INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of June 28, 2002, by and among Clarion Income Trust,
a Delaware business trust (the "Trust"), and Clarion Capital, LLC, a registered
investment adviser organized as a limited liability company under the laws of
the State of New York (the "Adviser").
1. DUTIES OF ADVISER. The Trust hereby appoints the Adviser to act as
discretionary investment adviser to the Clarion Total Return Fund (the "Fund"),
a series of the Trust, for the period and on such terms as set forth in this
Agreement. The Fund employs the Adviser to (a) manage the investment and
reinvestment of the assets, xxxxxx and liabilities of the Fund in accordance
with the Fund's investment objectives detailed in the offering memorandum, (b)
continuously review, supervise and administer the investment program of the
Fund, (c) determine the investments to be purchased or sold and the portion of
the Fund's assets to be held uninvested, (d) provide the Fund with records
concerning the Adviser's activities which the Fund is required to maintain, (e)
take all other actions advisable or appropriate relating to the investments and
other assets of the Fund, and (f) render regular reports to the Trust's officers
and Trustees concerning the Adviser's discharge of the foregoing
responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the officers and the Trustees of the Trust, and in compliance
with the objectives, policies and limitations set forth in the Fund's prospectus
and any investment guidelines from time to time furnished to the Adviser by the
Trustees of the Trust and applicable laws and regulations. The Adviser accepts
as a part of its responsibilities, the duty to manage the Fund consistent with
the Fund's intent to qualify annually to be taxed as a regulated investment
company under subchapter M of the Internal Revenue Code of 1986, as amended. The
Adviser accepts such employment and agrees to render the services and to
provide, at its own expense, the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for the
compensation provided herein. The Adviser will only be reimbursed for out of
pocket expenses incurred in managing the Fund and its investments, including,
but not limited to, due diligence, accounting and legal expenses.
2. FUND TRANSACTIONS. The Adviser is authorized to select the brokers
or dealers that will execute the purchases and sales of investments of the Fund
and is directed to use its best efforts to obtain the best available price and
most favorable execution, provided, however, that, subject to policies
established from time to time by the Trustees of the Trust, the Adviser may
effect securities transactions at commission rates (or "xxxx-up" to dealers) in
excess of the minimum commission rates (or "xxxx-up" to dealers) available, if
the Adviser determines in good faith that such amount of commission (or
"xxxx-up" to dealers) is reasonable in relation to the value of the brokerage,
research or other services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the Fund. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this Agreement or
otherwise. The Adviser will promptly communicate to the officers and Trustees of
the
Trust such information relating to portfolio transactions as they may
reasonably request.
The Adviser is authorized to execute all transactions and form all
affiliates and strategic relationships necessary to achieve objectives of the
Fund, as detailed in the offering memorandum.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the
Adviser in quarterly installments an advisory fee calculated by applying the
following annual percentage rate to the Fund's average daily assets for the
quarter: 0.25%. In the absence of a recorded value for the Fund's assets on any
day, the most recent previous recorded value of assets will be used to calculate
the advisory fee.
4. OTHER SERVICES. At the request of the independent Trustees of the
Trust, the Adviser may make available to the Fund office facilities, equipment,
personnel and other services not contemplated in the ordinary course of managing
the Fund at the Fund's expense. Such office facilities, equipment, personnel and
services shall be provided or rendered by the Adviser and billed to the Fund at
the Adviser's cost.
5. REPORTS. The Trust and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. STATUS OF ADVISER. The Adviser has represented to the Trust that it
is a registered investment adviser under the Investment Advisers Act of 1940.
The Trust acknowledges receipt from the Adviser, at least 48 hours prior to
entering into this Agreement, of Part II of the Adviser's Form ADV as filed with
the Securities and Exchange Commission. The services of the Adviser to the Fund
are not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Fund are not impaired in any
material respect thereby.
7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act")), the Adviser shall not be subject to any liability whatsoever to the
Fund, or to any shareholder of the Fund, for any error of judgment, mistake of
law or any other act or omission in the course of, or connected with, rendering
services hereunder including, without limitation, for any losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security on behalf of the portfolio. The Adviser shall be protected with respect
to actions which it takes or forbears from taking in reliance on advice of
unaffiliated agents or counsel prudently selected. The foregoing shall not
constitute a waiver or limitation on any right of any person under Federal or
state securities laws.
8. PERMISSIBLE INTEREST. Subject to and in accordance with the
Agreement and Declaration of Trust of the Trust and the LLC Agreement of the
Adviser, Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Adviser (or any successor thereof) as members, officers,
agents, investors or otherwise; and members, officers, agents, investors or
otherwise of the Adviser (or any successor) are or may be interested in the
Trust as shareholders or otherwise. The effect of any such interrelationships
shall be governed by said Agreement and Declaration of Trust and LLC Agreement
and the provisions of the 1940 Act.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated
as provided herein, shall continue for an initial period of two years and shall
continue in effect year to year thereafter so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or (c) by vote of a majority of the outstanding voting
securities of the Fund; however, if the Shareholders of the Fund fail to approve
the Agreement as provided herein, the Adviser may continue to serve in such
capacity in the manner and to the extent permitted by the 1940 Act and rules
thereunder. This Agreement may be terminated by the Trust at any time, without
the payment of any penalty, by vote of a majority of the entire Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund on 60 days' written notice to the Adviser. This Agreement
may be terminated by the Adviser at any time, without the payment of any
penalty, upon 90 days' written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its assignment. Any
notice under this Agreement shall be given in writing, addressed and delivered
or mailed postpaid, to the other party at the principal office of such party.
As used in this Section 9, the terms "assignment", "interested
persons" and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.
10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those members of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) unless not
required by the 1940 act, rules thereunder or applicable administrative
interpretation, by vote of a majority of the outstanding voting securities of
the Fund.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York, subject to the supremacy of the federal securities laws
governing the terms of this Agreement.
13. NOTICES. Notices to the Trust shall be delivered to:
Xxxxxxxx Xxxxxxxxx
Vice President and Treasurer
Clarion Total Return
c/o Clarion Capital, LLC
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Notices to the Adviser shall be sent to:
Xxxxxx Xxxxxx
President and Chief Executive Officer
Clarion Capital, LLC
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the first date set forth above.
CLARION TOTAL RETURN FUND
By: /s/ Xxxxxxxx Xxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxx
Title: Vice President and Treasurer
CLARION CAPITAL, LLC
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: President and Chief Executive Officer
