INVESTMENT MANAGEMENT AGREEMENT
Exhibit (g)(1)
AGREEMENT, dated September 30, 2003, between ING Clarion Real Estate Income Fund (the
“Trust”), a Delaware statutory trust, and ING Clarion Real Estate Securities, L.P. (the “Advisor”)
a Delaware limited partnership.
WHEREAS, Advisor has agreed to furnish investment advisory services to the Trust, a closed-end
management investment company registered under the Investment Company Act of 1940, as amended (the
“1940 Act”);
WHEREAS, this Agreement has been approved in accordance with the provisions of the 1940 Act,
and the Advisor is willing to furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants herein contained and
other good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by
and between the parties hereto as follows:
1. In General. The Advisor agrees, all as more fully set forth herein, to act as
investment advisor to the Trust with respect to the investment of the Trust’s assets and to
supervise and arrange for the day-to-day operations of the Trust and the purchase of securities for
and the sale of securities held in the investment portfolio of the Trust.
2. Duties and Obligations of the Advisor. Subject to the succeeding provisions of this
section and subject to the direction and control of the Trust’s Board of Trustees, the Advisor
shall (i) act as investment advisor for and supervise and manage the investment and reinvestment of
the Trust’s assets and in connection therewith have complete discretion in purchasing and selling
securities and other assets for the Trust and in voting, exercising consents and exercising all
other rights appertaining to such securities and other assets on behalf of the Trust; (ii)
supervise continuously the investment program of the Trust and the composition of its investment
portfolio; (iii) arrange, subject to the provisions of paragraph 4 hereof, for the purchase and
sale of securities and other assets held in the investment portfolio of the Trust; and (iv) provide
investment research to the Trust. Subject to the requirements of the 1940 Act, the Advisor may
delegate any of the above duties to one or more sub-advisors.
3. Covenants. (a) In the performance of its duties under this Agreement, the Advisor
shall at all times conform to, and act in accordance with, any requirements imposed by: (i) the
provisions of the 1940 Act and the Investment Advisers Act of 1940, as amended, and all applicable
Rules and Regulations of the Securities and Exchange Commission; (ii) any other applicable
provision of law; (iii) the provisions of the Agreement and Declaration of Trust, as amended and
restated, and By-Laws of the Trust, as such documents are amended from time to time; (iv) the
investment objectives and policies of the Trust as set forth in its Registration Statement on Form
N-2; and (v) any policies and determinations of the Board of Trustees of the Trust and
(b) In addition, the Advisor will: (i) place orders either directly with the issuer or with
any broker or dealer. Subject to the other provisions of this paragraph, in placing orders with
brokers and dealers, the Advisor will attempt to obtain the best price and the most favorable
execution of its orders. In placing orders, the Advisor will consider the experience and skill
of the firm’s securities traders as well as the firm’s financial responsibility and administrative
efficiency. Consistent with this obligation, the Advisor may select brokers on the basis of the
research, statistical and pricing services they provide to the Trust and other clients of the
Advisor. Information and research received from such brokers will be in addition to, and not in
lieu of, the services required to be performed by the Advisor hereunder. A commission paid to such
brokers may be higher than that which another qualified broker would have charged for effecting the
same transaction, provided that the Advisor determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of the Advisor to the
Trust and its other clients and that the total commissions paid by the Trust will be reasonable in
relation to the benefits to the Trust over the long-term. In addition, the Advisor is authorized to
take into account the sale of shares of the Trust in allocating purchase and sale orders for
portfolio securities to brokers or dealers (including brokers and dealers that are affiliated with
the Advisor), provided that the Advisor believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified firms. In no instance,
however, will the Trust’s securities be purchased from or sold to the Advisor, or any affiliated
person thereof, except to the extent permitted by the SEC or by applicable law;
(ii) maintain a policy and practice of conducting its investment advisory services
hereunder independently of any commercial banking operations of its affiliates. When the
Advisor makes investment recommendations for the Trust, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities proposed for
purchase or sale for the Trust’s account are customers of the commercial department of its
affiliates; and
(iii) treat confidentially and as proprietary information of the Trust all records and
other information relative to the Trust, and the Trust’s prior, current or potential
shareholders, and will not use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where the Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
4. Services Not Exclusive. Nothing in this Agreement shall prevent the Advisor or any
officer, employee or other affiliate thereof from acting as investment advisor for any other
person, firm or corporation, or from engaging in any other lawful activity, and shall not in any
way limit or restrict the Advisor or any of its officers, employees or agents from buying, selling
or trading any securities for its or their own accounts or for the accounts of others for whom it
or they may be acting; provided, however, that the Advisor will undertake no activities which, in
its judgment, will adversely affect the performance of its obligations under this Agreement.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Advisor hereby agrees that all records which it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust any such records upon the
Trust’s request. The Advisor further agrees to preserve for the periods prescribed by Rule
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31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940
Act.
6. Agency Cross Transactions. From time to time, the Advisor or brokers or dealers
affiliated with it may find themselves in a position to buy for certain of their brokerage clients
(each an “Account”) securities which the Advisor’s investment advisory clients wish to sell, and to
sell for certain of their brokerage clients securities which advisory clients wish to buy. Where
one of the parties is an advisory client, the Advisor or the affiliated broker or dealer cannot
participate in this type of transaction (known as a cross transaction) on behalf of an advisory
client and retain commissions from one or both parties to the transaction without the advisory
client’s consent. This is because in a situation where the Advisor is making the investment
decision (as opposed to a brokerage client who makes his own investment decisions), and the Advisor
or an affiliate is receiving commissions from both sides of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the Advisor’s part regarding the advisory
client. The SEC has adopted a rule under the Investment Advisers Act of 1940, as amended, which
permits the Advisor or its affiliates to participate on behalf of an Account in agency cross
transactions if the advisory client has given written consent in advance. By execution of this
Agreement, the Trust authorizes the Advisor or its affiliates to participate in agency cross
transactions involving an Account. The Trust may revoke its consent at any time by written notice
to the Advisor.
7. Expenses. During the term of this Agreement, the Advisor will bear all costs and
expenses of its employees and any overhead incurred in connection with its duties hereunder and
shall bear the costs of any salaries or trustees fees of any officers or trustees of the Trust who
are affiliated persons (as defined in the 0000 Xxx) of the Advisor; provided that the Board of
Trustees of the Trust may approve reimbursement to the Advisor of the pro rata portion of the
salaries, bonuses, health insurance, retirement benefits and all similar employment costs for the
time spent on Trust operations (other than the provision of investment advice required to be
provided hereunder) of all personnel employed by the Advisor who devote substantial time to Trust
operations or the operations of other investment companies advised by the Advisor.
8. Compensation of the Advisor. (a) The Trust agrees to pay to the Advisor and the
Advisor agrees to accept as full compensation for all services rendered by the Advisor as such, a
monthly fee (the “Investment Advisory Fee”) in arrears at an annual rate equal to 0.85% of the
average weekly value of the Trust’s Managed Assets. “Managed Assets” means the total assets of the
Trust minus the sum of the accrued liabilities (other than the aggregate indebtedness constituting
financial leverage). For any period less than a month during which this Agreement is in effect, the
fee shall be prorated according to the proportion which such period bears to a full month of 28,
29, 30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the net assets of the Trust shall be calculated pursuant
to the procedures adopted by resolutions of the Trustees of the Trust for calculating the value of
the Trust’s assets or delegating such calculations to third parties.
9. Indemnity. (a) The Trust hereby agrees to indemnify the Advisor, and each of the
Advisor’s directors, officers, employees, agents, associates and controlling persons and the
directors, partners, members, officers, employees and agents thereof (including any individual
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who serves at the Advisor’s request as director, officer, partner, member, trustee or the like
of another entity) (each such person being an “Indemnitee”) against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees (all as provided in accordance with applicable state law) reasonably incurred by such
Indemnitee in connection with the defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or investigative body in which such
Indemnitee may be or may have been involved as a party or otherwise or with which such Indemnitee
may be or may have been threatened, while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity, except with respect to any matter as
to which such Indemnitee shall have been adjudicated not to have acted in good faith in the
reasonable belief that such Indemnitee’s action was in the best interest of the Trust and
furthermore, in the case of any criminal proceeding, so long as such Indemnitee had no reasonable
cause to believe that the conduct was unlawful; provided, however, that (1) no Indemnitee shall be
indemnified hereunder against any liability to the Trust or its shareholders or any expense of such
Indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or
(iv) reckless disregard of the duties involved in the conduct of such Indemnitee’s position (the
conduct referred to in such clauses (i) through (iv) being sometimes referred to herein as
“disabling conduct”), (2) as to any matter disposed of by settlement or a compromise payment by
such Indemnitee, pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a determination that such
settlement or compromise is in the best interests of the Trust and that such Indemnitee appears to
have acted in good faith in the reasonable belief that such Indemnitee’s action was in the best
interest of the Trust and did not involve disabling conduct by such Indemnitee and (3) with respect
to any action, suit or other proceeding voluntarily prosecuted by any Indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action, suit or other proceeding
by such Indemnitee was authorized by a majority of the full Board of Trustees of the Trust.
(b) The Trust shall make advance payments in connection with the expenses of defending any
action with respect to which indemnification might be sought hereunder if the Trust receives a
written affirmation of the Indemnitee’s good faith belief that the standard of conduct necessary
for indemnification has been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification and if the
trustees of the Trust determine that the facts then known to them would not preclude
indemnification. In addition, at least one of the following conditions must be met: (A) the
Indemnitee shall provide a security for such Indemnitee-undertaking, (B) the Trust shall be insured
against losses arising by reason of any lawful advance, or (C) a majority of a quorum consisting of
trustees of the Trust who are neither “interested persons” of the Trust (as defined in Section
2(a)(19) of the 0000 Xxx) nor parties to the proceeding (“Disinterested Non-Party Trustees”) or an
independent legal counsel in a written opinion, shall determine, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the
Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before whom the proceeding was brought that such
Indemnitee is not liable or is not liable by reason of disabling conduct, or (2) in the absence of
such a decision, by (i) a majority vote of a quorum of the Disinterested
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Non-Party Trustees of the Trust, or (ii) if such a quorum is not obtainable or, even if
obtainable, if a majority vote of such quorum so directs, independent legal counsel in a written
opinion. All determinations that advance payments in connection with the expense of defending any
proceeding shall be authorized shall be made in accordance with the immediately preceding clause
(2) above.
The rights accruing to any Indemnitee under these provisions shall not exclude any other right
to which such Indemnitee may be lawfully entitled.
10. Limitation on Liability. (a) The Advisor will not be liable for any error of
judgment or mistake of law or for any loss suffered by Advisor or by the Trust in connection with
the performance of this Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.
(b) Notwithstanding anything to the contrary contained in this Agreement, the parties hereto
acknowledge and agree that, as provided in Section 5.1 of Article V of the Declaration of Trust,
this Agreement is executed by the Trustees and/or officers of the Trust, not individually but as
such Trustees and/or officers of the Trust, and the obligations hereunder are not binding upon any
of the Trustees or Shareholders individually but bind only the estate of the Trust.
11. Duration and Termination. This Agreement shall become effective as of the date
hereof and, unless sooner terminated with respect to the Trust as provided herein, shall continue
in effect for a period of two years. Thereafter, if not terminated, this Agreement shall continue
in effect with respect to the Trust for successive periods of 12 months, provided such continuance
is specifically approved at least annually by both (a) the vote of a majority of the Trust’s Board
of Trustees or the vote of a majority of the outstanding voting securities of the Trust at the time
outstanding and entitled to vote, and (b) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Trust at any time, without the payment of any penalty, upon
giving the Advisor 60 days’ notice (which notice may be waived by the Advisor), provided that such
termination by the Trust shall be directed or approved by the vote of a majority of the Trustees of
the Trust in office at the time or by the vote of the holders of a majority of the voting
securities of the Trust at the time outstanding and entitled to vote, or by the Advisor on 60 days’
written notice (which notice may be waived by the Trust). This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the terms “majority of the
outstanding voting securities,” “interested person” and “assignment” shall have the same meanings
of such terms in the 1940 Act.)
12. Notices. Any notice under this Agreement shall be in writing to the other party at
such address as the other party may designate from time to time for the receipt of such notice and
shall be deemed to be received on the earlier of the date actually received or on the fourth day
after the postmark if such notice is mailed first class postage prepaid.
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13. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is sought. Any amendment
of this Agreement shall be subject to the 1940 Act.
14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance with the applicable provisions of
the 1940 Act.
15. Use of the Names ING and Clarion. The Advisor has consented to the use by the
Trust of the name or identifying words “ING” and “Clarion” in the name of the Trust. Such consent
is conditioned upon the employment of the Advisor as the investment advisor to the Trust. The name
or identifying words “ING” and “Clarion” may be used from time to time in other connections and for
other purposes by the Advisor and any of its affiliates. The Advisor may require the Trust to cease
using “ING” and “Clarion” in the name of the Trust if the Trust ceases to employ, for any reason,
the Advisor, any successor thereto or any affiliate thereof as investment advisor of the Trust.
16. Miscellaneous. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. 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. This Agreement shall be binding on, and shall inure to the benefit of the parties hereto
and their respective successors.
17. Counterparts. This Agreement may be executed in counterparts by the parties
hereto, each of which shall constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by
their duly authorized officers, all as of the day and the year first above written.
| ING CLARION REAL ESTATE INCOME FUND |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Secretary | |||
| ING CLARION REAL ESTATE SECURITIES, LP |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Senior Vice President | |||
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