EXHIBIT (g)(1)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated [ ], 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.
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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 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
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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 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
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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
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.
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(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.
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 Commonwealth of Pennsylvania 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.
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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:______________________________________
Name:
Title:
ING CLARION REAL ESTATE SECURITIES,
L.P.
By: ING CRA Real Estate Holdings, Inc. as
General Partner
By:_______________________________________
Name:
Title:
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