8-K
Inland Real Estate Income Trust, Inc. (INRE)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): January 13, 2024 |
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Inland Real Estate Income Trust, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 000-55146 | 45-3079597 |
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| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 2901 Butterfield Road | ||
| Oak Brook, Illinois | 60523 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: (630) 218-8000 | ||
| --- | ||
| N/A | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On January 19, 2024, Inland Real Estate Income Trust, Inc. (the “Company”) entered into the Fourth Amended and Restated Business Management Agreement (the “Business Management Agreement”) with IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an affiliate of Inland Real Estate Investment Corporation, the Company’s sponsor to, among other things, add a provision that allows the Company’s board of directors (the “Board”) to hire or engage a person unaffiliated with the Business Manager to serve as the Company’s president and chief executive officer at a cost to be borne by the Business Manager.
The foregoing is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Management Agreement filed as Exhibit 10.1, and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 13, 2024, Mitchell A. Sabshon, the President and Chief Executive Officer of the Company notified the Company that, because of his decision to retire from his position with Inland Investments, an affiliate of the Company’s Business Manager, he was also resigning his position as a director of the Company and as the Company’s President and Chief Executive Officer, effective at the close of business on January 31, 2024. His resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Additionally, on January 17, 2024, Mr. Sabshon notified the Business Manager that he was resigning from his position as a director of the Business Manager and as president of the Business Manager, effective at the close of business on January 17, 2024.
On January 18, 2024, the Board of the Company elected Mark E. Zalatoris to serve as the Company’s President and Chief Executive Officer effective February 1, 2024 and elected Mr. Zalatoris to fill the vacancy resulting from Mr. Sabshon’s resignation as a director also effective February 1, 2024. In addition, on January 19, 2024, the Company entered into an agreement with Mr. Zalatoris (the “Agreement”) to, among other things, compensate him for performing services as the Company’s President and Chief Executive Officer. Pursuant to the Agreement, the Company will pay Mr. Zalatoris an annual fee (payable pro rata on a monthly basis) equal to $350,000 per year. In connection with entering into the Agreement, the Company and the Business Manager entered into the Business Management Agreement to, among other things, reduce the business management fee payable to the Business Manager by the amount of any payments made to Mr. Zalatoris under the Agreement. Mr. Zalatoris will not be an employee of the Company and will not be an officer or director of the Business Manager but will have authority under the Agreement and the Business Management Agreement to direct the day-to day operations of the Business Manager. The initial term of the Agreement is for one year, commencing on February 1, 2024. The Agreement may be terminated by the Company at any time for Cause, as defined in the Agreement, immediately upon written notice of termination to Mr. Zalatoris, or at any time by the Company other than for Cause or by Mr. Zalatoris for any reason or no reason upon ninety (90) days’ written notice. The foregoing is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement filed as Exhibit 10.2, and is incorporated herein by reference.
Since 2018, Mr. Zalatoris has been the lead independent director of Parkway Bancorp and wholly-owned subsidiary, Parkway Bank. He also served in multiple positions at IRC Retail Centers, including as a member of the board of directors, Chief Executive Officer and President from 2008 to 2017; Executive Vice President and Chief Operating Officer from 2004 to 2008; and Senior Vice President, Chief Financial Officer and Treasurer from 2000 to 2004. IRC Retail Centers was a REIT originally formed and sponsored by affiliates of the Business Manager. Mr. Zalatoris earned his undergraduate degree from University of Illinois, Urbana-Champaign and his Master of Accounting Science degree from University of Illinois, Urbana-Champaign.
Except as described herein, Mr. Zalatoris’ election was not made pursuant to any arrangement or understanding with any other person. Except for the payment to be made under the Agreement, we do neither separately compensate our executive officers for their service as officers, nor do we reimburse either our business manager or our real estate managers for any compensation paid to individuals who serve as our executive officers or as executive officers of our business manager, our real estate managers or their affiliates. Mr. Zalatoris does not have any direct or indirect material interest in any transaction with us or in any currently proposed transaction to which we are a participant.
Item 9.01 Financial Statements and Exhibits.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements,” which are not historical facts, within the meaning of the Private Securities Litigation Reform Act of 1995. The statements may be identified by terminology such as “may,” “can,” “would,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “seek,” “appear,” or “believe.” Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions related to certain factors including, without limitation, the uncertainties related to general economic conditions, unforeseen events affecting the real estate industry or particular markets, and other factors detailed under Risk Factors in our most recent Form 10-K as of December 31, 2022 filed on March 16, 2023 and subsequent Form 10-Qs and Form 8-Ks on file with the SEC. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. You should exercise caution when considering forward-looking statements and not place undue reliance on them. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein. Except as required by federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INLAND REAL ESTATE INCOME TRUST, INC. | |||
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| Date: | January 19, 2024 | By: | /s/ Cathleen M. Hrtanek |
| Cathleen M. Hrtanek, Secretary |
EX-10.1
EXHIBIT 10.1
Fourth Amended and Restated Business Management Agreement
THIS FOURTH AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT (this “Agreement”), dated as of January 19, 2024, is entered into by and between Inland Real Estate Income Trust, Inc., a Maryland corporation (the “Company”), and IREIT Business Manager & Advisor Inc., an Illinois corporation (the “Business Manager”).
WITNESSETH:
WHEREAS, the Company is a Maryland corporation created in accordance with Maryland General Corporation Law and intends to continue to qualify as a REIT (as defined 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 below), all as provided herein;
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;
WHEREAS, the Company and the Business Manager previously entered into that certain Business Management Agreement, dated as of October 18, 2012, as amended by that certain Amended and Restated Business Management Agreement, dated as of February 11, 2019, as amended by that certain Second Amended and Restated Business Management Agreement, dated as of October 15, 2021 and as amended by the Third Amended and Restated Business Management Agreement dated April 1, 2023 (collectively, the “Original Agreement”);
WHEREAS, the Company and the Business Manager desire to provide the Company with the authority to engage a person not affiliated with or employed by the Business Manager to serve as president and chief executive officer of the Company and to revise the fee payable to the Business Manager in that circumstance; and
WHEREAS, the Company and the Business Manager desire to amend and restate the Original Agreement in its entirety.
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 Expenses” means any and all expenses incurred by the Company, the Business Manager or any Affiliate of either in connection with selecting, evaluating or acquiring any investment in Real Estate Assets, including but not limited to legal fees and expenses, travel and communication, appraisals and surveys, nonrefundable option payments regardless of whether the Real Estate Asset is acquired, accounting fees and expenses, computer related expenses, architectural and engineering reports, environmental and asbestos audits and surveys, title insurance and escrow fees, and personal and miscellaneous expenses.
“Affiliate” or “Affiliates” means, with respect to any other Person: any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; any Person directly or indirectly controlling, controlled by or under common control with such other Person; any executive officer, director, trustee, general partner or manager of such other Person; and any legal entity for which such Person acts as an executive officer, director, trustee, general partner or manager.
“Average Invested Assets” means, for any period, the average of the aggregate book value of the assets of the Company, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and Loans secured by, Real Estate Assets, and all Real Estate-Related Securities and consolidated and unconsolidated Joint Ventures or other partnerships, before non-cash charges such as depreciation, amortization, impairments and bad debt reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.
“Board of Directors” means the persons holding the office of director of the Company as of any particular time under the Charter.
“Business Day” means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.
“Business Management Fee” means the fee payable to the Business Manager under Section 7(a) hereof.
“Cause Event” means (i) a final judgment by any court or governmental body of competent jurisdiction not stayed or vacated within thirty (30) days that the Business Manager, any of its agents or any of its assignees has committed a felony or a material violation of applicable securities laws that has a material adverse effect on the business of the Company or the ability of the Business Manager to perform its duties under the terms of this Agreement, (ii) a decree or order for relief, or the consent by the Business Manager to the entry of an order for relief, in an involuntary bankruptcy case relating to the Business Manager or the authorization or filing of a voluntary bankruptcy petition by the Business Manager, (iii) the appointment of, or consent by the Business Manager 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 the Business Manager’s property, (iv) the making by the Business Manager of any general assignment for the benefit of creditors or failure of the Business Manager generally to pay its debts as they become due, (v) the dissolution of the Business Manager or order for the winding up or liquidation of the Business Manager’s affairs that is not dismissed within ninety (90) days, or (vi) a determination that the Business Manager has committed fraud against the Company, misappropriated or embezzled funds of the Company, or acted, or failed to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement; provided, however, that if any of the actions or omissions described in this clause (vi) are caused by an employee and/or officer of the Business Manager or one of its Affiliates and the Business Manager takes all necessary action against such
person and cures the damage caused by such actions or omissions within thirty (30) days of such determination, then such event shall not constitute a Cause Event.
“Charter” means the articles of incorporation of the Company, as amended or restated from time to time.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder or corresponding provisions of subsequent revenue laws.
“Equity Stock” means all classes or series of capital stock of the Company authorized under the Charter, 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 generally accepted accounting principles as in effect in the United States of America from time to time or any other accounting basis mandated by the Securities and Exchange Commission.
“Gross Offering Proceeds” means the total proceeds from the sale of up to 150,000,000 Shares in the Offering before deducting Issuer Costs. 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 is an “Independent Director” for purposes of the Charter.
“Invested Capital” means the aggregate original issue price paid for the Shares, before reduction for Organization and Offering Expenses, reduced by any distribution of Sale or financing proceeds.
“Issuer Costs” means all expenses, other than Selling Commissions and the Marketing Contribution, 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, expenses for printing, engraving and mailing, salaries of the employees of the Company, or the Sponsor and its Affiliates, while engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts, expenses of qualifying the sale of the Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees and expenses.
“Joint Venture” means a joint venture, limited liability company, corporation or partnership arrangement in which the Company, or any subsidiary thereof, is a co-venturer, member, stockholder or partner with one or more other Persons or an entity, which acquires, owns or manages Real Estate Assets.
“Key Person” means a natural person who, at the time of the determination: (1) serves as an executive officer of the Company; (2) serves as an executive officer of the Business Manager; or (3) performs services that are integral to the operation of the Company, as mutually agreed upon in writing by the Company and the Business Manager; provided, however, that for purposes of clauses (1) and (2), a “Key Person” shall not include any person that, as of the date on which the Company has mailed or otherwise delivered the Qualifying Internalization Notice, concurrently serves as a director or executive officer of any other REIT(s) sponsored by the Sponsor; provided, further, that for purposes of this definition, a secretary of an entity shall not be considered an “executive officer.”
“Liquidity Amount” means: (1) in the case of a Sale of Real Estate Assets, the Net Sales Proceeds realized by the Company from the Sale of Real Estate Assets since the Company’s inception and distributed to Stockholders, in the aggregate, plus the total amount of any other distributions paid by the Company to Stockholders, in the aggregate, from the Company’s inception until the date that the Liquidity Amount is determined, in the aggregate; and (2) in the case of a Liquidity Event, the Market Value, plus the total distributions paid by the Company to Stockholders from the Company’s inception until the date that the Liquidity Amount is determined.
“Liquidity Event” means a Listing or any merger, reorganization, business combination, share exchange or acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all of the Shares in one or more related transactions, or another similar transaction involving the Company, pursuant to which the Stockholders receive cash or the securities of another issuer that are listed on a national securities exchange, as full or partial consideration for their Shares.
“Listing” means, in the aggregate, the filing of a Form 8-A (or any successor form) with the Securities and Exchange Commission to register any or all Shares, or the shares of common stock of any of the Company’s subsidiaries, on a national securities exchange, the approval of the original listing application related thereto by the applicable exchange and the commencement of trading in the Shares, or the shares of common stock of any of the Company’s subsidiaries, on the exchange. Upon a Listing, the Shares, or the shares of common stock of the Company’s subsidiaries, shall be deemed “Listed.” A Listing shall also be deemed to occur on the effective date of a merger in which the consideration received by the holders of the Shares is securities of another issuer that are listed on a national securities exchange; provided, however, that if the merger is effectuated through a wholly owned subsidiary of the Company, a Listing will not occur until the consideration received by the Company shall be distributed to the holders of the Shares.
“Loans” means debt financing evidenced by bonds, notes, debentures or similar instruments or letters of credit and Mortgage Loans.
“Market Value” means the value of the Company measured in connection with an applicable Liquidity Event determined as follows: (1) in the case of a Listing of the Shares, or the shares of common stock of any of the Company’s subsidiaries, by taking the average closing price over the period of thirty (30) consecutive trading days during which the Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, are eligible for trading, beginning
on the 180th day after Listing of the Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, multiplied by the number of Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, outstanding on the date of measurement; or (2) in the case of the receipt by Stockholders of securities of another entity that are trading on a national securities exchange prior to, or that become listed on a national securities exchange concurrent with, the consummation of the Liquidity Event, as follows: (a) in the case of securities of another entity that are trading on a national securities exchange prior to the consummation of the Liquidity Event, the value ascribed to the securities in the transaction giving rise to the Liquidity Event, multiplied by the number of those securities issued to the holders of the Shares in respect of the transaction; and (b) in the case of securities of another entity that become listed on a national securities exchange concurrent with the consummation of the Liquidity Event, the average closing price over a period of thirty (30) consecutive trading days during which the securities are eligible for trading, beginning on the 180th day after the listing of the securities, multiplied by the number of those securities issued to the holders of the Shares in respect of the transaction. In addition, any distribution of cash consideration received by the Stockholders in connection with any Liquidity Event shall be added to the Market Value determined in accordance with clause (1) or (2).
“Marketing Contribution” means any and all compensation payable to underwriters, dealer managers or other broker-dealers in connection with marketing the sale of Shares, including, without limitation, compensation payable to Inland Securities Corporation, and which includes reimbursement for any out-of-pocket, itemized and detailed due diligence expenses incurred in connection with investigating the Company or any offering of Shares.
“Mortgage Loans” means notes or other evidences of indebtedness or obligations that are secured or collateralized, directly or indirectly, by Real Property or other interests in Real Property.
“Net Sales Proceeds” means the proceeds from any Sale of Real Estate Assets, less any costs incurred in selling the Real Estate Asset(s) including, but not limited to, legal fees and selling commissions and further reduced by the amount of any indebtedness encumbering the Real Estate Asset(s).
“Offering” means the initial public offering of Shares on a “best efforts” basis pursuant to the Prospectus, as amended and supplemented from time to time.
“Organization and Offering Expenses” means the aggregate of all Issuer Costs, plus Selling Commissions and the Marketing Contribution.
“Person” means any individual, corporation, business trust, estate, trust, partnership, limited liability company, association, two or more persons having a joint or common interest or any other legal or commercial entity.
“Priority Return” means a seven percent (7.0%) per annum cumulative, pre-tax non-compounded return on Invested Capital.
“Property” or “Properties” means interests in: (1) Real Property; (2) long-term ground leases; or (3) 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 Improvements” means any monies invested or otherwise funded by the Company, directly or indirectly to develop, construct, renovate, or otherwise physically improve a Real Estate Asset, including, but not limited to major tenant improvements, whether pursuant to allowances, concessions or rent abatements, all to the extent that the monies invested or funded for each of these purposes were approved by the Board of Directors as part of the initial plan for the Real Estate Asset.
“Prospectus” has the meaning set forth in Section 2(10) of the Securities Act of 1933, as amended (the “Securities Act”), including a preliminary prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act, or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling the Shares to the public.
“Real Estate Assets” means any and all Properties and other direct or indirect investments in equity interests in, or Loans secured, directly or indirectly, by, or otherwise relating to, Property (other than investments in bank accounts, money market funds or other current assets), including any interest in a Joint Venture, owned by the Company, directly or indirectly through one or more of its Affiliates or Joint Ventures. Notwithstanding the foregoing, “Real Estate Assets” shall not include any investments in Real Estate-Related Securities.
“Real Estate Manager” means Inland Commercial Real Estate Services LLC, a Delaware limited liability company, or any of its successors or assigns, or entities owned or controlled by the Sponsor and engaged by the Company to manage a Property or Properties.
“Real Estate-Related Securities” means investments in equity securities of both publicly traded and private companies, including REITs and pass-through entities, that own Real Estate Assets, including investments in commercial mortgage-backed securities, owned by the Company, directly or indirectly through one or more of its Affiliates or Joint Ventures, but excluding, for these purposes, ownership interests in a Joint Venture.
“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.
“Sale” means any transaction or series of transactions, regardless of whether Net Sales Proceeds are distributed to Stockholders as a result thereof, whereby: (1) the Company directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof, except for a contribution to a Joint Venture in which the Company, directly or indirectly, has, or will have, an ownership interest; (2) the Company directly or
indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (3) any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof (excluding for these purposes any Loans or Mortgage Loans); (4) the Company or any Joint Venture directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, through any event which results in the Company or the Joint Venture, as applicable, receiving a insurance proceeds or condemnation awards; (5) the Company directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of any other Real Estate Asset not previously described in this definition or any portion thereof. Notwithstanding anything to the contrary herein, the sale, grant, transfer or conveyance of any Real Estate-Related Security shall not be treated as a “Sale” hereunder.
“Selling Commissions” means any and all commissions, not to exceed seven percent (7.0%) of the gross offering price of any Shares, payable to underwriters, dealer managers or other broker-dealers in connection with the sale of Shares.
“Shares” means the shares of common stock, par value $.001 per share, of the Company, and “Share” means one of those Shares.
“Sponsor” means Inland Real Estate Investment Corporation, a Delaware corporation.
“Stockholders” means holders of shares of the Company’s common stock, $.001 par value per share, or any other share of Equity Stock having the right to elect directors of the Company.
2. Duties of the Business Manager. The Business Manager shall consult with the Company and its executive officers including its president and chief executive officer and shall 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 the Company’s president and chief executive officer and consistent with the provisions of the Charter, the Business Manager, directly or indirectly through Affiliates or third parties supervised by the Business Manager or its Affiliates, shall use commercially reasonable efforts to:
(a) identify potential investment opportunities in Real Estate Assets located in the United States, 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 financing and refinancing or other changes in the asset or capital structure of the Company and reinvesting the proceeds from the Sale of, or otherwise deal with the investments in, Real Estate Assets; and
(iv) overseeing material leases and service contracts, related to the Real Estate Assets.
(b) assist the Board of Directors and the Company’s executive officers in evaluating investment opportunities;
(c) provide the Board of Directors and the Company’s executive officers with research and other statistical data and analysis in connection with Real Estate Assets and the Company’s 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 and the Company’s president and chief executive officer from time to time, including hiring and supervising Company employees, if any, provided that the Board of Directors shall retain exclusive authority to appoint or otherwise engage executive officers and provided further that the Company’s president and chief executive officer shall have the authority to oversee and direct the employees of the Business Manager to the extent consistent with managing and supervising the Company’s day-to-day operations;
(e) investigate and conduct relations with lenders, consultants, accountants, brokers, third party asset managers, attorneys, underwriters, appraisers, insurers, corporate fiduciaries, banks, builders and developers, sellers and buyers of investments and persons acting in any other capacity specified by the Company from time to time, and enter into contracts in the Company’s name with, and retaining and supervising services performed by, such parties in connection with investments that have been or may be acquired or disposed of by the Company;
(f) cooperate with the Real Estate Manager in connection with real estate management services and other activities relating to Real Estate Assets, subject to any requirement under the laws, rules and regulations affecting REITs that own Real Property that the Business Manager or the Real Estate Manager, as the case may be, qualifies as an “independent contractor” as that phrase is used in connection with applicable laws, rules and regulations affecting REITs;
(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 funds in connection with any acquisition or disposition, 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 Equity Stock 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) coordinate placement of casualty and public liability insurance and directors’ and officers’ insurance;
(k) except as otherwise provided by the Company, provide office space, equipment and personnel as required for the performance of the foregoing services as Business Manager, subject to the reimbursement of costs associated therewith, provided that the Board may, in its sole discretion, appoint a person unaffiliated with the Business Manager to serve as the Company’s president and chief executive officer; and compensate such person in an amount to be borne by the Business Manager as provided in Section 7 hereof;
(l) advise the Board of Directors and the Company’s president and chief executive officer, from time to time, of the Company’s operating results and coordinate preparation, with the Real Estate Manager, of an operating budget including one, three and five year projections of operating results and such other reports as may be appropriate for each Real Estate Asset;
(m) prepare, on behalf of the Company, and supervise the filing of all reports required by the Securities and Exchange Commission, including without limitation Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, and all reports and returns required by the Internal Revenue Service, other state or federal governmental agencies or other Company vendors relating to the Company and its operations, including specifically its compliance with REIT rules;
(n) prepare, on behalf of the Company, and supervise the distribution of reports to Stockholders, and act on behalf of the Company to communicate with Stockholders, brokers, dealers, financial advisors and custodians, whether by in person, written, electronic or telephonic means;
(o) arrange for, and plan, the Company’s annual meetings of Stockholders;
(p) supervise communications with the Company’s transfer agent;
(q) maintain the Company’s books and records including, but not limited to, appraisals and fairness opinions obtained in connection with acquiring or disposing Real Estate Assets;
(r) assist the Board of Directors and the Company’s president and chief executive officer in evaluating Sales and Liquidity Events, including without limitation: (i) performing due diligence in connection with investigating potential Sales or Liquidity Events; (ii) selecting and conducting relations with experts, investment banking firms and potential acquirors of Real Estate Assets, among others; (iii) preparing investment and other strategic models regarding Liquidity Events for evaluation by the Board of Directors and the Company’s president and chief executive officer; and (iv) preparing written reports and making presentations regarding potential Sales and Liquidity Events to the Board of Directors;
(s) administer the Company’s bookkeeping and accounting functions, including without limitation: (i) establishing and implementing accounting and financial reporting procedures, processes and policies; (ii) maintaining the Company’s general ledger and sub ledgers; (iii) recording investments in Real Estate Assets, investments in Joint Ventures and any funding of indebtedness; (iv) performing accounting research; (v) budgeting, forecasting and analyzing the Company’s performance; (vi) assisting in selecting and implementing accounting and financial system software; (vii) overseeing platform accounting functions and practices; (viii) reporting to the Board of Directors, the Company’s president and chief executive officer and the audit committee; (ix) monitoring the Company’s compliance with The Sarbanes-Oxley Act of 2002, as amended, and the effectiveness of the Company’s internal controls; (x) monitoring and ensuring compliance with ratios and covenants set forth in the loan documents for any Loans; (xi) providing required monthly, quarterly and annual financial reporting to the Company’s lenders; and (xii) ensuring proper accounting treatment for derivative instruments;
(t) enter into ancillary agreements with the Sponsor and its Affiliates to arrange for the services and licenses to be provided by the Business Manager hereunder, as summarized on Schedule 2(t) hereto (collectively, the “Service Provider Agreements”);
(u) undertake and perform all services or other activities necessary and proper to carry out the Company’s investment objectives, including providing secretarial, clerical and administrative assistance for the Company and maintaining a web site that provides up-to-date Company information; and
(v) undertake and perform all services necessary and proper to ensure the Company’s compliance with all laws, rules and regulations applicable to its business.
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, its Equity Stock or its Real Estate Assets, or that would otherwise not be permitted by the Charter. 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 Charter, and that the Business Manager 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. Compensation. Subject to the provisions of this Agreement, including Section 12 hereof, and in addition to any compensation for additional services that may be paid pursuant to Section 9 hereof, for services rendered hereunder the Company shall pay, in cash, to the Business Manager the following:
(a) An annual business management fee (the “Business Management Fee”) equal to 0.55% of Average Invested Assets, payable quarterly in an amount equal to 0.1375% of Average Invested Assets as of the last day of the immediately preceding quarter reduced by the amount paid by the Company during the applicable quarter pursuant to any employment or other agreement entered into by the Company with any third-party performing the services of the Company’s chief executive officer or president in an amount not to exceed $350,000 annually, unless otherwise agreed to by the Parties (“Executive Officer Compensation”); provided, that the Business Manager may decide, in its sole discretion, to be paid an amount less than the total amount to which it is entitled in any particular quarter, and the excess amount that is not paid may, in the Business Manager’s sole discretion, be waived permanently or deferred or accrued, without interest, to be paid at a later point in time.
(b) Upon any (i) Sale of Real Estate Assets in which the Net Sales Proceeds resulting from the Sale are specifically identified and distributed to Stockholders or (ii) Liquidity Event (each, an “Incentive Triggering Event”), an incentive fee equal to ten percent (10.0%) of the amount by which: (1) the Liquidity Amount exceeds (2) Invested Capital, plus the total distributions required to be paid to Stockholders in order to pay them the Priority Return, measured as of the date of the applicable Incentive Triggering Event set forth in clause (i) or (ii) of this Section 7(b); provided, that if the Company has not satisfied the Priority Return at the time of any particular Incentive Triggering Event, this fee shall be paid on any future Incentive Triggering Event if, at the time, the Company has satisfied the return requirements set forth in clause (2) herein.
8. Expenses.
(a) In addition to the compensation paid to the Business Manager pursuant to Section 7 and Section 9 hereof, and subject to the limits herein, the Company shall reimburse the Business Manager, the Sponsor and their respective Affiliates for all expenses attributable to the Company paid or incurred by the Business Manager, the Sponsor or their respective Affiliates in providing certain services and licenses hereunder, including all expenses and the costs of salaries and benefits of persons employed by the Business Manager, the Sponsor and their respective Affiliates and performing services for the Company, except for the salaries and benefits of persons who also serve as one of the Company’s executive officers or as an executive officer of the Business Manager or its Affiliates. For purposes of this Section 8(a), a secretary of an entity shall not be considered an “executive officer.”
(b) Expenses that the Company shall reimburse pursuant to Section 8(a) hereof include, but are not limited to all:
(i) Issuer Costs, in an amount not to exceed one and one-half percent (1.5%) of Gross Offering Proceeds;
(ii) expenses, including Acquisition Expenses incurred in connection with selecting or acquiring Real Estate Assets or any Sale of Real Estate Assets or any contribution of Real Estate Assets to a Joint Venture;
(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 money borrowed on behalf of the Company, including points and other similar fees;
(v) taxes and assessments on income or attributed to Real Property;
(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) 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 dividends or distributions paid or caused to be paid by the Company to Stockholders;
(x) expenses of organizing the Company and filing, revising, amending, converting or modifying the Charter or the bylaws;
(xi) expenses associated with Stockholder communications including the cost of preparing, printing and mailing annual reports, proxy statements and other reports required by governmental entities;
(xii) administrative service expenses charged to, or for the benefit of, the Company by non-affiliated third parties;
(xiii) audit, accounting and legal fees charged to, or for the benefit of, the Company by non-affiliated third parties;
(xiv) transfer agent and registrar’s fees and charges;
(xv) 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;
(xvi) payments made by the Business Manager to Affiliates of the Sponsor for the services and licenses provided for the benefit of the Company, as summarized on Schedule 2(t) hereto;
(xvii) expenses incurred in connection with any Liquidity Event or Qualifying Internalization (as defined in Section 10(a)); and
(xviii) expenses incurred in connection with any investment in Real Estate-Related Securities and charged to, or for the benefit of, the Company by non-affiliated third parties.
(c) The Company shall also reimburse the Business Manager, the Sponsor and their respective Affiliates pursuant to Section 8(a) hereof for the salaries and benefits of persons employed by the Business Manager, the Sponsor or their respective Affiliates and performing services for the Company, subject to the following:
(i) In the case of employees of the Sponsor who 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 such persons on matters for the Company compared to the time spent by such persons on all other matters including the Company’s matters.
(ii) In the case of Affiliates of the Sponsor (excluding the Sponsor and Inland Risk and Insurance Management Services, Inc.), and unless otherwise agreed to in writing by the Company or the Business Manager, the Company shall be responsible for the payment of the charges billed by such Affiliates for work done for the benefit of the Company. Such charges shall be based upon: (A) such Affiliate’s “hourly billing rate” of its employees, (B) fixed amounts or (C) a combination of the “hourly billing rate” and fixed amounts, all as set forth in the respective Service Provider Agreements between the Business Manager or the Company and the Affiliate. The “hourly billing rate” for employees of Affiliates of the Sponsor shall be based on the budgeted salaries, benefits, overhead and operating expenses of such Affiliates. In the event that an Affiliate of the Sponsor providing services for the benefit of the Company has revenues for any one Fiscal Year that exceed its expenses for that year, such Affiliate shall rebate the excess on a pro rata basis to its clients based on the revenues attributable to such client.
Except for the Executive Officer Compensation provided in Section 7 and the exclusion from reimbursement for executive officer salaries and benefits provided in Section 8(a) hereof, the Company shall reimburse salaries and related salary expenses pursuant to this Section 8(c) irrespective of whether the services performed by the subject persons could have been performed directly for the Company by independent, non-affiliated third parties.
(d) The Business Manager shall prepare a statement documenting the expenses paid or incurred by the Business Manager, the Sponsor and their respective Affiliates for the Company on a monthly basis. The Company shall reimburse the Business Manager, the Sponsor and their respective Affiliates for any expenses reimbursable in accordance with this Section 8 within twenty (20) days after receipt of such statements. With respect to expenses incurred by Affiliates of the Sponsor related to services and licenses provided for the benefit of the Company, or payments made for these services and licenses, the Business Manager, in its sole discretion, may arrange for payment to be made directly from the Company to the Affiliates of the Sponsor.
(e) The Business Manager 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 8. All time sheets or other appropriate billing records or receipts shall be made available to the Company for review or inspection upon reasonable request to the Business Manager.
9. Compensation for Additional Services, Certain Limitations. 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.
10. Qualifying Internalization.
(a) Qualifying Internalization Process. At any time following the one-year anniversary of the completion of the Offering, the Company may elect to internalize the functions performed by the Business Manager through an agreed-upon, one-year transition with the Business Manager on the terms and subject to the conditions set forth in this Section 10 (a “Qualifying Internalization”). Any decision to pursue a Qualifying Internalization must be approved by the affirmative vote of a majority of the Board of Directors, including a majority of the Independent Directors. If the Company elects to pursue a Qualifying Internalization, the Company shall provide written notice to the Business Manager, stating the Company’s intention to pursue the Qualifying Internalization (the “Qualifying Internalization Notice”). During the one-year period commencing upon the Business Manager’s receipt of the Qualifying Internalization Notice and ending on the one-year anniversary thereof (the “Transition Period”), the Company and the Business Manager shall transition the services provided by the Business Manager to the Company, as follows:
(i) during the Transition Period (the “Solicitation Period”), the Company, or any of its subsidiaries, may, without the Business Manager’s consent, solicit and offer to hire each Key Person for employment by the Company or any of its subsidiaries; provided, however, that any Key Person solicited or hired by the Company or its subsidiaries during the Solicitation Period shall not commence his or her employment with the Company or its subsidiaries until the Completion Date (as hereinafter defined); provided, further, that notwithstanding anything to the contrary in this Agreement, the non-solicitation provisions of Section 19 of this Agreement shall not apply to the Key Persons during the Solicitation Period; and
(ii) upon the written request of the Company, the Business Manager shall assign one or more of the Service Provider Agreements to the Company.
The closing of the Qualifying Internalization shall occur on the last business day of the Transition Period or such other date that the Company and the Business Manager mutually agree (the “Completion Date”) This Agreement shall terminate on the Completion Date.
(iii) Nothing in this Section 10 shall impact the Company’s right to enter into an agreement with any person to serve as the Company’s president or chief executive officer or any amounts payable under an agreement governing Executive Officer Compensation.
(b) Compensation During the Transition Period. The Company shall not pay any internalization fee to acquire the Business Manager. The Company shall continue to compensate the Business Manager on the terms and conditions set forth in this Agreement throughout the Transition Period. In addition, Company, in its sole discretion, may agree to pay or reimburse the Business Manager for: (x) costs and expenses the Business Manager has incurred on the Company’s behalf in connection with the Qualifying Internalization; and (y) costs and expenses the Business Manager incurs directly in connection with the Qualifying Internalization.
(c) Other Arrangements. Notwithstanding anything to the contrary in Section 10(b) of this Agreement, the Company and the Business Manager may enter into separate arrangements for the purchase and sale of tangible assets or services in connection with the Qualifying Internalization, which are not addressed by paragraphs (i) and (ii) of Section 10(a) of this Agreement. These arrangements shall be subject to the negotiation and execution of definitive agreements acceptable to both parties.
11. Statements. Within a reasonable period of time following the end of each fiscal or calendar quarter, the Business Manager or service entity shall furnish to the Company a statement or invoice computing any and all fees and expense reimbursements due hereunder. The Business Manager shall also furnish to the Company, within a reasonable period of time following the end of each Fiscal Year, a statement computing the fees payable to the Business Manager for the just completed Fiscal Year.
12. Intentionally Omitted.
13. Other Activities of the Business Manager. Nothing contained herein shall prevent the Business Manager or any Affiliate of the Business Manager (including the Sponsor) from engaging in any other business or activity including rendering services or advising on real estate investment opportunities to any other person or entity.
14. Term; Termination of Agreement.
(a) Term. Except as otherwise provided herein, the term of this Agreement ends on March 31, 2027 (the “Term”).
(b) Termination by the Company for a Cause Event. With the affirmative vote of a majority of the Independent Directors, the Company may terminate this Agreement effective upon thirty (30) days’ prior written notice from the Company to the Business Manager due to the occurrence of a Cause Event. The Business Manager agrees that if any of the events specified in clauses (ii) through (v) of the definition of Cause Event occurs, it will give written notice thereof to the Company within seven (7) days after the occurrence of such event.
(c) Termination by the Company for Convenience. With the affirmative vote of a majority of the Independent Directors, the Company may terminate this Agreement
effective upon sixty (60) days’ prior written notice from the Company to the Business Manager for convenience.
(d) Termination by the Business Manager. The Business Manager may terminate this Agreement effective upon sixty (60) days’ prior written notice of termination to the Company and the Independent Directors in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of thirty (30) days after written notice thereof specifying such default and requesting that the same be remedied in such thirty (30) day period.
(e) Termination Pursuant to a Qualifying Internalization. This Agreement shall terminate on the Completion Date, as described in Section 10 of this Agreement.
(f) Effect of Termination.
(i) If this Agreement is terminated by the Company pursuant to Section 14(b) (Termination by the Company for a Cause Event), the Business Manager shall not be entitled to compensation after the date of termination, but shall be paid all compensation accruing or accrued to the date of termination, or which the Business Manager has deferred and then elects to be paid at the time of termination; provided, that with respect to any Business Management Fee payable under Section 7(a) of this Agreement for the calendar quarter in which the termination occurred, the Business Manager shall be paid on a pro rata basis through the date of termination, based on the number of days in such calendar quarter for which the Business Manager served as such under this Agreement; provided further that for these purposes, the Business Management Fee shall not be reduced by the amount of any Executive Officer Compensation paid for the applicable period.
(ii) If this Agreement is terminated pursuant to Section 14(c) (Termination by the Company for Convenience), Section 14(d) (Termination by the Business Manager) or Section 14(e) (Termination Pursuant to a Qualifying Internalization), the Business Manager shall be entitled to payment of the Business Management Fee payable under Section 7(a) for the remainder of the Term using the calculations made for the calendar quarter in which the Agreement was terminated and payable on or before thirty (30) days following the effective date of termination; provided further that for these purposes, the Business Management Fee shall not be reduced by the amount of any Executive Officer Compensation paid for the applicable period. In addition, if this Agreement is terminated pursuant to Section 14(e) (Termination Pursuant to a Qualifying Internalization), with respect to the incentive fee payable under Section 7(b), the Business Manager, or its successor or designee, shall be entitled to an incentive fee equal to the product of: (x) the amount of the incentive fee to which the Business Manager would have been entitled under Section 7(b) had this Agreement not been terminated; and (y) the quotient of the number of days elapsed from the effective date of the Original Agreement through the Completion Date and the number of days elapsed from the date of the Original Agreement through the date of the closing of the applicable Incentive Triggering Event.
(g) Obligations Following Termination. If this Agreement is terminated pursuant to this Section 14, the parties shall have no liability or obligation to each other including any obligations imposed by Section 2(a) hereof, except as provided in this Section 14 and in Section 17 and Section 19. Further, if this Agreement is terminated by the Company pursuant to Section 14(b) or Section 14(c) or by the Business Manager pursuant to Section 14(d) after the date on which the Company has mailed or otherwise delivered the Qualifying Internalization Notice, the parties shall immediately cease all actions undertaken in connection with the Qualifying Internalization and shall take no further actions in connection therewith.
15. Assignments. The Business Manager may not assign this Agreement except to a successor organization that acquires substantially all of its property and carries on the affairs of the Business Manager; provided that following the assignment, the persons who controlled the operations of the Business Manager immediately prior thereto (the “Control Persons”), control the operations of the successor organization, including the performance of duties under this Agreement; provided, further, that if at any time subsequent to the assignment the Control 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, by operation of law or otherwise, without the consent of the Business Manager. Any permitted assignment of this Agreement shall bind the assignee hereunder in the same manner as the assignor is bound hereunder.
16. Intentionally Omitted.
17. Action Upon Termination; Survival of Certain Provisions. Except as otherwise set forth herein, upon termination of this Agreement, including any termination pursuant to Section 10 of this Agreement, the parties shall have no further liability or obligation hereunder, provided that Sections 14, 17, 19 and 24 shall survive termination of this Agreement.
18. Actions Upon Termination. In connection with the 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 or deferred 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 to the date of termination;
(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.
19. Non-Solicitation. Except as otherwise provided in Section 10 hereof, during the period commencing on the date the Original Agreement was entered into and ending one year following the termination of this Agreement, the Company shall not, without the Business
Manager’s prior written consent, directly or indirectly: (i) solicit, induce, or encourage any person, including any Key Person, to leave the employment or other service of the Business Manager or any of its Affiliates to become employed by the Company or any of its subsidiaries; or (ii) hire or offer to hire, on behalf of the Company or any other Person, firm, corporation or other business organization, any employee of the Business Manager or any of its Affiliates, including any Key Person. Further, except as otherwise provided in Section 10 hereof, with respect to any person who left the employment of the Business Manager or any of its Affiliates (x) during the term of this Agreement or (y) within six months immediately after the termination of this Agreement, the Company shall not, without the Business Manager’s prior written consent, directly or indirectly hire or offer to hire on behalf of the Company or any other Person, firm, corporation or other business organization, that person during the six months immediately following his or her cessation of employment.
20. Tradename and Marks. The Company has entered into a license agreement granting the Company the right, subject to the terms and conditions of the license agreement, to use the “Inland” name and marks.
21. Amendments. This Agreement shall not be amended, changed, modified or terminated, or the obligations hereunder 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 in Section 10 of this Agreement.
22. Successors and Assigns. This Agreement shall inure to the benefit of, and shall bind, any successors or assigns of the parties hereto.
23. 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.
24. Liability and Indemnification.
(a) The Business Manager shall have no responsibility other than to render the services and take the actions described herein in good faith and with the exercise of due care and shall not be responsible for any action of the Board of Directors in following or declining to follow any advice or recommendation of the Business Manager. The Business Manager (including its officers, directors, managers, employees and members) will not be liable for any act or omission by the Business Manager (or its officers, directors, managers, employees and members) performed in accordance with and pursuant to this Agreement, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of its duties under this Agreement.
(b) The Company shall indemnify the Business Manager and its officers, directors, employees and agents (individually an “Indemnitee,” collectively the “Indemnitees”) to the full extent lawful, from and against any and all losses, claims, damages or liabilities of any nature whatsoever with respect to or arising from any acts or omission of the Business Manager (including ordinary negligence) in its capacity as such, except with respect to losses, claims, damages or liabilities with respect to or arising out of such Indemnitees’ gross negligence, bad faith or willful misconduct, or reckless disregard of its duties under this Agreement.
(c) The Company shall not indemnify any Indemnitee seeking indemnification for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws (“Securities Claims”) unless one or more of the following conditions are met:
(i) there has been a successful adjudication for the Indemnitee on the merits of each count involving alleged material Securities Claims as to such Indemnitee;
(ii) the Securities Claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Indemnitee; or
(iii) a court of competent jurisdiction approves a settlement of the Securities Claims and finds that indemnification for the costs of 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 of the published opinions of any state securities regulatory authority in which securities of the Company were offered and sold as to indemnification for Securities Claims.
(d) The Company shall advance amounts to Indemnitees 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 Indemnitee receiving advances affirms its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and undertakes in writing to repay the advanced funds to the Company in cases in which the party is found not to be entitled to indemnification.
25. Notices. All notices, requests or demands to be given under this Agreement from one party to the other (collectively, “Notices” and individually a “Notice”) shall be in writing and shall be given by personal delivery, or by overnight courier service for next Business Day delivery at the other party’s address set forth below, or by email at the other party’s email address set forth below. Notices given by personal delivery (i.e., by the sending party or a messenger) shall be deemed given on the date of delivery. Notices given by overnight courier service shall be deemed given upon deposit with the overnight courier service and Notices given by email transmission shall be deemed given on the date of transmission provided such transmission is completed by 5:00 p.m. (sending party’s local time) on a Business Day and no undelivered message is received, otherwise such delivery shall be deemed to occur on the next succeeding Business Day. If any party’s address is a business, receipt, or the refusal to accept delivery, by a receptionist or by any Person in the employ of such party, shall be deemed actual receipt by the party of Notices. Notices may be issued by an attorney for a party and in such case such Notices shall be deemed given by such party. The parties’ addresses are as follows:
| If to the Company: | Inland Real Estate Income Trust, Inc.<br><br>2901 Butterfield Road<br><br>Oak Brook, IL 60523<br><br>Attention: Ms. Catherine L. Lynch<br><br>Telephone: (630) 218-8000<br><br>Email: lynch@inland-investments.com<br><br><br><br>With a copy to:<br><br><br><br>Inland Real Estate Income Trust, Inc.<br><br>2901 Butterfield Road<br><br>Oak Brook, IL 60523<br><br>Attention: Lead Independent Director |
|---|---|
| If to the Business Manager: | IREIT Business Manager & Advisor Inc.<br><br>2901 Butterfield Road<br><br>Oak Brook, IL 60523<br><br>Attention: Mr. Daniel Zatloukal<br><br>Telephone: (630) 218-8000<br><br>Email: daniel.zatloukal@inlandgroup.com |
Any 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 25.
26. Conflicts of Interest and Fiduciary Relationship to the Company and to the Company’s Stockholders. The Company and the Business Manager recognize that their relationship is subject to various conflicts of interest. The Business Manager, on behalf of itself and its Affiliates, acknowledges that the Business Manager has a fiduciary relationship to the Company and to the Stockholders. The Business Manager, on behalf of itself and its Affiliates, shall endeavor to balance the interests of the Company with the interests of the Business Manager and its Affiliates in making any determination where a conflict of interest exists between the Company and the Business Manager or its Affiliates.
27. 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.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
| COMPANY: | BUSINESS MANAGER: | ||
|---|---|---|---|
| Inland Real Estate Income Trust, Inc. | IREIT Business Manager & Advisor Inc. | ||
| By: | /s/ Catherine L. Lynch | By: | /s/ Daniel Zatloukal |
| Name: | Catherine L. Lynch | Name: | Daniel Zatloukal |
| Its: | Chief Financial Officer | Its: | Senior Vice President/Asset Management |
Schedule 2(t)
The Business Manager has entered into the Service Provider Agreements with certain Affiliates of the Sponsor, as summarized below (as used in this Schedule 2(t), the “Service Providers”), to arrange for the services and licenses to be provided by the Business Manager under this Agreement, as summarized below.
• Insurance and Risk Management Services. Inland Risk and Insurance Management Services, Inc., or “IRIM,” will provide insurance and risk management services, including negotiating and obtaining insurance policies, managing and settling claims and reviewing and monitoring the Company’s insurance policies. IRIM will receive a portion of commissions paid by insurance companies to third party brokers for placing insurance policies for the Company. So long as IRIM receives commissions in an amount sufficient to cover operating expenses, the Company will not pay any fees or reimbursements for the services provided by IRIM.
• Investment Advisory Services. Inland Investment Advisors, Inc., or “Inland Advisors,” will provide investment advisory agreement services. This agreement will grant Inland Advisors full discretionary authority to invest or reinvest certain of the Company’s assets in securities of publicly traded and privately held entities, and will give Inland Advisors the power to act as the Company’s proxy and attorney-in-fact to vote, tender or direct the voting or tendering of these securities. The Business Manager will assign to Inland Advisors any portion of the annual business management fee that it earns on the Company’s investments in securities. The Company will not reimburse Inland Advisors for any expenses incurred in providing these services.
• Institutional Investor Relationship Services. Inland Institutional Capital Partners Corporation, or “ICAP,” will provide advice regarding the Company’s current market position, secure institutional investor commitments, and form joint ventures with unaffiliated operating partners, each as requested by the Business Manager. The Business Manager will pay ICAP any fees or expenses related to the services it provides for the Company. The Company will not reimburse ICAP for any expenses incurred in providing these services.
• Master Services Agreement. The Inland Real Estate Group, LLC will provide services related to communications, technology, office services, personnel and property tax.
• Mortgage Placement Services. Inland Mortgage Brokerage Corporation, or “IMBC,” and Inland Commercial Mortgage Corporation, or “ICMC,” will place mortgages for the Company, as requested by the Business Manager.
• Mortgage Servicing. Inland Mortgage Servicing Corporation, or “IMSC,” will service mortgages for the Company, as requested by the Business Manager.
• Software License. The IT Department of The Inland Real Estate Group, LLC (“TIREG IT”) will grant the Business Manager a non-exclusive and royalty-free right and license to use and copy software owned by TIREG IT and to use certain third party software according to the terms of the applicable third party licenses to TIREG IT, all in connection with the Business Manager’s obligations under the Agreement. TIREG IT will provide the Business Manager with all upgrades to the licensed software, as available.
EX-10.2
EXHIBIT 10.2
AGREEMENT
This Agreement (the “Agreement”), dated as of January 19, 2024 is by and between Inland Real Estate Income Trust, Inc., a Maryland corporation (the “Company”), and Mark Zalatoris (the “Zalatoris” and, together with the Company, the “Parties”).
In consideration of the promises in this Agreement, the mutuality and sufficiency of which are hereby acknowledged, the parties agree as follows:
Services. Zalatoris will provide various services to the Company, as determined by the Company and the Company’s Board of Directors (the “Board”), including but not limited to serving in the role of President and Chief Executive Officer and associated responsibilities, on behalf of the Company directing the day-to-day operations of IREIT Business Manager & Advisor Inc., an Illinois corporation (the “Business Manager”) in accordance with the Fourth Amended and Restated Business Management Agreement, dated as of January 19, 2024, by and between the Company and the Business Manager, as the same may be amended or restated from time to time (the “Business Manager Agreement”), and any other services as reasonably required by the Company or requested by the Board (collectively, the “Services”). In connection with Zalatoris’s performance of the Services, the Company shall cause the Business Manager to make available to Zalatoris access to the Company’s books and records as maintained by the Business Manager and the Business Manager’s computer and IT systems, in each case as may be necessary or appropriate in order for Zalatoris to satisfactorily perform the Services, as reasonably determined by Zalatoris or the Board.
Term. The term of this Agreement shall commence on February 1, 2024 (the “Effective Date”) and shall terminate on the one (1)-year anniversary thereof, unless earlier terminated as set forth in Section 8 hereof (the “Term”). The Term shall be subject to renewal upon the mutual agreement of the Parties. If Zalatoris fails to commence the Services on the Effective Date to the reasonable satisfaction of the Board, this Agreement shall be null and void ab initio and of no further force or effect, without further action or notice.
Reporting; Location. During the Term, Zalatoris shall report to the Board and, in accordance with the Business Manager Agreement, the Business Manager shall report to the Board and to Zalatoris. During the Term. Zalatoris shall perform the Services from such location(s) as Zalatoris reasonably determines is necessary and appropriate to satisfactorily perform the Services or as otherwise reasonably requested by the Board. On such days as Zalatoris performs the Services from the offices of the Company, subject to reasonable advance notice from Zalatoris to the Company, the Company agrees to make available to Zalatoris a conference room at the Company’s offices for Zalatoris’s use in performing the Services.
Fee. As consideration for Zalatoris’s performance of the Services, the Company will pay to Zalatoris an aggregate cash fee of $350,000, delivered over the course of the engagement in substantially equal monthly installments in arrears no later than the thirtieth (30th) day of the month to which the Services relate (the “Fee”).
Business Expenses. During the Term, the Company shall reimburse Zalatoris on a monthly basis for reasonable out-of-pocket expenses incurred by Zalatoris in the course of performing the Services, in each case in accordance with applicable Company policies and procedures.
Indemnification.
(a) The Company hereby agrees to indemnify Zalatoris in his capacity as an officer of the Company on the same terms as indemnification is made available by the Company to its officers and directors, whether through governing documents or otherwise. In furtherance of the
foregoing, the Company shall cause Zalatoris to be added to the Company’s Directors & Officers Insurance policy on terms provided to its officers and directors from time to time.
(b) Zalatoris agrees to indemnify and hold harmless the Business Manager, the Company and its wholly-owned subsidiaries, and their respective officers and directors (each an “Indemnified Party”), who was or is a party (or is threatened to be made a party) to any threatened, pending or completed action, suit or proceedings (collectively, a “Proceeding”), whether civil, criminal, administrative or investigative from any loss, liability, damage or expense (collectively, “Loss”), and shall indemnify any Indemnified Party who has otherwise suffered a Loss, in either case, to the extent attributable to the gross negligence or willful misconduct of Zalatoris in connection with the Services provided by Zalatoris under this Agreement or to the extent attributable to Zalatoris’s breach of any representation, warranty or obligation under this Agreement.
- Independent Contractor.
(a) Zalatoris is and shall be deemed for all purposes to be an independent contractor of the Company. Zalatoris acknowledges that this Agreement is not an employment contract.
(b) Nothing contained herein shall be construed to create a relationship of employer and employee between the Company and Zalatoris. Zalatoris acknowledges and agrees that there will be no withholding of taxes by the Company, and Zalatoris will pay, and will indemnify the Company against, all applicable taxes related to the Fees and any other amounts or benefits paid or made available to Zalatoris in respect of the Services, including, but not limited to, all federal, state, and local income or business taxes, social security, Medicare and self-employment taxes and all other taxes, fees, additions to tax, interest and penalties that may be assessed, imposed, or incurred as a result of the compensation or benefits payable or otherwise made available to Zalatoris pursuant to this Agreement, and that the Company has no obligations, liabilities or responsibilities in connection therewith. Zalatoris will bear sole responsibility for payment on behalf of himself and any persons employed or engaged by Zalatoris (if any) of any unemployment insurance, workers’ compensation insurance, or business liability insurance arising out of or related to the performance of the Services. Zalatoris further agrees and acknowledges that he shall have no right to receive pension, health, vacation pay, sick pay or other fringe benefit from the Company.
(c) Zalatoris shall devote such amount of his working time to the Company as may be reasonably required by the Board.
Termination. The Agreement and Zalatoris’s relationship with the Company may be terminated by the Company at any time for Cause immediately upon written notice of termination to Zalatoris, or at any time by the Company other than for Cause or by Zalatoris for any reason or no reason upon ninety (90) days’ written notice. In the event of termination, Zalatoris shall receive any portion of the Fee that has been accrued to the date of termination. For the purposes of this Agreement, “Cause” means (a) material or willful breach by Zalatoris of his obligations under this Agreement or (b) Zalatoris’s commission of a felony offense involving moral turpitude, fraud or dishonesty, or (c) Zalatoris’s unsatisfactory performance of Zalatoris’s material duties, unless Zalatoris fully corrects its unsatisfactory performance within ten (10) days following receipt of notice of unsatisfactory performance. Upon termination of Zalatoris’s service with the Company for any reason, Zalatoris shall be deemed to have resigned from all offices and directorships (or comparable positions), if any, then held with the Company or any of its subsidiaries or affiliates.
Representation. Zalatoris expressly represents and warrants to the Company that as of the date of the signing of this Agreement he is not a party to any contract, agreement or relationship which will or may restrict in any way his ability to fully perform his responsibilities under this Agreement. Zalatoris agrees to comply with the terms of this Agreement, all of the rules, regulations, policies and procedures established by the Company from time to time (as such rules, regulations, policies and procedures may be amended or supplemented) and all applicable laws, rules and regulations imposed by any governmental body or regulatory authority from time to time. Zalatoris will not engage in any activity that is harmful to the business, reputation or best interests of the “Protected Parties” (as defined in Section 10) or any member thereof.
Restrictive Covenants.
(a) Confidentiality.
(i) Zalatoris will have access to certain trade secrets and confidential, nonpublic or proprietary information relating to the Company, the Business Manager and their respective subsidiaries and affiliates (the “Protected Parties”) which is not readily available from sources outside the Company or the Business Manager. The confidential, nonpublic and/or proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including but not limited to, information (whether or not specifically identified as confidential), in any form or medium, that is disclosed to, or developed or learned by, Zalatoris, as the case may be, or that relates to the business of the Protected Parties or any of the investors, partners, strategic alliance participants, officers, directors, employees or equityholders of the Protected Parties, including, without limitation: (A) internal business information of the Protected Parties or which is otherwise related to the business of the Protected Parties (including information relating to strategic plans and practices, business, accounting, financial or marketing plans, practices or programs, training practices and programs, salaries, bonuses, incentive plans and other compensation and benefits information and accounting and business methods); (B) identities of, individual requirements of, specific contractual arrangements with, and information about, the Protected Parties, the business of the Protected Parties, their respective customers and their respective confidential information; (C) any confidential or proprietary information of any third party that any Protected Party has a duty to maintain confidentiality of, or use only for certain limited purposes; (D) industry research compiled by, or on behalf of the Protected Parties, or the business of the Protected Parties; (E) compilations of data and analyses, processes, methods, track and performance records, data and data bases relating thereto; and (F) information related to the intellectual property used by the Protected Parties or otherwise in connection with the business of the Protected Parties and updates of any of the foregoing. The Protected Parties invested, and continue to invest, considerable amounts of time and money in their process, technology, know-how, obtaining and developing the goodwill of their customers, their other external relationships, their data systems and data bases, and all the information described above (hereinafter collectively referred to as “Confidential Information”), and any misappropriation or unauthorized disclosure of Confidential Information in any form would irreparably harm the Protected Parties. Zalatoris acknowledges that such Confidential Information constitutes valuable, highly confidential, special and unique property of the Protected Parties. Zalatoris shall hold for the benefit of the Protected Parties all Confidential Information relating to the Protected Parties and their businesses which shall not be or become public knowledge (other than by acts by Zalatoris or representatives of Zalatoris in violation of this Agreement). Except as required by law, an order of a court or request
of a governmental agency with jurisdiction or as otherwise set forth herein Zalatoris shall not, during the period Zalatoris is retained by the Company or at any time thereafter, disclose any Confidential Information, directly or indirectly, to any person or entity for any reason or purpose whatsoever, nor shall Zalatoris use it in any way, except in the course of Zalatoris’s retention with, and for the benefit of, the Protected Parties or to enforce any rights or defend any claims hereunder or under any other agreement to which Zalatoris is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto. In the event that Zalatoris receives a subpoena or other request pursuant to an order of a court or from a governmental agency, Zalatoris shall provide reasonable advance written notice to the Company prior to responding to such subpoena, request or court order, make available to the Company and its counsel as much in advance of the return date as possible the documents and information sought, and assist such counsel at the Company’s expense in resisting or otherwise responding to such process, in each case to the extent permitted by applicable laws or rules. Zalatoris shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. Zalatoris understands and agrees that Zalatoris shall acquire no rights to any such Confidential Information and shall not use such Confidential Information for his own benefit or the benefit of others.
(ii) All files, models, memos, records, documents, drawings, specifications, data, computer programs, research methods, evaluation mechanisms and analytics and any and all other information thereto or to the Protected Parties’ business, as well as all customer lists, specific customer information, intellectual property, compilations of product research and marketing techniques of the Protected Parties, whether prepared by Zalatoris or otherwise coming into Zalatoris’s possession, shall be deemed Confidential Information as defined above, and remain the exclusive property of the Protected Parties, and Zalatoris shall not use such information for his own benefit or the benefit of others and further shall not remove any such items from the premises of the Protected Parties except in furtherance of Zalatoris’s services for the Company.
(iii) It is understood that while retained by the Company, Zalatoris will promptly disclose to it, and assign to it Zalatoris’s interest in any invention, improvement or discovery made or conceived by Zalatoris, either alone or jointly with others, which arises out of Zalatoris’s retention. At the Protected Parties’ request and expense, Zalatoris will reasonably assist the Protected Parties during the period of Zalatoris’s retention by the Company and thereafter in connection with any controversy or legal proceeding relating to such invention, improvement or discovery and in obtaining domestic and foreign patent or other protection covering the same.
(iv) As requested by the Company from time to time and upon the termination of Zalatoris’s retention with the Company for any reason, Zalatoris will promptly deliver to the Protected Parties all copies and embodiments, in whatever form, of all Confidential Information in Zalatoris’s possession or within his control (including, but not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information) irrespective of the location or form of such material. If requested by the Protected Parties, Zalatoris will provide the Protected Parties with written confirmation that all such materials have been delivered to the Protected Parties as provided herein.
(v) Confidential Information shall also include any information, financial, personal or otherwise, related to any of the employees or members of the Protected Parties.
(vi) Nothing in this Agreement shall prohibit Zalatoris from (A) disclosing information and documents when required by law, subpoena or court order (subject to the requirements of Section 10(a)(i) above), (B) disclosing Zalatoris’s post-service restrictions in this Agreement in confidence to any potential new employer or in connection with any potential new engagement, or (C) filing a charge with, reporting possible violations to, or participating or cooperating with any governmental agency or entity, including but not limited to, the Equal Employment Opportunity Commission, the Department of Justice, the Securities and Exchange Commission, Congress, or any agency Inspector General, or making other disclosures that are protected under the whistleblower, anti-discrimination, or anti-retaliation provisions of federal, state or local law or regulation (provided, however, that Zalatoris may not disclose information of, or regarding, any Protected Party that is protected by the attorney-client privilege, except as otherwise required by applicable law) and Zalatoris does not need the authorization of the Company to make any such reports or disclosure and shall not be required to notify the Company that Zalatoris has made such reports or disclosures.
(vii) Zalatoris acknowledges that Zalatoris has the following immunity rights in compliance with the requirements of the Defend Trade Secrets Act: (A) Zalatoris shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, (B) Zalatoris shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of Confidential Information that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (C) if Zalatoris files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Zalatoris may disclose the Confidential Information to his attorney and use the Confidential Information in the court proceeding if Zalatoris files any document containing the Confidential Information under seal, and does not disclose the Confidential Information, except pursuant to court order.
(b) Non-Disparagement. Zalatoris agrees that he will not at any time (whether during or after the Agreement is terminated) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the other party or Protected Parties and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns. “Disparaging” remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.
- Remedies; Specific Performance. The parties acknowledge and agree that Zalatoris’s breach or threatened breach of any of the restrictions set forth in Section 10 will result in irreparable and continuing damage to the Protected Parties for which there may be no adequate remedy at law and that the Protected Parties shall be entitled to equitable relief, including specific performance and injunctive relief as remedies for any such breach or threatened or attempted breach. Zalatoris hereby consents to the grant of an injunction (temporary or otherwise) against Zalatoris or the entry of any other court order against Zalatoris prohibiting and enjoining Zalatoris
from violating, or directing Zalatoris to comply with any provision of Section 10. Zalatoris also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Protected Parties against Zalatoris for such breaches or threatened or attempted breaches. For the avoidance of doubt, Zalatoris’s obligations under Sections 10 shall also apply to Zalatoris’s representatives.
Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the principles of conflicts of laws.
Arbitration. Except for any claims for injunctive relief under Section 10, any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement shall be settled by submission by either Zalatoris or the Company to binding arbitration in Chicago, Illinois, before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof. Each party shall bear its costs and expenses in any such arbitration; provided, however, that the arbitrator shall have the discretion to award the prevailing party reimbursement of its reasonable attorney’s fees and costs.
Notices. All notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery or electronically (e.g., e-mail), or if sent by overnight courier, the next day after mailing.
(i) If to the Company, to:
Inland Real Estate Income Trust, Inc.
2901 Butterfield Road
Oak Brook, IL 60523
Attention: Ms. Catherine L. Lynch
Telephone No.: (630) 218-8000
Email: lynch@inland-investments.com
With a copy to:
Inland Real Estate Income Trust, Inc.
2901 Butterfield Road
Oak Brook, IL 60523
Attention: Lead Independent Director
(ii) If to Zalatoris, to the last address that the Company has in its records for Zalatoris.
Assignability. The Company may assign the Agreement to any successor that continues the business of the Company or to any subsidiary or affiliate of the Company. Zalatoris may not assign this Agreement.
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
Amendment/Entire Agreement. This Agreement may be amended only by an agreement in writing signed by the parties hereto. The Agreement contains the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, oral or written, between the parties with respect to the subject matter of this Agreement.
Severability. If any term, provision, covenant or restriction of this Agreement, or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government, an arbitrator or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected or impaired or invalidated.
Material Non-Public Information. Zalatoris understands and agrees that the Company under no circumstances, wants to receive information which may be considered material non-public information and/or any information the disclosure of which may breach an obligation of confidentiality. By signing below, Zalatoris further agrees that he has received, read, understands and will abide by the Company’s policies regarding insider trading and material non-public information. Zalatoris further confirms that he is familiar with the laws governing trading of all relevant jurisdictions whose laws may be implicated by the services he provides to the Company, and that he shall scrupulously adhere to the governing trading laws of all applicable jurisdictions.
Section 409A. The intent of the parties hereto is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. In no event shall the Company or any of its subsidiaries or affiliates or any of their respective directors, officers, employees, consultants or advisers be liable for any additional tax, interest or penalties that may be imposed on Zalatoris by Section 409A or for any damages for failing to comply with Section 409A. To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Zalatoris shall be paid to Zalatoris no later than December 31 of the year following the year in which the expense was incurred; the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Zalatoris’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit. Zalatoris’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and year first above written.
INLAND REAL ESTATE INCOME TRUST, INC.
By:_/s/ Catherine L. Lynch______________
Name: Catherine L. Lynch
Title: Chief Financial officer
/s/ Mark Zalatoris
MARK ZALATORIS