Section 10
hereof, and subject to the limits herein, the Company shall reimburse the
Business Manager, the Sponsor and its Affiliates for all expenses paid or
incurred by the Business Manager, the Sponsor or its Affiliates to provide
certain services and licenses hereunder, including all direct expenses and the
costs of salaries and benefits of persons employed by the Business Manager, the
Sponsor and its Affiliates and performing services for the Company, except for
the salaries and benefits of persons who also serve as one of the Company’s
executive officers or as an executive officer of the Business Manager.

 

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

 

(i)            any Offering Expenses;

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

(ix)           expenses associated with
listing or with issuing Shares and Securities, including advertising expenses,
taxes, legal and accounting fees, listing and registration fees and other
Organization Expenses and Offering Expenses except for Selling Commissions or
other fees and expenses paid by the Dealer Manager to any Soliciting Dealer (as
those terms are defined in the Dealer Manager Agreement) pursuant to that
certain Dealer Manager Agreement dated                   ,
2009 by and between the Company and Inland Securities Corporation;

 

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

 

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

 

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

 

(xiii)         administrative service
expenses including personnel costs in accordance with Section 9(f);
provided, however, that no reimbursement shall be made for costs
of personnel to the extent that such personnel perform services in transactions
for which the Business Manager receives a separate fee; provided, further,
that any reimbursement of personnel costs shall be subject to the restrictions
set forth in Section 9(a);

 

(xiv)        audit, accounting and legal
fees;

 

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

 

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

 

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

 

12

 

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

 

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

 

(1)           the average amount of all
salaries and bonuses paid to the employees of the Affiliate; and

 

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

 

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

 

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

 

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

 

13

 

10.           Compensation for Additional
Services, Certain Limitations.

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           On or before the fifteenth
(15th) day after the completion of the annual audit of the Company’s
financial statements for each Fiscal Year, the Business Manager shall reimburse
the Company for the amounts, if any by which the Total Operating 

 

14

 

Expenses (including the Management Fee and other fees payable
hereunder) of the Company for the Fiscal Year just ended exceeded the greater
of:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

(b)           a court of competent
jurisdiction enters a decree or order for relief in respect of the Business
Manager in any involuntary case under the applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appoints a receiver
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Business Manager or for any substantial part of its property or orders the
winding up or liquidation of the Business Manager’s affairs; or

 

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

 

The Business Manager agrees
that if any of the events specified in subsections (b) and (c) of
this Section 17 occur, it will give written notice thereof to the
Company within seven (7) days after the occurrence of such event.

 

17.           Action Upon Termination. The Business
Manager shall not be entitled to compensation after the date of termination of
this Agreement for further services hereunder, but 

 

16

 

shall be paid all
compensation accruing to the date of termination. Upon termination of this
Agreement, the Business Manager shall:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21.           Successors and Assigns. This
Agreement shall bind any successors or assigns of the parties hereto as herein
provided.

 

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

 

17

 

23.           Liability and
Indemnification.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

24.           Notices.  All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed given or
delivered:

 

a.             when delivered personally or by commercial messenger;

 

b.             one (1) business day following
deposit with a recognized overnight courier service, provided the deposit
occurs prior to the deadline imposed by the overnight courier service for
overnight delivery; or

 

c.             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 the notice or other
communication is addressed to the intended recipient thereof as set forth
below: 

 

	
  If to the Company:

  	
  Inland
  Diversified Real Estate Trust, Inc.

  2901
  Butterfield Road

  Oak
  Brook, IL  60523

  
	
   

  	
  Attention:

  	
  Ms. Roberta
  S. Matlin

  
	
   

  	
  Telephone:

  	
  (630)
  218-8000

  
	
   

  	
  Facsimile:

  	
  (630)
  218-4955

  
	
   

  	
   

  
	
  If to the Business Manager:

  	
  Inland
  Diversified Business Manager & Advisor Inc.

  2901
  Butterfield Road

  Oak
  Brook, IL 60523

  
	
   

  	
  Attention:

  	
  Ms. Brenda
  Gujral

  
	
   

  	
  Telephone:

  	
  (630)
  218-8000

  
	
   

  	
  Facsimile:

  	
  (630)
  218-4955

  

 

A party’s address for notice
may be changed from time to time by notice given to the other party in the
manner herein provided for giving notice.

 

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

 

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

 

19

 

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

 

	
  COMPANY:

  	
   

  	
  BUSINESS
  MANAGER:

  
	
   

  	
   

  	
   

  
	
  INLAND
  DIVERSIFIED REAL ESTATE TRUST, INC.

  	
   

  	
  INLAND
  DIVERSIFIED BUSINESS MANAGER & ADVISOR INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  

 

 

Schedule 2.9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

·              Software License.   ICS will grant the Business Manager a
non-exclusive and royalty-free right and license to use and copy software owned
by ICS and to use certain third party software according to the terms of the
applicable third party licenses to ICS, all in connection with the Business
Manager’s obligations under the Agreement. 
ICS will provide the Business Manager with all upgrades to the licensed
software.EXHIBIT 10.3

 

INVESTMENT ADVISORY AGREEMENT FOR
DISCRETIONARY ACCOUNTS

 

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

 

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

 

1.             APPOINTMENT AS INVESTMENT
ADVISER.

 

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

 

2.             AUTHORITY OF ADVISER.

 

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

 

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

 

 

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

 

3.             CUSTODIANSHIP.

 

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

 

4.             BROKERAGE/RESEARCH.

 

A.            Selection of
Broker-dealer.

 

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

 

B.            Research Services.

 

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

 

2

 

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

 

C.                                     Execution
of Transactions by Broker-Dealer.

 

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

 

5.             SERVICES TO OTHERS.

 

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

 

6.             PROXIES AND RELATED
MATTERS.

 

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

 

3

 

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

 

7.             REPRESENTATIONS AND
WARRANTIES.

 

A.            Client’s
Representations and Warranties.

 

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

 

B.            Adviser’s Representations
and Warranties.

 

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

 

8.             VALUATION OF ASSETS.

 

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

 

9.             INVESTMENT
GUIDELINES.

 

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

 

4

 

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

 

10.           CLIENT REPORTS AND
MEETINGS.

 

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

 

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

 

11.           FEES AND EXPENSES.

 

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

 

12.           ADVISER’S DUTY OF CARE.

 

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

 

5

 

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

 

13.           CONFIDENTIAL
RELATIONSHIP.

 

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

 

14.           TERMINATION

 

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

 

15.           ASSIGNMENT.

 

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

 

16.           AMENDMENT.

 

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

 

17.           GOVERNANCE.

 

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

 

6

 

18.           NOTICES.

 

If to Adviser:

 

Inland
Investment Advisors, Inc.

2901 Butterfield Road

Oak Brook, Illinois  60523

Telephone:  (630) 218-8000

Fax:  (630) 218-4955

Attn: Roberta S. Matlin

 

If to Client:

 

Inland
Diversified Real Estate Trust, Inc

2901
Butterfield Road

Oak Brook, IL
60523

Telephone:  (630) 218-8000

FAX:   (630) 218-4955

Attn:  Barry L. Lazarus

 

19.           RECEIPT OF FORM ADV.

 

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

 

20.           SUCCESSORS.

 

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

 

7

 

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

 

	
  CLIENT:

  	
   

  	
  ADVISER:

  
	
   

  	
   

  	
   

  
	
  INLAND
  DIVERSIFIED REAL ESTATE TRUST, INC.

  	
   

  	
  INLAND
  INVESTMENT ADVISORS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  

 

8

 

SCHEDULE A

DATED [              ]
[       ], 2009

TO INVESTMENT
ADVISORY AGREEMENT

DATED [                 ]
[      ], 2009

BETWEEN

INLAND
INVESTMENT ADVISORS, INC (“Adviser”)

AND

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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