Document:

EXHIBIT 10.1

 

BUSINESS
MANAGEMENT AGREEMENT

 

THIS BUSINESS MANAGEMENT AGREEMENT (this “Agreement”), dated as of [ __________ ],
2005, is entered into by and between INLAND AMERICAN REAL ESTATE TRUST, INC., a
Maryland corporation (the “Company”), and INLAND AMERICAN 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 as a REIT (as defined in Section 1
below), and 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.

 

“Acquisition Fees”
means the total of all fees and commissions, excluding Acquisition Expenses,
paid by any Person to any other Person (including any fees or

 

 

commissions paid by or to the Company, the Business
Manager or any Affiliate of either) in connection with an investment in Real
Estate Assets or purchasing, developing or constructing a property by the
Company.  For these purposes, the fees or
commissions shall include any real estate commission, selection fee,
development fee, construction fee, nonrecurring management fee, loan fee,
including points, or any fee of a similar nature, however designated, except
for development fees and construction fees paid to any Person not Affiliated
with the Sponsor or Business Manager in connection with the actual development
and construction of a project, or fees in connection with temporary short-term
investments acquired for purposes of cash management.

 

“Acquisition of a Real Estate Operating Company”
means the acquisition of a Real Estate Operating Company by the Company or a
wholly-owned subsidiary of the Company: (i) by purchasing at least fifty
and one-tenth percent (50.1%) of the capital stock or other equity interest in a
Real Estate Operating Company, or by merger or other business combination,
reorganization or tender offer or (ii) by acquiring all or substantially
all of a Real Estate Operating Company’s assets in a single purchase or series
of purchases.

 

“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 (10.0%) or more of the outstanding voting securities of such
other Person;

 

(b)                                 any
Person ten percent (10.0%) 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 Affiliated with the Sponsor.

 

“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 lease intangibles, invested, directly or indirectly, in financial
instruments, debt and equity securities and equity interests in and loans
secured by Real Estate Assets including amounts invested in Real Estate
Operating Companies, before reserves for 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 period.

 

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“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.

 

“Current Return” means a non-cumulative,
non-compounded return, equal to five percent (5.0%) per annum on Invested
Capital.

 

“Due Diligence Expense Allowance” means
any and all bona fide amounts reimbursed for
expenses incurred by any underwriters, dealer managers or other broker-dealers
in connection with investigating the Company or any offering of Securities made
by the Company.

 

“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 two other REITs organized by the Sponsor or
advised by the Business Manager or any of its Affiliates; and

 

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(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 (5.0%) 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.

 

“Invested Capital” means the original
issue price paid for the Shares reduced by prior distributions from the sale or
financing of the Company’s Properties.

 

“Marketing Contribution” means any and
all compensation payable to underwriters, dealer managers or other
broker-dealers for expenses in connection with marketing the sale of Shares,
including, without limitation, compensation payable to Inland Securities
Corporation.

 

“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, or allowances
for, reserves for depreciation, amortization or bad debts or other similar
noncash reserves all calculated in accordance with GAAP; provided, however,
that Net Income shall not include any gain recognized upon the sale of the
Company’s assets.

 

“Net Sales Proceeds”
means the 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, less
any costs incurred in selling the asset including, but not limited to, legal
fees and selling commissions and further reduced by the amount of any
indebtedness encumbering the asset and any amounts reinvested in one or more
Real Estate Assets or set aside as a reserve within one hundred eighty (180) days
of closing of sale, grant or conveyance.

 

“Offering” means the initial public offering
of Shares on a “best efforts” basis pursuant to the Prospectus dated [ ___________ ],
2005.

 

“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, mailing,
salaries of the Company’s employees while engaged in sales activity, charges of
transfer agents, registrars, trustees, escrow holders, depositaries, experts,
expenses of qualification of the sale of the securities under federal and state
laws, including taxes and fees and accountants’ and attorneys’ fees and
expenses.

 

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

 

“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.

 

“Primary Geographical Area of Investment”
means, with respect to the Company, the United States and Canada.

 

“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.

 

“Property Manager” means any of Inland
American Retail Management LLC, Inland American Office Management LLC, Inland
American Industrial Management LLC or Inland American Apartment Management LLC,
each a Delaware limited liability company, and any of their successors and
assigns.

 

“Prospectus” means the final prospectus
of the Company in connection with the registration of Shares filed with the
Securities and Exchange Commission on Form S-11, as amended and supplemented.

 

“Real Estate Assets”
means any and all investments in: (i) Real Property whether directly or
indirectly through owned or controlled subsidiaries or a Real Estate Operating
Company and including amounts invested in joint ventures; (ii) loans, or
other evidence of indebtedness secured, directly or indirectly, by interests in
Real Property; (iii) mortgage backed securities; and (iv) “Real
Estate Assets” as that term is defined in the Articles of Incorporation.

 

“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 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

 

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affiliate or sponsor of, or advisor to, the
entity to, on a daily basis, actively operate the entity and its subsidiaries
and businesses.

 

“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, including, without
limitation, commissions payable to Inland Securities Corporation.

 

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

 

“Stockholders” means holders of shares of
Equity Stock.

 

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

 

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

 

(b)                                 property
expenses;

 

(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
Fees, 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).

 

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2.                                       Duties
of the Business Manager. The Business Manager shall consult with the
Company and shall, at the request of the Board of Directors or the officers of
the Company, 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 best efforts
to:

 

(a)                                  subject
to the terms and conditions set forth in that certain Property Acquisition
Agreement by and between the Company and Acquisition Co., of even date herewith,
use commercially reasonable efforts to identify potential investment
opportunities in Real Estate Assets located in the Primary Geographical Area of
Investment 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 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,
property 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;

 

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(f)                                    cooperate
with the Property Managers in connection with property management services and
other activities relating to the Company’s assets, subject to the requirement
that the Business Manager or the applicable Property 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;

 

(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)                                  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
coordinating preparation, with each property 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 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

 

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(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.

 

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 any law, rule or
regulation or the Articles of Incorporation and shall refrain from taking such
action pending further clarification or instruction from the Board of Directors.

 

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

 

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

 

7.                                       Information
Furnished to the Business Manager. The Board of Directors will keep the Business
Manager informed in writing concerning the investment and financing policies of
the Company. The Board of Directors shall notify the Business Manager promptly
in writing of the Board of Director’s intention to make any investments or to
sell or dispose of any existing investments. The Company shall furnish the Business
Manager with a certified copy of all financial statements, a signed copy of
each report prepared by independent certified public accountants and such other
information with regard to its affairs as the Business Manager may reasonably
request.

 

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8.                                       Compensation.
Subject to the provisions of Section 13 hereof, for services
rendered hereunder the Company shall pay to the Business Manager or its
designee the following:

 

(a)                                  A
Management Fee of not more than one percent (1.0%) of the Average Invested
Assets, payable quarterly in an amount equal to one-quarter of one percent (0.25%)
of the Average Invested Assets of the Company as of the last day of the
immediately preceding quarter; provided that in no event shall the
Company be obligated to pay a Management Fee unless and until all of its Stockholders
have received the Current Return.  This
fee terminates if the Company acquires the Business Manager.

 

(b)                                 An
Acquisition Fee, equal to two and one-half percent (2.5%) of the aggregate
purchase price paid upon Acquisition of a Real Estate Operating Company; provided,
however, that Acquisition Fees shall not be paid for acquisitions solely
of a fee interest in Property.  The
Company shall pay Acquisition Fees either in cash or by issuing Shares valued per
share at the greater of (i) the per share offering price of common stock
in the Company’s most recent public offering; (ii) if applicable, the per
share price ascribed to shares of common stock used in the Company’s most
recent Acquisition of a Real Estate Operating Company; and (iii) $10.00
per share.  Any Shares issued will be
subject to restrictions on transfer.  If
the issuance of Shares to pay an Acquisition Fee would result in more than 9.8%
of the Company’s common stock being held by The Inland Group, Inc., a
Delaware corporation, and its Affiliates including the Business Manager, the
Board of Directors may waive the ownership restrictions set forth in the
Articles of Incorporation to permit the issuance of the additional Shares and
the payment of the Acquisition Fee in that instance.  Any waiver by the Board of Directors shall,
as a consequence, reduce the aggregate number of Shares of the Company’s common
stock that may be held by individuals and entities other than the Business
Manager.  If the Board of Directors does
not waive the ownership restrictions, the Company shall pay any excess fee in
cash.  This fee terminates if the Company
acquires the Business Manager.

 

(c)                                  An
incentive fee equal to fifteen percent (15.0%) 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 a ten percent (10.0%)
cumulative, non-compounded return on, plus return of, their Invested
Capital.  This fee terminates 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.

 

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(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;

 

(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 Selling
Commissions, 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 [                    ],
2005 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; provided, however,
that no reimbursement shall be made for costs of personnel to

 

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the extent that such personnel
perform services in transactions for which the Business Manager receives a
separate fee;

 

(xiv)                         audit,
accounting and legal fees paid to third parties;

 

(xv)                            transfer
agent and registrar’s fees and charges paid to third parties; 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.

 

(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.

 

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(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.

 

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;

 

(ii)                                  the
compensation, price or fee must be equal to the lesser of ninety percent (90.0%)
of the compensation, price or fee the Company would be required to pay to independent,
non-affiliated third parties who are rendering comparable services or selling
or leasing comparable goods on competitive terms in the same geographic
location, or ninety percent (90.0%) of the compensation, price or fee charged
by the Business Manager or its Affiliates for rendering comparable services or
selling or leasing comparable goods on competitive terms; and

 

(iii)                               if
at least ninety-five percent (95.0%) 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.

 

13

 

(c)                                  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.

 

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, Acquisition
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.                                 Business
Combination.

 

(a)                                  Business Combinations.  The
Company shall consider becoming a self-administered REIT once the Company’s
assets and income are, in the view of the Board of Directors, of sufficient
size such that internalizing the management functions performed by the Business
Manager and the Property Managers is in the best interests of the Stockholders.

 

If the Board
of Directors should make this determination in the future, the Company shall
pay one-half of the costs, and the Business Manager and the Property Managers shall
pay the other half, of an investment banking firm.  This firm shall jointly advise the Company
and the Sponsor on the value of the Business Manager and the Property Managers.  After the investment banking firm completes
its analyses, the Company shall require it to prepare a written report and make
a formal presentation to the Board of Directors.

 

Following the
presentation by the investment banking firm, the Board of Directors shall form
a special committee comprised entirely of Independent Directors to consider a
possible business combination with the Business Manager and the Property
Managers.  The Board of Directors shall,
subject to applicable law, delegate all of its decision-making power and
authority to the special committee with respect to these matters.  The special committee also shall be
authorized to retain its own financial advisors and legal counsel to, among
other things, negotiate with representatives of the Business Manager and the
Property Managers regarding a possible business combination.

 

(b)                                 Conditions to Completion of Business
Combination.  Before the Company may complete any
business combination with either the Business Manager or any

 

14

 

Property Manager in accordance
with this Section 12, the following two conditions shall be
satisfied:

 

(i)                                     the
special committee formed in accordance with Section 12(a) hereof
receives an opinion from a recognized investment banking firm, separate and
distinct from the firm jointly retained to provide a valuation analysis in
accordance with Section 12(a) hereof, concluding that the
consideration to be paid to acquire the Business Manager or the Property
Manager, as the case may be, is fair to the Stockholders from a financial point
of view; and

 

(ii)                                  the
holders of a majority of the votes cast at a meeting of the Stockholders called
for such purpose (if a quorum is present at the meeting) approves the
acquisition; provided that, for these purposes only, any shares held by
The Inland Group, Inc., the Sponsor or any of their Affiliates will be
counted for purposes of determining the presence of quorum but will not,
however, initially constitute a vote cast for purposes of determining the
number of votes necessary to approve the acquisition.  If the proposal receives the necessary votes
to approve the acquisition, all shares held by The Inland Group, Inc., the
Sponsor or any of their Affiliates may then be voted in favor of the
transaction.

 

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

 

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

 

(i)                                     two
percent (2.0%) of the total of the Average Invested Assets for the just ended Fiscal
Year; or

 

(ii)                                  twenty-five
percent (25.0%) of the Net Income for the just ended Fiscal Year;

 

provided, however,
that the Business Manager may satisfy any obligation under this Section 13(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 13(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 13(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 (15.0%) of
the Gross Offering Proceeds or the aggregate of all Offering Expenses
(excluding any Selling Commissions, the Marketing Contribution and the Due
Diligence Expense Allowance) exceed four and one-half percent (4.5%) of the
Gross Offering Proceeds, the Business Manager or its Affiliates shall reimburse
the Company for, or pay

 

15

 

directly, any excess Organization
Expenses or Offering Expenses incurred by the Company above the greater of
these limits.

 

14.                                 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.

 

15.                                 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. 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 at 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.

 

This Agreement shall also terminate upon the closing of a business
combination between the Company and the Business Manager as described in Section 12
or as otherwise provided in Section 17 hereof.

 

If this Agreement is terminated pursuant to this Section 15,
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 18.

 

16.                                 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 such 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

 

17.                                 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
such violation shall not cure such default 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.

 

18.                                 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 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.

 

17

 

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.

 

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
Indemnitee 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 person or entity for losses, liabilities or
expenses arising from, or out of, an alleged violation of federal or state
securities laws by any party seeking indemnity unless one or more of the
following conditions are met:

 

(i)                                     there
has been a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular person or entity;

 

(ii)                                  the
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular person or entity; or

 

18

 

(iii)                               a
court of competent jurisdiction approves a settlement of the 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 law violations.

 

(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;

 

(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.
Any notice, report or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice,
report or other communication is accepted by the party to whom it is given and
shall be given by being delivered at the following addresses of the parties
hereto:

 

	
  If to the Company:

  	
  Inland American 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 American Business Manager &
  Advisor Inc.

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
  Attention:

  	
  Ms. Brenda Gujral

  
	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
  Facsimile:

  	
  (630) 218-4955

  

 

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

 

19

 

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 such as set forth in
the Prospectus. 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, agrees, on the one hand, that the Business Manager
and its Affiliates will endeavor to balance the interests of the Company with
the interests of the Business Manager and its Affiliates in making any
determination where a conflict of interest exists between the Company and the Business
Manager or its Affiliates.

 

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

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

20

 

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

 

	
  COMPANY:

  	
  BUSINESS MANAGER:

  
	
   

  	
   

  
	
  INLAND AMERICAN REAL ESTATE TRUST,

  INC.

  	
  INLAND AMERICAN BUSINESS MANAGER &

  ADVISOR INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:EXHIBIT 10.2

 

MASTER MANAGEMENT
AGREEMENT

 

THIS MASTER MANAGEMENT AGREEMENT (this “Agreement”), dated as of [ __________ ]
[ __ ], 2005, is entered into by and between INLAND AMERICAN REAL
ESTATE TRUST, INC., a Maryland corporation (the “Company”), and [ _______________________ ],
a Delaware limited liability company (the “Property Manager”).

 

WITNESSETH:

 

WHEREAS, the Company intends to operate as a “real estate investment
trust” (a “REIT”), as defined in Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the “Code”), for federal and state income tax
purposes and expects to make investments in real estate assets of the type
permitted to be made by REITs under the Code and otherwise in accordance with
the Articles of Incorporation and Bylaws of the Company (such investments being
referred to herein collectively as the “Properties” and individually as a “Property”);
and

 

WHEREAS, the Company desires to have the Property Manager manage certain
Properties, and the Property Manager is willing to manage those Properties, on
the terms and conditions herein set forth.

 

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

 

1.                                       Effective
Date.  Effective as of [ __________ ]
[ __ ], 2005, the Company hereby retains the Property Manager to
manage certain [ __________ ] Properties located in the United States
and Canada (collectively, the “Territory”).  This Agreement is not an exclusive management
agreement and the Property Manager acknowledges and agrees that the Company may
engage other management companies to manage Properties within the Territory.

 

2.                                       Terms
and Conditions.

 

(a)                                  The
engagement of the Property Manager by the Company for any Property shall be
pursuant to the terms and conditions of a separate management agreement in
substantially the form attached hereto as Exhibit A (the
“Management Agreement”).  The initial
term of each Management Agreement shall commence on the date of acquisition by
the Company of the Property, if the Property will be managed by the Property
Manager, and shall end December 31 of the year in which the Property was acquired,
with three successive one-year renewal periods occurring immediately after this
initial term unless either party to the Management Agreement notifies the other
party in writing of its intent to terminate between sixty (60) and ninety (90)
days prior to the expiration of the initial or renewal term.  Notwithstanding the foregoing, the parties
may mutually agree to vary the terms of the Management Agreement for any or all
of the Properties or to not enter into a written Management Agreement for any Property.

 

 

(b)                                 For
each [ _________ ] Property managed directly by entities other than
the Property Manager, its affiliates or agents, the Company shall pay the Property
Manager a monthly oversight fee of up to one percent (1.0%) of the “gross
income” attributable to the Property for the month for which the oversight fee
is paid.  For these purposes, the term
“gross income” means the aggregate amount of any and all rents, assessments and
other items, including, but not limited to, tenant payments for real estate
taxes, property liability and other insurance, damages and repairs, common area
maintenance, tax reduction fees and all other tenant reimbursements,
administrative charges, proceeds of rental interruption insurance, parking
fees, income from coin operated machines and other miscellaneous income,
collected by, paid to, or otherwise due and owing, the management company in a
given month with respect to the Property. 
In no event shall the Property Manager receive both an oversight fee and
a management fee pursuant to a Management Agreement for the same Property.  Further, in no event shall the aggregate
amount of the management fee paid to entities other than the Property Manager,
its affiliates or agents plus the oversight fee paid to the Property Manager
exceed four and one-half percent (4.5%) of the “gross income” of a particular
property.  In no event shall an oversight
fee for any Property be paid to the Property Manager for more than three years
following the date that the Property or the Real Estate Operating Company (as
defined below), as the case may be, was acquired by the Company or any of its
affiliates.  For purposes of this
Agreement, the term “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:

 

(1)                                  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;

 

(2)                                  has
a policy or purpose of reinvesting sale, financing or refinancing proceeds or
cash from operations;

 

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

 

(4)                                  either:
(A) has its own officers and employees that, on a daily basis, actively
operate the entity and its subsidiaries and businesses; or (B) 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.

 

3.                                       Business Combination:

 

(a)                                  Business Combinations.  The
Company shall consider becoming a self-administered REIT once the Company’s
assets and income are, in the view of the Board of Directors, of sufficient
size such that internalizing the management functions performed by the Company’s
business manager, Inland American Business Manager &

 

2

 

Advisor, Inc. (the
“Business Manager”), and its property managers, including the Property Manager,
is in the best interests of the Stockholders.

 

If the Board
of Directors should make this determination in the future, the Company shall
pay one-half of the costs, and the Business Manager and the property managers
shall pay the other half, of an investment banking firm.  This firm shall jointly advise the Company
and the Sponsor on the value of the Business Manager and the property managers.  After the investment banking firm completes
its analyses, the Company shall require it to prepare a written report and make
a formal presentation to the Board of Directors.

 

Following the
presentation by the investment banking firm, the Board of Directors shall form
a special committee comprised entirely of Independent Directors to consider a
possible business combination with the Business Manager and the property managers.  The Board of Directors shall, subject to
applicable law, delegate all of its decision-making power and authority to the
special committee with respect to these matters.  The special committee also shall be
authorized to retain its own financial advisors and legal counsel to, among
other things, negotiate with representatives of the Business Manager and the
property managers regarding a possible business combination.

 

(b)                                 Conditions to Completion of Business
Combination.  Before the Company may complete any
business combination with either the Business Manager or the Property Manager
in accordance with this Section 3, the following two conditions
shall be satisfied:

 

(i)                                     the
special committee formed in accordance with Section 3(a) hereof
receives an opinion from a recognized investment banking firm, separate and
distinct from the firm jointly retained to provide a valuation analysis in
accordance with Section 3(a) hereof, concluding that the
consideration to be paid to acquire the Business Manager or the Property
Manager, as the case may be, is fair to the Stockholders from a financial point
of view; and

 

(ii)                                  the
holders of a majority of the votes cast at a meeting of the Stockholders called
for such purpose (if a quorum is present at the meeting) approves the
acquisition; provided that, for these purposes only, any shares held by
The Inland Group, Inc., the Sponsor or any of their Affiliates will be counted
for purposes of determining the presence of quorum but will not, however,
initially constitute a vote cast for purposes of determining the number of
votes necessary to approve the acquisition. 
If the proposal receives the necessary votes to approve the acquisition,
all shares held by The Inland Group, Inc., the Sponsor or any of their
Affiliates may then be voted in favor of the transaction.

 

4.                                       Term;
Termination of Agreement.

 

(a)                                  This
Agreement shall have an initial term of three years 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. Each

 

3

 

extension shall be executed in
writing by both parties hereto prior to the expiration of this Agreement or of
any extension thereof.

 

(b)                                 Notwithstanding
any other provision of the Agreement to the contrary, this Agreement may be
terminated at 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 Property Manager.
In the event of the termination of the Agreement, the Property 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 Property Manager.

 

(c)                                  If
this Agreement is terminated pursuant to this Section 4, the
parties shall have no liability or obligation to each other, except as provided
in Section 6 hereof.

 

5.                                       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
of the Company to the Property Manager if any of the following events occurs:

 

(a)                                  the
Property Manager violates any provisions of this Agreement and after notice of
such violation fails to cure the default within thirty (30) days;

 

(b)                                 a
court of competent jurisdiction enters a decree or order for relief in respect
of the Property 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 Property Manager or for any substantial part of its property
or orders the winding up or liquidation of the Property Manager’s affairs; or

 

(c)                                  the
Property 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
Property 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 Property Manager agrees that if any of
the events specified in subsections (b) and (c) of this Section 5
occur, it will give written notice thereof to the Company within seven (7) days
after the occurrence of the event.

 

6.                                       Action
Upon Termination. The Property Manager shall not be entitled to
compensation after the date of termination of this Agreement for further
services hereunder, but shall be paid all compensation accruing to the date of
termination. Upon termination of this Agreement, the Property Manager shall:

 

4

 

(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 Property Manager is entitled;

 

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

 

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

 

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

 

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

 

8.                                       Liability
and Indemnification.

 

(a)                                  The
Company shall indemnify the Property Manager and its affiliates, 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 of the Company 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 person or entity for losses, liabilities or
expenses arising from, or out of, an alleged violation of federal or state
securities laws by any party seeking indemnity unless one or more of the
following conditions are met:

 

(i)                                     there
has been a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular person or entity;

 

5

 

(ii)                                  the
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular person or entity; or

 

(iii)                               a
court of competent jurisdiction approves a settlement of the 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 law violations.

 

(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;

 

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

 

9.                                       Notices.  Any notice, report or other communication
required or permitted to be given hereunder shall be in writing unless some other
method of giving such notice, report or other communication is accepted by the
party to whom it is given and shall be given by being delivered at the
following addresses of the parties hereto:

 

	
  If to the Company, to:

  	
  Inland American Real Estate Trust, Inc.

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
  Attention:

  	
  Ms. Roberta S. Matlin,

  
	
   

  	
   

  	
  Vice President, Administration

  
	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
  Facsimile:

  	
  (630) 218-4955

  
	
   

  	
   

  
	
  If to the Property Manager, to:

  	
  [ _____________________ ]

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
  Attention:

  	
  [ _____________________ ]

  
	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
  Facsimile:

  	
  (630) 218-4955

  

 

6

 

Either party may at any time give notice in writing to the other party
of a change of its address for the purpose of this Section 9.

 

10.                                 Counterparts.  This Agreement may be executed in one or more
counterparts, all or which taken together shall constitute one and the same
agreement, and shall become effective when the counterparts have been signed by
each party hereto and delivered to the other party hereto.

 

11.                                 Governing
Law.  This Agreement shall be
construed, performed and enforced in accordance with and governed by the
internal laws of the State of Illinois, without giving effect to the principles
of conflicts of law thereof.

 

12.                                 Amendments.  This Agreement may be amended or modified,
and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed by the parties
hereto, or in the case of a waiver, by the party waiving compliance.

 

13.                                 Headings.  The descriptive headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

 

14.                                 Severability.  In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in
full force and effect.

 

[THE
REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

7

 

WHEREFORE, the undersigned have executed this Agreement by their duly authorized
officers as of the date first above written.

 

	
  COMPANY:

  	
  PROPERTY MANAGER:

  
	
   

  	
   

  
	
  INLAND AMERICAN REAL ESTATE TRUST, INC.

  	
  [ _____________________ ]

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

 

EXHIBIT A

 

FORM OF
MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this “Agreement”),
dated as of [ _________ ] [ __ ], 20[ __ ], is
entered into by and between INLAND AMERICAN REAL ESTATE TRUST, INC., a Maryland
corporation (“Owner”), and [ ____________________ ], a Delaware
limited liability company (the “Property Manager”).

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

 

1.                                       Owner
hereby employs the Property Manager exclusively to rent, lease, operate and manage
the property commonly known as and located in and legally described on Exhibit A
attached hereto and made a part hereof (the “Premises”), upon the terms and
conditions hereinafter set forth, for a term beginning on [ __________ ]
[ __ ], 20[ __ ] and ending on December 31, 20[ __ ]
(the “Initial Term”) and thereafter for three successive one-year renewal
periods (each, a “Renewal Term”), with the first such one-year renewal period
commencing on January 1, 20[ __ ], and ending on December 31,
20[ __ ], unless, between sixty (60) and ninety (90) days prior to
the expiration of the Initial Term or the current Renewal Term, if applicable,
either Owner or the Property Manager notifies the other party hereto in writing
that it elects to terminate this Agreement, in which case this Agreement shall
be terminated on the last day of the Initial Term or the current Renewal Term,
if applicable.  The Owner also may
terminate this Agreement without cause or penalty upon a vote of a majority of
the Owner’s independent directors by providing no less than sixty (60) days
written notice to the Property Manager.  In the event this Agreement is terminated for
any reason prior to the expiration of the Initial Term or any Renewal Term, Owner
shall indemnify, protect, defend, save and hold the Property Manager and all of
its affiliates, shareholders, officers, directors, employees, agents, successors
and assigns harmless from and against any and all claims, causes of action,
demands, suits, proceedings, loss, judgments, damage, awards, liens, fines,
costs, attorneys’ fees and expenses, of every kind and nature whatsoever that
may be imposed on or incurred by the Property Manager by reason of the willful
misconduct, gross negligence, malfeasance or unlawful acts (such unlawfulness
having been adjudicated by a court of proper jurisdiction) of Owner.

 

2.                                       THE PROPERTY
MANAGER AGREES:

 

2.1                                 To accept the
management of the Premises, to the extent, for the period, and upon the terms herein
provided and agrees to furnish the services of its organization in connection
with renting, leasing, operating and managing the Premises, and, without
limiting the generality of the foregoing, the Property Manager agrees to be
responsible for those specific duties and functions set forth in Section 3
hereof.  The Property Manager shall be
entitled at all times to manage the Premises in accordance with the Property
Manager’s standard operating policies and procedures, except to the extent that
any specific provisions contained herein are to the contrary, in which case the
Property Manager shall manage the Premises consistent with the specific
provisions of the Agreement. The Property Manager agrees to use its best
efforts to maintain the highest occupancy at the highest rents for each space
comprising the Premises.

 

A-1

 

2.2                                 To render monthly
reports for the Premises to Owner, to the attention of the individual and
address as directed by Owner from time to time, and to remit to Owner the
excess of Gross Income (as defined in Section 3.3 hereof) over
expenses paid pursuant to Section 3.4 hereof (“Net Proceeds”) for
each month on or before the 15th day of the following month.  The Property Manager will remit the Net
Proceeds to Owner at the address as stated in Section 6.1 hereof.
The reports to be submitted shall consist of the Property Manager’s commercial income
report and commercial budget variance report, and such other monthly, quarterly
and annual reports as are customary in commercial property management
relationships and as reasonably requested by Owner in writing from time to
time.

 

2.4                                 In the event that
expenses paid pursuant to Section 3.4 hereof shall be in excess of
Gross Income for any monthly period, to notify Owner of same and Owner agrees
to pay the excess amount immediately upon request from the Property Manager,
but nothing herein contained shall obligate the Property Manager to advance its
own funds on behalf of Owner. All advances by the Property Manager on behalf of
Owner shall be paid to the Property Manager by Owner within ten (10) days
after request.

 

2.5                                 To prepare annualized
budgets for operation of the Premises and submit them to Owner for approval. Annualized
budgets shall be for planning and informational purposes only, and the Property
Manager shall have no liability to Owner for any failure to meet any budget.
However, the Property Manager will use its best efforts to operate the Premises
pursuant to the annualized budget. The parties acknowledge that the first
annualized budget has been prepared and approved for the year commencing [ ______________ ],
[ __ ] 20[ __ ] and ending on December 31, 20[ __ ].  Notwithstanding the period covered by the
first annualized budget, all subsequent annualized budgets shall cover the
period from January 1st of each year through December 31st of the
same year. The proposed annualized budget for each calendar year shall be
submitted by the Property Manager to Owner by December 1st of the year
preceding the year for which it applies, and Owner shall notify the Property
Manager within fifteen (15) days as to whether Owner has or has not approved
the proposed annualized budget. If Owner does not approve the proposed
annualized budget, Owner shall notify the Property Manager and the Property
Manager shall make the necessary amendments to the annualized budget. During
the time the Property Manager is preparing these amendments, the Property
Manager will continue to operate the Premises according to the last approved annualized
budget. Owner’s approval of the annualized budget shall constitute approval for
the Property Manager to expend sums for all budgeted expenditures, without the
necessity to obtain additional approval of Owner under any other expenditure
limitations as set forth elsewhere in this Agreement.

 

3.                                       OWNER AGREES, and
does hereby give the Property Manager the following exclusive authority and
powers (all of which shall be exercised in the name of the Property Manager, as
the Property Manager for Owner) and Owner agrees to assume and reimburse the
Property Manager, its affiliates and agents for all expenses paid or incurred
in connection therewith:

 

3.1                                 To advertise the
Premises or any part thereof and to display signs thereon, as permitted by law;
and to rent the same; to pay all expenses of leasing the Premises, including
but not limited to, newspaper and other advertising, signage, banners,
brochures, referral commissions, leasing commissions, finder’s fees, salaries,
bonuses and other compensation of

 

A-2

 

leasing personnel responsible for the leasing
of the Premises, salaries and benefit expenses for on-site personnel and all
other property-level expenses; to cause references of prospective tenants to be
investigated, it being understood and agreed by the parties hereto that the Property
Manager does not guarantee the credit worthiness or collectibility of accounts
receivable from tenants, users or lessees; and to negotiate new leases and
renewals and cancellations of existing leases, which shall be subject to the Property
Manager obtaining Owner’s prior approval.  The Property Manager may collect from tenants
all or any of the following: a late rent administrative charge; a
non-negotiable check charge; credit report fee; a subleasing administrative
charge and/or broker’s commission and need not account for such charges and/or
commission to Owner; to terminate tenancies and to sign and serve in the name
of Owner of the Premises such notices as are deemed necessary by the Property
Manager; to institute and prosecute actions to evict tenants and to recover
possession of the Premises or portions thereof; with Owner’s prior authorization,
to sue for in the name of Owner of the Premises and recover rent and other sums
due; and to settle, compromise and release such actions or suits, or reinstate
such tenancies. All expenses of litigation including, but not limited to,
attorneys’ fees, filing fees and court costs that the Property Manager shall
incur in connection with the collecting of rent and other sums, or to recover
possession of the Premises or any portion thereof shall be deemed to be an
operational expense of the Premises. The Property Manager and Owner shall
concur on the selection of the attorney to handle any litigation.

 

3.2                                 To hire, supervise,
discharge and pay salary and benefit expenses for all labor required for the
operation and maintenance of the Premises including, but not limited to, on-site
personnel, property managers, assistant property managers, leasing consultants,
engineers, janitors, maintenance supervisors and other employees required for
the operation and maintenance of the Premises, including personnel spending a
portion of their working hours (to be charged on a pro rata
basis) at the Premises (all of whom shall be deemed employees of the Premises,
not of the Property Manager). All expenses of such employment shall be deemed
operational expenses of the Premises. To make or cause to be made all ordinary
repairs and replacements necessary to preserve the Premises in its present
condition and for the operating efficiency thereof and all alterations required
to comply with lease requirements, and to do decorating on the Premises; to
negotiate and enter into, as the Property Manager for Owner of the Premises,
contracts for all items on budgets that have been approved by Owner, any
emergency services or repairs for items not exceeding $5,000.00, appropriate
service agreements and labor agreements for normal operation of the Premises, which
shall have terms not to exceed three years, and agreements for all budgeted
maintenance, minor alterations and utility services, including, but not limited
to, electricity, gas, fuel, water, telephone, window washing, scavenger
service, landscaping, snow removal, pest exterminating, decorating and legal services
in collection with the leases and service agreements relating to the Premises,
and other services or such of them as the Property Manager may consider
appropriate; and to purchase supplies and pay all bills.  The Property Manager shall use its best
efforts to obtain the foregoing services and utilities for the Premises at the
most economical costs and terms available to the Property Manager. Owner hereby
appoints the Property Manager as Owner’s authorized Property Manager for the
purpose of executing, as the managing Property Manager for Owner, all of the
foregoing types of agreements. In addition, Owner agrees to specifically assume
in writing all obligations under all agreements so entered into by the Property
Manager, on behalf of Owner of the Premises, upon the termination of this
Agreement and Owner shall indemnify, protect, save, defend and hold the Property
Manager and all of its affiliates, shareholders, officers, directors,

 

A-3

 

employees, agents, successors and assigns
harmless from and against any and all claims, causes of action, demands, suits,
proceedings, loss, judgments, damage, awards, liens, fines, costs, attorneys’
fees and expenses, of every kind and nature whatsoever, resulting from, arising
out of or in any way related to those agreements and which relate to or concern
matters occurring after termination of this Agreement, but excluding matters
arising out of the Property Manager’s willful misconduct, gross negligence,
malfeasance or unlawful acts. The Property Manager shall secure the approval
of, and execution of appropriate agreements by, Owner for any non-budgeted and
non-emergency/contingency capital items, alterations or other expenditures in
excess of $5,000.00 for anyone item, securing for each item at least three (3) written
bids, if practicable, or providing evidence satisfactory to Owner that the agreed
amount is lower than industry standard pricing, from responsible contractors. The
Property Manager shall have the right from time to time during the term hereof,
to contract with and make purchases from its affiliates and third party agents;
provided that contract rates and prices are competitive with other
available sources. The Property Manager may at any time, and from time to time,
request and receive the prior written authorization of Owner of the Premises of
any one or more purchases or other expenditures, notwithstanding that the Property
Manager may otherwise be authorized hereunder to make such purchases or
expenditures.

 

3.3                                 To collect rents
and/or assessments and other items, including, but not limited to, tenant
payments for real estate taxes, property liability and other insurance, damages
and repairs, common area maintenance, tax reduction fees and all other tenant
reimbursements, administrative charges, proceeds of rental interruption
insurance, parking fees, income from coin operated machines and other
miscellaneous income, due or to become due (all such items being referred to
herein as “Gross Income”) and give receipts therefore and to deposit all such
Gross Income collected hereunder in the Property Manager’s custodial account
which the Property Manager will open and maintain, in a state or national bank
of the Property Manager’s choice and whose deposits are insured by the Federal
Deposit Insurance Corporation, exclusively for the Premises and any other
properties owned by Owner (or any entity that is owned or controlled by the
general partner of Owner) and managed by the Property Manager. Owner agrees
that the Property Manager shall be authorized to maintain a reasonable minimum
balance (to be determined jointly from time to time) in the custodial account. The
Property Manager may endorse any and all checks received in connection with the
operation of the Premises and drawn to the order of Owner and Owner shall, upon
request, furnish the Property Manager’s depository with an appropriate
authorization for the Property Manager to make the endorsement.

 

3.4                                 To pay all expenses of
the Premises from the Gross Income collected in accordance with Section 3.3
hereof, from the Property Manager’s custodial account. It is understood that
the Gross Income will be used first to pay the compensation to the Property
Manager as contained in Section 5 hereof, then operational expenses
and then any mortgage indebtedness, including real estate tax and insurance impounds,
but only as directed by Owner in writing and only if sufficient Gross Income is
available for such payments.

 

3.5                                 Nothing in this
Agreement shall be interpreted to obligate the Property Manager to pay from
Gross Income, any expenses incurred by Owner prior to the commencement of this
Agreement, except to the extent Owner advances additional funds to pay the expenses.

 

A-4

 

3.6                                 To collect and handle
tenants’ security deposits, including the right to apply the security deposits
to unpaid rent, and to comply, on behalf of Owner of the Premises, with
applicable state or local laws concerning security deposits and interest
thereon, if any.

 

3.7                                 The Property Manager
shall not be required to advance any monies for the care or management of the
Premises, and Owner agrees to advance all monies necessary therefor. If the Property
Manager shall elect to advance any money in connection with the Premises, Owner
agrees to reimburse the Property Manager forthwith and hereby authorizes the Property
Manager to deduct the advanced amounts from any monies due Owner.

 

3.8                                 To handle all steps
necessary regarding any claim for insured losses or damages; provided
that the Property Manager will not make any adjustments or settlements in
excess of $10,000.00 without Owner’s prior written consent.

 

3.9                                 Notwithstanding
anything to the contrary contained in this Agreement, Owner acknowledges and
agrees that any or all of the duties of the Property Manager as contained
herein may be delegated by the Property Manager and performed by an affiliate
or third-party agent (a “SubProperty Manager”) with whom the Property Manager
contracts for the purpose of performing such duties. Owner specifically grants the
Property Manager the authority to enter management agreements with any SubProperty
Manager; provided that Owner shall have no liability or responsibility
to any SubProperty Manager for the payment of the SubProperty Manager’s fee or
for reimbursement to the SubProperty Manager of its expenses or to indemnify
the SubProperty Manager in any manner for any matter; and provided  further
that the Property Manager shall require such SubProperty Manager to agree, in
the written agreement setting forth the duties and obligations of such SubProperty
Manager, to indemnify Owner for all loss, damage or claims incurred by Owner as
a result of the willful misconduct, gross negligence, malfeasance or unlawful
acts of the SubProperty Manager. Owner further acknowledges and agrees that the
Property Manager may assign this Agreement and all of the Property Manager’s
rights and obligations hereunder, to another management entity that is then
managing other property for Owner (“Successor Property Manager”). Owner
specifically grants the Property Manager the authority to make an assignment of
this Agreement to a Successor Property Manager.

 

4.                                       OWNER FURTHER
AGREES:

 

4.1                                 To indemnify, defend,
protect, save and hold the Property Manager and all of its affiliates, shareholders,
officers, directors, employees, agents, SubProperty Managers, successors and
assigns (collectively, “Indemnified Parties”) harmless from any and all claims,
causes of action, demands, suits, proceedings, loss, judgments, damage, awards,
liens, fines, costs, attorneys’ fees and expenses, of every kind and nature
whatsoever (collectively, “Losses”) in connection with or in any way related to
the Premises and from liability for damage to the Premises and injuries to or
death of any person whomsoever, and damage to property; provided,  however,
that any indemnification pursuant to this Section 4.1 shall not
extend to any such Losses arising out of the negligence or misconduct (such
unlawfulness having been adjudicated by a court of proper jurisdiction) of the Property
Manager or any of the other Indemnified Parties. Owner agrees to procure and
carry at its own expense public liability insurance, fire and extended coverage
insurance, burglary and theft insurance, rental interruption insurance, flood

 

A-5

 

insurance (if appropriate) and boiler insurance
(if appropriate) naming Owner and the Property Manager as insureds and adequate
to protect their interests and in form, substance, and amounts reasonably
satisfactory to the Property Manager, and to furnish to the Property Manager
certificates and policies evidencing the existence of this insurance. The
premiums for all insurance maintained by Owner shall be paid by either Owner
directly or, provided sufficient Gross Income is available, by the Property
Manager from Gross Income.  Unless Owner
shall provide insurance and furnish certificates and policies within ten (10) days
from the date of this Agreement, the Property Manager may, in its sole
discretion, but shall not be obligated to, purchase insurance and charge the
cost thereof to the account of Owner. All insurance policies shall provide that
the Property Manager shall receive thirty (30) days’ written notice prior to
cancellation of the policy.  The Property
Manager shall not be liable for any error of judgment or for any mistake of
fact or law, or for any thing that it may do or refrain from doing, except in
cases of negligence or misconduct on the part of the Property Manager (such
unlawfulness having been adjudicated by a court of proper jurisdiction).

 

4.2                                 Owner hereby warrants
and represents to the Property Manager that to the best of Owner’s knowledge,
neither the Premises, nor any part thereof, has previously been or is presently
being used to treat, deposit, store, dispose of or place any hazardous
substance, that may subject the Property Manager to liability or claims under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9607) or any constitutional provision, statute,
ordinance, law or regulation of any governmental body or of any order or ruling
of any public authority or official thereof, having or claiming to have
jurisdiction thereover.  Furthermore, Owner
agrees to indemnify, protect, defend, save and hold the Property Manager and
all of its affiliates, shareholders, officers, directors, employees, agents,
successors and assigns harmless from any and all claims, causes of action,
demands, suits, proceedings, loss, judgments, damage, awards, liens, fines,
costs, attorneys’ fees and expenses, of every kind and nature whatsoever,
involving, concerning or in any way related to any past, current or future
allegations regarding treatment, depositing, storage, disposal or placement by
any party other than the Property Manager of hazardous substances on the
Premises.

 

4.3                                 To give adequate
advance written notice to the Property Manager if Owner desires that the Property
Manager make payment, out of Gross Income, to the extent funds are available
after the payment of the Property Manager’s compensation as contained in Section 5
hereof and all operational expenses, of mortgage indebtedness, general taxes,
special assessments, or fire, boiler or any other insurance premiums. In no
event shall the Property Manager be required to advance its own money in
payment of any such indebtedness, taxes, assessments or premiums.

 

5.                                       OWNER
AGREES TO PAY THE PROPERTY MANAGER, AS A MONTHLY MANAGEMENT FEE HEREUNDER FOR
MANAGING THE PREMISES DIRECTLY OR THROUGH ITS AFFILIATES OR AGENTS, an amount equal
to four and one-half percent (4.5%) of Gross Income for the month for which the
management fee is paid (each, a “Management Fee”), which shall be deducted
monthly by the Property Manager and retained by the Property Manager from Gross
Income prior to payment to Owner of Net Proceeds. The Management Fee shall be
compensation for all services specified herein and provided by the Property
Manager in connection with renting, leasing, operating and managing the
Premises. Any services beyond those specified herein, such as sales brokerage,
construction management,

 

A-6

 

loan origination and servicing, property tax
reduction and risk management services, shall be performed by Property Manager
and compensated by Owner only if the parties agree on the scope of the services
to be performed; provided that the compensation to be paid therefor will
not exceed ninety percent (90.0%) of the market rate that would be paid to
unrelated parties providing these services; provided  further that
all compensation must be approved by a majority of the independent directors of
Owner. Owner acknowledges and agrees that Property Manager may pay or assign
all or any portion of its Management Fee to a SubProperty Manager as described
in Section 3.9 hereof.

 

5.1                                 The Property Manager
shall retain all administrative charges actually collected from tenants in
connection with annual common area maintenance reconciliations and tenant
chargebacks for same.

 

6.                                       IT IS MUTUALLY
AGREED THAT:

 

6.1                                 Owner shall designate
one (1) person to serve as Owner’s Representative in all dealings with the
Property Manager hereunder. Whenever the notification and reporting to Owner or
the approval, consent or other action of Owner is called for hereunder, any
notification and reporting if sent to or specified in writing to Owner’s
Representative, and any approval, consent or action if executed by Owner’s Representative,
shall be binding on Owner. Owner’s Representative initially shall be:

 

	
  Name

  	
   

  	
  Address

  
	
  Ms. Roberta S. Matlin,

  Vice President, Administration

  	
   

  	
  2901 Butterfield Road

  Oak Brook, IL 60523

  Telephone:       (630) 218-8000

  Facsimile:        (630) 218-4955

  

 

Owner’s Representative may be changed at the discretion of Owner, at
any time and from time to time, and shall be effective upon the Property
Manager’s receipt of written notice of the new Owner’s Representative.

 

6.2                                 Owner expressly
withholds from the Property Manager any power or authority to make any
structural changes in any building or to make any other major alterations or
additions in or to any such building or equipment therein, or to incur any
expense chargeable to Owner, other than expenses related to exercising the
express powers above vested in the Property Manager without the prior written
direction of Owner’s Representative, except that the Property Manager shall
make all emergency repairs as may be required to ensure the safety of persons
or property or which are immediately necessary for the preservation and safety
of the Premises or the safety of the tenants and occupants thereof or are
required to avoid the suspension of any necessary service to the Premises.

 

6.3                                 The Property Manager
shall be responsible for notifying Owner in the event it receives notice that
any building on the Premises or any equipment therein does not comply with the
requirements of any statute, ordinance, law or regulation of any governmental
body or of any public authority or official thereof having or claiming to have
jurisdiction thereover. The Property Manager shall promptly forward to Owner
any complaints, warnings,

 

A-7

 

notices or summonses received by the Property
Manager relating to these matters. Owner represents that to the best of its
knowledge the Premises and such equipment comply with all such requirements and
authorizes the Property Manager to disclose Owner of the Premises to any
officials and agrees to indemnify, protect, defend, save and hold the Property
Manager and the other Indemnified Parties harmless of and from any and all
Losses which may be imposed on them or any of them by reason of the failure of Owner
to correct any present or future violation or alleged violation of any and all
present or future laws, ordinances, statutes, or regulations of any public
authority or official thereof, having or claiming to have jurisdiction
thereover, of which it has actual notice.

 

6.4                                 In the event it is alleged
or charged that any building on the Premises or any equipment therein or any
act or failure to act by Owner with respect to the Premises or the sale,
rental, or other disposition thereof fails to comply with, or is in violation
of, any of the requirements of any constitutional provision, statute,
ordinance, law or regulation of any governmental body or any order or ruling of
any public authority or official thereof having or claiming to have
jurisdiction thereover, and the Property Manager, in its sole and absolute
discretion, considers that the action or position of Owner, with respect
thereto may result in damage or liability to the Property Manager, the Property
Manager shall have the right to cancel this Agreement at any time by written
notice to Owner of its election so to do, which cancellation shall be effective
upon delivery of the notice to Owner. Any notice may be delivered personally or
by registered mail, on or to the person named to receive the Property Manager’s
monthly statement at the address provided in Section 6.1 hereof,
and if delivered by mail shall be deemed to have been delivered when deposited
in the mails. Any cancellation pursuant to this Section 6.4 shall
not release the indemnities of Owner set forth in this Agreement, including,
but not limited to, those set forth in Sections 1, 3.2, 4.1,
4.2 and 6.3 above and shall not terminate any liability or
obligation of Owner to the Property Manager for any payment, reimbursement, or
other sum of money then due and payable to the Property Manager hereunder.

 

6.5                                 All personnel
expenses, including but not limited to, wages, salaries, insurance, benefits,
employment related taxes and other governmental charges, shall be charges
incurred in connection with the Premises for purposes of Section 3.4
hereof, to the extent that these expenses are apportioned by the Property
Manager to services rendered for the benefit of the Premises. The number and
classification of employees serving the Premises shall be as determined by the Property
Manager to be appropriate for the proper operation of the Premises; provided
that Owner may request changes in the number and/or classifications of
employees, and the Property Manager shall make all requested changes unless in
its judgment the resulting level of operation and/or maintenance of the
Premises will be inadequate. The Property Manager shall honor any collective
bargaining contract covering employment at the Premises which is in effect upon
the date of execution of this Agreement; provided that the Property
Manager shall not assume or otherwise become a party to any collective
bargaining contract for any purpose whatsoever and all personnel subject to a
collective bargaining contract shall be considered the employees of the
Premises and not the Property Manager.

 

7.                                       Owner
shall pay or reimburse the Property Manager, its affiliates or agents for all
amounts due it under this Agreement for services and advances prior to
termination of this Agreement. All provisions of this Agreement that require Owner
to have insured, or to protect, defend, save, hold and indemnify or to
reimburse the Property Manager shall survive any

 

A-8

 

expiration or termination of this Agreement
and, if the Property Manager is or becomes involved in any claim, proceeding or
litigation by reason of having been the Property Manager of Owner, such
provisions shall apply as if this Agreement were still in effect. The parties
understand and agree that the Property Manager may withhold funds for sixty
(60) days after the end of the month in which this Agreement is terminated to
pay bills previously incurred but not yet invoiced and to close accounts.
Should the funds withheld be insufficient to meet the obligation of the Property
Manager to pay bills previously incurred, Owner shall, upon demand, advance
sufficient funds to the Property Manager to ensure fulfillment of the Property
Manager’s obligation to do so, within ten (10) days of receipt of notice
and an itemization of all unpaid bills.

 

8.                                       Nothing
contained herein shall be construed as creating any rights in third parties who
are not the parties to this Agreement, nor shall anything contained herein be
construed to impose any liability upon Owner or the Property Manager for the
performance by Owner or the Property Manager under any other agreement they
have entered into or may in the future enter into, without the express written
consent of the other having been obtained.  Nothing contained in this Agreement shall be
deemed or construed to create a partnership or joint venture between Owner and the
Property Manager or to cause either party to be responsible in any way for the
debts or obligations of the other or any other party (but nothing contained
herein shall affect the Property Manager’s responsibility to transmit payments
for the account of Owner as provided herein), it being the intention of the
parties that the only relationship hereunder is that of the Property Manager
and principal.

 

9.                                       Wherever
possible, each provision of this Agreement shall be interpreted in a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited or invalid under applicable law, the provision
shall be ineffective only to the extent of the prohibition or invalidity,
without invalidating the remainder of the provision or the remaining provisions
of this Agreement. This Agreement, its validity, performance and enforcement
shall be construed in accordance with, and governed by, the internal laws of
the State in which the Premises are located without regard to that State’s
conflicts of law principles.

 

10.                                 This
Agreement shall be binding upon the successors and assigns of the Property
Manager and the heirs, administrators, executors, successors and assignees of Owner.
 This Agreement contains the entire Agreement
of the parties relating to the subject matter hereof, and there are no
understandings, representations or undertakings by either party except as
herein contained. This Agreement may be modified solely by a written agreement
executed by both parties hereto.

 

11.                                 If
any party hereto defaults under the terms or conditions of this Agreement, the
defaulting party shall pay the non-defaulting party’s court costs and attorneys’
fees incurred in the enforcement of any provision of this Agreement.

 

12.                                 The
failure of either party to this Agreement to, in anyone or more instances,
insist upon the performance of any of the terms, covenants or conditions of
this Agreement, or to exercise any rights or privileges conferred in this
Agreement, shall not be construed as thereafter waiving any such terms,
covenants, conditions, rights or privileges, but the same shall continue in
full force and effect as if no the forbearance or waiver had occurred.

 

A-9

 

13.                                 This
Agreement is deemed to have been drafted jointly by the parties, and any
uncertainty or ambiguity shall not be construed for or against either party as
an attribution of drafting to either party.

 

14.                                 All
notices given under this Agreement shall be sent by certified mail, return
receipt requested, sent by facsimile transmission, or hand delivered at:

 

	
  If to Owner, to:

  	
  Inland American Real Estate Trust, Inc.

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
  Attention:

  	
  Ms. Roberta S. Matlin,

  
	
   

  	
   

  	
  Vice President, Administration

  
	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
  Facsimile:

  	
  (630) 218-4955

  
	
   

  	
   

  
	
  If to Property Manager, to:

  	
  [ __________________________ ]

  
	
   

  	
  2901 Butterfield Road

  
	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
  Attention:

  	
  [ ______________________ ]

  
	
   

  	
  Telephone:

  	
  (630) 218-8000

  
	
   

  	
  Facsimile:

  	
  (630) 218-4955

  

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY
BLANK]

 

A-10

 

WHEREFORE, the undersigned have executed this Agreement by their duly
authorized officers as of the date first above written.

 

	
  PROPERTY MANAGER:

  	
  OWNER:

  
	
   

  	
   

  
	
  [ _____________________ ], a Delaware limited

  liability company

  	
  INLAND AMERICAN REAL ESTATE TRUST,

  INC., a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

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