Document:

Exhibit 10.1

 

ADVISORY AGREEMENT

 

AMONG

 

CLARION PROPERTY TRUST INC.,

 

CLARION PROPERTY TRUST OPERATING PARTNERSHIP LP,

 

AND

 

CPT ADVISORS LLC

 

 

TABLE OF CONTENTS

 

	
1.
  	
Definitions
  	
1
  
	
2.
  	
Appointment
  	
6
  
	
3.
  	
Duties of the Advisor
  	
6
  
	
4.
  	
Authority of Advisor
  	
9
  
	
5.
  	
Sub-Advisors
  	
9
  
	
6.
  	
Bank Accounts
  	
10
  
	
7.
  	
Records; Access
  	
10
  
	
8.
  	
Limitations on Activities
  	
10
  
	
9.
  	
Relationship with Directors
  	
10
  
	
10.
  	
Advisory Fee
  	
11
  
	
11.
  	
Expenses
  	
12
  
	
12.
  	
Other Services
  	
13
  
	
13.
  	
Reimbursement to the Advisor
  	
13
  
	
14.
  	
Other Activities of the Advisor
  	
14
  
	
15.
  	
Relationship of the Parties
  	
14
  
	
16.
  	
The Clarion Name
  	
15
  
	
17.
  	
Term of Agreement
  	
15
  
	
18.
  	
Termination by the Parties
  	
15
  
	
19.
  	
Assignment to an Affiliate
  	
15
  
	
20.
  	
Payments to and Duties of Advisor Upon Termination
  	
15
  
	
21.
  	
Indemnification by the Company and the Operating Partnership
  	
16
  
	
22.
  	
Indemnification by Advisor
  	
16
  
	
23.
  	
Non-Solicitation
  	
16
  
	
24.
  	
Miscellaneous
  	
17
  

 

i

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT (the “Agreement”), dated as of the 30th day of November, 2010 and effective as of the date the Registration Statement (as defined below) is declared effective by the Securities and Exchange Commission (the “Effective Date”), is among Clarion Property Trust Inc., a Maryland corporation (the “Company”), Clarion Property Trust Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”), and CPT Advisors LLC, a Delaware limited liability company. Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.

 

W I T N E S S E T H

 

WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments permitted by the terms of Sections 856 through 860 of the Code;

 

WHEREAS, the Company is the general partner of the Operating Partnership and intends to conduct all of its business and make all Investments through the Operating Partnership;

 

WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience, sources of information, advice, assistance and certain facilities of the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the Board, all as provided herein; and

 

WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board, on the terms and conditions hereinafter set forth;

 

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

 

1.             DEFINITIONS.  As used in this Agreement, the following terms have the definitions hereinafter indicated:

 

Acquisition Expenses. Any and all expenses incurred by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection with the selection, acquisition, origination, making or development of any Investments, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums, and the costs of performing due diligence.

 

Advisor. CPT Advisors LLC, a Delaware limited liability company, any successor advisor to the Company, the Operating Partnership or any Person to which CPT Advisors LLC or any successor advisor subcontracts substantially all of its functions. Notwithstanding the foregoing, a Person hired or retained by CPT Advisors LLC to perform sub-advisory or property management and related services for the Company or the Operating Partnership that is not hired or retained to perform substantially all of the functions of CPT Advisors LLC with respect to the Company or the Operating Partnership as a whole shall not be deemed to be an Advisor.

 

Advisory Fee. The fee payable to the Advisor pursuant to Section 10.

 

Affiliate or Affiliated. With respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, 10.0% or more of the outstanding voting securities of such other Person; (ii) any Person 10.0% or more of whose outstanding voting securities are directly or 

 

 

indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

 

Annual Total Return. As further described in Section 10, the investment return provided to Stockholders, which shall be calculated independently for the Class A Shares and the Class W Shares and shall be equal to, for all such Shares outstanding during the calendar year (or such other applicable period), (i) distributions paid per Class A Share or Class W Share over the calendar year (or such other applicable period) adjusted for (ii) change in Class A NAV per Class A Share or Class W NAV per Class W Share over the calendar year (or such other applicable period).

 

Articles of Incorporation. The Articles of Incorporation of the Company, as amended from time to time.

 

Average Invested Assets. For a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Investments before deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of such values at the end of each month during such period.

 

Board. The board of directors of the Company, as of any particular time.

 

Business Day. Any day on which the New York Stock Exchange is open for trading.

 

Bylaws. The bylaws of the Company, as the same are in effect from time to time.

 

Cause. With respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by the Advisor in connection with performing its duties hereunder.

 

Class A NAV. The portion of the NAV allocable to class A Shares, calculated pursuant to the Valuation Guidelines.

 

Class A Shares. Shares of the Company’s $0.01 par value common stock that have been designated as Class A.

 

Class A. Stockholders. The registered holders of the Class A. Shares.

 

Class W NAV. The portion of the NAV allocable to class W Shares, calculated pursuant to the Valuation Guidelines.

 

Class W Shares. Shares of the Company’s $0.01 par value common stock that have been designated as Class W.

 

Class W. Stockholders. The registered holders of the Class W. Shares.

 

Code. Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

 

Company. Company shall have the meaning set forth in the preamble of this Agreement.

 

Dealer Manager. ING Investments Distributor, LLC, or such other Person or entity selected by the Board to act as the dealer manager for the Offering.

 

Dealer Manager Fee. The dealer manager fee payable to the Dealer Manager as described in the Company’s Prospectus.

 

Director. A member of the Board.

 

Distribution Fee. The distribution fee payable to the Dealer Manager with respect to the Class A Shares and reallowable to Participating Broker-Dealers with respect to Class A Shares sold by them as described in the Company’s Prospectus.

 

Distributions. Any distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.

 

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Effective Date. Effective Date shall have the meaning set forth in the preamble of this Agreement.

 

Excess Amount. Excess Amount shall have the meaning set forth in Section 13.

 

Expense Year. Expense Year shall have the meaning set forth in Section 13.

 

Fixed Component. The non-variable component of the Advisory Fee as described in Section 10(b).

 

GAAP. Generally accepted accounting principles as in effect in the United States of America from time to time.

 

Gross Proceeds. The aggregate purchase price of all Shares sold for the account of the Company through all Offerings, without deduction for Selling Commissions, volume discounts, any due diligence expense reimbursement or Organization and Offering Expenses. For the purpose of computing Gross Proceeds from the sale of Class A Shares, the purchase price of any Class A Share for which reduced Selling Commissions are paid to the Dealer Manager or a Participating Broker-Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full amount of the offering price per Class A Share pursuant to the Prospectus for such Offering without reduction.

 

Indemnitee. Indemnitee and Indemnitees shall have the meaning set forth in Section 21 herein.

 

Independent Director. Independent Director shall have the meaning set forth in the Articles of Incorporation.

 

Independent Valuation Advisor. A firm that is (i) engaged to a substantial degree in the business of conducting appraisals on commercial real estate properties, (ii) not affiliated with the Advisor and (iii) engaged by the Company with the approval of the Board to appraise the Real Properties pursuant to the Valuation Guidelines.

 

Investment Company Act. The Investment Company Act of 1940, as amended.

 

Investment Guidelines. The investment guidelines adopted by the Board, as amended from time to time, pursuant to which the Advisor has discretion to acquire and dispose of Investments for the Company without the prior approval of the Board.

 

Investments. Any investments by the Company or the Operating Partnership in Real Property and Real Estate Related Assets.

 

Joint Ventures. The joint venture or partnership arrangements (other than with the Operating Partnership and including in the form of limited liability companies) in which the Company or any of its subsidiaries is a co-venturer or general partner which are established to acquire Real Properties.

 

Loans. Any indebtedness or obligations in respect of borrowed money or evidenced by bonds, notes, debentures, deeds of trust, letters of credit or similar instruments, including mortgages and mezzanine loans.

 

NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association on May 7, 2007, as may be amended from time to time.

 

NAV. The Company’s net asset value, calculated pursuant to the Valuation Guidelines.

 

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Net Income. For any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Company’s assets.

 

Offering. The public offering of Shares pursuant to a Prospectus.

 

Operating Partnership. Operating Partnership shall have the meaning set forth in the preamble of this Agreement.

 

Operating Partnership Agreement. The Limited Partnership Agreement of Clarion Property Trust Operating Partnership LP, as amended from time to time.

 

Organizational and Offering Expenses. All expenses incurred by or on behalf of the Company in connection with and in preparing the Company for registration of, and subsequently offering and distributing to the public, its Shares, whether incurred before or after the date of this Agreement, which may include but are not limited to: total underwriting and brokerage discounts and commissions including fees of the underwriters’ attorneys; expenses for printing, engraving and mailing; salaries of employees while engaged in sales activity; telephone and other telecommunications costs; all advertising and marketing expenses (including the costs related to investor and broker-dealer sales meetings); charges of transfer agents, registrars, trustees, escrow holders, depositories and experts; and fees, expenses and taxes related to the filing, registration and qualification of the sale of the Shares under federal and state laws, including accountants’ and attorneys’ fees and expenses.

 

Participating Broker-Dealers. Broker-dealers who are members of Financial Industry Regulatory Authority, Inc., or that are exempt from broker-dealer registration, and who, in either case, have executed participating broker-dealer or other agreements with the Dealer Manager to sell Shares in an Offering.

 

Performance Component. The variable component of the Advisory Fee as described in Section 10(b).

 

Person. An individual, corporation, partnership, trust, joint venture, limited liability company or other entity.

 

Primary Offering. The portion of an Offering other than the Shares offered pursuant to the Company’s distribution reinvestment plan.

 

Priority Return Percentage. Priority Return Percentage has the meaning set forth in Section 10(c).

 

Prospectus. A “Prospectus” under Section 2(10) of 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 securities to the public.

 

Real Estate Related Assets. Any investments by the Company or the Operating Partnership in (i) mortgage, mezzanine, bridge and other loans on Real Property, (ii) equity securities such as common stocks, preferred stocks and convertible securities of public or private real estate companies, and (iii) debt securities such as collateralized mortgage backed securities, commercial mortgages and other debt securities.

 

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Real Property. Real property owned from time to time by the Company, the Operating Partnership or a subsidiary thereof, either directly or through Joint Ventures, which consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only or (iv) such investments the Board and the Advisor mutually designate as Real Property to the extent such investments could be classified as Real Property.

 

Registration Statement. That certain registration statement on Form S-11, as amended, of the Company filed with the Securities and Exchange Commission related to the registration of the Shares for the Company’s initial Offering.

 

REIT. A “real estate investment trust” under Sections 856 through 860 of the Code or as may be amended.

 

Related Party. With respect to any Person, any other Person whose ownership of Shares would be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).

 

Securities Act. The Securities Act of 1933, as amended.

 

Selling Commission. That percentage of Gross Proceeds from the sale of Class A Shares in the Primary Offering payable to the Dealer Manager and reallowable to Participating Broker-Dealers with respect to Class A Shares sold by them as described in the Company’s Prospectus.

 

Shares. The Class A shares and Class W Shares.

 

Stockholders. The Class A Stockholders and Class W Stockholders.

 

Sub-Advisor. Sub-Advisor and Sub-Advisors shall have the meaning set forth in Section 5.

 

Termination Date. The date of termination of this Agreement or expiration of this Agreement in the event this Agreement is not renewed for an additional term.

 

Total Operating Expenses. All costs and expenses paid or incurred by the Company, as determined under GAAP, that are in any way related to the operation of the Company or its business, including the Advisory Fee, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer and registration of securities, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines; (vi) acquisition fees and Acquisition Expenses, (vii) real estate commissions on the sale of Real Property, and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgages or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property). The definition of “Total Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as Total Operating Expenses under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as part of Total Operating Expenses for purposes hereof.

 

2%/25% Guidelines. 2%/25% Guidelines shall have the meaning set forth in Section 13.

 

Valuation Guidelines. The valuation guidelines adopted by the Board, as amended from time to time.

 

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2.             APPOINTMENT. The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

 

3.             DUTIES OF THE ADVISOR.  The Advisor undertakes to use its commercially reasonable efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide the Company and the Operating Partnership with a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. In performance of this undertaking, subject to the supervision of the Board and consistent with the provisions of the Articles of Incorporation and Bylaws and the Operating Partnership Agreement, the Advisor shall, either directly or by engaging an Affiliate or a third party:

 

(a)       serve as the Company’s and the Operating Partnership’s investment and financial advisor and provide research and economic and statistical data in connection with the Company’s and the Operating Partnership’s Investments and investment policies;

 

(b)       provide the daily management for the Company and the Operating Partnership and perform and supervise the various administrative functions reasonably necessary for the management of the Company and the Operating Partnership, including the collection of revenues and the payment of the Company’s and the Operating Partnership’s debts and obligations; maintenance of appropriate computer services to perform such administrative functions; maintaining the Company’s and the Operating Partnership’s books and records; and organizing meetings of the Board;

 

(c)       determine the proper allocation of the Company’s and the Operating Partnership’s Investments between (i) Real Property, (ii) Real Estate Related Assets, and (iii) cash and cash equivalents and other short-term investments;

 

(d)       consult with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s financial, investment, valuation and other policies; 

 

(e)       subject to the provisions of Section 4 hereof, (i) to the extent within the Advisor’s authority as set forth in the Investment Guidelines, identify, analyze and complete acquisitions and dispositions of Investments; (ii) to the extent outside the Advisor’s authority as set forth in the Investment Guidelines, identify, analyze and recommend acquisitions and dispositions of Investments to the Board and complete such transactions on behalf of the Company and the Operating Partnership in accordance with the direction of the Board; (iii) structure and negotiate the terms and conditions of transactions pursuant to which acquisitions and dispositions of Investments will be made; (iv) arrange for financing and refinancing and make other changes in the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with, Investments; (v) enter into leases and service contracts for Investments and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Investments; (vi) actively oversee and manage Investments for purposes of meeting the Company’s investment objectives; (vii) select Joint Venture partners, structure corresponding agreements and oversee and monitor these relationships; (viii) oversee Affiliated and non-Affiliated property managers who perform services for the Company or the Operating Partnership; (ix) oversee Affiliated and non-Affiliated Persons with whom the Advisor contracts to perform certain of the services required to be performed under this Agreement; and (x) manage accounting and other record-keeping functions for the Company and the Operating Partnership;

 

6

 

(f)        arrange and secure on behalf of the Company and the Operating Partnership with banks or lenders for Loans to be made to the Company and the Operating Partnership, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company or the Operating Partnership;

 

(g)       monitor the operating performance of the Investments and provide periodic reports with respect thereto to the Board, including comparative information with respect to such operating performance and budgeted or projected operating results;

 

(h)       from time to time, or at any time reasonably requested by the Directors, make reports to the Directors of its performance of services to the Company and the Operating Partnership under this Agreement, including reports with respect to potential conflicts of interest involving the Advisor or any of its Affiliates;

 

(i)        calculate, at the end of each Business Day, the Class A NAV and Class W NAV as provided in the Valuation Guidelines, and in connection therewith, obtain appraisals performed by an Independent Valuation Advisor concerning the value of the Real Properties;

 

(j)        deliver to, or maintain on behalf of, the Company copies of all appraisals obtained in connection with the investments in any Real Property;

 

(k)       provide the Company and the Operating Partnership with all necessary cash management services;

 

(l)        arrange, negotiate, coordinate and manage operations of any Joint Venture interests held by the Company or the Operating Partnership and conduct all matters with any Joint Venture partners;

 

(m)      communicate on the Company’s or the Operating Partnership’s behalf with the respective holders of any of the Company’s or the Operating Partnership’s equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies and to maintain effective relations with such holders;

 

(n)       evaluate and recommend to the Board hedging strategies and modifications thereto in effect and cause the Company to engage in overall hedging strategies consistent with the Company’s status as a REIT and with the Company’s investment policies approved by the Board;

 

(o)       advise the Company regarding the maintenance of the Company’s exemption from the Investment Company Act and monitor compliance with the requirements for maintaining an exemption from such act;

 

(p)       advise the Company regarding the maintenance of the Company’s status as a REIT and monitor compliance with the various REIT qualification tests and other rules set out in the Code and the regulations promulgated thereunder;

 

7

 

(q)       invest or reinvest any money of the Company or the Operating Partnership (including investing in short-term investments pending investment in long-term Investments, payment of fees, costs and expenses, or payments of distributions to the Stockholders and the Operating Partnership’s partners), and advise the Company and the Operating Partnership as to the Company’s or the Operating Partnership’s respective capital structure and capital raising;

 

(r)        investigate, select, and, on behalf of the Company and the Operating Partnership, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, real estate management companies, real estate operating companies, securities investment advisors, mortgagors, and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including, but not limited to, entering into contracts in the name of the Company and the Operating Partnership with any of the foregoing;

 

(s)       cause the Company and the Operating Partnership to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures, compliance procedures and testing systems with respect to financial reporting obligations and compliance with the REIT provisions of the Code and to conduct compliance reviews thereto, as required;

 

(t)        cause the Company and the Operating Partnership to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

 

(u)       assist the Company in maintaining the registration of the Shares under federal and state securities laws and complying with all federal, state and local regulatory requirements applicable to the Company in respect of the Offering and the Company’s business activities (including the Sarbanes-Oxley Act of 2002, as amended), including preparing or causing to be prepared all supplements to the Prospectus, post-effective amendments to the registration statement for any Offering and financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Securities Act and the Securities Exchange Act of 1934, as amended;

 

(v)       take all necessary actions to enable the Company and the Operating Partnership to make required tax filings and reports, including soliciting Stockholders for required information to the extent provided by the REIT provisions of the Code;

 

(w)      handle and resolve all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company and the Operating Partnership may be involved or to which the Company and the Operating Partnership may be subject, arising out of the Company’s or the Operating Partnership’s day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board;

 

(x)        use commercially reasonable efforts to cause expenses incurred by or on behalf of the Company and the Operating Partnership to be reasonable or customary and within any budgeted parameters or expense guidelines set by the Board from time to time;

 

(y)       supervise one or more Independent Valuation Advisors and, if and when necessary, recommend to the Board its replacement;

 

8

 

(z)        perform such other services as may be required from time to time for the management and other activities relating to the Company’s and the Operating Partnership’s respective business and assets as the Board shall reasonably request or the Advisor shall deem appropriate under the particular circumstances; and

 

(aa)     use commercially reasonable efforts to cause the Company and the Operating Partnership to comply with all applicable laws.

 

4.             AUTHORITY OF ADVISOR.

 

(a)           Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 8), and subject to the continuing and exclusive authority of the Board over the management of the Company, the Board (by virtue of its approval of this Agreement and authorization of the execution hereof by the officers of the Company) hereby delegates to the Advisor the authority to take, or cause to be taken, any and all actions and to execute and deliver any and all agreements, certificates, assignments, instruments or other documents and to do any and all things that, in the judgment of the Advisor, may be necessary or advisable in connection with the Advisor’s duties described in Section 3, including the making of any Investment that fits within the Company’s investment objectives, strategy and guidelines, policies and limitations as described in the Company’s Prospectus and within the discretionary limits and authority as granted to the Advisor from time to time by the Board.

 

(b)           Notwithstanding the foregoing, any investment in an Investment that does not fit within the Investment Guidelines will require the prior approval of the Board, any particular Directors specified by the Board or any committee of the Board, as the case may be.

 

(c)           If a transaction requires approval by the Directors, the Advisor will deliver to the Directors all documents and other information required by them to properly evaluate the proposed transaction.

 

(d)           The prior approval of a majority of the Independent Directors not otherwise interested in the transaction and a majority of the Directors not otherwise interested in the transaction will be required for each transaction to which the Advisor or its Affiliates is a party.

 

(e)           The Board may, at any time upon the giving of notice to the Advisor, amend the Investment Guidelines or modify or revoke the authority set forth in this Section 4; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company or the Operating Partnership prior to the date of receipt by the Advisor of such notification.

 

5.             SUB-ADVISORS. The Advisor is hereby authorized to enter into one or more sub-advisory agreements with other investment advisors, including any Affiliate of the Advisor (each, a “Sub-Advisor”) pursuant to which the Advisor may obtain the services of the Sub-Advisor(s) to assist the Advisor in fulfilling any of its responsibilities hereunder. Specifically, the Advisor may retain a Sub-Advisor to recommend specific real properties, securities or other investments based upon the Company’s investment objectives, policies, guidelines and restrictions, and work, along with the Advisor, in sourcing, structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Company, subject to the oversight of the Advisor and the Board.

 

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(a)           The Advisor and not the Company shall be responsible for any compensation payable to any Sub-Advisor. Notwithstanding the foregoing, the Company shall reimburse the Advisor for any expenses properly incurred by the Sub-Advisor, to the extent such expenses would be reimbursable if incurred by the Advisor pursuant to the terms of Section 11 hereof, in order for the Advisor to timely reimburse the Sub-Advisor for such out-of-pocket costs.

 

(b)           Any sub-advisory agreement entered into by the Advisor shall be in accordance with the requirements of the Articles of Incorporation and other applicable federal and state law.

 

6.             BANK ACCOUNTS. The Advisor may establish and maintain one or more bank accounts in the name of the Company and the Operating Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Directors may approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Directors and to the auditors of the Company, as applicable.

 

7.             RECORDS; ACCESS. The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company and the Operating Partnership.

 

8.             LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company or its Shares, or otherwise not be permitted by the Articles of Incorporation or Bylaws of the Company, except if such action shall be ordered by the Directors, in which case the Advisor shall notify promptly the Directors of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Directors. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Directors so given. Notwithstanding the foregoing, the Advisor, its directors, officers, employees and members, and partners, directors, officers, members and stockholders of the Advisor’s Affiliates shall not be liable to the Company or to the Directors or Stockholders for any act or omission by the Advisor, its directors, officers, employees, or members, and partners, directors, officers, members or stockholders of the Advisor’s Affiliates taken or omitted to be taken in the performance of their duties under this Agreement except as provided in Section 22 of this Agreement.

 

9.             RELATIONSHIP WITH DIRECTORS. Subject to Section 8 of this Agreement and to restrictions advisable with respect to the qualification of the Company as a REIT, directors, managers, officers and employees of the Advisor or an Affiliate of the Advisor or any corporate parent of an Affiliate, may serve as a Director and as officers of the Company, except that no director, officer or employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the Company for serving as a Director or officer other than (a) reasonable reimbursement for travel and related expenses incurred in attending meetings of the Directors or (b) as otherwise approved by the Board, including a majority of the Independent Directors, and no such Director shall be deemed an Independent Director for purposes of satisfying the Director independence requirement set forth in the Articles of Incorporation.

 

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10.          ADVISORY FEE.

 

(a)           The Advisor is not entitled to acquisition, disposition or financing fees.

 

(b)           The Advisor shall receive the Advisory Fee as compensation for services rendered hereunder. The Advisory Fee will be comprised of two separate components: (1) a fixed component in an amount equal to 1/365th of 0.9% of NAV for each day (the “Fixed Component”) and (2) a performance component (the “Performance Component”) that is paid annually and calculated based on the Annual Total Return allocable to each class of shares of the Company’s common stock.

 

(c)           The Performance Component will not be paid with respect to the Class A Shares or the Class W Shares, each of which is evaluated independently when calculating the Performance Component for any calendar year in which the Annual Total Return allocable to the applicable class expressed as a percentage is less than or equal to 6.0% (the “Priority Return Percentage”). For each class the dollar amount of the Performance Component will equal 25.0% of the difference between (i) the Annual Total Return allocable to Class A Shares or Class W Shares, as applicable and (ii) the amount required to provide Class A Stockholders an Annual Total Return equal to the Priority Return Percentage. In no event will the Performance Component exceed 10.0% of the Annual Total Return allocable to Class A Shares or Class W Shares, as applicable, for any calendar year. In the event Class A NAV per share or Class W NAV per share decreases below $10.00 on any day during the measurement period, subject to adjustment pursuant to any stock dividend, stock split, recapitalization, or other similar change in the capital structure of the Company, any subsequent increase in such NAV per share to $10.00 (or such other adjusted number) shall not be included in the calculation of the Performance Component with respect to that class.  If the Performance Component is payable with respect to Class A Shares or Class W Shares pursuant to this Section 10(c), the Advisor will be entitled to such payment even in the event that the Annual Total Return to Class A Stockholders or Class W Stockholders (or any particular Stockholder) expressed as a percentage on a cumulative basis over any longer or shorter period has been less than the Priority Return Percentage. The Advisor shall not be obligated to return any portion of any Advisory Fee paid based on the Company’s subsequent performance. The Performance Component may be earned in a given period for one or more of the Company’s classes of common stock.

 

(d)           The Advisor shall, on a daily basis, (i) accrue a liability reserve account equal to the amount due for both the Fixed Component and the Performance Component, such accrual to be reflected in the NAV per share calculations for such day; and (ii) calculate the Annual Total Return allocable to Class A Shares and Class W Shares, prorated as of the end of such day and, based on such calculation, adjust the balance of liability reserve accrual to reflect the estimated amount due on account of the Performance Component.

 

(e)           The Advisory Fee will accrue daily and is payable in cash. The Fixed Component is payable monthly in arrears (after the close of business and NAV calculations for the last Business Day for such month), the Performance Component is payable promptly after the audited financial statements for each calendar year become available, provided that if this Agreement or its term expires without renewal prior to December 31 of any calendar year, then the Performance Component for such partial year shall be payable promptly after the Company files its unaudited financial statements on Form 10-Q for the quarter that includes the Termination Date.  The Performance Component shall be payable for each calendar year in which this Agreement is in effect, even if the Agreement is in effect for less than a full calendar year.  In the event this Agreement is terminated or its term expires without renewal, the Advisory Fee will be calculated and due and payable after the calculation of NAV on the Termination Date. If the Advisory Fee is payable with respect to any partial calendar month or calendar year, the Fixed 

 

11

 

Component will be prorated based on the number of days elapsed during any partial calendar month and the Performance Component will be prorated based on the number of days elapsed during and Annual Total Return achieved for the period of such partial calendar year.

 

(f)            In the event the Company or the Operating Partnership commences a liquidation of its Investments during any calendar year, the Company will pay the Advisor its Advisory Fee from the proceeds of the liquidation and the performance component of the Advisory Fee will be calculated at the end of the liquidation period prior to the distribution of the liquidation proceeds to the Stockholders.

 

(g)           In lieu of cash, the Advisor may elect to receive the payment of any of its fees in Shares, which shall be paid as either Class A Shares or Class W Shares as determined by a majority of the Board, including a majority of the Independent Directors.  Any such Shares will be valued at the Company’s NAV per Share applicable to their class on the issue date and will not be eligible for redemption by the Advisor until six months from the issue date.

 

11.          EXPENSES.

 

(a)           As required by the NASAA REIT Guidelines, the cumulative Selling Commissions, Dealer Manager Fees, Distribution Fees and Organizational and Offering Expenses paid by the Company will not exceed 15.0% of Gross Proceeds from the sale of Shares in the Primary Offering.

 

(b)           In addition to the compensation paid to the Advisor pursuant to Section 10 hereof, the Company or the Operating Partnership shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor in connection with the services it provides to the Company and the Operating Partnership pursuant to this Agreement, including, but not limited to:

 

(i)            Organizational and Offering Expenses; provided that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent the Organizational and Offering Expenses, Selling Commissions, Dealer Manager Fees and Distribution Fees borne by the Company exceed 15.0% of the Gross Proceeds raised in the completed Offering;

 

(ii)           Acquisition Expenses incurred in connection with the selection and acquisition of Investments, including such expenses incurred related to assets pursued or considered but not ultimately acquired by the Company, subject to limitations set forth in the Articles of Incorporation;

 

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

 

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

 

(v)           taxes and assessments on income of the Company or Investments, taxes as an expense of doing business and any other taxes otherwise imposed on the Company and its business, assets or income;

 

(vi)          costs associated with insurance required in connection with the business of the Company or by the Board;

 

(vii)         expenses of managing, improving, developing, operating and selling Investments, whether payable to an Affiliate of the Company or a non-affiliated Person;

 

12

 

(viii)        all expenses in connection with payments to the Directors for attending meetings of the Board and Stockholders;

 

(ix)           expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders;

 

(x)            expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Articles of Incorporation or the Bylaws;

 

(xi)           expenses of providing services for and maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;

 

(xii)          administrative service expenses, including but not limited to personnel and related employment costs incurred by the Advisor or its Affiliates in performing the services described in Section 3 hereof, including but not limited to reasonable salaries, bonuses and wages, benefits and overhead of all individuals whose primary job function relates to the Company’s business, provided that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent that such employees perform services for which the Advisor receives a separate fee and provided further that in the event that personnel costs are reimbursed for individuals who serve as executive officers of the Company, the Advisor shall cause the Company to include disclosures of the amount of such costs in its next quarterly or annual report filed with the Securities and Exchange Commission; and

 

(xiii)         audit, accounting and legal fees and other fees for professional services relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Board, the Independent Directors or any committee of the Board.

 

(c)           Expenses incurred by the Advisor on behalf of the Company and the Operating Partnership and payable pursuant to this Section 11 shall be reimbursed no less than monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company and the Operating Partnership and the calculation of the Advisory Fee during each quarter, and shall deliver such statement to the Company and the Operating Partnership within forty-five (45) days after the end of each quarter.

 

(d)           In lieu of cash, the Advisor may elect to receive the reimbursement of any of its expenses in Shares, which shall be paid as either Class A Shares or Class W Shares as determined by a majority of the Board, including a majority of the Independent Directors.  Any such Shares will be valued at the Company’s NAV per Share applicable to their respective class on the issue date and will not be eligible for redemption by the Advisor until six months from the issue date.

 

(e)           Organizational and Offering Expenses incurred by the Advisor prior to the date the Company receives the escrowed offering proceeds from the Company’s escrow agent as set forth in the Registration Statement shall be reimbursed by the Company to the Advisor over 60 months.

 

12.          OTHER SERVICES. Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company and the Operating Partnership other than set forth in Section 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Independent Directors, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.

 

13.          REIMBURSEMENT TO THE ADVISOR. The Company shall not reimburse the Advisor at the end of any fiscal quarter for Total Operating Expenses that in the four consecutive fiscal quarters then ended (the “Expense Year”) exceeded (the “Excess Amount”) the greater of 2.0% of Average Invested Assets or 25.0% of Net Income (the “2%/25% Guidelines”) for such year unless the Independent Directors determine that such excess was justified, based on unusual and nonrecurring 

 

13

 

factors that the Independent Directors deem sufficient. If the Independent Directors do not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. If the Independent Directors determine such excess was justified, then, within sixty (60) days after the end of any fiscal quarter of the Company for which total reimbursed Total Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Independent Directors, shall cause such fact to be disclosed to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the Securities and Exchange Commission within sixty (60) days of such quarter end), together with an explanation of the factors the Independent Directors considered in determining that such excess were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computations shall be determined in accordance with GAAP applied on a consistent basis.

 

14.          OTHER ACTIVITIES OF THE ADVISOR.

 

(a)           Relationship. Nothing herein contained shall prevent the Advisor or any of its Affiliates from engaging in or earning fees from other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, member, partner, employee, or stockholder of the Advisor or its Affiliates to engage in or earn fees from any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association and earn fees for rendering such services. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein, and earn fees for rendering such advice and service. Specifically, it is contemplated that the Company may enter into joint ventures or other similar co-investment arrangements with certain Persons, and pursuant to the agreements governing such joint ventures or arrangements, the Advisor may be engaged to provide advice and service to such Persons, in which case the Advisor will earn fees for rendering such advice and service.

 

(b)           Time Commitment. The Advisor shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to conduct the business and affairs of the Company in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons other than the Company or any of its Affiliates.

 

(c)           Investment Opportunities. The Advisor shall use its commercially reasonable efforts to present to the Company and the Operating Partnership a number of potential investment opportunities appropriate for the portfolio of the Company and the Operating Partnership consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company or the Operating Partnership even if the opportunity is of a character that, if presented to the Company or the Operating Partnership, could be taken by the Company or the Operating Partnership. In the event an investment opportunity is located, the allocation procedure set forth under the caption “Conflicts of Interest — Certain Conflict Resolution Measures — Allocation of Investment Opportunities” in the Prospectus shall govern the allocation of the opportunity among the Company and the Operating Partnership, on the one hand, and Affiliates of the Advisor, on the other hand; provided any changes to the procedure shall be presented in advance and approved by the Board, including a majority of the Independent Directors.

 

15.          RELATIONSHIP OF THE PARTIES. The Company and the Operating Partnership, on the one hand, and the Advisor on the other, are not partners or joint venturers with each other, and 

 

14

 

nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.

 

16.          THE CLARION NAME.  The Advisor and its Affiliates have a proprietary interest in the name “Clarion.” The Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive, royalty-free right and license to use the name “Clarion” during the term of this Agreement. Accordingly, and in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Advisor, cease to conduct business under or use the name “Clarion” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does not contain the name “Clarion” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any of its Affiliates.  At such time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to the word “Clarion.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in Real Property and Real Estate Related Assets) and financial and service organizations having “Clarion” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.

 

17.          TERM OF AGREEMENT. This Agreement shall continue in force for a period of one year from the Effective Date, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties. It is the duty of the Directors to evaluate the performance of the Advisor annually before renewing the Agreement, and each such renewal shall be for a term of no more than one year.

 

18.          TERMINATION BY THE PARTIES. This Agreement may be terminated (i) immediately by the Company or the Operating Partnership for Cause or upon the bankruptcy of the Advisor or upon a material breach of this Agreement by the Advisor; provided, that such material breach is not capable of being cured or has not been cured within sixty (60) days after the giving of notice thereof by the Company or the Operating Partnership to the Advisor; (ii) upon sixty (60) days’ written notice without Cause or penalty by a majority vote of the Independent Directors; or (iii) upon sixty (60) days’ written notice by the Advisor. The provisions of Sections 16 and 20 through 32 survive termination of this Agreement.

 

19.          ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Directors (including a majority of the Independent Directors). The Advisor may assign any rights to receive fees or other payments under this Agreement to any Person without obtaining the approval of the Directors. This Agreement shall not be assigned by the Company or the Operating Partnership without the consent of the Advisor, except in the case of an assignment by the Company or the Operating Partnership to a corporation, limited partnership or other organization which is a successor to all of the assets, rights and obligations of the Company or the Operating Partnership, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company and the Operating Partnership are bound by this Agreement.

 

20.          PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

 

(a)           After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company or the Operating Partnership within thirty (30) days after the effective date of such termination all unpaid reimbursements of expenses 

 

15

 

and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.

 

(b)           The Advisor shall promptly upon termination:

 

(i)            pay over to the Company and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

 

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

 

(iii)          deliver to the Board all assets, including all Investments, and documents of the Company and the Operating Partnership then in the custody of the Advisor; and

 

(iv)          cooperate with the Company and the Operating Partnership to provide an orderly management transition.

 

21.          INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the Operating Partnership shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners and employees (the “Indemnitees,” and each an “Indemnitee”), from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, and to the extent that such indemnification would not be inconsistent with the laws of the State of Maryland, the Articles of Incorporation or the provisions of Section II.G of the NASAA REIT Guidelines.

 

22.          INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless the Company and the Operating Partnership from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud, willful misfeasance, gross negligence or reckless disregard of its duties; provided, however, that the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.

 

23.          NON-SOLICITATION. During the period commencing on the Effective Date and ending one year following the Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or indirectly, (i) solicit or encourage any person to leave the employment or other service of the Advisor or its Affiliates, or (ii) hire, on behalf of the Company or any other person or entity, any person who has left the employment within the one year period following the termination of that person’s employment the Advisor or its Affiliates. During the period commencing on the date hereof through and ending one year following the Termination Date, the Company will not, whether for its own account or for the account of any other Person, intentionally interfere with the relationship of the Advisor or its Affiliates with, or endeavor to entice away from the Advisor or its Affiliates, any person who during the term of the Agreement is, or during the preceding one-year period, was a tenant, co-investor, co-developer, joint venturer or other customer of the Advisor or its Affiliates.

 

16

 

24.          MISCELLANEOUS.

 

(a)           Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand, by courier or overnight carrier or by registered or certified mail to the addresses set forth herein:

 

	
To the Company:
  	
Clarion Property Trust Inc.
 230 Park Avenue
 New York, NY 10169
  
	
 
  	
Attention: 
  	
Edward L. Carey, Co-President
  
	
 
  	
 
  	
Douglas L. DuMond, Co-President
  
	
 
  	
 
  	
 
  
	
To the Operating Partnership:
  	
Clarion Property Trust Operating Partnership LP
 230 Park Avenue
 New York, NY 10169
  
	
 
  	
Attention: 
  	
Edward L. Carey, Co-President, Clarion
  
	
 
  	
 
  	
Property Trust Inc.
  
	
 
  	
 
  	
Douglas L. DuMond, Co-President,
  
	
 
  	
 
  	
Clarion Property Trust Inc.
  
	
 
  	
 
  	
 
  
	
To the Advisor:
  	
CPT Advisors LLC
 230 Park Avenue
 New York, NY 10169
  
	
 
  	
Attention: 
  	
Edward L. Carey, Co-President
  
	
 
  	
 
  	
Douglas L. DuMond, Co-President
  

 

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

 

(b)           Modification.  This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.

 

(c)           Severability.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

 

(d)           Governing Law; Exclusive Jurisdiction; Jury Trial.  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York without regard to the conflicts-of-law principles that would require the application of any other law. The parties hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in Borough of Manhattan, New York for purposes of any suit, action or other proceeding arising from this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. Each of the parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

(e)           Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

 

17

 

(f)            Indulgences, Not Waivers.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

(g)           Gender.  Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

 

(h)           Titles Not to Affect Interpretation.  The titles of Sections and Subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

 

(i)            Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

[Remainder of page intentionally left blank]

 

18

 

IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the date and year first above written.

 

	
 
  	
Clarion Property Trust Inc.
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/ DOUGLAS L. DUMOND
  
	
 
  	
Name:
  	
Douglas L. DuMond
  
	
 
  	
Title:
  	
Co-President
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
Clarion Property Trust Operating Partnership LP
  
	
 
  	
 
  
	
 
  	
By:
  	
Clarion Property Trust Inc.,
  
	
 
  	
 
  	
Its General Partner
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
/s/ DOUGLAS L. DUMOND
  
	
 
  	
 
  	
Name:
  	
Douglas L. DuMond
  
	
 
  	
 
  	
Title:
  	
Co-President
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
CPT Advisors LLC
  
	
 
  	
 
  
	
 
  	
By:
  	
ING Clarion Partners LLC,
  
	
 
  	
 
  	
Its member
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
/s/ EDWARD L. CAREY
  
	
 
  	
 
  	
Name:
  	
Edward L. Carey
  
	
 
  	
 
  	
Title:
  	
Co-PresidentExhibit 10.2

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT (the “Agreement”) is made and entered into as of the 22nd day of October, 2010 (“Effective Date”), by and among Clarion Property Trust Inc. (the “Company”), ING Investments Distributor, LLC (the “Dealer Manager”), and BNY Mellon Investment Servicing (US) Inc., as escrow agent (the “Escrow Agent” or “BNYM”).

 

RECITALS

 

WHEREAS, the Company proposes to offer for sale (the “Initial Offering”), on a continuing basis, up to $2,250,000,000 in shares of the Company’s common stock, par value $0.01 per share, some of which will be designated as Class A and some of which will be designated as Class W (collectively the “Shares”), pursuant to the terms of the prospectus (the “Prospectus”) contained in the Company’s Registration Statement on Form S-11, filed with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended, and dated February 8, 2010, as it may be amended from time to time (“Registration Statement”);

 

WHEREAS, the Dealer Manager, a registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”), has agreed to serve as the dealer manager for the Initial Offering and will offer the Shares through other registered broker-dealers that are members of FINRA (the “Dealers”);

 

WHEREAS, it is anticipated that investors submitting orders for the purchase of Shares (“Investors”) will provide the Dealer Manager with payments for such Shares (“Share Payments”), which purchase orders will be contingent upon (i) their respective acceptances by the Company; (ii) the Company’s acceptance of purchases aggregating at least $50,000,000 from investors (the “Minimum Offering Amount”) before the date on which the minimum offering period expires (the “Minimum Offering Termination Date”), which is 180 days following the first date on which the Shares are offered for sale to the public (the “Initial Offering Date”); and (iii) a determination by the Company’s board of directors that it is in the best interest of the stockholders of the Company to cause the proceeds to be released to the Company so that it may commence operations before the Minimum Offering Termination Date;

 

WHEREAS, the Company and the Dealer Manager desire to deposit Share Payments with the Escrow Agent, to be held for the benefit of Purchasers (as defined herein) and the Company until such time as purchases for the Minimum Offering Amount have been deposited into escrow or otherwise in accordance with the terms of this Agreement;

 

WHEREAS, the Escrow Agent has agreed to receive and hold in escrow all Share Payments in accordance with this Agreement; and

 

WHEREAS, the Escrow Agent is willing to accept appointment as the escrow agent for only the expressed duties, terms and conditions outlined herein.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.                                      Appointment of Escrow Agent.  The Company and the Dealer Manager hereby appoint the Escrow Agent to serve as escrow agent, and the Escrow Agent hereby accepts such appointment, each in accordance with the terms of this Agreement. The Company and the Dealer Manager hereby acknowledge that the status of the Escrow Agent is that of agent only for the limited purposes set forth herein, and hereby agree that they will not represent (i) that the Escrow Agent has investigated the desirability or advisability of investment in the Shares or has approved, endorsed or passed upon the merits of the investment therein, or (ii) that the Escrow Agent serves in any other capacity, except as 

 

 

transfer agent in the event the Company and BNYM enter into an agreement providing for BNYM to perform transfer agency and related shareholder services to the Company. The Company and the Dealer Manager further agree that the name of the Escrow Agent shall not be used in any manner in connection with the offer or sale of the Shares other than to state that the Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth herein and, if applicable, to serve as transfer agent under the terms of the applicable transfer agency services agreement.  The Escrow Agent acknowledges and agrees that the Consolidated DDA Account, the Escrow (Eligible) Account, and the Escrow (Non-Eligible) Account (each as defined at Exhibit B) (collectively, the “Accounts”), shall at all times be accounts in a commercial banking institution as described in Section 7 below.

 

2.                                      Proceeds.

 

(a)                                 Until such time as the Escrow Agent receives the Disbursement Instruction (as defined below):

 

(i)                                     Escrow Agent shall accept for deposit into the Consolidated DDA Account, on behalf of a particular Investor, “Conforming Instruments”, which are hereby defined to be personal checks of that Investor (i) payable to the order of “BNY Mellon Investment Servicing (US) Inc., as escrow agent for Clarion Property Trust Inc.,” or a recognizable contraction or abbreviation thereof reasonably acceptable to the Escrow Agent, (ii) which have been delivered to Escrow Agent by the Company’s transfer agent (the “Transfer Agent”) (iii) with instructions of the Transfer Agent to deposit such personal check into the Consolidated DDA Account; and

 

(ii)                              Escrow Agent shall accept for deposit into the Consolidated DDA Account “Conforming Wire Payments”, which are hereby defined to be funds sent by wire transfer (i) with respect to which the Escrow Agent has been notified in advance by the Transfer Agent to accept, and (ii) that have been transmitted pursuant to wire instructions that are in the form set forth on Exhibit A.

 

(b)                                 Escrow Agent shall not be obligated to accept for deposit into the Consolidated DDA Account any Share Payment which is not a Conforming Instrument or a Conforming Wire Payment.  In the event Escrow Agent receives in connection with the Initial Offering personal checks other than a Conforming Instrument or other negotiable instruments or wire transfers other than a Conforming Wire Payment, Escrow Agent may take any appropriate commercially reasonable action, including (i) delivering any instrument which is not a Conforming Instrument to the Transfer Agent, and (ii) refusing acceptance of or returning to the sending institution any wire transfer which is not a Conforming Wire Payment.

 

(c)                                  Following its receipt of the Disbursement Instruction and on and after the Minimum Offering Termination Date, and notwithstanding any other provision of this Agreement: Escrow Agent will have no obligation to accept any Share Payment for deposit into the Consolidated DDA Account or for any other reason and the Escrow Agent’s only obligation with respect to any Share Payment received after he Disbursement Instruction has been received will be to notify the Transfer Agent of such and (i) deliver it to the Transfer Agent in the case of personal checks or other negotiable instruments, and (ii) refuse acceptance or return it to the sending institution in the case of wire transfers.

 

(d)                             By 5:00 PM (Eastern Time) of the business day following the business day the Escrow Agent receives a Conforming Instrument or Conforming Wire Payment (collectively, “Conforming Payments”) the Escrow Agent shall deposit the Conforming Payment into the Consolidated DDA Account.  Investors with respect to whom the Escrow Agent has deposited one or more Conforming Payments into the Consolidated DDA Account are referred to herein as “Purchasers”.

 

(e)                                  By 5:00 PM (Eastern Time) of the business day following the business day the Escrow Agent has deposited a particular Conforming Payment into the Consolidated DDA Account on behalf of a person who is eligible under Federal banking law and Regulation D (“Regulation D”) of the Board of Governors 

 

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of the Federal Reserve System to hold a NOW account, the Escrow Agent shall transfer amounts corresponding to such Conforming Payment into the Escrow (Eligible) Account (as defined in Schedule B). By 5:00 PM (Eastern Time) of the business day following the business day the Escrow Agent has deposited a particular Conforming Payment into the Consolidated DDA Account on behalf of a person who is not eligible under Federal banking laws and Regulation D to hold a NOW account, the Escrow Agent shall transfer amounts corresponding to such Conforming Payment into the Escrow (Non-Eligible) Account.  Notwithstanding the foregoing, in the event a Conforming Payment deposited into the Consolidated DDA Account is subject to a funds availability restriction of the Depository Bank (as defined in Exhibit B) greater than one day, the Escrow Agent shall instead be obligated to transfer the funds represented by such Conforming Payment to the Escrow (Non-Eligible) Account or the Escrow (Eligible) Account, as appropriate, in accordance with the foregoing, by 5:00 PM (Eastern Time) of the business day the funds availability restriction expires.

 

(f)                                   All Conforming Payments deposited into the Consolidated DDA Account and transferred to the “Escrow Accounts” (which are hereby defined to mean, collectively, the Escrow (Non-Eligible) Account and the Escrow (Eligible) Account, whether such term is used in the singular or plural form), shall be considered the property of the respective Purchasers and shall be held for the benefit of such Purchasers and shall not be (i) commingled with the monies or become an asset of the Company, or (ii) subject to any liens or charges by the Company or the Escrow Agent, or judgments or creditors’ claims against the Company, until released to the Company pursuant to the Disbursement Instructions.

 

(g)                                  In the event that any Payment Instrument or Wire Transfer deposited in the Consolidated DDA Account is subsequently returned or reversed as uncollectible (“Uncollectible Amounts”) after the funds represented thereby have been released by the Escrow Agent pursuant to this Agreement, the Dealer Manager or the Company shall, upon the request of the Escrow Agent, promptly reimburse the Escrow Agent the full amount of the Payment Instrument or Wire Transfer and any and all costs incurred in connection with the uncollectability of funds, and the Escrow Agent shall deliver any such uncollectible Payment Instrument to the party from whom the Escrow Agent has requested reimbursement pursuant to this provision. Company and Dealer Manager shall be jointly and severally liable to Escrow Agent for the foregoing payment obligation.

 

(h)                                 If the Escrow Agent receives a request for a full or partial refund from any Purchaser which the Escrow Agent determines to be in good order in accordance with applicable industry standards and legal requirements (respectively, a “Full Refund Request” and a “Partial Refund Request”, and collectively, “Refund Requests”) prior to receiving the Disbursement Instruction, the Escrow Agent shall notify the Dealer Manager of the Refund Request and return to the Purchaser:

 

(i)                                     if a Partial Refund Request, the amount of the requested refund, without deduction for escrow expenses, or

 

(ii)                                  if a Full Refund Request: (A) the aggregate amount of all Conforming Payments made by the Purchaser, together with all Allocable Interest (as defined in Section 4(c) below), or (B) at the option of the Escrow Agent, if all Conforming Payments were made with Payment Instruments and the relevant Payment Instruments have not been tendered for deposit into the Consolidated DDA Account, the relevant Payment Instruments.

 

The Escrow Agent shall have no liability with respect to a Refund Request it receives after it receives the Disbursement Instruction and its sole duty with respect to such a Refund Request shall be to deliver it to the Transfer Agent.

 

3.             Commencement Date of Services and Fees. The Escrow Agent shall become obligated to perform the services described in this Agreement, and shall become entitled to the fees provided for herein for such services, only at such date and time as the SEC declares the Registration Statement effective and the Company commences taking purchase orders.

 

4.                                      Disbursement of Proceeds.

 

(a)                                 On or about 5:00 PM (Eastern Time) of the Minimum Offering Termination Date (or, if not a business day, the next business day), and prior thereto on a weekly basis or as otherwise reasonably requested by Company, the Escrow Agent shall notify the Company of the aggregate amount of 

 

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Conforming Payments the Escrow Agent has received, adjusted for any Refund Requests, Uncollected Amounts and Rejection Notifications (as defined in Section 4(e) below) (the “Collected Funds”) as of such time and date or as of the time of the request, as applicable. The notification given by the Escrow Agent pursuant to the foregoing sentence with respect the Minimum Offering Termination Date is referred to herein as the “Termination Date Collected Funds Notice”.  If as of 5:00 PM (Eastern Time) on any business day prior to the Minimum Offering Termination Date the Collected Funds are equal to or greater than the Minimum Offering Amount, the Escrow Agent shall promptly deliver notice to the Company and the Dealer Manager stating the amount of the Collected Funds (the “Minimum Offering Amount Notice”).

 

(b)                                 If after delivering a Minimum Offering Amount Notice or if after delivering a Termination Date Collected Funds Notice indicating Collected Funds equal to or exceeding the Minimum Offering Amount, the Escrow Agent receives a Written Instruction from the Company citing this Section 4(b) and instructing the Escrow Agent to disburse the entire balance in the Escrow Accounts to the Company or its designee (the “Disbursement Instruction”), the Escrow Agent shall, by 5:00 PM (Eastern Time) of the business day following the business day that the Escrow Agent has transferred all amounts to the Escrow (Non-Eligible) Account and the Escrow (Eligible) Account, as appropriate, as required by Section 2(e), transfer the entire balance in the Escrow Accounts to the Transfer Agent along with a list that includes the name of each Purchaser, the number and Class of Shares purchased by such Purchaser, the aggregate Share Payments remitted by such Purchaser, and such Purchaser’s Allocable Interest (defined below).

 

(c)                                  Purchasers shall be entitled to a pro rata share of the aggregate interest earned by balances in the Escrow Accounts (“Interest”), with such pro rata share determined by reference to the amount of Conforming Payments made by each Purchaser and deposited in the Escrow Accounts and the period of time each such amount was held in, as appropriate, the Escrow (Eligible) Account or Escrow (Non-Eligible) Accounts (assuming in all cases a one-day funds availability restriction on Conforming Payments) (“Allocable Interest”).  In the absence of commercially reasonable Written Instructions from the Company directing the Escrow Agent with respect to the methodology for calculating the Allocable Interest of each Purchaser, the Escrow Agent may employ any commercially reasonable methodology for calculating the pro rata share of Allocable Interest of each Purchaser.

 

(d)                                 If the Termination Date Collected Funds Notice indicates an amount of Collected Funds that does not equal or exceed the Minimum Offering Amount, the Escrow Agent shall within a reasonable time following the Minimum Offering Termination Date, but in no event more than fifteen (15) days after the Minimum Offering Termination Date, send to each Purchaser by first-class mail a covering letter furnished by the Company or Dealer Manager and (i) a check in an aggregate amount equal to all Conforming Payments paid by such Purchaser (and not refunded) together with any Allocable Interest, or (ii) at the option of the Escrow Agent, if all Conforming Payments of a Purchaser were made by Conforming Instruments and the relevant Conforming Instruments have not been tendered for deposit into the Consolidated DDA Account, then the relevant Conforming Instruments.  In addition, the Escrow Agent shall deliver to the Company a list that includes the name of each Purchaser, the number and Class of Shares purchased by such Purchaser, the aggregate Share Payments remitted by such Purchaser, and such Purchaser’s Allocable Interest.

 

(e)                                  In the event the Escrow Agent receives written notification from the Company or Dealer Manager that a Purchaser’s purchase order for Shares has been rejected (“Rejection Notification”) prior to its receipt of the Disbursement Instruction, the Escrow Agent shall no later than the fifth (5th) business day following receipt of the Rejection Notification send to the Purchaser by first-class mail a covering letter furnished by the Company or Dealer Manager and (i) a check in an aggregate amount equal to all 

 

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Conforming Payments paid by such Purchaser (and not refunded) together with any Allocable Interest, or (ii) at the option of the Escrow Agent, if all Conforming Payments of the Purchaser were made by Conforming Instruments and the relevant Conforming Instruments have not been deposited into the Consolidated DDA Account, then the relevant Conforming Instruments. The Escrow Agent shall have no duty or liability with respect to a Rejection Notification it receives after it receives the Disbursement Instruction.

 

5.                                      Duties and Liabilities of the Escrow Agent.

 

(a)                                 The duties, responsibilities and obligations of the Escrow Agent are purely ministerial in nature and shall be limited to those expressly set forth herein and no duties, responsibilities, covenants or obligations, fiduciary or otherwise, shall be inferred or implied, against the Escrow Agent by reason of this Agreement. The Escrow Agent shall not be subject to, nor required to comply with, any other agreement between or among the Company or to which the Company is a party, even though reference thereto may be made herein, or to comply with any direction or instruction (other than those expressly contained herein or Written Instructions delivered pursuant to this Agreement and in accordance with applicable requirements) from the Company or the Dealer Manager. The Escrow Agent shall be under no duty to determine whether the Company or the Dealer Manager is complying with requirements of this Agreement or the Prospectus in tendering to the Escrow Agent the Share Payments or in connection with any other matter or action or inaction of any nature.

 

(b)                                 The Escrow Agent shall have the right to perform any of its duties hereunder through its agents, attorneys, custodians or nominees; provided that the Escrow Agent shall at all times have ultimate responsibility for performing its obligations under this Agreement.

 

(c)                                  The Escrow Agent may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request, consent, order or other document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

(d)                                 The Escrow Agent shall not be under any duty or obligation to inquire into and shall not be liable for the validity, authority, truthfulness, accuracy, sufficiency, correctness, genuineness, or lack of any of the foregoing, of any asset deposited with it or of any statement, certificate, notice, request, instruction, direction, document, instrument, consent, order or information which the Escrow Agent reasonably believes to be genuine.

 

(e)                                  The Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified to its satisfaction. The Escrow Agent may consult and hire counsel in respect of any question arising under this Agreement, and the Escrow Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel. The Escrow Agent shall have the right to seek an adjudication in a court of competent jurisdiction as to the respective rights of the parties hereto and shall not be held liable by any party hereto for any delay or the consequences of any delay occasioned by such resort to court.  The expenses associated with such retention of counsel shall be borne by the Company and Dealer Manager, jointly and severally.

 

(f)                                   In the event the Escrow Agent determines that it requires instructions from the Company or Dealer Manager in order for it to perform a service or obligation hereunder in circumstances where the manner of performing the service or obligation is not expressly provided for herein or in the standard operating procedures of the Escrow Agent, the Escrow Agent may require the Company or Dealer Manager, as the case may be, to furnish Written Instructions acceptable to the Escrow Agent in its sole discretion, with such acceptance to be indicated by the signature of an Authorized Person of the Escrow Agent (“Conforming Written Instructions”) and may refrain from acting (or omitting an action) in connection with such a service or obligation until 

 

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receiving such Conforming Written Instruction. Escrow Agent’s obligation to act on Written Instructions is limited to acting on Conforming Written Instructions. The Escrow Agent shall be entitled to assume that any Written Instruction received hereunder is not in any way inconsistent with the provisions of the Company’s charter or other governing instruments or this Agreement or of any vote, resolution or proceeding of the Company’s or Dealer Manager’s Board of Directors, unless and until the Escrow Agent receives Written Instructions to the contrary.

 

(g)                                  Subject to the terms of this Section 5, the Escrow Agent shall be liable to the Company and Dealer Manager (or any person or entity claiming through either) only to the extent the Loss (defined below) to the Company or Dealer Manager is finally adjudicated to have directly resulted from or been caused by the Escrow Agent’s own intentional misconduct, bad faith or gross negligence with respect to its duties under this Agreement.

 

(h)                                 Notwithstanding any other provision of the Agreement, neither party, nor its affiliates nor any of its or their directors, officers, employees, agents or subcontractors shall be liable under any theory of tort, contract, strict liability or other legal or equitable theory for lost profits, for exemplary, punitive, special, incidental, indirect or consequential damages, or for any other damages which are not direct damages regardless of whether such damages were or could have been foreseeable to any extent and regardless of whether any entity has been advised of the possibility of such damages, all and each of which damages is hereby excluded by agreement of the parties. For purposes of clarification: no other provision of this Agreement shall be interpreted to condition, limit, modify, nullify or otherwise prevail in whole or in part over this Section 5(h).  Notwithstanding the foregoing provisions of this Section 5(h), this Section 5(h) shall not in any manner restrict, limit or condition BNYM’s ability to receive payment of fees, charges and reimbursable expenses owed hereunder to BNYM due to services rendered hereunder by BNYM or BNYM’s ability to claim lost fees as damages in any claim for wrongful termination.

 

(i)                                     Notwithstanding any other provision, and for all purposes, of this Agreement: Neither party shall be liable for any Loss (including Loss caused by delays, failure, errors, interruption or loss of data) or breach hereunder occurring directly or indirectly by reason of any event or circumstance, whether foreseeable or unforeseeable, which despite the taking of commercially reasonable measures is beyond its reasonable control (“Event Beyond Reasonable Control”).  Upon the occurrence of an Event Beyond Reasonable Control, the affected party shall be excused from any non-performance caused by the Event Beyond Reasonable Control for so long as (i) the Event Beyond Reasonable Control or circumstances caused by it prevail and such party continues to use commercially reasonable efforts to attempt to perform the obligation so impacted and (ii) the affected party gives prompt notice to the other parties of the occurrence of such Event Beyond Reasonable Control.

 

(j)                                    No party may assert a cause of action against the Escrow Agent or any of its affiliates that allegedly occurred more than eighteen (18) months immediately prior to the filing of the suit (or, if applicable, commencement of arbitration proceedings) alleging such cause of action.

 

(k)                                 The Company will provide such information and documentation as the Escrow Agent may reasonably request in connection with the services provided by the Escrow Agent under this Agreement.

 

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(l)                                     Except as expressly provided in this Agreement, the Escrow Agent hereby disclaims all representations and warranties, express or implied, made to the Company and the Dealer Manager or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or goods provided incidental to services provided under this Agreement.  The Escrow Agent disclaims any warranty of title or non-infringement except as otherwise set forth in this Agreement.

 

(m)                             Notwithstanding any other provision in this Agreement, the Company and the Dealer Manager each agrees not to amend or adopt any governing documents, amend or adopt any policies or amend the terms of the Initial Offering or Prospectus which would materially affect the obligations or responsibilities of the Escrow Agent hereunder without the prior written approval of the Escrow Agent, which approval shall not be unreasonably withheld or delayed.

 

(n)                                 The parties agree that the Escrow Agent has no role in the preparation of the documents used in the Initial Offering (the “Offering Documents”), has not reviewed any such documents and makes no representations or warranties with respect to the information contained therein or omitted therefrom. The Escrow Agent agrees that it may be named in the Prospectus and other Offering Documents, to the extent necessary to describe this Agreement and the duties of the Escrow Agent herein, and for no other purpose. The Escrow Agent shall have no obligation, duty or liability with respect to compliance with any federal or state securities, disclosure or tax laws concerning the Offering Documents or the issuance, offering or sale of the Shares. The Escrow Agent shall have no duty or obligation to monitor the application and use of Collected Funds once transferred to the Company, that being the sole obligation and responsibility of the Company.

 

(o)           Notwithstanding any other provision of this Agreement, BNYM shall have no duty or obligation to act in accordance with a Transaction Restriction (as defined immediately below) unless and until the Company and BNYM have mutually agreed to and executed Written Instructions in accordance with Section 5(f) which govern all actions BNYM is expected to take or not take in connection with the Transaction Restriction. “Transaction Restriction” is hereby defined to mean any provision in the Prospectus which provides for the delay, elimination, restriction, limitation, conditioning, suspension or other adverse impact on the ability of an individual shareholder, groups or categories of shareholders or all shareholders to purchase, transfer or redeem Shares solely upon presentation, as the case may be, of a purchase order satisfying all conditions imposed by this Agreement or a transfer or redemption instruction satisfying all conditions imposed by this Agreement, or any provision of the Company’s charter or any other Company governance document or an action or resolution of the Company’s Board of Directors having the same or similar effect, and includes by way of illustration and not limitation any of the foregoing relative to an excessive trading policy, a minimum holding period, a minimum investment period, a share redemption plan, a redemption allocation or proration policy, a cap or limitation on individual or aggregate redemptions under any circumstances or over any period of time, liquidity requirements, a funds availability policy or suitability standards.

 

(p)                                 The quoted terms below have the indicated meanings:

 

(i)                                     “Authorized Person” means those officers of the Company or Dealer Manager, as the case may be, specified to be Authorized Persons for purposes of this Agreement in a written instrument executed by the Company or the Dealer Manager, as the case may be, and delivered to the Escrow Agent, as such written instrument may be amended from time to time by an Authorized Person of the Company or Dealer Manager, as appropriate, and each such person is duly authorized by, respectively, the Company or the Dealer Manager to give Written Instructions on behalf of, respectively, the Company or the Dealer Manager.  An Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by an Authorized Person.

 

(ii)                                  “BNYM Authorized Person” means those employees of the Escrow Agent specified to be Authorized Persons for purposes of this Agreement in a written instrument executed by the Escrow Agent and delivered to the Company and the Dealer Manager, as such written instrument may be amended from time to time by an Authorized Person of the Escrow Agent, and each such person is duly authorized by the Escrow Agent to give Written Instructions on behalf of the Escrow Agent. A BNYM Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by a BNYM Authorized Person.

 

(iii)                               “Loss” means any loss, claim, suit, controversy, breach or damage of any nature whatsoever (including but not limited to those arising out of or related to this Agreement) and regardless of the form of action or legal theory.

 

(iv)                              “Written Instructions” means:

 

(A)                               written instructions signed by an Authorized Person (or a person reasonably believed by the Escrow Agent to be an Authorized Person), addressed to and received by the Escrow Agent, and delivered by hand, private messenger with signed acknowledgment of receipt, U.S. Postal Service with signed acknowledgment of receipt, or overnight national courier service with signed acknowledgment of receipt; and

 

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(B)                               email sent by an Authorized Person (or a person reasonably believed by the Escrow Agent to be an Authorized Person) to the email address of a BNYM Authorized Person, with a return email from the BNYM Authorized Person acknowledging receipt.

 

6.                                      Escrow Agent Fee. The Escrow Agent shall be entitled to compensation for services provided hereunder in accordance with the fees and charges set forth in the fee letter agreement between the parties dated October 22, 2010, as such fee letter agreement may be amended from time to time, and reimbursement of the reasonable out-of-pocket expenses incurred in connection with such services, which compensation and reimbursement shall be paid by the Company. The foregoing obligation of the Company shall become an obligation of the Dealer Manager with respect to fees and reimbursable expenses that the Company does not pay within 30 days of being invoiced by BNYM. Subject to the provisions of Section 10 hereof, the fee agreed upon for the services rendered hereunder in the aforementioned fee letter agreement is intended as full compensation for the Escrow Agent’s services as contemplated by this Agreement. Any fee, reimbursement for costs and expenses, indemnification for damages incurred by the Escrow Agent or other monies of any sort may be paid out of or chargeable to the income of assets of the Escrow Accounts if such is not paid by the Company or Dealer manager within thirty (30) days of demand by the Escrow Agent, but any partial recovery by the Escrow Agent pursuant to the foregoing sentence shall not be construed as an accord and satisfaction of all amounts that may be owed.

 

7.                                      Investment of Share Payments.

 

(a)                                 The accounts constituting the Escrow Accounts shall be titled in a manner as the parties hereto may agree.

 

(b)                                 All interest earned by funds in the Escrow Accounts shall be retained in the Escrow Accounts until disbursed in accordance with Section 4 or Section 2(f).

 

(c)                                  The Escrow Agent shall have no responsibility or liability for any loss which may result from the deposit of Conforming Payments into and holding of the proceeds of the Conforming Payments and interest in, as appropriate, the Consolidated DDA Account or the Escrow Accounts unless such loss is the result of willful misconduct or gross negligence of the Escrow Agent.

 

(d)                                 The parties recognize and agree that the Escrow Agent will not provide supervision, recommendations or advice relating to the investment of moneys held in the Escrow Accounts.

 

(e)                                  The Escrow Agent shall send statements to the Company on a monthly basis reflecting activity in the Escrow Accounts for the preceding month, provided that no such statement need be rendered for an Account if no activity occurred in the particular Account for such month.

 

8.                                      Tax Reporting.

 

(a)                                 As of the end of each calendar year and to the extent required under the provisions of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”), whether or not such income was disbursed during a such calendar year, the Escrow Agent shall report to the Internal Revenue Service (the “IRS”) all income earned from the investment of any sum held in the Escrow Accounts to the person or entity receiving the interest or other taxable income.

 

(b)                                 The Company shall, upon request of the Escrow Agent after the date hereof, provide the Escrow Agent with certified tax identification numbers by furnishing appropriate IRS forms W-9 or W-8 and other forms and documents that the Escrow Agent may reasonably request. The parties hereto understand that if such tax reporting documentation is not so certified to the Escrow Agent, the Escrow Agent may be required by the Code to withhold a portion of any interest or other income earned on the Collected Funds.

 

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(c)                                  To the extent that the Escrow Agent becomes liable for the payment of any taxes in respect of income derived from the investment of funds held or payments made hereunder, the Escrow Agent shall satisfy such liability to the extent possible from the funds in the Escrow Accounts.

 

9.                                      Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given, (ii) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and written confirmation of receipt is obtained promptly after completion of transmission, (iii) on the day after delivery to the United Parcel Service or similar overnight courier or the Express Mail service maintained by the United States Postal Service and sent via overnight delivery or (iv) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows:

 

If to Company:

 

Clarion Property Trust Inc.

230 Park Avenue, New York, NY 10169

Attention: Michael O’Connor and Amy Boyle

Fax: (212) 883-2700

 

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

 

Alston & Bird LLP

1201 West Peachtree Street

Atlanta, Georgia 30309

Attention:  Rosemarie Thurston

Fax:  (404) 881-7777

 

If to the Dealer Manager:

 

ING Investments Distributor, LLC

7337 E. Doubletree Ranch Road, Scottsdale, AR 85258

Attention: Senior Vice President of Operations

Fax:  (480) 477-2745

 

If to the Escrow Agent:

 

BNY Mellon Investment Servicing (US) Inc.

301 Bellevue Parkway

Wilmington, Delaware 19809

Attention:  President

 

With a copy to:

 

BNY Mellon Investment Servicing (US) Inc.

301 Bellevue Parkway

Wilmington, Delaware 19809

Attention: Senior Counsel — TA & SubAccounting

 

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

 

10.          Indemnification of the Escrow Agent. The Company and the Dealer Manager each hereby agree to jointly and severally indemnify and defend the Escrow Agent and its officers, directors, employees and agents, and hold them harmless, from and against any and all claims, suits, actions, proceedings, damages, losses, liabilities, obligations, costs and reasonable expenses (including attorneys’ fees and court costs, travel costs, reasonable settlement costs and other reasonable out-of-pocket costs related to dispute resolution) which the Escrow Agent may suffer or incur directly or indirectly from or which relate in any way to (i) this Agreement, (ii) any transaction to which this Agreement relates, (iii) for avoidance of doubt: any actions taken or not taken hereunder pursuant to Sections 11, 19 or 21 (except, with respect to Section 21, a removal attributable to a material breach of the Agreement by the Escrow Agent) or the second to last sentence of Section 20 hereunder, (iv) any action taken or omitted to be taken by the Escrow Agent in connection with the provision of services to the Company or pursuant to Written Instructions, and, (v) for the avoidance of doubt: any liability for taxes or any additions for late payment, interest, penalties or other assessments or expenses that may be charged to or incurred by the Escrow Agent under applicable tax laws or tax regulations attributable to the investment of funds held in escrow by the Escrow Agent or disbursements made hereunder; except to the extent any of the foregoing in clauses (i) through (v) is finally adjudicated to have directly resulted from or been caused by the Escrow Agent’s own intentional misconduct, bad faith or gross negligence with respect to its duties under this Agreement. The provisions of this Section 10 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

 

11.          Attachment of Escrow Property; Compliance with Legal Orders. In the event that any property held under escrow hereunder (“Escrow Property”) shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the Escrow Property, the Escrow Agent is hereby expressly authorized, in its sole discretion, to respond as it deems appropriate or to comply with all writs, orders or decrees so entered or issued, or which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction. In the event that the Escrow Agent obeys or complies with any such writ, order or decree, it shall not be liable to the Company or the Dealer Manager or to any other person, firm or corporation, should, by reason of such compliance notwithstanding, such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

 

12.          Successors and Assigns.

 

(a)           Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties hereto and any such attempted assignment without such prior written consent shall be null and void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the heirs, executors, administrators, successors and permitted assigns of the parties hereto,

 

(b)           Notwithstanding the above, any corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor escrow agent under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.

 

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(c)           For purposes of clarification: a change in control of Escrow Agent shall not constitute an assignment under this Section 12.

 

13.          Term.

 

(a)           In the event the SEC has not declared the Registration Statement effective by the date which is the first anniversary of the Effective Date, each of the Company and the Dealer Manager may terminate this Agreement by sending written notice of termination to the other parties to this Agreement specifying the date as of which the Agreement shall terminate, which may not be less than 30 days from the date such notice is delivered to the other parties, whereupon this Agreement shall terminate at 11:59 PM on the date specified in the termination notice.

 

(b)           Unless this Agreement is earlier terminated in accordance with Section 13(a), this Agreement shall remain in effect from the Effective Date until the Escrow Agent has disbursed all funds in the Escrow Accounts in accordance with Section 4 of this Agreement and has performed all responsibilities associated with such disbursement, whereupon this Agreement shall terminate. While the termination of this Agreement may occur in accordance with the foregoing sentence without further action by any party, any party may document the termination of this Agreement by sending written notification of termination to the other parties and the termination shall be effective as of the date cited in the notification, or the date of receipt of the notification if no date is cited, unless a party objects to the notification of termination in which case the Agreement will terminate as of the date and time agreed in writing by the parties. Upon a termination of the Agreement, the Escrow Agent shall thereafter be relieved of all responsibilities, including those relating to the Accounts, except claims which are occasioned by its gross negligence or willful misconduct.

 

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

 

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

 

16.          Amendments; Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other provision, term, covenant, representation or warranty of this Agreement.

 

17.          Entire Agreement; Counterparts. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter of this Agreement and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to the subject matter of this Agreement. This Agreement, and any amendments hereto, may be executed by the parties hereto in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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

 

11

 

19.          Disputes.

 

(a)           In the event of a disagreement among any of the parties to this Agreement, or among them or any other person resulting in adverse claims and demands being made in connection with or from any property in the Accounts, the Escrow Agent shall be entitled to refuse to comply with any such claims or demands as long as such disagreement may continue, and in so refusing, shall make no delivery or other disposition of any property then held by it in the Accounts under this Agreement, and in so doing, the Escrow Agent shall be entitled to continue to refrain from acting until (i) the right of adverse claimants shall have been finally settled by binding arbitration or finally adjudicated in a court assuming and having jurisdiction of the property involved herein or affected hereby or (ii) all differences shall have been adjusted by agreement and the Escrow Agent shall have been notified in writing of such agreement signed by the parties hereto.

 

(b)           In the event of such a dispute, the Escrow Agent shall be entitled, in its discretion and judgment, to tender into the registry or custody of any court of competent jurisdiction subject to the limitations set forth in Section 14 of this Agreement, all money or property in its hands under this Agreement, together with such legal pleadings as the Escrow Agent deems appropriate, and thereupon be discharged from all further duties and liabilities under this Agreement. In the event of any uncertainty as to its duties hereunder, the Escrow Agent may refuse to act under the provisions of this Agreement pending order of a court of competent jurisdiction and the Escrow Agent shall have no liability to the Company, the Dealer Manager, any Dealer or to any other person as a result of such action. The filing of any such legal proceedings shall not deprive the Escrow Agent of its compensation earned under this Agreement.

 

20.          Resignation. The Escrow Agent may resign upon thirty (30) days advance written notice to the Company and the Dealer Manager (a “Resignation Notice”). Such resignation shall become effective on the date specified in a Resignation Notice, which shall be not earlier than thirty (30) days after such Resignation Notice has been given. In the event of any such resignation, a successor escrow agent, which shall be a bank or trust company organized under the laws of the United States of America, shall be appointed by the mutual agreement of the Company and the Dealer Manager. Any such successor escrow agent shall deliver to the Company and the Dealer Manager a written instrument accepting such appointment, and thereupon shall succeed to all the rights and duties of the Escrow Agent hereunder and shall be entitled to receive the Accounts from the Escrow Agent. The Escrow Agent shall promptly pay all funds in the Accounts, including interest thereon, to the successor escrow agent. If a successor escrow agent is not appointed by the Company or the Dealer Manager within the thirty (30) day period following delivery of a Resignation Notice by the Escrow Agent, the Escrow Agent may petition any court of competent jurisdiction to name a successor escrow agent. All costs, expenses and reasonable attorney’s fees the Escrow Agent incurs in connection with such proceeding shall be paid by the Company.

 

21.          Removal. The Escrow Agent may be jointly removed by the Company and the Dealer Manager at any time, by written notice executed by both of them (a “Removal Notice”), which Removal Notice shall become effective on the date specified in such Removal Notice. The removal of the Escrow Agent shall not deprive the Escrow Agent of its compensation earned prior to such removal. In the event of any such removal, a successor escrow agent, which shall be a bank or trust company organized under the laws of the United States of America, shall be appointed by the mutual agreement of the Company and the Dealer Manager. Any such successor escrow agent shall deliver to the Company and the Dealer Manager a written instrument accepting such appointment, and thereupon shall succeed to all the rights and duties of the Escrow Agent hereunder and shall be entitled to receive the Accounts from the Escrow Agent. The Escrow Agent shall promptly pay all funds in the Accounts, including interest thereon, to the successor escrow agent. If a successor escrow agent is not appointed by the Company or the Dealer Manager within the thirty (30) day period following delivery of a Removal Notice, the Escrow

 

12

 

Agent may petition any court of competent jurisdiction to name a successor escrow agent. All costs, expenses and reasonable attorneys fees the Escrow Agent incurs in connection with such proceeding shall be paid by the Company.

 

22.          Maintenance of Records. The Escrow Agent shall maintain accurate records of all transactions hereunder. Promptly after the termination of this Agreement, and as may from time to time be reasonably requested by the Company before such termination, the Escrow Agent shall, at the Company’s sole cost and expense, provide the Company with a copy of such records, certified by the Escrow Agent to be a complete and accurate account of all transactions hereunder. The authorized representatives of the Company and the Dealer Manager shall also have access to the Escrow Agent’s books and records to the extent relating to its duties hereunder, during normal business hours upon reasonable notice to the Escrow Agent, and at the requesting party’s expense.

 

23.          Representatives. Authorized Persons have been duly appointed to act as the representatives of the Company or Dealer Manager, as applicable, hereunder and have full power and authority to execute and deliver any Written Instructions, to amend, modify or waive any provision of this Agreement and to take any and all other actions on behalf of the Company or Dealer Manager, as applicable, under this Agreement, all without further consent or direction from, or notice to, the Company or Dealer Manager, as applicable, or any other party.

 

24.          USA Patriot Act. The Company and Dealer Manager acknowledge that the Escrow Agent may request identifying information in connection with the USA Patriot Act, Pub.L. 107-56 (the “Patriot Act”), and the Company and Dealer Manager agree to provide any such information requested by the Escrow Agent in connection with the Patriot Act or any similar legislation or regulation to which the Escrow Agent is subject, in a timely manner.

 

25.          Illegal Activities. The Escrow Agent shall have the right in its sole discretion to not accept appointment as escrow agent and reject funds and collateral from any party in the event that the Escrow Agent has reason to believe that such funds or collateral violate applicable banking practices or applicable laws or regulations, including, but not limited to, the Patriot Act. In the event of suspicious or illegal activity and pursuant to all applicable laws, regulations and practices, the other parties to this Agreement will assist the Escrow Agent and comply with any reviews, investigations and examinations directed against the deposited funds.

 

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed the day and year first set forth above.

 

	
 
  	
Clarion Property Trust Inc., the Company
  
	
 
  	
 
  	
 
  
	
 
  	
By:
  	
/s/ MICHAEL O’ CONNOR
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Name:
  	
Michael O’ Connor
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Title:
  	
Senior Vice President
  	
 
  
	
 
  	
 
  
	
 
  	
ING Investments Distributor, LLC, as Dealer Manager
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ MARK SPINA
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Name:
  	
Mark Spina
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Title:
  	
Head of Retail Distributor
  	
 
  

 

13

 

	
 
  	
BNY Mellon Investment Servicing (US) Inc., as Escrow Agent
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ SUSAN FRASU
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Name:
  	
Susan Frasu
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Title:
  	
Senior Vice President
  	
 
  

 

14

 

Exhibit A

 

Wire Instructions

 

	
Bank Name:
  	
PNC Bank, National Association
  
	
Bank Address:
  	
Pittsburgh, PA
  
	
ABA Number:
  	
031000053
  
	
Account Number:
  	
8611811781
  
	
Credit to:
  	
[Stockholder’s Name]
  
	
Stockholder A/C#:
  	
 
  

 

 

Exhibit B

 

Bank and Accounts

 

Bank: PNC Bank, National Association (“Depository Bank”) 

 

Accounts:

 

“Consolidated DDA Account” - A non-interest bearing business checking account at the Depository Bank. Balance credits are given by the Depository Bank on balances in the account to offset account fees. FDIC insurance up to the FDIC insurance limit ($250,000 as of the Effective Date) is applicable to this account but it is applicable to this account solely as a single account and it is not applicable separately and individually to each and every owner of a subaccount in this account. This means that this account receives FDIC insurance (up to the FDIC insurance limit) as if owned by a single person and that the FDIC insurance does not apply up to its limit for each and every Purchaser whose Share Payment may be in this account.

 

“Escrow (Non-Eligible) Account” - A non-interest bearing business checking account at the Depository Bank. After the close of business each business day, funds in this account (the “Checking Account”) in excess of $l00,000 are transferred (or “swept”) to an interest-bearing account at the Nassau (Bahamas) branch of the Depository Bank (“Nassau Account”). The Depository Bank periodically sets the rate at which interest is paid. Each morning, principal and interest in the Nassau Account is transferred to the Checking Account. FDIC insurance is applicable to the Checking Account to the same extent as described above for the Consolidated DDA Account. The Nassau Account is not FDIC insured.

 

“Escrow (Eligible) Account” - An interest bearing FDIC-insured (for eligible persons) checking account at the Depository Bank. The Depository Bank periodically sets the rate at which interest is paid. Interest accrues daily and is paid monthly on the last business day of each month. The FDIC insurance applicable to this account is available individually up to the FDIC insurance limit to each Purchaser whose Share Payment may be in this account as of a particular day, subject to all rules of the FDIC regarding FDIC deposit insurance.

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