Property Services Agreement

Exhibit 99.2




THIS PROPERTY SERVICES AGREEMENT (this “Agreement”) is entered into as of the24th day of February, 2005, by and between Inland RealEstate Acquisitions, Inc., an Illinois corporation (“Acquisitions”),and Inland Retail Real Estate Trust, Inc.,a Maryland corporation (the “Company”). Acquisitions and the Company are sometimes referred to hereinindividually as a “Party” and collectively as the “Parties.”


WHEREAS, the Company is in the business, among otherthings, of acquiring and managing real estate assets, primarily multi-tenantproperties improved for use as retail establishments or improved for use asmulti-family and/or office facilities that also provide retail services andsingle-tenant retail or commercial properties, located mainly in thesoutheastern United States;


WHEREAS, Acquisitions is in the business ofacquiring and assisting certain third parties, including, without limitation,the Company, in acquiring real estate properties; and


WHEREAS, Acquisitions has requested that the Companygrant to Acquisitions, and the Company is willing to grant to Acquisitions, a rightto retain the services of the Company (a) to negotiate, for the benefit ofAcquisitions and/or its clients, Acquisition Agreements (as defined in Section3 below) for Subject Properties (as defined in Section 2 below) the acquisitionof which the Company determines it does not desire to pursue, and (b) toperform certain due diligence services with respect to certain SubjectProperties, all upon and subject to the terms, provisions and conditionshereinafter set forth.


NOW, THEREFORE, in consideration of the mutual promises andcovenants contained herein, the receipt and sufficiency of which are herebyacknowledged, the Parties agree as follows:


1.             Incorporationof Recitals. By this reference, the recitals set forth above are herebyincorporated into this Agreement as if fully set forth herein.


2.             Definitions.  The following initially capitalized termsused in this Agreement shall have the following meanings:


(a)           “Retail Facility” shall mean real estateimproved for use as a multi-tenant shopping center with gross leasable retailarea of not less than 50,000 square feet and not more than 300,000 square feet.


(b)           “Mixed-Use Property” shall mean real estate,other than a Retail Facility or a Single-User Property, improved for use as acombination of two or more of (i) multi-family use, (ii) office use, and (iii)retail facility use, provided such real estate contains gross leasable retailarea of not less than 50,000 square feet and not more than 300,000 square feet.


(c)           “Single-User Property” shall mean real estateimproved for use as a single-tenant retail or commercial property.


(d)           “Subject Property” shall mean any RetailFacility, Mixed-Use Property or Single-User Property identified by the Company,excluding, however, any property identified or presented by Acquisitions to theCompany pursuant to that certain Property Acquisition Agreement, dated as ofDecember 29, 2004, between the Parties (the “Property Acquisition Agreement”).



3.             Services.  During the term of this Agreement, if theCompany determines that it does not desire to pursue (or continue to pursue ifalready commenced) the negotiation of any letter of intent, purchase contractor other agreement (an “Acquisition Agreement”) for the acquisition of a SubjectProperty, then the Company shall deliver to Acquisitions written notice (each a“Property Notice”) requesting whether Acquisitions desires to have the Company performNegotiation Services (hereinafter defined) with respect to such SubjectProperty for the benefit of Acquisitions and/or its clients.  Acquisitions shall have five (5) businessdays after the date of its receipt of a Property Notice (the “Notice Period”)to inform the Company in writing (a “Company Notice”) whether Acquisitions haselected to retain the Company to perform the Negotiation Services for theapplicable Subject Property, in which event the Company shall use good faithefforts to negotiate and finalize, on behalf of Acquisitions and/or its clients,such Acquisition Agreement.  Absent badfaith, in no event shall the Company be liable to Acquisitions for theperformance of the Negotiation Services or the Company’s failure to successfullynegotiate an Acquisition Agreement to the point of execution.  Acquisitions shall have no rights under thisAgreement with respect to, and the Company shall have no obligations toAcquisitions under this Agreement with respect to, any Subject Property whichthe Company determines that it intends to purchase for its own account.  Furthermore, notwithstanding the foregoing, Acquisitions’rights and the Company’s obligations set forth in this Section 3 shall notapply to either (i) the Acquisition of an Operating Company (hereinafterdefined), regardless of whether the Operating Company owns, directly orindirectly, a Subject Property, or (ii) the acquisition (in a manner describedin clauses (i), (ii) or (iii) of the definition of “Acquisition of an OperatingCompany” below) of any entity that owns, directly or indirectly, in addition toSubject Properties, real estate that does not constitute a Subject Property.  Upon the occurrence of a Termination Event(hereinafter defined), Acquisitions shall be deemed to have waived any and allrights under this Section 3 and the Company shall have no further obligationsto perform any Negotiation Services with respect to the applicable SubjectProperty.  Acquisitions shall, uponrequest, provide the Company with reasonable evidence (i.e., a resolution orwritten consent adopted by the Board of Directors of Acquisitions) settingforth the authority of certain officers of Acquisitions to make decisions inregards to responding to a Property Notice and the negotiation of an AcquisitionAgreement.  If Acquisitions delivers to theCompany a Company Notice pursuant to which Acquisitions retains the Company toperform the Negotiation Services with respect to a Subject Property, butthereafter Acquisitions determines not to pursue such acquisition, then Acquisitionsshall deliver to the Company written notice of same (each, a “PropertyTermination Notice”).  For the purposeshereof, the term “Negotiation Services” shall mean the pursuit and negotiationof the acquisition of a Subject Property, including, without limitation (w) receivingand gathering of information and other materials from the seller and itsbroker(s) regarding such Subject Property (and the forwarding of suchinformation and materials to Acquisitions), (x) based on the information andmaterials received, preparing a preliminary pro forma analysis (a “deal sheet”)for each Subject Property and providing copies of the deal sheet toAcquisitions, (y) negotiating in good faith, on behalf of Acquisitions and/orits clients, the potential acquisition of such Subject Property andmemorializing the same in an Acquisition Agreement, and (z) keepingAcquisitions apprised of the status and progress of any such negotiations.


Acquisitions’ election,whether in response to or at any time after its receipt of a Property Notice,not to retain the Company to perform Negotiation Services for a particularSubject Property shall not affect or impair any of Acquisitions’ rights setforth in this Agreement with respect to any other Subject Property or otherproperty that could thereafter constitute a Subject Property.


For the purposes hereof,the term “Termination Event” shall mean, with respect to any particular SubjectProperty, the first to occur of (i) Acquisitions’ failure to deliver to the




Companya Company Notice prior to the expiration of the Notice Period for the SubjectProperty, (ii) Acquisitions’ delivery to the Company of a Company Noticepursuant to which Acquisitions elects not to retain the Company to performNegotiation Services for the Subject Property and (iii) at any time after theexpiration of the Notice Period, Acquisitions’ delivery to the Company of aProperty Termination Notice.


For the purposes hereof,the term “Acquisition of an Operating Company” shall mean the acquisition of anOperating Company (hereinafter defined) (i) by purchasing controlling interestsof the stock or other equity interest in the entity or by merger or otherbusiness combination or reorganization, or tender offer, (ii) by acquisition ofall or substantially all of an Operating Company’s assets (provided that theexcluded assets do not comprise all or substantially all of such OperatingCompany’s non-real property or other non-real estate assets) or (iii) byobtaining management control of such Operating Company, through its board ofdirectors or other comparable management position, such as, without limitation,managing general partner or managing member.


For the purposes hereof,the term “Operating Company” shall mean (a) any entity that has equitysecurities registered under Section 12(b) or 12(g) of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”) or files periodic reports underSections 13 or 15(d) of the Exchange Act, or (b) any entity that, either itselfor through its subsidiaries:


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


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


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


(d)           either (A) has its own officers and employeesthat, on a daily basis, actively operate such entity and its subsidiaries andbusinesses, or (B) has retained the services of an affiliate or sponsor of, oradvisor to, such entity to, on a daily basis, actively operate such entity andits subsidiaries and businesses.


4.             AcquisitionAgreements.  Acquisitions agrees that it shallbe the party that signs any Acquisition Agreement negotiated by the Company forthe benefit of Acquisitions and/or its clients pursuant to this Agreement.  Acquisitions agrees to reasonably cooperatewith the Company in connection with performance of the Negotiation Services,including, without limitation, promptly responding to any questions or issuesraised by the Company, and providing any information about Acquisitions (and/orits client for whom the Subject Property is sought) reasonably requested by theCompany.


5.             Due Diligence Services.  Withrespect to a Subject Property for which the Company performs NegotiationServices, upon the agreement of the Parties, Acquisitions may retain theCompany to provide the due diligence services listed on Exhibit Aattached hereto and made a part hereof (the “Due Diligence Services”, andtogether with the Negotiation Services, the “Services”).  Nothing contained in this Agreement shallobligate or require the Company to provide, or retain the services of counselto provide, any legal analysis, consultation, advice or



services, it being theagreement of the Parties that if such legal analysis, consultation, advice orservices are necessary or appropriate, then Acquisitions shall retain counsel.


6.             Non-Performanceof Services.  Notwithstanding the foregoing oranything else contained in this Agreement, the Company shall not be required toprovide any Services hereunder with respect to any Subject Property if:


(a)           performing the Services would violate applicable law or the rules ofany regulatory body having jurisdiction over the Parties or the SubjectProperty;


(b)           performing the Services would result in the commission of fraud uponany person or party;


(c)           the Company has a reasonable basis, upon the advice of counsel, thatperforming the Services would subject the Company to material liability ormaterial damages in any civil litigation;


(d)           the Company reasonably believes that it does not have a sufficientnumber of qualified personnel to provide the Services; or


(e)           performing the Services would adversely affect the Company’s status asa real estate investment trust for federal tax purposes.


7.             Reimbursements.  For all Services provided and rendered underand pursuant to this Agreement, Acquisitions shall pay to the Company thefollowing:


(a)           any and all reasonable, third partyout-of-pocket costs incurred by the Company in connection with performing Servicesunder this Agreement (“Third Party Cost Reimbursement”);


(b)           Intentionally Omitted;


(c)           upon execution of an Acquisition Agreementfor a Subject Property which the Company negotiated for the benefit ofAcquisitions (or any client thereof) pursuant to this Agreement, anon-accountable administrative negotiation fee equal to $25,000 (“Negotiation Fee”);and


(d)           For Subject Properties with respect to whichAcquisitions specifically requests and the Company provides any Due DiligenceServices, a non-accountable due diligence fee equal to $15,000 (“Due Diligence Fee”).


Notwithstanding the foregoing, if, after execution of any AcquisitionAgreement negotiated by the Company pursuant hereto for the benefitAcquisitions (or any client thereof), Acquisitions (or such client) elects notto acquire the applicable Subject Property, then Acquisitions shall receive acredit against any future Negotiation Fees that may become due and payableunder this Agreement in an amount equal to the Negotiation Fee paid inconnection with such Subject Property; provided, however, that in no eventshall Acquisitions ever be entitled to a credit for any Third Party CostReimbursements or Due Diligence Fees paid with respect to such Subject Property.


All Third Party CostReimbursements, Negotiation Fees and Due Diligence Fees payable by Acquisitionsto the Company under and pursuant to this Agreement shall be due and payable




within thirty (30) days of Acquisitions’ receiptof a reasonably detailed invoice therefor (together with invoices from thethird party service providers for the Third Party Cost Reimbursements).  The compensation to be paid by Acquisitions pursuantto this Section 7 shall constitute full and complete payment for any and all Servicesrendered and performed by the Company (including the cost of any and all labor)under and pursuant to this Agreement.


8.             NoPartnership or Joint Venture.  TheParties to this Agreement are independent contractors.  Nothing in this Agreement is intended orshall be deemed to constitute a partnership, agency, franchise or joint venturerelationship between the Parties.


9.             Term;Termination of Agreement.


(a)           Term.  The term of this Agreementshall commence on the date hereof and shall continue until the termination ofthe Property Acquisition Agreement.


(b)           Termination by Acquisitions.


(i)            For Cause.  Acquisitions may terminatethis Agreement upon material default by the Company hereunder upon ten (10)days prior notice to the Company; provided, however, that priorto exercising its rights under this clause (i), Acquisitions shall notify theCompany of the alleged default, and the Company shall have thirty (30) daysafter receipt of such notice to cure the default to Acquisitions’ reasonablesatisfaction.  Upon terminating inaccordance with this clause (i), Acquisitions shall pay the Company all amountsthen payable to the Company pursuant to Section 7 hereof.


(ii)           Without Cause. Acquisitions may terminate this Agreement, without cause, by providingnot less than sixty (60) days prior notice (which notice shall specifically setforth the effective date of termination) to the Company of such election to soterminate.  Upon terminating inaccordance with this clause (ii), Acquisitions shall, pay the Company allamounts then payable to the Company pursuant to Section 7 hereof.


(c)           Termination by the Company.


(i)            For Cause.  The Company may terminate thisAgreement, upon the occurrence of any of the following events:


a.           Acquisitions fails, in the absence of a bona fide dispute with respectto such payment, to make payment for Services rendered hereunder on its duedate; provided, however, that Acquisitions may cure such breachup to three times per calendar year by making payment within ten (10) days ofAcquisitions’ receipt of notice that it failed to make such payment when due;


b.          Acquisitions requests that the Company violate any applicable law orthe rules of any regulatory body having jurisdiction over the Company (and Acquisitionsdoes not promptly revoke such request upon the Company’s refusal to comply);


c.           Acquisitions requests that the Company take any action which wouldresult in the commission of a fraud upon any person or party




(and Acquisitions does not promptly revoke such request upon theCompany’s refusal to comply); or


d.          Acquisitions requests that the Company take any action that, upon theadvice of counsel to the Company, would subject the Company to material liabilityor material damages in a civil litigation (and Acquisitions does not promptlyrevoke such request upon the Company’s refusal to comply).


10.           Rightto Audit.  If required by Acquisitions’auditors, the Company shall keep and make available for the examination andaudit of or by Acquisitions, or Acquisitions’ authorized employees, agents orrepresentatives during normal business hours at Acquisitions’ cost, all data,materials, books, records, receipts, accounts and other information substantiatingand verifying any and all reasonable, third party out-of-pocket costs incurredby the Company in connection with performing Services hereunder.  Acquisitions shall have the right to conductsuch examination and audit no more than two (2) times per calendar year.


11.           Confidentiality.  During the term of this Agreement, theparties may communicate to each other certain confidential information toenable the Company to perform the Services hereunder, or the Company maydevelop confidential information for Acquisitions.  Each Party agrees (i) to treat, and to causeits employees, agents, subcontractors and representatives, if any, to treat assecret and confidential, all such information, and (ii) except as necessary inthe performance of the Services hereunder, not to disclose any suchconfidential information or make available any reports, recommendations orconclusions that the Company may make for Acquisitions to any person, firm orcorporation without first obtaining Acquisitions’ written approval.  The foregoing shall not prohibit or restrictany party from disclosing any information: (a) the disclosure of which isnecessary to comply with any applicable laws, including, without limitation,federal or state securities laws, or any exchange listing or similar rules andregulations; (b) the disclosure of which is ordered pursuant to a subpoenaor other order from a court or governmental body of competent jurisdiction;(c) such information is now, or hereafter is made, generally available to thepublic other than by disclosure in violation of this Agreement; (d) suchinformation was disclosed to the disclosing party by a third party that thedisclosing party, in good faith, believes was not bound by an obligation ofconfidentiality; or (e) the parties hereto consent to the form and contentof any such disclosure.  If any Partylearns that disclosure of such information is sought in or by a court orgovernmental body of competent jurisdiction or through other means, such Partyshall (1) give prompt notice to the other Party prior to making such disclosureand allow such other Party, at its expense, to undertake appropriate action toprevent disclosure of, or to obtain a protective order for, such information,(2) reasonably cooperate with such other Party in its efforts to prevent, orobtain a protective order for, such disclosure, and (3) disclose only theminimum amount of information required to be disclosed.


12.           Assignments.  This Agreement may not be assigned exceptwith the written consent of each Party hereto, except in the case of assignmentby a Party to a corporation, trust or other organization which is a successorto such Party.  Any assignment of thisAgreement shall bind the assignee hereunder in the same manner as the assignoris bound hereunder.


13.           Amendments.  This Agreement and the schedules, attachmentsand exhibits referred to herein constitute the entire agreement between theParties with respect to the subject matter hereof, and this Agreementsupersedes all prior and contemporaneous proposals, agreements, memoranda,understandings, negotiations and discussions, whether written or oral, of theParties in connection with the subject matter hereof.  This Agreement shall not be




amended, changed,modified, terminated or discharged in whole or in part except by an instrumentin writing signed by each Party hereto or their respective successors orassigns.


14.           Successorsand Assigns.  This Agreement shall bind anysuccessors or assigns of the Parties hereto as herein provided.


15.           GoverningLaw.  The provisions of this Agreement shall begoverned, construed and interpreted in accordance with the internal laws of theState of Illinois without reference to its conflicts of laws principles.


16.           Notices.  All notices or other communications requiredor permitted hereunder shall be in writing and shall be deemed given ordelivered:  (i) when delivered personallyor by commercial messenger; (ii) one business day following deposit with arecognized overnight courier service, provided such deposit occurs prior to thedeadline imposed by such service for overnight delivery; (iii) whentransmitted, if sent by facsimile copy, provided confirmation of receipt isreceived by sender and such notice is sent by an additional method providedhereunder, in each case above provided such communication is addressed to theintended recipient thereof as set forth below:


If to Acquisitions:

G. Joseph Cosenza

Inland Real Estate Acquisitions, Inc.

2901 Butterfield Road

Oak Brook, IL 60523

Phone: (630) 218-8000

Fax: (630) 218-4935


with a copy to :


The Inland Real Estate Group, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attn: Robert H. Baum, General Counsel



If to the Company:

Inland Retail Real Estate Trust, Inc.

200 Waymont Circle, Suite 126-10

Lake Mary, FL 32746

Attention: Barry Lazarus

Phone: (407) 688-6540

Fax: (407) 688-6543


with a copy to:


Inland Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attn: Michael J. Moran

Phone: (630) 645-2085

Fax: (630) 218-4900




Any Party may at any timegive notice in writing to the other Parties of a change of its address for thepurpose of this Section 16.


17.           Headings.  The section headings hereof have beeninserted for convenience of reference only and shall not be construed to affectthe meaning, construction or effect of this Agreement.


18.           Waiver.  No delay or omission on the part of any partyhereto in exercising any right hereunder shall operate as a waiver of suchright or any other right under this Agreement.


19.           ForceMajeure.  No liability shall result fromthe delay or nonperformance of Services hereunder caused by circumstancesbeyond the control of the Company, including without limitation acts of God,fire, flood, snowstorm, war, acts of terrorism, government action, riot, civildisturbance, accident, inability to obtain labor, material, or equipment (“ForceMajeure”).  During periods of Force Majeure, Services so affected by suchForce Majeure may be postponed or, upon agreement of the Parties, eliminated,without liability, but this Agreement shall remain otherwise unaffected. Timely notice of Force Majeure and its expected duration shall be given by theaffected party to the other, and the party whose performance is affected by aForce Majeure event will use commercially reasonable efforts to avoid, removeor minimize the impact of such event on the performance of its obligations atthe required level at the earliest possible date.


20.           Severability.  The various terms, provisions and covenantsherein contained shall be deemed to be separate and severable, and theinvalidity or unenforceability of any of them shall in no manner affect or impairthe validity or enforceability of the remainder hereof.


21.           Counterparts. This Agreement may besigned in two or more counterparts, each of which shall be treated as anoriginal but which, when taken together, shall constitute one and the sameinstrument.  A signed facsimile copy ofthis Agreement shall constitute an original for all purposes.


22.           EquitableRelief.  Each Party hereto recognizes and acknowledges thata breach by the other party of this Agreement will cause irreparable damage tothe non-breaching party which cannot be readily remedied in monetary damages inan action at law.  In the event of anydefault or breach by either party, the non-breaching party shall be entitled toseek immediate injunctive relief to prevent such irreparable harm or loss, inaddition to any other remedies available at law and in equity.


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[Signatures on following page]




IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date firstabove written.












/s/ G. Joseph Cosenza




G. Joseph Cosenza





















/s/ Barry L. Lazarus




Barry L. Lazarus











•      Analyze whether the Subject Property is of atype, nature and quality that is comparable to or commensurate with theportfolio of properties owned and managed by Acquisitions and/or its otherclients.


•      Prepare a standard final pro forma analysis (“dealsheet”) for each Subject Property and provide copies of the deal sheet toAcquisitions.


•      Provide normal and customary due diligenceanalysis, review and investigation with respect to any Subject Propertyacquired or sought to be acquired by Acquisitions.  Specifically, gathering, assembling anddistributing any and all information received by the Company from third partiesand relating to a Subject Property upon request of the Acquisitions or orderingand reviewing from a business (not a legal perspective) any tests, appraisalsand reports, leases, lease amendments or guaranties, service contracts,warranties, material title documents and other agreements relating to theownership, operation, leasing and management of a Subject Property, andadvising Acquisitions of concerns or issues identified by the Company(collectively, “Due Diligence Documents”).


•      Document coordination and property transitionwith property management companies.


•      Deliver copies or originals to Acquisitionsof any and all Due Diligence Documents relating to a particular SubjectProperty at the time Acquisitions acquires the particular Subject Property.


•      Coordinate closing of, from a business (not alegal) perspective, properties, including preparing, reviewing and approvingclosing and proration statements.