EXPENSE UNDERTAKING
UNDERTAKING made as of the 25th day of August, 2004 by ADELANTE CAPITAL
MANAGEMENT LLC, a Delaware limited liability company ("ACM").
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 ACM have entered into an Advisory Agreement dated
August 25, 2004 (the "Management Agreement"), pursuant to which ACM provides
investment management services to the Fund for compensation based on the value
of the average daily net assets of the Fund; and
WHEREAS, the Trust and ACM 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 ACM, 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 ACM. 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):
Class Operating Expense Limit (in basis points)
----- -----------------------------------------
Class A Shares 150
Class K Shares 125
Class Y Shares 97
(b) To determine ACM'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, ACM 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 ACM.
(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, ACM shall be entitled to recoup from
the Fund the investment management fees waived or reduced and other payments
remitted by ACM 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 ACM 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 ACM 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. TERM OF AGREEMENT. This Agreement shall have an initial term through August
25, 2006. After such initial term, this Agreement shall automatically renew for
one-year terms unless ACM provides notice to the Trust 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. In addition, the Trust may terminate this Agreement
without penalty upon ninety days notice to ACM.
3. MISCELLANEOUS.
(a) Notices. All notices or other communications given under this
Undertaking 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:
ACM: Adelante Capital Management LLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Contract Compliance Officer
Trust: Lend Lease Funds
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
(b) Severability. If any provision of this Undertaking 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 Undertaking shall be construed in
accordance with and governed by the laws of the State of Delaware.
(d) Counterparties. This Undertaking 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 Undertaking 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 Undertaking to be
executed by their duly authorized officers as of the date first set forth above.
ADELANTE CAPITAL MANAGEMENT LLC
By: /s/ Xxxx X. Xxxx
------------------------
Name: Xxxx X. Xxxx
Title: Chief Operating Officer
Acknowledged:
LEND LEASE FUNDS, on behalf of its series
LEND LEASE U.S. REAL ESTATE SECURITIES FUND
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
