LMP Real Estate Income Fund Inc.
SUBADVISORY AGREEMENT
Dear Sirs:
Real Estate Income Fund Inc., a Maryland corporation (the "Fund"),
and Xxxx Xxxxx Partners Fund Advisor, LLC. (the "Adviser"),
each confirms its agreement with AEW Management and Advisors,
L.P. (the "Subadviser"), as follows:
1.Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance
with the investment objectives, policies and limitations
specified in its Articles of Incorporation, as amended
from time to time (the "Charter"), the Fund's prospectus
(the "Prospectus"), and the Fund's statement of additional
information (the "Statement") filed with the Securities
and Exchange Commission (the "SEC") as part of the Fund's
Registration Statement on Form N-2, as amended from time
to time, and in such manner and to such extent as may
from time to time be approved by the Board of Directors
of the Fund (the "Board"). Copies of the Fund's Prospectus
and the Statement and the Charter have been or will be
submitted to the Subadviser. The Fund employs the Adviser
as the investment adviser for the Fund and the Fund and the
Adviser desire to employ and hereby appoint the Subadviser
to act as the sub-investment adviser to the Fund. The
Subadviser accepts the appointment and agrees to furnish
the services for the compensation set forth below.
0.Xxxxxxxx as Sub-Investment Adviser
Subject to the supervision and direction of the Board and the
Adviser, the Subadviser will:
(a) manage the Fund's portfolio in accordance with the
Fund's investment objective(s) and policies as stated in
the Charter, the Prospectus and the
Statement;
(b) assist in supervising all aspects of the Fund's
operations;
(c) make investment decisions for the Fund;
(d) place purchase and sale orders for portfolio transactions for the Fund;
and (e) employ professional portfolio managers and securities analysts who
provide research services to the Fund. In providing those services,
the Subadviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the
Fund's assets.
3.Compensation
In consideration of the services rendered pursuant to this
Agreement, the Adviser will pay the Subadviser, on the
first business day of each month, a fee for the previous
month at the following annual rates:
(a) from the commencement of the Fund's operations until
July 31, 2007, 0.40% of the first $100 million of the sum
of the Fund's average daily net assets attributable to
the Fund's outstanding common shares, plus average daily
assets attributable to any of the Fund's preferred shares
that may be outstanding, plus the principal amount of any
commercial paper or notes issued by the Fund and any
borrowings by the Fund ("Managed Assets"), 0.35% of
the next $100 million of the Fund's Managed Assets
and 0.30% of the Fund's Managed Assets in excess of
$200 million; and
(b) after July 31, 2007, 50% of the management fee
paid by the Fund to the Adviser pursuant to the Fund's
Investment Management Agreement with the Adviser
(for the avoidance of doubt, the management fee
referred to above is to be calculated net of any waivers).
The Subadviser shall have no right to obtain compensation
directly from the Fund for services provided hereunder and
agrees to look solely to the Adviser for payment of fees due.
The fee for the period from the date the Fund commences its
investment operations to the end of the month during which
the Fund commences its investment operations shall be pro-rated
according to the proportion that such period bears to the full
monthly period. Upon any termination of this Agreement before
the end of any month, the fee for such part of that month
shall be pro-rated according to the proportion that such
period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the Subadviser,
the value of the Fund's Managed Assets shall be computed at
the times and in the manner specified in the Fund's Prospectus
and/or the Statement, as from time to time in effect.
4.Expenses
The Subadviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund
will bear all other expenses to be incurred in its operation,
including, but not limited to, investment advisory and
administration fees payable under the Fund's Investment
Management Agreement with the Adviser; taxes, interest,
brokerage fees and commissions, if any; fees of the Board
members of the Fund who are not officers, directors or
employees of Xxxxxxx Xxxxx Barney Inc. or any of its
affiliates; SEC fees and state blue sky qualification
fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's and its Board members'
proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing
and legal expenses; costs of maintaining the Fund's
existence; costs attributable to investor services,
including, without limitation, telephone and personnel
expenses; costs of preparing and printing Prospectuses
and Statements for regulatory purposes and for distribution
to existing shareholders; costs of shareholder reports and
meetings of the officers or Board and any extraordinary expenses.
5.Brokerage
In selecting brokers or dealers to execute transactions on behalf
of the Fund, the Subadviser will seek the best overall terms available.
In assessing the best overall terms available for any transaction,
the Subadviser will consider factors it deems relevant, including,
but not limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute
a particular transaction, and in evaluating the best overall
terms available, the Subadviser is authorized to consider the
brokerage and research services (as those terms are defined
in Section 28
(e) of the Securities Exchange Act of 1934, as amended) provided
to the Fund and/or other accounts over which the Subadviser or
its affiliates exercise investment discretion.
6.Information Provided to the Fund
The Subadviser will keep the Adviser and the Fund informed of
developments materially affecting the Fund and will, on its own
initiative, furnish the Adviser from time to time with whatever
information the Subadviser believes is appropriate for this purpose.
The Subadviser has adopted, and will maintain, a Code of Ethics in
accordance with Rule 17j-1 under the Investment Company Act of 1940,
as amended (the "1940 Act"), and will provide a copy of such Code of
Ethics to the Fund, including any amended versions thereof.
7.Standard of Care
The Subadviser shall exercise its best judgment in rendering
the services listed in paragraphs 2, 5 and 6 above.
The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect the
Subadviser against any liability to the Fund or to the
Fund's shareholders to which the Subadviser would otherwise
be subject by reason of willful malfeasance, bad faith or
gross negligence on its part in the performance of its
duties or by reason of the Subadviser's reckless disregard
of its obligations and duties under this Agreement.
0.Xxxxxxxx to Other Companies or Accounts
The Fund understands that the Subadviser now acts, will
continue to act and may act in the future as: investment
adviser to fiduciary and other managed accounts, as well
as to other investment companies; and the Fund has no
objection to the Subadviser so acting, provided that
whenever the Fund and one or more other clients advised
by the Subadviser have available funds for investment,
investments suitable and appropriate for each will be
allocated in accordance with a formula believed to be
equitable to each client. The Fund recognizes that in
some cases this procedure may adversely affect the size
of the position obtainable for the Fund. In addition,
the Fund understands that the persons employed by the
Subadviser to assist in the performance of the
Subadviser's duties under this Agreement will not
devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit
or restrict the right of the Subadviser or any
affiliate of the Subadviser to engage in and
devote time and attention to other businesses
or to render services of whatever kind or nature.
9.Term of Agreement
This Agreement shall become effective as of
August 1, 2006 and shall continue for an
initial term ending November 30, 2007, and
shall continue thereafter so long as such
continuance is specifically approved at
least annually by (i) the Board or
(ii) a vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act),
provided that in either event the continuance is
also approved by a majority of the Board members
who are not "interested persons" (as defined in the 0000 Xxx)
of any party to this Agreement, by vote cast in person at
a meeting called for the purpose of voting on such approval.
This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board or by vote of holders of a
majority of the Fund's shares, or upon 90 days' written
notice, by the Adviser or Subadviser. This Agreement will
also terminate automatically in the event of
its "assignment" (as defined in the 1940 Act).
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance hereof by signing and
returning the enclosed copy of this Agreement to us.
Very truly yours,
REAL ESTATE INCOME FUND INC.
By:
Name:
Title:
XXXX XXXXX PARTNERS FUND ADVISOR, LLC.
By:
Name:
Title:
Accepted:
AEW MANAGEMENT AND ADVISORS, L.P.
By: AEW Investment Group, Inc., its
General Partner
By:
Name:
Title:
