Exhibit h.4
ADDITIONAL COMPENSATION AGREEMENT
ADDITIONAL COMPENSATION AGREEMENT (the "Agreement"), dated as of November
__, 2002, between ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and AEW Management and Advisors, L.P. ("AEW
Management").
WHEREAS, AEW Real Estate Income Fund (including any successor by merger or
otherwise, the "Fund") is a newly organized, non-diversified, closed-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and its common shares of beneficial interest
("common shares") are registered under the Securities Act of 1933, as amended;
and
WHEREAS, AEW Management is the investment advisor of the Fund;
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting as lead underwriter in an offering of the
Fund's common shares;
WHEREAS, AEW Management desires to retain ▇▇▇▇▇▇▇ ▇▇▇▇▇ to provide
after-market support services designed to maintain the visibility of the Fund on
an ongoing basis, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ is willing to render such services for the
compensation set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. (a) AEW Management hereby employs ▇▇▇▇▇▇▇ ▇▇▇▇▇, for the period and on the
terms and conditions set forth herein, to provide the following
services at the reasonable request of AEW Management:
(1) after-market support services designed to maintain the
visibility of the Fund on an ongoing basis;
(2) relevant information, studies or reports regarding general
trends in the closed-end investment company and asset
management industries, if reasonably obtainable, and consult
with representatives of AEW Management in connection
therewith; and
(3) information to and consult with AEW Management with respect
to applicable strategies designed to address market value
discounts, if any.
(b) At the request of AEW Management, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall limit or cease
any action or service provided hereunder to the extent and for the
time period requested by AEW Management; provided, however, that
pending termination of this Agreement as provided for in Section 5
hereof, any such limitation or cessation shall not relieve AEW
Management of its payment obligations pursuant to Section 2 hereof.
(c) ▇▇▇▇▇▇▇ ▇▇▇▇▇ will promptly notify AEW Management, if it learns of any
material inaccuracy or misstatement in, or material omission from, any
written information as of the date such information was published,
provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇ to AEW Management in connection with the
performance of services by ▇▇▇▇▇▇▇ ▇▇▇▇▇ under this Agreement.
2. AEW Management shall pay ▇▇▇▇▇▇▇ ▇▇▇▇▇ a fee computed monthly and payable
quarterly in arrears commencing [ ], 2002 at an annualized rate of 0.10% of
the Fund's average daily managed assets ("managed assets" means the net
asset value of the common shares plus the liquidation preference of any
Fund preferred shares and the principal amount of any borrowings used for
leverage) for a term as described in Section 5 hereof; provided that the
total amount of the fee hereunder shall not exceed 4.5% of the total price
(including all Initial Securities and Option Securities as such terms are
described in the Purchase Agreement, dated November [25], 2002, by and
among the Fund, AEW Management and each of the Underwriters named therein,
the "Purchase Agreement") to the public of the Fund's common shares sold by
the prospectus dated [ ], 2002; and provided further, that in determining
when this maximum fee amount has been paid, the value of each of the
quarterly payments made hereunder shall be discounted at the annual rate of
10% to the closing date of the offering contemplated by the Purchase
Agreement. All quarterly fees payable hereunder shall be paid to ▇▇▇▇▇▇▇
▇▇▇▇▇ within 15 days following the end of each calendar quarter. AEW
Management shall have responsibility for making all calculations in
connection with the fees set forth in this Section 2, and each such
calculation shall be deemed conclusive and final unless objected to in
writing by ▇▇▇▇▇▇▇ ▇▇▇▇▇ within fifteen (15) days of receiving notification
from AEW Management of the applicable amount resulting from such
calculation (through receipt of payment or otherwise).
3. AEW Management acknowledges that the services of ▇▇▇▇▇▇▇ ▇▇▇▇▇ provided for
hereunder do not include any advice as to the value of securities or
regarding the advisability of purchasing or selling any securities for the
Fund's portfolio. No provision of this Agreement shall be considered as
creating, nor shall any provision create, any obligation on the part of
▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ is not hereby agreeing, to: (i) furnish
any advice or make any recommendations regarding the purchase or sale of
portfolio securities or (ii) render any opinions, valuations or
recommendations of any kind or to perform any such similar services in
connection with providing the services described in Section 1 hereof.
4. Nothing herein shall be construed as prohibiting ▇▇▇▇▇▇▇ ▇▇▇▇▇ or its
affiliates from providing similar or other services to any other clients
(including other registered investment companies or other investment
managers), so long as ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ services to AEW Management are not
impaired thereby.
5. The term of this Agreement shall commence upon the date referred to above
and shall be in effect so long as AEW Management acts as the investment
manager to the Fund pursuant to the Investment Management Agreement (as
such term is defined in the Purchase Agreement, dated [ ], 2002, by and
among the Fund, AEW Management and each of the Underwriters named therein)
or other subsequent advisory agreement to which AEW Management is a party.
6. AEW Management will ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ with such information as ▇▇▇▇▇▇▇
▇▇▇▇▇ reasonably requests in connection with its assignment hereunder (all
such information so furnished being the "Information"). AEW Management
recognizes and confirms that ▇▇▇▇▇▇▇ ▇▇▇▇▇ (a) will use and rely primarily
on the Information and on information available from generally recognized
public sources in performing the services contemplated by this Agreement
without having independently verified the same and (b) does not assume
responsibility for the accuracy or completeness of the Information and such
other information. To the best of AEW Management's knowledge, the
Information to be furnished by AEW Management when delivered, will be true
and correct in all material respects and will not contain any material
misstatement of fact or omit to state any material fact necessary to make
the statements contained therein not misleading. AEW Management will
promptly notify ▇▇▇▇▇▇▇ ▇▇▇▇▇ if it learns of any material inaccuracy or
misstatement in, or material omission from, any Information delivered to
▇▇▇▇▇▇▇ ▇▇▇▇▇.
2
7. It is understood that ▇▇▇▇▇▇▇ ▇▇▇▇▇ is being engaged hereunder solely to
provide the services described above to AEW Management and that ▇▇▇▇▇▇▇
▇▇▇▇▇ is not acting as an agent or fiduciary of, and shall have no duties
or liability to the current or future shareholders of the Fund or any other
third party in connection with its engagement hereunder, all of which are
hereby expressly waived; provided, however, that this Agreement shall in no
way limit or modify the terms of, or the obligations of either party
pursuant to, the Purchase Agreement.
8. Each party hereto agrees that the other party hereto shall have no
liability to it for any act or omission to act by such party in the course
of its performance under this Agreement, in the absence of bad faith, gross
negligence or willful misconduct on the part of AEW Management. Each party
further agrees to the indemnification and other agreement set forth in the
Indemnification Agreement attached hereto, the provisions of which are
incorporated herein by reference and shall survive the termination,
expiration or supersession of this Agreement.
9. This Agreement and any claim, counterclaim or dispute of any kind or nature
whatsoever arising out of or in any way relating to this Agreement
("Claim") shall be governed by and construed in accordance with the laws of
the State of New York.
10. No Claim may be commenced, prosecuted or continued in any court other than
the courts of the State of New York located in the City and County of New
York or in the United States District Court for the Southern District of
New York, which courts shall have exclusive jurisdiction over the
adjudication of such matters, and AEW Management and ▇▇▇▇▇▇▇ ▇▇▇▇▇ consent
to the jurisdiction of such courts and personal service with respect
thereto. Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and AEW Management waives all right to trial
by jury in any proceeding (whether based upon contract, tort or otherwise)
in any way arising out of or relating to this Agreement. Each party hereto
agrees that a final judgment in any proceeding or counterclaim brought in
any such court shall be conclusive and binding upon such party and may be
enforced in any other courts to the jurisdiction of which such party is or
may be subject, by suit upon such judgment.
11. This Agreement may not be assigned by either party without the prior
written consent of the other party.
12. This Agreement (including the attached Indemnification Agreement) embodies
the entire agreement and understanding between the parties hereto with
respect to the matters contemplated hereby and supersedes all prior
agreements and understandings relating to the subject matter hereof;
provided, however, that this Agreement shall in no way limit or modify the
terms of, or the obligations of either party pursuant to, the Purchase
Agreement. If any provision of this Agreement is determined to be invalid
or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Agreement,
which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both ▇▇▇▇▇▇▇ ▇▇▇▇▇ and AEW Management.
13. All notices required or permitted to be sent under this Agreement shall be
sent, if to AEW Management:
AEW Management and Advisors, L.P.
World Trade Center East
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or if to ▇▇▇▇▇▇▇ ▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
or such other name or address as may be given in writing to the other
parties. Any notice shall be deemed to be given or received on the third
day after deposit in the US mail with certified postage prepaid or when
actually received, whether by hand, express delivery service or facsimile
transmission, whichever is earlier.
14. This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
4
IN WITHESS WHEREOF, the parties hereto have duly executed this
Additional Compensation Agreement as of the date first above written.
AEW MANAGEMENT AND ADVISORS, ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
5
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Indemnification Agreement
[ ], 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the engagement of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") to advise and
assist the undersigned (together with its affiliates and subsidiaries, referred
to as the "Company") with the matters set forth in the Agreement dated [ ], 2002
between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Agreement"), in the event that
▇▇▇▇▇▇▇ ▇▇▇▇▇ becomes involved in any capacity in any claim, suit, action,
proceeding, investigation or inquiry (including, without limitation, any
shareholder or derivative action or arbitration proceeding) (collectively, a
"Proceeding") in connection with any matter in any way relating to or referred
to in the Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company agrees to indemnify, defend and hold ▇▇▇▇▇▇▇ ▇▇▇▇▇
harmless to the fullest extent permitted by law, from and against any losses,
claims, damages, liabilities and expenses in connection with any matter in any
way relating to or referred to in the Agreement or arising out of the matters
contemplated by the Agreement, including, without limitation, related services
and activities prior to the date of the Agreement, except to the extent that it
shall be determined by a court of competent jurisdiction in a judgment that has
become final in that it is no longer subject to appeal or other review, that
such losses, claims, damages, liabilities and expenses resulted solely from the
bad faith, gross negligence or willful misconduct of ▇▇▇▇▇▇▇ ▇▇▇▇▇. In addition,
in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ becomes involved in any capacity in any
Proceeding in connection with any matter in any way relating to or referred to
in the Agreement or arising out of the matters contemplated by the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, the Company will reimburse ▇▇▇▇▇▇▇ ▇▇▇▇▇ for its legal and
other expenses (including the cost of any investigation and preparation) as such
expenses are reasonably incurred by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in connection therewith. If
such indemnification were not to be available for any reason, the Company agrees
to contribute to the losses, claims, damages, liabilities and expenses involved
(i) in the proportion appropriate to reflect the relative benefits received or
sought to be received by the Company and its stockholders and affiliates and
other constituencies, on the one hand, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, on the other hand, in
the matters contemplated by the Agreement or (ii) if (but only if and to the
extent) the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of the
Company and its stockholders and affiliates and other constituencies, on the one
hand, and the party entitled to contribution, on the other hand, as well as any
other relevant equitable considerations. The Company agrees that for the
purposes of this paragraph the relative benefits received, or sought to be
received, by the Company and its stockholders and affiliates, on the one hand,
and the party entitled to contribution, on the other hand, of a transaction as
contemplated shall be deemed to be in the same proportion that the total value
received or paid or contemplated to be received or paid by the Company or its
stockholders or affiliates and other constituencies, as the case may be, as a
result of or in connection with the transaction (whether or not consummated) for
which ▇▇▇▇▇▇▇ ▇▇▇▇▇ has been retained to perform financial services bears to the
fees paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇ under the Agreement; provided, that in no event shall
the
6
Company contribute less than the amount necessary to assure that ▇▇▇▇▇▇▇ ▇▇▇▇▇
is not liable for losses, claims, damages, liabilities and expenses in excess of
the amount of fees actually received by ▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to the Agreement.
Relative fault shall be determined by reference to, among other things, whether
any alleged untrue statement or omission or any other alleged conduct relates to
information provided by the Company or other conduct by the Company (or its
employees or other agents), on the one hand, or by ▇▇▇▇▇▇▇ ▇▇▇▇▇, on the other
hand. The Company will not settle any Proceeding in respect of which indemnity
may be sought hereunder, whether or not ▇▇▇▇▇▇▇ ▇▇▇▇▇ is an actual or potential
party to such Proceeding, without ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ prior written consent. For
purposes of this Indemnification Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall include ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, any of its
affiliates, each other person, if any, controlling ▇▇▇▇▇▇▇ ▇▇▇▇▇ or any of its
affiliates, their respective officers, current and former directors, employees
and agents, and the successors and assigns of all of the foregoing persons. The
foregoing indemnity and contribution agreement shall be in addition to any
rights that any indemnified party may have at common law or otherwise.
The Company agrees that neither ▇▇▇▇▇▇▇ ▇▇▇▇▇ nor any of its
affiliates, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of either ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇
engagement under the Agreement or any matter referred to in the Agreement,
including, without limitation, related services and activities prior to the date
of the Agreement, except to the extent that it shall be determined by a court of
competent jurisdiction in a judgment that has become final in that it is no
longer subject to appeal or other review that any losses, claims, damages,
liabilities or expenses incurred by the Company resulted solely from the bad
faith, gross negligence or willful misconduct of ▇▇▇▇▇▇▇ ▇▇▇▇▇ in performing the
services that are the subject of the Agreement.
This INDEMNIFICATION Agreement and any claim, counterclaim or dispute
of any kind or nature whatsoever arising out of or in any way relating to this
Agreement ("Claim"), DIRECTLY OR INDIRECTLY, shall be governed by and construed
in accordance with the laws of the State of New York. Except as set forth below,
no Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have exclusive jurisdiction over the adjudication of such matters,
and the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ consent to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any claim arising out of
or in any way relating to this agreement is brought by anY third party against
▇▇▇▇▇▇▇ ▇▇▇▇▇ or any indemnified party. Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company
waives all right to trial by jury in any proceeding or claim (whether based upon
contract, tort or otherwise) arising out of or in any way relating to this
Agreement. The Company agrees that a final judgment in any proceeding or claim
arising out of or in any way relating to this agreement brought in any such
court shall be conclusive and binding upon the Company and may be enforced in
any other courts to the jurisdiction of which the Company is or may be subject,
by suit upon such judgment.
This Indemnification Agreement shall in no way limit or modify the
terms of, or the obligations of either party pursuant to, the Purchase Agreement
dated as of November [25], 2002 among the Company, AEW Real Estate Income Fund,
▇▇▇▇▇▇▇ ▇▇▇▇▇ and the other parties thereto.
7
The foregoing Indemnification Agreement shall remain in full force and
effect notwithstanding any termination of ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ engagement. This
Indemnification Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.
Very truly yours,
AEW MANAGEMENT AND ADVISORS, L.P.
By:____________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By______________________
Name:
Title:
8