Exhibit (E)
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of April, 2003, between The Kensington Funds
(the "Trust"), a Delaware statutory trust having its principal place of business
at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and BISYS FUND SERVICES LIMITED
PARTNERSHIP d/b/a BISYS FUND SERVICES ("Distributor"), having its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Trust is an open-end management investment company, organized
as a Delaware statutory trust and registered with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940, as
amended (the "1940 Act") and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each series of the Trust, as provided
on Schedule A, and such series as are hereafter created (individually referred
to herein as a "Fund" and collectively as the "Funds");
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent of Trust on behalf of each Fund for
the distribution of the Shares covered by the registration statement and
prospectus of Trust then in effect under the Securities Act of 1933, as amended
(the "Securities Act"). As used in this Agreement, the term "registration
statement" shall mean the registration statement and any amendments thereto,
then in effect, including Parts A (the prospectus), B (the Statement of
Additional Information) and C of each registration statement, as filed on Form
N-1A, or any successor thereto, with the Commission, together with any
amendments thereto. The term "prospectus" shall mean the then-current form of
prospectus and statement of additional information used by the Funds, in
accordance with the rules of the Commission, for delivery to shareholders and
prospective shareholders after the effective dates of the above referenced
registration statements together with any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders
for the sale of the Shares and will undertake such advertising and promotion as
it believes reasonable in connection with such solicitation. The Trust
understand that Distributor is now and may in the future be the distributor of
the shares of many other investment companies or series (together, "Companies")
including Companies having investment objectives similar to those of the Trust.
The Trust further understands the investors and potential investors in the Trust
may invest in shares of such other Companies. The Trust agrees that
Distributor's duties to such Companies shall not be deemed in conflict with its
duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense (except as provided in
Section 2 herein), finance appropriate activities which it deems reasonable,
which are primarily intended to result in the sale of the Shares, including, but
not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3. In its capacity as distributor of the Shares, all activities of
the Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Funds.
1.5 Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions or by abnormal circumstance of any
kind, the Trust's officers may upon reasonable notice instruct the Distributor
to decline to accept any orders for or make any sales of, the Shares until such
time as those officers deem it advisable to accept such orders and to make such
sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information that fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) a monthly itemized list of the securities in
the Funds, (c) monthly balance sheets as soon as practicable after the end of
each month, and (d) from time to time such additional information regarding the
financial condition of the Funds as Distributor may reasonably request.
1.10 The Trust represents and warrants to Distributor that, with
respect to the Shares, all registration statements and prospectuses filed by the
Trust with the Commission under the Securities Act have been carefully prepared
in conformity with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
statements required to be stated therein in conformity with said Act and the
rules and regulations of said Act and the rules and regulations of said
Commission and all statements of fact contained in any such registration
statement and prospectus are true and correct.
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Furthermore, neither any registration statement nor any prospectus including an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Shares. The foregoing representations and warranties shall
continue throughout the term of this Agreement and be deemed to be of a
continuing nature, applicable to all Shares distributed hereunder. Trust may,
but shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Trust's counsel, be necessary or advisable. If the Trust shall not propose
such amendment or amendments and/or supplement or supplements with in fifteen
days after receipt by the Trust of a written request from Distributor to do so,
Distributor may, at its option, terminate this Agreement. In such case, the
Distributor will be held harmless from, and indemnified by Trust for, any
liability or loss resulting from the failure to implement such amendment. The
Trust shall not file any amendment to any registration statement or supplement
to any prospectus without giving Distributor reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Trust's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.11 Trust may request Distributor to use an electronic processing
system over the internet in which electronically transmitted orders are
forwarded electronically for processing by a third party known to Trust under
circumstances in which Distributor will not review the orders. Under such
circumstances, Trust acknowledges and agrees that it will independently
determine that the third party is a satisfactory service provider and that
Distributor's review will not be necessary.
Trust authorizes Distributor and dealers to use any prospectus in
the form furnished from time to time in connection with the sale of the Shares.
Distributor shall not be liable for any error of judgment or mistake of law or
for any loss suffered by Trust in connection with the matters to which this
Agreement relates, except a loss resulting form willful misfeasance, bad faith
or gross negligence on the Distributor's part in the performance of its duties,
from reckless disregard by Distributor of its obligations and duties under this
Agreement, or from Distributor's failure to comply with laws, rules and
regulations applicable to it in connection with its distribution of the Shares.
Trust agrees to indemnify, defend and hold Distributor, its several partners and
employees, and any person who controls Distributor within the meaning of Section
15 of the Securities Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which Distributor, its partners and employees or any such
controlling person, may incur (a) as the result of acting as distributor of the
Funds; (b) under the Securities Act or under common law or otherwise, arising
out of or based upon (i) any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement or any prospectus, (ii)
any omission, or alleged omission, to state a material fact required to be
stated in any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading or (iii) any Trust-related
advertisement or sales literature that is not in compliance with applicable
laws, rules or regulations (including, but not limited to the Conduct Rules of
the National Association of
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Securities Dealers, Inc.); or (c) arising out of or based upon the electronic
processing of orders over the internet; provided, however, that Trust's
agreement to indemnify Distributor, its partners or employees, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses (x) arising out of any statements or representations as are
contained in any prospectus, advertisement or sales literature and in such
financial and other statements as are furnished in writing to Trust by
Distributor and used in the registration statement or in corresponding
statements made in the prospectus, advertisement or sales literature, or (y)
arising out of or based upon any omission or alleged omission to state a
material fact in such information furnished by the Distributor which is required
to be stated or necessary to make the information not misleading; and further
provided that Trust's agreement to indemnify Distributor and Trust's
representations and warranties hereinbefore set in paragraph 1.10 shall not be
deemed to cover any liability to Trust or its shareholders to which Distributor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, by reason of Distributor's reckless
disregard of its obligations and duties under this Agreement, or by
Distributor's failure to comply with any laws, rules or regulations applicable
to it in connection with its distribution of the Shares.
In the event of a formal legal action, the Trust's agreement to
indemnify Distributor, its partners and employees and any such controlling
person, as aforesaid, is expressly conditioned upon Trust being provided with
written notice of an action brought against Distributor, its partners and
employees, or any such controlling person, and identifying the person against
whom such action is brought, promptly following receipt of service of the
summons or other first legal process, and in any event within ten (10) days of
such receipt. Any failure to promptly notify the Trust will not relieve the
Trust from any liability which the Trust may have to the person against whom
such action is brought, or to any other person, by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Trust's indemnity obligations under this paragraph 11. The Trust
will be entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability if such defense shall be conducted by counsel of good
standing approved by Distributor, which approval shall not be unreasonably
withheld. In the event Trust elects to assume the defense of any such suit and
retain counsel of good standing so approved by Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in any case where Trust does not elect to
assume the defense of any such suit or in case Distributor reasonably withholds
approval of counsel chosen by Trust, Trust will reimburse Distributor, its
partners and employees, or the controlling person or persons named as defendant
or defendants in such suit, for the fees and expenses of any counsel retained by
Distributor or them. Trust's indemnification agreement contained in this
paragraph 11 and Trust's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Distributor, its partners and employees, or any
controlling person, and shall survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Trust agrees promptly to notify Distributor of the
commencement of any litigation of proceedings against Trust or any of its
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officers or Trustees which relate, directly or indirectly, to the issue and sale
of any Shares or which may otherwise form the basis of an obligation for Trust
to indemnify hereunder.
1.12 Distributor agrees to indemnify, defend and hold the Trust, it's
several officers and Trustees, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Trust, its
officers or Trustees or any such controlling person may incur under the
Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Trust, its officers or Trustees or
such controlling person resulting from such claims or demands shall arise
directly out any untrue, statement of a material fact contained in information
furnished in writing by Distributor to Trust and used in response to required
items of the registration statement or in the corresponding statements made in
the prospectus or any omission, or alleged omission, to state a material fact
required to be stated in such prospectus or information necessary to make such
information not misleading.
Distributor's agreement to indemnify the Trust, its officers and
Trustees and any such controlling person, as aforesaid, is expressly conditioned
upon Distributor being provided with written notice of an action brought against
Trust, its officers and Trustees, or any such controlling person, and
identifying the person against whom such action is brought, and sent to
Distributor identifying the person against whom such action is brought promptly
following the indemnified person's receipt of service of the summons or other
legal process, and in any event within ten (10) days of such receipt.
Distributor will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability to the extent the same is based on
an alleged misstatement or omission on Distributor's part, if such defense shall
be conducted by counsel of good standing approved by Trust, which approval shall
not be unreasonably withheld. In the event any such claim, demand or liability
is not based solely on an alleged misstatement or omission on Distributor's
part, the Trust, it's officers and Trustees, or any controlling person, shall
have the right to participate in the defense, and Distributor shall have the
right of first control thereof. In the event Distributor elects to assume the
defense of any such suit and retain counsel of good standing so approved by
Trust, the Trust and any other defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them; but in
any case where Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse Trust, its officers, directors, employees and
controlling persons or other persons named as defendant or defendants in such
suit for the reasonable fees and expenses of any counsel retained by Trust or
them to the extent related to a claim, demand, liability or expense covered
under this Section 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as required by Section
10(b)(2) of said Act is not on file with the Commission, provided, however, that
nothing contained in Section 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to
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repurchase Shares from a Shareholder in accordance with the provisions of the
Trust's prospectus, Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor:
(a) of any request of the Commission for amendments to the
registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by
service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration
statement or prospectus then in effect or which requires the
making of a change in such registration statement or
prospectus in order to make the statements therein not
misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus which
may from time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentiality and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to 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
Distributor may be exposed to civil or criminal liability for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State of
Ohio.
1.17 In the event Distributor purchases the initial shares of the
Trust for purposes of satisfying the minimum net worth requirements set forth in
Section 14(a) of the 1940 Act, and a notice of termination is subsequently given
or this Agreement is otherwise terminated pursuant to Section 6 herein for any
reason prior to the time that organizational expenses incurred by the Trust have
been fully amortized, then the Trust shall either (i) cause the successor
distributor of the shares (the "Successor Distributor") to pay to Distributor,
within ten (10) days prior to the termination of this Agreement, an amount of
cash that is sufficient to purchase the initial shares that are held by
Distributor or (ii) enable Distributor to redeem the
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initial shares of the Trust that it holds by causing the Successor Distributor
to contribute to the Trust, within ten (10) days prior to the termination of
this Agreement, any unamortized organizational costs in the same provision as
the number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of such contribution. In the latter case,
Distributor shall be entitled to redeem any or all of the initial shares that it
holds and receive redemption proceeds without any reduction in the amount of
such proceeds, prior to the termination of this Agreement.
2. Fee.
Distributor shall receive from the Funds identified in the Service and
Distribution Plan attached as Schedule A hereto (the "Distribution Plan Funds")
a distribution fee at the rate and upon the terms and conditions set forth in
such Plan. The distribution fee shall be accrued daily and shall be paid on the
first business day of each month, or at such time(s) as the Distributor shall
reasonably request.
3. Sale and Payment.
Shares of a Fund may be subject to a sales load and may be subject to
the imposition of a distribution fee pursuant to the Service and Distribution
Plan referred to above. To the extent that Shares of a Fund are sold at an
offering price which includes a sales load or subject to a contingent deferred
sales load with respect to certain redemptions (either within a single class of
Shares or pursuant to two or more classes of Shares), such Shares shall
hereinafter be referred to collectively as "Load Shares" (and in the case of
Shares that are sold with a front-end sales load, "Front-end Load Shares", or
Shares that are sold subject to a contingent deferred sales load, "CDSL
Shares"). Funds that issue Front-End Load Shares shall hereinafter be referred
to collectively as "Front-End Load Funds". Funds that issue CDSL Shares shall
hereinafter be referred to collectively as "CDSL Funds". Front-end Load Funds
and CDSL Funds may individually or collectively be referred as "Load Funds".
Under this Agreement, the following provision shall apply with respect to the
sale of, and payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load Shares at their
net asset value and to sell such Load Shares to the public against orders
therefore at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefore at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load Fund
to, or on the order of, Distributor, Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in Boston or New York clearing house
funds equal to the applicable net asset value of such Shares. Distributor may
retain so much of any sales charge or underwriting discount as is not allowed by
Distributor as a concession to dealers.
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4. Public Offering Price.
The public offering price of a Load Share shall be the net asset
value of such Load Share, plus any applicable sales charge, all as set forth in
the current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the then-current prospectus of the Load Fund.
5. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Load Shares at
net asset values (a) in connection with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially of the assets or of the
outstanding Shares of any other investment company (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then-current prospectus of the Load Fund; and (e) otherwise in accordance
with any then-current prospectus of the Load Fund.
6. Term, Duration and Termination.
This Agreement shall become effective with respect to each Fund as of
the date first written above (the "Effective Date") (or, if a particular Fund is
not in existence on such date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed) and, unless sooner terminated as
provided herein, shall continue for a one year period following the Effective
Date. Thereafter, if not terminated, this Agreement shall continue with respect
to a particular Fund automatically for successive one-year terms, provided that
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the trust's Board of Trustees who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval and (b) by the vote of
the Trust's Board of Trustees or the vote of a majority of the outstanding
voting securities of such Fund. This Agreement is terminable without penalty,
upon sixty days prior written notice, by the Trust's Board of Trustees, by vote
of a majority of the outstanding voting securities of the Trust, or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as ascribed to such terms in the 1940 Act.)
7. Limitation of Liability of the Trustees and Shareholders.
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made
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by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Trust's Declaration of Trust.
8. Privacy.
Nonpublic personal financial information relating to consumers or
customers of the Funds provided by, or at the direction of, Trust to the
Distributor, or collected or retained by the Distributor to perform its duties
as distributor, shall be considered confidential information. The Distributor
shall not disclose or otherwise use nonpublic personal financial information
relating to present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the Distributor, including
use under an exception in sections 248.14 or 248.15 of Securities and Exchange
Commission Regulation S-P in the ordinary course of business to carry out those
purposes. The Distributor shall have in place and maintain physical, electronic
and procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or use
of records and information relating to consumers of the Funds. Trust represents
to the Distributor that it has adopted a Statement of its privacy policies and
practices as required by Securities and Exchange Commission Regulation S-P and
agrees to provide Distributor with a copy of that statement annually.
9. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Trust, to Kensington Investment Group, Inc.,
0 Xxxxxx Xxx, Xxxxx 000X, Xxxxxx, Xxxxxxxxxx 00000; Attn: Xx. Xxxx X. Xxxxxx,
President, with a copy to the Trust at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000
Attention: President; and if to Distributor, to it at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000, Attn: President, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
THE KENSINGTON FUNDS
By: ___________________________
Title: ________________________
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: ___________________________
Title: ________________________
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Dated: April 1, 2003
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
THE KENSINGTON FUNDS
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
KENSINGTON REAL ESTATE SECURITIES FUND
KENSINGTON SELECT INCOME FUND
KENSINGTON STRATEGIC REALTY FUND
A-1
SERVICE AND DISTRIBUTION PLAN
A-2
