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EX. 99(d-3)
EXPENSE AGREEMENT
AGREEMENT made as of the 1st day of February, 2000 between LEND LEASE
REAL ESTATE INVESTMENTS, INC. a Delaware corporation ("REI"), and LEND LEASE
REAL ESTATE SECURITIES, LLC, a limited liability company organized under the
laws of the state of Delaware ("Xxxxx").
WHEREAS, Lend Lease Funds (the "Trust") is a Delaware business trust,
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company of the series type, and Lend
Lease U.S. Real Estate Securities Fund (the "Fund") is a series of the Trust;
WHEREAS, the Trust and REI have entered into an Advisory Agreement
dated as of the date hereof ("Management Agreement"), pursuant to which REI
provides investment management services to the Fund for compensation based on
the value of the average daily net assets of the Fund; and
WHEREAS, REI and Xxxxx have entered into a Sub-Advisory Agreement dated
as of the date hereof (the "Sub-advisory Agreement"), pursuant to which Xxxxx
provides investment advisory services to the Fund for compensation based on the
value of the average daily net assets of the Fund; and
WHEREAS, the Trust, REI and Xxxxx have determined that it is
appropriate and in the best interests of the Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which the Fund
may normally be subject;
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION; RECOUPMENT.
(a) To the extent that the ordinary operating expenses incurred by a
class of the Fund in any fiscal year, including but not limited to investment
management fees of REI, but excluding interest, taxes, brokerage commissions,
other investment-related costs, extraordinary expenses such as litigation, other
expenses not incurred in the ordinary course of such Fund's business, and
expenses of any counsel or other persons or services retained by the Trust's
trustees who are not "interested persons," as that term is defined in the 1940
Act, of the Investment Manager ("Fund Operating Expenses"), exceed the Operating
Expense Limit, as defined below, such excess amount (the "Excess Amount") shall
be the liability of REI, but shall be subject to allocation as describe in
Section 2 below. The "Operating Expense Limit" in any fiscal year with respect
to each class of the Fund shall be as follows (based on a percentage of the
average daily net assets of such class of the Fund):
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Class Operating Expense Limit (in basis points)
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Class A Shares 150
Class K Shares 125
Class Y Shares 97
(b) To determine REI's obligation with respect to the Excess Amount,
each day the Fund Operating Expenses for each class of the Fund shall be
annualized. If the annualized Fund Operating Expenses for any day of a class of
the Fund exceed the Operating Expense Limit of for that class of the Fund, REI
shall remit to the appropriate class of the Fund an amount that, together with
the waived or reduced investment management fee, is sufficient to pay that day's
Excess Amount. The Trust may offset amounts owed to the Fund pursuant to this
Agreement against the advisory fee payable to REI.
(c) If on any day during which the Management Agreement is in effect,
the estimated annualized Fund Operating Expenses of a class of the Fund for that
day are less than the Operating Expense Limit, REI shall be entitled to recoup
from the Fund the investment management fees waived or reduced and other
payments remitted by REI to such class of the Fund pursuant to Section 1 hereof
(the "Recoupment Amount") during any of the previous thirty-six (36) months, to
the extent that such class' annualized Operating Expenses plus the amount so
recouped equals, for such day, the Operating Expense Limit for such class,
provided that such amount paid to REI will in no event exceed the total
Recoupment Amount and will not include any amounts previously recouped.
(d) If necessary, on or before the last day of the first month of each
fiscal year, an adjustment payment shall be made by the appropriate party in
order that (i) the amount of the investment management fees waived or reduced
and other payments remitted by REI to each class of the Fund with respect to the
previous fiscal year shall equal the Excess Amount; and (ii) the actual Fund
Operating Expenses of each class of each the Fund for the prior fiscal year
(including any recoupment payments hereunder with respect to such fiscal year)
do not exceed the Operating Expense Limit.
2. ALLOCATION BETWEEN REI AND XXXXX.
(a) For so long as the fee payable to Xxxxx under the Sub-advisory
Agreement is equal to 50% of the advisory fee payable to REI by the Fund, Xxxxx
shall waive or reduce its sub-advisory fee and/or promptly remit to REI an
amount that is sufficient to pay 50% of any Excess Amount paid to the Fund by
REI pursuant to Section 1 of this Agreement, provided that Xxxxx'x obligation to
waive or reduce its sub-advisory fee and to pay 50% of the Excess Amount shall
not in any year exceed $250,000 (the "Annual Cap"). REI may offset amounts owed
to REI pursuant to this Section 2(a) against the sub-advisory fee paid to Xxxxx.
(b) REI shall promptly remit to Xxxxx 50% of any amount recouped by REI
pursuant to Section 1(c) of this Agreement, provided, however, that if at any
time the Annual Cap has been in effect for any year, the obligation of REI to
remit recouped amounts with
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respect to such year shall cease when recoupments paid to Xxxxx with respect to
such year are equal to the Annual Cap, using a "first-in, first-out" system.
(c) The Trust and REI will provide Xxxxx with reasonable access to the
books and records of each for purposes of confirming the amounts contributed and
recouped under this Agreement.
3. TERM OF AGREEMENT. This Agreement shall have an initial term through the
initial term of the Management Agreement. After such initial term, this
Agreement shall automatically renew for one-year terms unless (a) REI provides
notice to the Trust and Xxxxx of its termination at least thirty days prior to
the end of the then current term, (b) Xxxxx provides notice to the Trust and REI
of its termination at least thirty days prior to the end of the then current
term; provided, however, that this Agreement shall terminate automatically upon
termination of the Management Agreement and Section 2 shall terminate
automatically upon termination of the Sub-advisory Agreement. In addition, the
Trust may terminate this Agreement without penalty upon ninety days notice to
REI and Xxxxx.
4. MISCELLANEOUS.
(a) Notices. All notices or other communications given under
this Agreement shall be made by guaranteed overnight delivery, telecopy or
certified mail; notice is effective when received. Notice shall be given to the
parties at the following addresses:
REI: Lend Lease Real Estate Investments, Inc.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, XX 00000-0000
Attention: General Counsel
Xxxxx: Lend Lease Xxxxx Real Estate Securities, LLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Contract Compliance Officer
Trust: Lend Lease Funds
000 Xxxx Xxxxxxx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
(b) Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
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(d) Counterparties. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(e) Entire Agreement. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the Investment Company Act of 1940, as amended, when applicable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first set forth above.
LEND LEASE REAL ESTATE
INVESTMENTS, INC.
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Chief Investment Officer
LEND LEASE XXXXX REAL ESTATE
SECURITIES, LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
Acknowledged:
LEND LEASE FUNDS, on behalf of its series
LEND LEASE U.S. REAL ESTATE
SECURITIES FUND
By: /s/ Xxxxx X. Xxxxx-Xxxxxxx
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Xxxxx X. Xxxxx-Xxxxxxx, President
