Document:

SHARE
      PURCHASE AGREEMENT

    

    THIS
      SHARE PURCHASE AGREEMENT (this “Agreement”)
      is
      entered into as of April 20, 2007, between Trestle Holdings, Inc., a Delaware
      corporation (the “Company”),
      and
      W-Net, Inc., a California corporation (the “Purchaser”).

    W
      I T
      N E S S E T H:

    

    WHEREAS,
      Company desires to sell to Purchaser, and Purchaser desires to buy from Company,
      135,000,000 shares (the “Shares”)
      of
      Company’s common stock, par value $0.001 per share (the “Common
      Stock”),
      representing
      approximately 94% of Company’s issued and outstanding Common Stock.

    

    NOW,
      THEREFORE, in consideration of and subject to the mutual agreements, terms
      and
      conditions herein contained, the receipt and sufficiency of which are hereby
      acknowledged, Company and Purchaser agree as follows:

    

    1. SUBSCRIPTION
      FOR AND PURCHASE OF SHARES

    

    1.1 Purchase
      of Shares.
      Subject
      to the terms and conditions set forth herein, Purchaser hereby subscribes for
      and agrees to purchase, and Company hereby agrees to sell, assign, transfer
      and
      deliver to Purchaser, the Shares for an aggregate consideration of $350,000.00
      (the “Purchase
      Price”).
      

    

    1.2 Escrow.
      In
      connection with this Agreement, the parties have appointed, and hereby do
      appoint, Stubbs Alderton & Markiles, LLP, as escrow agent (the “Escrow
      Agent”)
      for
      the transfer of the aggregate Purchase Price hereunder. The parties acknowledge
      that upon the signing of this Agreement, Purchaser has deposited with the Escrow
      Agent an amount equal to the aggregate Purchase Price (the “Escrow
      Amount”).
      Upon
      the
      signing of this Agreement, the Parties hereby direct Escrow Agent to deliver
      to
      Company (by
      wire
      transfer of immediately available funds to an account designated by Company
      in
      writing)
      a
      portion of the Escrow Amount equal to Fifty
      Thousand Dollars ($50,000.00) as a non-refundable deposit (except as set forth
      herein) of a portion of the Purchase Price (the “Deposit”)
      for
      and in anticipation of the closing of the transactions contemplated
      herein.

    

    1.3 Closing
      Date.
      The
      closing of the transactions contemplated hereby shall take place at the offices
      of Stubbs Alderton & Markiles, LLP, 15260 Ventura Blvd., 20th
      Floor,
      Sherman Oaks, California 91403, at 10:00 a.m. PDT, on May 4, 2007, or at
      such other location, date and time, as may be agreed upon between Purchaser
      and
      Company, or by facsimile or other electronic means (such closing being called
      the “Closing”
and
      such date and time being called the “Closing
      Date”).
      

    

    1.3 Delivery.
      At the
      Closing, (i) Company shall deliver to Purchaser or its designee a certificate
      or
      certificates registered solely in Purchaser’s name representing the Shares, (ii)
      the parties will instruct the Escrow Agent in writing to deliver the Escrow
      Amount, less the Deposit, by wire transfer of immediately available funds to
      an
      account designated by Company in writing, and (iii) Company shall retain the
      Deposit delivered on the date hereof. 

    

    1.4 Legend.
      (a) The
      certificate or certificates representing the Shares shall bear a legend
      restricting transfer under the Securities Act of 1933, as amended (the
“Securities
      Act”)
      and
      acknowledging the restrictions on transfer set forth herein, such legend shall
      be substantially in the following form:

    

    

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
      SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL
      BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) THE HOLDER SHALL
      DELIVER TO COMPANY
      AN OPINION OF ITS COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO
      COMPANY AND REASONABLY CONCURRED IN BY COMPANY’S COUNSEL, THAT SUCH PROPOSED
      TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
      

    

    (b)
      Company agrees (i) to remove the legend set forth in Section
      1.4(a)
      upon
      receipt of an opinion of Purchaser’s counsel, reasonably concurred in by
      Company’s counsel within ten (10) business days of Company’s receipt of such
      opinion, that the Shares are eligible for transfer without registration under
      the Securities Act and (ii) to remove such legend at such time as the Shares
      are
      subject to an effective registration statement registering the Shares under
      the
      Securities Act.

    

    2. REPRESENTATIONS
      AND WARRANTIES OF COMPANY

    

    Company
      represents and warrants to Purchaser that:

    

    2.1 Organization.
      Company
      is a corporation duly organized and validly existing under the laws of the
      State
      of Delaware and is in good standing under such laws. Company has the requisite
      corporate power to own and operate its properties and assets, and to carry
      on
      its business as presently conducted. Company is qualified to do business as
      a
      foreign corporation in each jurisdiction in which the ownership of its property
      or the nature of its business requires such qualification, except where the
      failure to be so qualified would not reasonably be expected to have a material
      adverse effect on the business, assets, liabilities, operations or conditions
      (financial or otherwise) of Company and its subsidiaries, taken as a whole
      (a
“Material
      Adverse Effect”).
      Purchaser acknowledges that Company has no business or operations.

    

    2.2 Authorization.
      Company
      has taken all corporate action necessary for the authorization, execution,
      delivery and performance of this Agreement and the authorization, sale, issuance
      and delivery of the Shares. This Agreement constitutes the legal, valid, and
      binding obligation of Company enforceable in accordance with its terms, except
      to the extent limited by (a) applicable bankruptcy, insolvency, reorganization,
      moratorium or similar laws of general application related to the enforcement
      of
      creditors’ rights generally and (b) general principles of equity, and except
      that enforcement of rights to indemnification contained herein may be limited
      by
      applicable federal or state laws or the public policy underlying such laws,
      regardless of whether enforcement is considered in a proceeding in equity or
      at
      law.

    

    2.3 No
      Conflict.
      The
      execution and delivery of this Agreement does not, and the consummation of
      the
      transactions contemplated hereby will not, conflict with, or result in any
      violation of, or default under (with or without notice or lapse of time, or
      both), or give rise to a right of termination, cancellation or acceleration
      of
      any obligation or to a loss of a material benefit under any provision of,
      Company’s Amended and Restated Certificate of Incorporation or Bylaws, as
      amended (“Organizational Documents”), or any mortgage, indenture, lease or other
      agreement or instrument, permit, concession, franchise, license, judgment,
      order, decree, statute, law, ordinance, rule or regulation applicable to Company
      or its properties or assets.

    

    2.4 Capitalization.
      (a) The
      authorized capital stock of Company consists solely of (i) 150,000,000 shares
      of
      Common Stock, of which 8,257,214
      shares
      are issued and outstanding, and (ii) 5,000,000 shares of preferred stock, par
      value $0.001 per share, none of which are issued and outstanding. All of the
      issued and outstanding shares of Common Stock have been duly authorized and
      validly issued and are fully paid and nonassessable and are not subject to
      any
      preemptive rights. The Shares, when issued at the Closing, will be duly
      authorized, validly issued, fully paid and nonassessable.

    

    (b)
      Except for warrants
      to purchase 4,180,000 shares of Common Stock, which are exercisable at ranges
      from $0.51 to $120.00 per share, and options to purchase 10,000 shares of Common
      Stock exercisable at $67.50 per share,
      Company
      has not issued or granted any outstanding options, warrants, rights or other
      securities convertible into or exchangeable or exercisable for shares of
      Company’s capital stock, any other commitments or agreements providing for the
      issuance of additional shares of Company’s capital stock, the sale of treasury
      shares or for the repurchase or redemption of shares of Company’s capital stock
      or any obligations arising from canceled stock of Company. There are no
      agreements of any kind which may obligate Company to issue, purchase, register
      for sale or re-sale, redeem or otherwise acquire any of its securities or
      interests. The issuance and sale of the Shares will not give rise to any
      preemptive rights or rights of first refusal on behalf of any person in
      existence on the date hereof. There are no outstanding or authorized stock
      appreciation, phantom stock or similar rights with respect to Company. There
      are
      no outstanding securities of Company, or contracts binding on Company relating
      to such securities, that give to their holders anti-dilution protections or
      similar rights. The issuance of the Shares will not give any other holder of
      Company’s securities the right to receive as a result of such issuance any
      additional securities or property or change any material rights enjoyed with
      respect to such securities. 

    

    (c)
      There
      are no voting trusts, stockholder agreements, proxies or other agreements in
      effect with respect to the voting or transfer of the Shares known to the
      Company.

    

    2.5 Compliance
      With Securities Laws.
      Subject
      to and in reliance on the truth and accuracy of Purchaser’s representations and
      warranties set forth in this Agreement, the offer, sale and issuance of the
      Shares is exempt from the registration requirements of the Securities Act and
      any applicable state securities laws and neither Company nor any authorized
      agent acting on its behalf will take any action hereafter that would cause
      the
      loss of such exemption.

    

    2.6 SEC
      Documents.
      Company
      has timely filed all required reports, schedules, forms, statements and other
      documents with the Securities and Exchange Commission (the “SEC”)
      since
      December 31, 2005 (the “SEC
      Documents”).
      As of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the Securities Act or the Securities Exchange Act of 1934,
      as amended (the “Exchange
      Act”),
      as
      the case may be, and the rules and regulations of the SEC promulgated
      thereunder, and, except to the extent that information contained in any SEC
      Document has been revised or superseded by a later document filed with the
      SEC
      and made publicly available prior to the date of this Agreement, none of the
      SEC
      Documents contain any untrue statement of a material fact or omit to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. Company’s financial statements included in the SEC Documents
      comply as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC with respect
      thereto, have been prepared in accordance with U.S. generally accepted
      accounting principles (“GAAP”)
      applied on a consistent basis during the periods involved and fairly present
      the
      consolidated financial position of Company and its consolidated subsidiaries
      as
      of the dates thereof and the consolidated results of their operation and
      cashflows for the periods then ending in accordance with GAAP (subject, in
      the
      case of the unaudited statements, to normal year-end audit adjustments and
      the
      absence of footnotes). Except as disclosed in financial statements included
      in
      the SEC Documents, neither Company nor any of its subsidiaries has any
      liabilities or obligations of any nature (whether accrued, absolute, contingent
      or otherwise) required by GAAP to be set forth on a consolidated balance sheet
      of Company and its consolidated subsidiaries or in the notes thereto and which
      would reasonably be expected to have a Material Adverse Effect.

    

    2.7 Absence
      of Certain Changes or Events.
      Since
      the date of Company’s Quarterly Report on Form 10-QSB filed on April 16, 2007,
      which contains unaudited financial statements of Company prepared in accordance
      with the requirements of Form 10-QSB, (a) Company has conducted its business
      in
      the ordinary course and (b) there has not been any action taken and there has
      not been any event which would require Company to amend or supplement any of
      the
      SEC Documents or to file a Current Report on Form 8-K. Schedule
      2.7
      sets
      forth (i) the
      aggregate accounts payable, liabilities and other obligations of Company
      expected to be accrued through May 4, 2007, and (ii) the aggregate accounts
      payable, liabilities and other obligations of Company not expected to be accrued
      through May 4, 2007 but known to Company (including to any director, officer
      or
      employee of Company) (collectively, the “Reserved
      Amounts”).
      Schedule
      2.7,
      and the
      Reserved Amounts reflected therein, shall be updated on and as of the Closing
      Date by mutual agreement of the parties.

    

    2.8 Governmental
      and Like Consents.
      No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of Company is required in connection
      with
      the valid execution and delivery of this Agreement, the offer, sale or issuance
      of the Shares or the consummation of any other transaction contemplated hereby,
      except such filings as may be required to be made with the SEC, the
      Over-the-Counter Bulletin Board or under applicable state securities
      laws.

    

    2.9 Litigation.
      Except
      as disclosed in the SEC Documents, there is no suit, action, or proceeding
      pending or affecting Company or any of its subsidiaries that, individually
      or in
      the aggregate, would reasonably be expected to (a) have a Material Adverse
      Effect, (b) impair Company’s ability to perform its obligations under this
      Agreement or (c) prevent the consummation of any of the transactions
      contemplated by this Agreement, nor is there any judgment, decree, injunction,
      rule or order of any governmental entity or arbitrator outstanding against
      Company or any of its subsidiaries having, or which, insofar as reasonably
      can
      be foreseen in the future have, any such effect.

    

    3. REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

    

    Purchaser
      hereby represents and warrants to Company as follows:

    

    3.1 Organization.
      Purchaser is a corporation duly organized and validly existing under the laws
      of
      the State of California, with all requisite corporate power and authority to
      own, lease and operate its properties and to conduct its business as presently
      conducted. 

    

    3.2 Authority.
      Purchaser has taken all corporate action necessary for the authorization,
      execution, delivery and performance of this Agreement. This Agreement has been
      duly executed and delivered by Purchaser and constitutes the legal, valid and
      binding obligation of Purchaser, enforceable in accordance with its terms,
      except to the extent limited by (a) applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws of general application related to
      the
      enforcement of creditors’ rights generally and (b) general principles of equity,
      and except that enforcement of rights to indemnification contained herein may
      be
      limited by applicable federal or state laws or the public policy underlying
      such
      laws, regardless of whether enforcement is considered in a proceeding in equity
      or at law. 

    

    3.3 Investment.
      Purchaser is acquiring the Shares for investment for its own account, not as
      a
      nominee or agent, and not with a view to, or for resale in connection with,
      any
      distribution thereof. Purchaser understands that the Shares have not been
      registered under the Securities Act and are being issued pursuant to an
      exemption from the registration requirements of the Securities Act.

    

    3.4 Accredited
      Investor Status.
      Purchaser is an “accredited investor” within the meaning of Regulation D
      promulgated under the Securities Act and is (a) fully capable of evaluating
      the
      risks and merits associated with the execution of this Agreement and the
      purchase of the Shares, without qualification, and (b) able to bear the economic
      risk of its investment in the Shares, hold the Shares for an indefinite period
      of time and afford a complete loss of its investment.

    

    3.5  Restricted
      Securities.
      Purchaser understands that the Shares are restricted securities under the
      Securities Act insofar as they are being acquired from Company in a transaction
      not involving a public offering and that under the Securities Act and applicable
      regulations promulgated thereunder the Shares may be resold without registration
      under the Securities Act only in certain limited circumstances. Purchaser is
      familiar with Rule 144 promulgated by the SEC, as presently in effect, and
      understands the resale limitations imposed thereby and by the Securities
      Act.

    

    3.6  Distribution
      of Proceeds.
      Purchaser
      acknowledges that Company will be distributing, immediately prior to the
      Closing, all
      existing cash and stock purchase proceeds received from the sale contemplated
      hereunder, except for the Holdback Amount (as defined below) and the Reserved
      Amounts,
      to
      shareholders of record as of April 19th, 2007, and that the Shares issued to
      Purchaser are exempt from the distribution of those proceeds.

    

    3.7  Director’s
      and Officer’s Insurance.
      Purchaser will maintain and keep effective Company’s existing Director’s and
      Officer’s Liability Insurance, in the form and containing the terms existing as
      of the date hereof, through September 30, 2007. Additionally, Purchaser will
      not, for a period of one year following the Closing Date, change Company’s
      Organizational Documents regarding indemnification of directors and officers
      except as may be required by law.

    

    3.8  Adverse
      Claims.
      Neither
      Purchaser (nor any of its principal stockholders or directors or executive
      officers): (a) has ever been party to any adverse action brought by the
      Securities and Exchange Commission or any similar state agency; (b) any material
      criminal proceeding regarding the purchase or sale of securities or other
      crimes, excluding only misdemeanor crimes; or (c) filed bankruptcy proceedings
      within the past five years.

    

    3.9  Filing.
      Within
      two (2) days of the execution of this Agreement, Purchaser will provide the
      Company with the true and correct copy of the information needed to complete
      the
      information statement (the “Information
      Statement”)
      under
      Rule 14(f)(1) of the Securities Exchange Act of 1934, as amended, containing
      the
      information required therein to be filed by the Company in connection with
      this
      Agreement. 

    

    4. CONDITIONS
      PRECEDENT TO CLOSING

    

    4.1 Conditions
      to Obligations of Purchaser.
      Purchaser’s obligation to purchase the Shares pursuant to this Agreement is
      subject to the satisfaction or waiver, at or prior to the Closing Date, of
      each
      of the following conditions:

    

    (a) Representations
      and Warranties.
      The
      representations and warranties of Company under Section
      2
      of this
      Agreement shall be true, complete and correct on and as of the Closing Date,
      with the same effect as though such representations and warranties had been
      made
      on and as of such date, and Company’s Interim President shall have certified to
      such effect to Purchaser in writing.

    

    (b) No
      Order Pending.
      There
      shall be no order, ruling, judgment or decree in effect, including of any
      regulatory agency, which would enjoin or prohibit the transactions contemplated
      hereby.

    

    (c) Delivery
      of Stock Certificates.
      Company
      shall have delivered a stock certificate or stock certificates representing
      the
      Shares.

    

    (d) Agreements,
      Conditions and Covenants.
      Company
      shall have performed or complied in all respects with all agreements, conditions
      and covenants required by this Agreement to be performed or complied with by
      it
      on or before the Closing Date.

    

    (e)
       Other
      Closing Conditions.
      The
      following closing conditions must also have been satisfied, or otherwise waived
      by Purchaser:

    

    (i)  Company
      shall have obtained
      and delivered to Purchaser a resolution of its Board of Directors approving
      (A)
      the transactions contemplated hereby (including, without limitation, the
      issuance of the Shares), (B) execution and performance of this Agreement, (C)
      the appointment of a new Board of Directors, (D) resignation of Company’s
      current directors, and (E) the filing of a Form 8-K announcing a change in
      control;

    

    (ii)  Company
      shall have no liabilities exceeding its remaining cash; 

    

    (iii)  Company
      shall have no outstanding unresolved SEC issues; 

    

    (iv)  Company
      shall have no operating business;

    

    (v)  Company
      shall have obtained the resignation of its Board of Directors, effective as
      of
      the Closing Date, and shall have appointed a new Board of Directors, effective
      as of the Closing Date, as directed by Purchaser prior to the Closing;

    

    (vi)  Company
      shall have had no disagreements with its independent auditors or legal counsel;
      

    

    (vii)  at
      least
      ten (10) days prior to the Closing Date, Company shall have filed the
      Information Statement under Rule 14(f)(1) of the Securities and Exchange Act
      of
      1934, as amended, disclosing the change of control of Company contemplated
      by
      the transactions herein; 

    

    (viii)  Company
      shall have distributed all existing cash and stock purchase proceeds hereunder,
      except for the Holdback Amount (as defined below) and the Reserved Amounts,
      to
      its paying agent who will distribute such monies to Company’s record
      shareholders as of April 19, 2007, and prior to issuing the Shares to Purchaser;
      and

    (ix)  Company
      shall have no liens, security interests, encumbrances or other obligations
      on or
      in respect of any of its property or assets and shall cause all existing UCC
      financial statements to have been terminated.

    

    4.2 Conditions
      to Obligations of Company.
      Company’s obligation to sell and transfer the Shares pursuant to this Agreement
      is subject to the satisfaction or waiver at or prior to the Closing Date of
      the
      following conditions:

    

    (a) Representations
      and Warranties.
      The
      representations and warranties of Purchaser under Section
      3
      of this
      Agreement shall be true, complete and correct on and as of the Closing Date,
      with the same effect as though such representations and warranties had been
      made
      on and as of such date.

    

    (b) No
      Order Pending.
      There
      shall be no order, ruling, judgment or decree in effect, including of any
      regulatory agency, which would enjoin or prohibit the transactions contemplated
      hereby.

     

    (c) Agreements,
      Conditions and Covenants.
      Purchaser shall have performed or complied in all respects with all agreements,
      conditions and covenants required by this Agreement to be formed or complied
      with by it on or before the Closing Date.

    

    5. COVENANTS

    

    5.1 The
      parties will use their reasonable best efforts to complete the transactions
      contemplated hereby no later than May 4, 2007. At Closing, the parties will
      deliver such documentation as may be reasonably requested by the other party’s
      counsel to effect the transactions contemplated herein.

    

    5.2 A
      portion
      of the Purchase Price equal to $75,000 (the “Holdback
      Amount”),
      plus
      an amount equal to the Reserved Amounts will, at the Closing, be deposited
      into
      a separate account to be held by Company on and after the Closing Date and
      utilized for ordinary course business purposes in the sole discretion of
      Company’s Board of Directors appointed on or following the Closing. Such uses
      may include, but will not be limited to, paying any applicable accounts payable,
      liabilities or other obligations of Company. 

    

    5.3 The
      directors of Company prior to the Closing will compromise and settle all amounts
      of any kind due and owing to them by Company for any reason whatsoever, without
      qualification, through and including the Closing Date, and
      Company’s Interim President shall have certified to such effect, and shall have
      provided written evidence thereof, to Purchaser in writing.

    

    5.4 Until
      the
      earlier of the termination hereof, the Closing, or the mutual written agreement
      of the parties, the parties agree as follows:

     

    (a)  Company
      shall operate its business, if any, prior to the Closing in the normal and
      ordinary course consistent with past practices, and hereby agrees to take all
      necessary steps to ensure that Company does not incur any material
      liabilities.

    

    (b)  Each
      party shall keep confidential any information obtained in connection with the
      transactions contemplated herein, unless such information has been rightfully
      obtained from a third party or is generally available to the public. In the
      event that public disclosure is required to be made by any regulation or law,
      or
      by any regulatory filing in connection with the transactions contemplated
      herein, such disclosure shall be agreed by all parties, including, without
      limitation, approval as to form and content. 

    

    (c)  Company
      shall provide Purchaser and its representatives with access to financial and
      other information relating to Company as may be reasonably necessary in order
      for Purchaser to make informed decisions as to the viability of the business
      arrangements contemplated herein.

    

    (d)  (i)Between
      the date hereof and 11:59 p.m. (Pacific Daylight Time) on May 4, 2007, or such
      earlier time and date as Purchaser and Company mutually agree in writing to
      the
      termination hereof (the “Expiration
      Date”),
      neither Company nor any of its officers, directors, employees, agents, advisors
      or controlled affiliates will take any action to solicit, initiate, seek,
      encourage or support any inquiry, proposal or offer from, furnish any
      information to, or participate in any discussions and/or negotiations with,
      any
      corporation, partnership, person or other entity or group (an “Entity”)
      (other
      than discussions with Purchaser) regarding any acquisition of Company, any
      merger or consolidation or any similar transaction with or involving Company,
      or
      any acquisition of any material portion of the stock or assets of Company (each,
      a “Competing
      Transaction”).
      Company agrees that any such negotiations (other than negotiations with
      Purchaser) in progress as of the date hereof will be terminated or suspended
      during such period.

    

    (ii) Notwithstanding
      any portion of the foregoing to the contrary, Company’s Board of Directors may
      furnish information to, and enter into discussions and/or negotiations with,
      any
      Entity who makes (and does not withdraw) an unsolicited, written proposal or
      offer regarding a Competing Transaction if: (1) Company’s Board of
      Directors has concluded in good faith, after consultation with its outside
      legal
      counsel, that such action is required in order for Company’s Board of Directors
      to comply with its fiduciary obligations to Company’s stockholders under
      applicable law; (2) (x) at least one (1) business day prior to
      furnishing any such information to, or entering into discussions and/or
      negotiations with, such Entity, Company gives Purchaser written notice of
      Company’s intention to furnish information to, or enter into discussions and/or
      negotiations with, such Entity, and (y) Company receives from such Entity an
      executed confidentiality agreement; and (3) contemporaneously with
      furnishing any such information to such Entity, Company furnishes such
      information to Purchaser (to the extent such information has not been previously
      furnished by Company to Purchaser). Company will notify Purchaser promptly,
      and
      in any event within one (1) business day, after receipt by Company (or any
      of
      its officers, directors, employees, agents, advisors or controlled affiliates)
      of any proposal or offer for, or inquiry respecting, any Competing Transaction
      or any request for information in connection with such a proposal, offer or
      inquiry, or for access to the properties, books or records of Company by any
      Entity that informs Company that it is considering making, or has made, such
      a
      proposal, offer or inquiry. Such notice to Purchaser will indicate in reasonable
      detail the identity of the Entity making such proposal, offer or inquiry and
      the
      terms and conditions of such proposal, offer or inquiry. Thereafter Company
      shall provide Purchaser as promptly as practicable oral and written notice
      setting forth all such information as is reasonably necessary to keep Purchaser
      informed in all material respects of the status and details (including material
      amendments or proposed material amendments) of any such proposal, offer, inquiry
      or request. In no event will Company enter into an agreement (other than a
      confidentiality agreement as provided above) concerning any such Competing
      Transaction prior to the Expiration Date. 

    

    5.5 Dividend.
      Purchaser shall cause the Company after Closing to take no action which would
      delay, interfere, interrupt or otherwise impede or stop the distribution
      contemplated by Section 3.6 hereof. 

    

    6. TERMINATION;
      ESCROW

    

    6.1 Termination.
      This
      Agreement may be terminated only as follows:

     

    (a) at
      any
      time by mutual agreement of Company and Purchaser; or

     

    (b) by
      Purchaser, by providing written notice to Company at any time (i) after the
      Expiration Date, if the Closing shall not have occurred on or before that date,
      so long as Purchaser is not then in material breach of its obligations
      hereunder, or (ii) if Company shall have materially breached its obligations
      under this Agreement and shall have failed to cure such breach within ten (10)
      days following written notice thereof, or (iii) if, on or before the Expiration
      Date, Company shall have communicated to Purchaser (whether in writing or
      otherwise) its intention to enter into a Competing Transaction; or

     

    (c) by
      Company, by providing written notice to Purchaser (i) after the Expiration
      Date,
      if the Closing shall not have occurred on or before that date, so long as
      Company is not then in material breach of its obligations hereunder, or
      (ii) if Purchaser shall have materially breached its obligations under this
      Agreement and shall have failed to cure such breach within ten (10) days
      following written notice thereof, or (iii) at any time on or before the
      Expiration Date, by providing written notice to Purchaser of its intention
      to
      enter into a Competing Transaction.

     

    6.2 Effect
      of Termination.

    

    (a) In
      the
      event of termination of this Agreement by either Company or Purchaser as
      provided in Section
      6.1,
      this
      Agreement will forthwith become null and void and there will be no liability
      or
      obligations on the part of Company, on the one hand, or Purchaser, on the other
      hand, or any of their respective affiliates, officers, directors or
      shareholders, except (i) with respect to the provisions of this Section
      6.2,
      as
      applicable, and (ii) that no such termination will relieve any party from
      liability for any breach of their respective representations, warranties,
      covenants and other obligations hereunder prior to the date of
      termination.

    

    (b) If
      this
      Agreement is terminated mutually by the parties pursuant to Section
      6.1(a),
      by
      Purchaser pursuant to Sections
      6.1(b)(i)
      or
6.1(b)(ii),
      or by
      Company pursuant to Section
      6.1(c)(i),
      then,
      without limitation of a party’s rights and remedies hereunder or otherwise,
      Purchaser shall be entitled to a return of the Escrow Amount and a full refund
      of the Deposit. In such event, Purchaser shall notify the Escrow Agent in
      writing and the Escrow Agent will immediately return the Escrow Amount (less
      the
      Deposit) as instructed. The Escrow Agent shall return the Escrow Amount (less
      the Deposit) to Purchaser regardless of any dispute or written instrument from
      Company. Company shall further return the Deposit to Purchaser in cash or by
      wire transfer of immediately available funds within two (2) days following
      the
      effective date of any such termination.

    

    (c) If
      this
      Agreement is terminated by Purchaser pursuant to Section
      6.1(b)(iii),
      or by
      Company pursuant to Section
      6.1(c)(iii),
      then,
      as Purchaser’s sole and exclusive remedy and as liquidated damages, Purchaser
      shall be entitled to a return of the Escrow Amount (less the Deposit), a full
      refund of the Deposit, and Company will pay to Purchaser a termination fee
      equal
      to Ten Thousand Dollars ($10,000.00) (the “Termination
      Fee”).
      In
      such event, Purchaser shall notify the Escrow Agent in writing and the Escrow
      Agent will immediately return the Escrow Amount (less the Deposit) as
      instructed. The Escrow Agent shall return the Escrow Amount (less the Deposit)
      to Purchaser regardless of any dispute or written instrument from Company.
      Company shall further return the Deposit and pay the Termination Fee to
      Purchaser in cash or by wire transfer of immediately available funds, in each
      case within two (2) days following the effective date of any such
      termination.

    

    (d) If
      this
      Agreement is terminated by Company pursuant to Section
      6.1(c)(ii),
      then,
      as Company’s sole and exclusive remedy and as liquidated damages, Company shall
      be entitled to retain the Deposit without any further action required by
      Purchaser. Purchaser will be entitled to the Escrow Amount (less the Deposit)
      and shall accordingly notify the Escrow Agent in writing thereof. Upon Escrow
      Agent’s receipt of notice from Purchaser, Escrow Agent will immediately forward
      the Escrow Amount (less the Deposit) as instructed. The Escrow Agent shall
      forward the Escrow Amount (less the Deposit) to Purchaser regardless of any
      dispute or written instrument from Company. 

     

    7. MISCELLANEOUS

    

    7.1 Representations
      and Warranties.
      The
      representations and warranties of Company and Purchaser shall not survive beyond
      the Closing. 

    

    7.2 Escrow
      Agent; Waiver of Conflict. 

    

    (a) The
      parties expressly acknowledge and agree that Escrow Agent is specifically
      indemnified and held harmless hereby for its actions or inactions in following
      any instructions hereunder. In the event of a dispute involving the escrow
      instructions or the consideration to be delivered in escrow, the escrow agent
      is
      authorized to implead consideration received in the courts located in Orange
      County, California upon ten days written notice, and be relieved of any further
      escrow duties thereupon. Any and all costs of attorney’s fees and legal actions
      of escrow agent for any dispute resolution or impleader action shall be paid
      in
      equal shares by the parties to this Agreement.

    

    (b) The
      parties acknowledge that the Escrow Agent has previously served as outside
      corporate counsel to Company, provided, however, such services have not been
      provided to Company for at least the two (2) year period prior to the date
      hereof. The parties further acknowledge that the Escrow Agent is currently
      serving as outside corporate counsel to Purchaser, including, without
      limitation, in connection with the transactions contemplated herein. Company
      hereby further acknowledges that Escrow Agent does not represent Company in
      connection with the transactions contemplated herein or in the Agreement, and
      that in the absence of any written agreement to the contrary, Escrow Agent
      shall
      owe no duties directly to Company, except such duties, if any, required in
      its
      express capacity as the escrow agent hereunder.  

    

    7.3 Waiver,
      Amendment.
      Neither
      this Agreement nor any provisions hereof shall be waived, modified, changed,
      discharged or terminated except by an instrument in writing signed by the party
      against whom any waiver, modification, change, discharge or termination is
      sought.

    

    7.4 Assignability.
      Neither
      this Agreement nor any right, remedy, obligation or liability arising hereunder
      or by reason hereof shall be assignable by either Company or Purchaser, without
      the prior written consent of each other party.

    

    7.5 Section
      and Other Headings.
      The
      section headings contained in this Agreement are for reference purposes only
      and
      shall not affect in any way the meaning or interpretation of this
      Agreement.

    

    7.6 Governing
      Law.
      This
      Agreement shall be governed by, and construed and enforced in accordance with,
      the laws of the State of California, without regard to principles of conflicts
      of laws thereof.

    

    7.7 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed and delivered shall be deemed to be an original and all of which
      together shall be deemed to be one and the same agreement.

    

    7.8 Notices.
      All
      notices and other communications provided for herein shall be in writing and
      shall be deemed to have been duly given if delivered personally or sent by
      registered or certified mail, return receipt requested, postage
      prepaid:

    

    
      	 	 	
              (a)

            	
              if
                to Purchaser:

            

    

    

    
      	 	 	 	
              W-Net,
                Inc.

            

    

    3940
      Laurel Canyon Boulevard

    Suite
      327

    Studio
      City, California 91604

    Attn:
      David Weiner, President

    

    with
      a
      copy to (which copy shall not constitute notice):

    

    Stubbs
      Alderton & Markiles, LLP

    15260
      Ventura Blvd.

    20th
      Floor

    Sherman
      Oaks, California 91403

    Attn:
      Gregory Akselrud, Esq.

    

    
      	 	 	
              (b)

            	
              if
                to Company:

            

    

    

    Trestle
      Holdings, Inc.

    1328
      West
      Balboa Blvd

    Suite
      C

    Newport
      Beach California 92661

    Attn:
      Eric Stoppenhagen, Interim President

    

    with
      copy
      to (which copy shall not constitute notice):

    

    Kaye
      Scholer, LLP

    1999
      Avenue of the Stars

    Suite
      1700

    Los
      Angeles, California 90067

    Attn:
      Glenn Smith, Esq.

    

    7.9 Binding
      Effect.
      The
      provisions of this Agreement shall be binding upon and accrue to the benefit
      of
      the parties hereto and their respective heirs, legal representatives, permitted
      successors and assigns.

    

    IN
      WITNESS WHEREOF, Company and Purchaser have executed this Agreement as of the
      date first written above.

    

    TRESTLE
      HOLDINGS, INC.

    

    

    By:
           

    Name:
      Eric Stoppenhagen

    Title:
      Interim President

    

    

    W-NET,
      INC.

    

    

    By:
           

    Name:
      David Weiner

    Title:
      President

    

    

    

    

    ACKNOWLEDGEMENT
      OF ESCROW AGENT

    

    Stubbs
      Alderton & Markiles, LLP

    

    

    By:
           

    Name:

    Title:
      PartnerEMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of ______________, 2007, but shall be effective, nunc pro tunc, as of January 1, 2007, by and between INLAND REAL ESTATE CORPORATION, a Maryland corporation (the “Company”), and Mark Zalatoris (the “Executive”).

RECITALS:

A.

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

B.

Executive has served as the Company’s Chief Operating Officer and 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, 2007.

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, 2007 (the “Effective Date”), Executive shall serve as Chief Operating Officer, Executive Vice President and Treasurer, with duties commensurate with such positions and such other duties and responsibilities as assigned from time to time by the Company.

(b)

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

1.2

Activities and Duties During Employment.  Executive represents and warrants to the Company that 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, 2008 (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.

2.3

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 his duties or is expected to be in the condition for periods totaling six (6) months (whether or not consecutive) during any period of twelve (12) months.  Nothing herein shall limit Executive’s right to receive any payments to which Executive may be entitled under any disability or employee benefit plan of the Company or under any disability or insurance policy or plan.  During a period of Total Disability prior to termination hereunder, Executive shall continue to receive his full compensation (including base salary) and benefits.

(c)

“Good Reason” will mean any of the following events which have not been cured within ten (10) days following the Company’s receipt of Executive’s written notice specifying the events or factors constituting Good Reason:

(i)

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

(ii)

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

(iii)

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

(iv)

following a Change of Control, the assignment to Executive of duties which constitute a material reduction in Executive’s title or authority and which are materially inconsistent with Executive’s position as contemplated by this Agreement.

(d)

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

(i)

the members of the Company’s board of directors as of the date of this Agreement fail to constitute a majority of the members of the board; provided, however, that any individual becoming a member of the board who is nominated or appointed to the board seat on the recommendation and approval of the Company’s Nominating and Corporate Governance Committee shall be treated as if he or she were a member of the board as of the date of this Agreement;

(ii)

the disposition by the Company of all, or substantially all, of the assets of the Company; or

(iii)

the termination and liquidation of the Company.

ARTICLE III

COMPENSATION AND BENEFITS

3.1

Compensation.

(a)

Base Salary.  During the Employment Term, the Company shall pay Executive a base salary (the “Base Salary”) of $350,000 per annum.

(b)

Annual Incentive Bonus.  The Company shall, in addition to Executive’s Base Salary, pay Executive an Annual Incentive Bonus, which shall be payable within 120 days of the end of each fiscal year in accordance with the formula set forth on Exhibit A, attached hereto and made a part hereof.

(c)

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

(i)

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

(ii)

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

(iii)

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

(iv)

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

(A)

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

(B)

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

(C)

Executive acknowledges that an investment in the Company’s common stock is subject to significant risk, including the risks described, from time to time, in the Company’s annual reports on Form 10-K.  Executive represents and warrants that 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 the Company’s common stock and the ability to bear the economic risk of the investment; and

(D)

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

(d)

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

(i)

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

(ii)

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

(iii)

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

(A)

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

(B)

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

(C)

Executive acknowledges that an investment in the Company’s common stock is subject to significant risk, including the risks described, from time to time, in the Company’s annual reports on Form 10-K.  Executive represents and warrants that 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 the Company’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.

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 his estate or beneficiaries):

(i)

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

(ii)

any compensation for unused vacation days accrued as of the termination date in an amount equal to Executive’s Base Salary multiplied by a 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:

(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 1.25 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 2.99 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.

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 hers 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 his control.

4.2

Non-Solicitation and Covenant Not to Compete.

(a)

General.  Executive acknowledges that the covenants set forth in this Section 4.2 are reasonable in scope and essential to the preservation of the business and the goodwill of the Company, and are consideration for the amounts to be paid to Executive hereunder.  Executive also acknowledges that the enforcement of the covenants set forth in this Section 4.2 will not preclude Executive from being gainfully employed in such manner and to the extent as to provide a standard of living for herself, 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 its Affiliates have obtained an advantage over their competitors that is characterized by relationships with clients, principals, tenants and other contacts.

(b)

Covenants.  Executive hereby covenants and agrees that, except as permitted by the Company, during the Employment Term, and any extensions thereof, and for a period of one (1) year following the expiration, termination or extension of this Agreement, Executive shall not, directly or indirectly:  (i) alone, together or in association with others, either as a principal, agent, owner, shareholder, officer, director, partner, employee, lender, investor or in any other capacity, engage in, have any financial interest in or be in any way connected or affiliated with, or render advice or services to, any business engaged in purchasing, selling, financing, managing, leasing, brokering or providing services for retail shopping centers or any new business or lines of business which the Company may enter prior which business or businesses are conducted in the greater metropolitan area of Chicago, Illinois, other than as an employee of The Inland Group, Inc. (“TIGI”) or an affiliate of TIGI or otherwise on behalf of the Company as an employee thereof or such other business as may be permitted by the Company in writing; (ii) directly or indirectly divert, take away, solicit or interfere with or attempt to divert, take away, solicit or interfere with any present or prospective customer, except on behalf of the Company as an employee thereof; (iii) directly or indirectly solicit, induce, influence or attempt to solicit, induce or influence any employee or agent of the Company to leave his employment or engagement with the Company, or offer employment or engagement to or employ or engage any such employee of the Company, or assist or attempt to assist any such employee of the Company in seeking other employment; (iv) in any manner slander, libel or by other means take action which is or intended, or could reasonably be expected, to be detrimental to the Company or an Affiliate or their respective employees or operations; (v) knowingly make or participate in any “solicitation” of “proxies” or “consents” (as such terms are used in the proxy rules of the United States Securities and Exchange Commission) or make proposals for approval of the Company’s stockholders; (vi) knowingly form, join or participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Company’s securities; (vii) otherwise knowingly act to control or seek to control the management, board of directors or policies of the Company (except with respect to actions taken solely in Executive’s capacity as an officer of the Company in the exercise of his fiduciary duties; or (viii) make any agreement to do any of the foregoing to the extent restricted thereby.  As used in this Section 4.2, the term “Company” shall mean the Company or any Affiliate thereof.  As used in this Section 4.2(b), “customer” and “prospective customer” shall include: (i) any tenant of the Company’s properties or any other person or entity with whom the Company is negotiating for the leasing of real property from the Company or an Affiliate at the time of the termination of this Agreement or during the six month period immediately prior to such termination; (ii) any owner or prospective owner of real property the purchase or sale of which is being negotiated by the Company at the time of the termination of this Agreement or during the six month period immediately prior to such termination; or (iii) any joint venture partner of the Company.  The restrictions imposed by this subparagraph 4.2(b) shall not apply to the ownership of one percent (1%) or less of all of the outstanding securities of any entity whose securities are listed on a national securities exchange, or included for quotation on any interdealer quotation system.

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:

To Executive at his home address.

		
	To the Company at:

	Inland Real Estate Corporation

2901 Butterfield Road

Oak Brook, Illinois 60523

Attn: Robert D. Parks

	 
	 

	With a copy to:

	Shefsky & Froelich Ltd.

111 East Wacker Drive, Suite 2800

Chicago, Illinois  60601

Attn:  Michael J. Choate

Telephone: (312) 836-4066

Facsimile: (312) 527-5921

Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above.

5.2

Entire Agreement; Amendments, Etc.  This Agreement contains the entire agreement and understanding of the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter thereof.  No modification, amendment, waiver or alteration of this Agreement or any provision or term hereof shall in any event be effective unless the same shall be in writing, executed by both parties hereto, and any waiver so given shall be effective only in the specific instance and for the specific purpose for which given.

5.3

Benefit.  This Agreement shall be binding upon, and inure to the benefit of, and shall be enforceable by, the heirs, successors and legal representatives of Executive and the successors, assignees and transferees of the Company and its current or future Affiliates.  This Agreement or any right or interest hereunder may not be assigned by Executive.

5.4

No Waiver.  No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder or pursuant hereto shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or pursuant thereto.

5.5

Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law but, if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.  If any part of any covenant or other provision in this Agreement is determined by a court of law to be overly broad thereby making the covenant unenforceable, the parties hereto agree, and it is their desire, that the court shall substitute a judicially enforceable limitation in its place, and that as so modified the covenant shall be binding upon the parties as if originally set forth herein.

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]

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered as of the day and year first above written.

INLAND REAL ESTATE CORPORATION,

a Maryland corporation

By: /s/Robert D. Parks

  

Name:  Robert D. Parks

Its:  President and CEO

EXECUTIVE

By:/s/Mark Zalatoris

Name:  Mark Zalatoris

#40764

EXHIBIT A

(FORMULA FOR DETERMINING ANNUAL INCENTIVE BONUS)

I.

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

·

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

·

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

·

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

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

Subject to Section II. below, if the Company achieves a Threshold level of performance, the Executive’s AIBO will be equal to 20% of Executive’s Base Salary for the applicable year.  If the Company achieves a Target level of performance, the Executive’s AIBO will be equal to 30% of Executive’s Base Salary for the applicable year.  If the Company achieves a High level of performance, the Executive’s AIBO will be equal to 50% of Executive’s Base Salary for the applicable year.

II.

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

A.

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

B.

The second component shall be determined by the Company’s chief executive officer, as recommended to and approved by the board of directors, based on a subjective assessment of the Executive’s performance, and may be up to but not in excess of 50% of the Executive’s AIBO.

III.

Notwithstanding anything to the contrary in this Exhibit A, in the event that the Company fails to achieve a Threshold level of performance in any given year, the Executive’s Annual Incentive Bonus shall be equal to 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 the Company, measured to either a Threshold, Target, or High level of performance.

·

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

·

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

·

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

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

Subject to Section II. below, if the Company achieves a Threshold level of performance, the Executive’s LTS grant will be the number of shares equal to the quotient of (1) 20% of the Executive’s Base Salary for the applicable year, divided by (2) the average of the high and low trading price as reported by the New York Stock Exchange on the date of grant.  If the Company achieves a Target 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.  If the Company achieves a High level of performance, the Executive’s LTS grant will be the number of shares equal to the quotient of (1) 50% of the Executive’s Base Salary for the applicable year, divided by (2) the average of the high and low trading price as reported by the New York Stock Exchange on the date of grant.

II.

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

A.

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

B.

The second component shall be determined by the Company’s chief executive officer, as recommended to and approved by the board of directors, based on a subjective assessment of the Executive’s performance, and may be up to but not in excess of 50% of the Executive’s LTS grant.

III.

Notwithstanding anything to the contrary in this Exhibit B, in the event that the Company fails to achieve a Threshold level of performance in a given year, the Executive’s Annual Award of Long Term Shares shall be equal to the quotient of (1) 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.  Any Annual Award of Long Term Shares determined pursuant to this Section III. shall be non-discretionary on the part of the Company, and shall be awarded to the Executive in accordance with the provisions of Section 3.1(c) of the Agreement.

EXHIBIT C

(FORMULA FOR DETERMINING ANNUAL STOCK OPTION AWARD)

I.

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

II.

If the Company achieves a Threshold level of performance, the Executive’s Annual Stock Option Award will authorize the Executive to purchase the number of shares equal to the quotient of (1) 10% 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.  

#40764

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]