Exhibit (g)
CUSTODY AGREEMENT
AGREEMENT, dated as of April 1, 2003 by and between THE KENSINGTON
FUNDS (the "Trust"), a statutory trust organized and existing under the laws of
the State of Delaware, acting with respect to and on behalf of each of the
series of the Trust that are identified on Exhibit A hereto (each, a
"Portfolio"), and CUSTODIAL TRUST COMPANY, a bank organized and existing under
the laws of the State of New Jersey (the "Custodian").
WHEREAS, the Trust desires that the securities, funds and other assets
of the Portfolios be held and administered by Custodian pursuant to this
Agreement;
WHEREAS, each Portfolio is an investment portfolio represented by a
series of Shares included among the shares of beneficial interest issued by the
Trust, an open-end management investment company registered under the 1940 Act;
WHEREAS, Custodian represents that it is a bank having the
qualifications prescribed in the 1940 Act to act as custodian for management
investment companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall mean:
1.1. "AUTHORIZED PERSON" means any person authorized by resolution of
the Board of Trustees to give Oral Instructions and Written Instructions on
behalf of the Trust and identified, by name or by office, in Exhibit B hereto or
any person designated to do so by an investment adviser of any Portfolio who is
named by the Trust in Exhibit C hereto.
1.2. "BOARD OF TRUSTEES" means the Board of Trustees of the Trust or,
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3. "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a
Federal Reserve Bank for securities of the United States government or of
agencies or instrumentalities thereof (including government-sponsored
enterprises).
1.4. "BUSINESS DAY" means any day on which banks in the State of New
Jersey and New York are open for business.
1.5. "CUSTODY ACCOUNT" means, with respect to a Portfolio, the account
in the name of such Portfolio, which is provided for in Section 3.2 below.
1.6. "DOMESTIC SECURITIES DEPOSITORY" means The Depository Trust
Company and any other clearing agency registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, which acts as a
securities depository.
1.7. "ELIGIBLE DOMESTIC BANK" means a bank as defined in the 1940 Act.
1.8. "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under the 1940 Act to act as a custodian for
securities and other assets of a Portfolio held outside the United States.
1.9. "ELIGIBLE FOREIGN SECURITIES DEPOSITORY" means an Eligible
Securities Depository as defined in Rule 17f-7 under the 0000 Xxx.
1.10. FOREIGN ASSETS" has the same meaning as in Rule 17f-5 under the
0000 Xxx.
1.11. "FOREIGN CUSTODY MANAGER" has the same meaning as in the 1940
Act.
1.12. "MASTER REPURCHASE AGREEMENT" means the Master Repurchase
Agreement of even date herewith between the Trust and Bear, Xxxxxxx & Co. Inc.
("Bear Xxxxxxx") as it may from time to time be amended.
1.13. "MASTER SECURITIES LOAN AGREEMENT" means the Master Securities
Loan Agreement of even date herewith between the Trust and Bear, Xxxxxxx
Securities Corp. ("BS Securities") as it may from time to time be amended.
-2-
1.14. "1940 ACT" means the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
1.15. "ORAL INSTRUCTIONS" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) completed in
accordance with Custodian's requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust.
1.16. "PROPER INSTRUCTIONS" means Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by the Trust and Custodian.
1.17. "SECURITIES DEPOSITORY" means any Domestic Securities Depository
or Foreign Securities Depository.
1.18. "SHARES" means, with respect to a Portfolio, those shares in a
series or class of the beneficial interests of the Trust that represent
interests in such Portfolio.
1.19. "WRITTEN INSTRUCTIONS" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (b) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic tape, and (c)
completed in accordance with Custodian's requirements from time to time as to
content of instructions and their manner and timeliness of delivery by the
Trust.
-3-
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1. APPOINTMENT. The Trust hereby appoints Custodian as custodian of
all such securities, funds and other assets of each Portfolio as may be
acceptable to Custodian and from time to time delivered to it by the Trust or
others for the account of such Portfolio.
2.2. ACCEPTANCE. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1. SEGREGATION. All securities and non-cash property of a Portfolio
in the possession of Custodian (other than securities maintained by Custodian
with a sub-custodian appointed pursuant to this Agreement or in a Securities
Depository or Book-Entry System) shall be physically segregated from other such
securities and non-cash property in the possession of Custodian. All cash,
securities and other non-cash property of a Portfolio shall be identified as
belonging to such Portfolio.
3.2. CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its
trust department a custody account in the name of each Portfolio, subject only
to draft or order of Custodian, in which Custodian shall enter and carry all
securities, funds and other assets of such Portfolio which are delivered to
Custodian and accepted by it.
(b) If, with respect to any Portfolio, Custodian at any time fails to
receive any of the documents referred to in Section 3.10(a) below, then, until
such time as it receives such document, it shall not be obligated to receive any
securities into the Custody Account of such Portfolio and shall be entitled to
return to such Portfolio any securities that it is holding in such Custody
Account.
3.3. SECURITIES IN PHYSICAL FORM. Custodian may, but shall not be
obligated to, hold securities that may be held only in physical form.
-4-
3.4. DISCLOSURE TO ISSUERS OF SECURITIES. Custodian is authorized to
disclose the Trust's and any Portfolio's names and addresses, and the securities
positions in such Portfolio's Custody Account, to the issuers of such securities
when requested by them to do so.
3.5. EMPLOYMENT OF DOMESTIC SUB-CUSTODIANS. At any time and from time
to time, Custodian in its discretion may appoint and employ, and may also cease
to employ, any Eligible Domestic Bank as sub-custodian to hold securities and
other assets of a Portfolio that are maintained in the United States and to
carry out such other provisions of this Agreement as it may determine, provided,
however, that the employment of any such sub-custodian has been approved by the
Trust. The employment of any such sub-custodian shall be at Custodian's expense
and shall not relieve Custodian of any of its obligations or liabilities under
this Agreement.
3.6. EMPLOYMENT OF FOREIGN SUB-CUSTODIANS. (a) Unless otherwise
instructed in Written Instructions, Custodian is authorized to hold any Foreign
Asset of a Portfolio in any country in which all or a portion of the primary
market for such Foreign Asset is situated.
(b) At any time and from time to time, Custodian in its
discretion may appoint and employ in accordance with the 1940 Act, and may also
cease to employ, (i) any overseas branch of any Eligible Domestic Bank, or (ii)
any Eligible Foreign Custodian selected by the Foreign Custody Manager, in each
case as a foreign sub-custodian for Foreign Assets of a Portfolio, provided,
however, that the employment of any such overseas branch has been approved by
the Trust and, provided further, that, in the case of any such Eligible Foreign
Custodian, the Foreign Custody Manager has approved the agreement pursuant to
which Custodian employs such Eligible Foreign Custodian.
(c) Set forth on Exhibit D hereto, with respect to each
Portfolio, are the foreign sub-custodians that Custodian may employ pursuant to
Section 3.6(b) above. Exhibit D shall be revised from time to time as foreign
sub-custodians are added or deleted.
(d) If the Trust proposes to have a Portfolio make an investment
which is to be held in a country in which Custodian does not have appropriate
arrangements in place with either an overseas branch of an Eligible Domestic
Bank or an Eligible Foreign Custodian
-5-
selected by the Foreign Custody Manager, then the Trust shall inform Custodian
sufficiently in advance of such investment to allow Custodian to make such
arrangements.
(e) Notwithstanding anything to the contrary in Section 8.1
below, Custodian shall have no greater liability to any Portfolio or the Trust
for the actions or omissions of any foreign sub-custodian appointed pursuant to
this Agreement than any such foreign sub-custodian has to Custodian, and
Custodian shall not be required to discharge any such liability which may be
imposed on it unless and until such foreign sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.
(f) Upon the request of the Foreign Custody Manager, Custodian
shall furnish to the Foreign Custody Manager information concerning all foreign
sub-custodians employed pursuant to this Agreement which shall be similar in
kind and scope to any such information that may have been furnished to the
Foreign Custody Manager in connection with the initial approval by the Foreign
Custody Manager of the agreements pursuant to which Custodian employs such
foreign sub-custodians or as otherwise required by the 1940 Act.
3.7. EMPLOYMENT OF OTHER AGENTS. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear Xxxxxxx or BS
Securities, both of which are securities broker-dealers, provided, however, that
Custodian shall not employ (a) BS Securities to hold any collateral pledged by
BS Securities under the Master Securities Loan Agreement or any other securities
loan agreement between the Trust and BS Securities, whether now or hereafter in
effect, or (b) Bear Xxxxxxx to hold any securities purchased from Bear Xxxxxxx
under the Master Repurchase Agreement or any other repurchase agreement between
the Trust and Bear Xxxxxxx, whether now or hereafter in effect. The appointment
of any agent pursuant to this Section 3.7 shall not relieve Custodian of any of
its obligations or liabilities under this Agreement.
3.8. BANK ACCOUNTS. In its discretion and from time to time Custodian
may open and maintain one or more demand deposit accounts with any Eligible
Domestic Bank (any such accounts to be in the name of Custodian and subject only
to its draft or order), provided, however, that the opening and maintenance of
any such account shall be at Custodian's expense and shall not relieve Custodian
of any of its obligations or liabilities under this Agreement.
-6-
3.9. DELIVERY OF ASSETS TO CUSTODIAN. Provided they are acceptable to
Custodian, the Trust shall deliver to Custodian the securities, funds and other
assets of each Portfolio, including (a) payments of income, payments of
principal and capital distributions received by such Portfolio with respect to
securities, funds or other assets owned by such Portfolio at any time during the
term of this Agreement, and (b) funds received by such Portfolio for the
issuance, at any time during such term, of Shares of such Portfolio. Custodian
shall not be under any duty or obligation to require the Trust to deliver to it
any securities or other assets owned by a Portfolio and shall have no
responsibility or liability for or on account of securities or other assets not
so delivered.
3.10. DOMESTIC SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS.
Custodian and any sub-custodian appointed pursuant to Section 3.5 above may
deposit and/or maintain securities of any Portfolio in a Domestic Securities
Depository or in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of a Portfolio in any
Domestic Securities Depository or Book-Entry System, the Trust shall deliver to
Custodian a resolution of the Board of Trustees, certified by an officer of the
Trust, authorizing and instructing Custodian (and any sub-custodian appointed
pursuant to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities Depository or Book-Entry System all securities eligible for deposit
therein and to make use of such Domestic Securities Depository or Book-Entry
System to the extent possible and practical in connection with the performance
of its obligations hereunder (or under the applicable sub-custody agreement in
the case of such sub-custodian), including, without limitation, in connection
with settlements of purchases and sales of securities, loans of securities, and
deliveries and returns of collateral consisting of securities.
(b) Securities of a Portfolio kept in a Book-Entry System or
Domestic Securities Depository shall be kept in an account ("Depository
Account") of Custodian (or of any sub-custodian appointed pursuant to Section
3.5 above) in such Book-Entry System or Domestic Securities Depository which
includes only assets held by Custodian (or such sub-custodian) as a fiduciary,
custodian or otherwise for customers.
-7-
(c) The records of Custodian with respect to securities of a
Portfolio that are maintained in a Book-Entry System or Domestic Securities
Depository shall at all times identify such securities as belonging to such
Portfolio.
(d) If securities purchased by a Portfolio are to be held in a
Book-Entry System or Domestic Securities Depository, Custodian (or any
sub-custodian appointed pursuant to Section 3.5 above) shall pay for such
securities upon (i) receipt of advice from the Book-Entry System or Domestic
Securities Depository that such securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such payment and transfer for the account
of such Portfolio. If securities sold by a Portfolio are held in a Book-Entry
System or Domestic Securities Depository, Custodian (or such sub-custodian)
shall transfer such securities upon (A) receipt of advice from the Book-Entry
System or Domestic Securities Depository that payment for such securities has
been transferred to the Depository Account, and (B) the making of an entry on
the records of Custodian (or of such sub-custodian) to reflect such transfer and
payment for the account of such Portfolio.
(e) Custodian shall provide the Trust with copies of any report
obtained by Custodian (or by any sub-custodian appointed pursuant to Section 3.5
above) from a Book-Entry System or Domestic Securities Depository in which
securities of a Portfolio are kept on the internal accounting controls and
procedures for safeguarding securities deposited in such Book-Entry System or
Domestic Securities Depository.
(f) At its election, the Trust shall be subrogated to the rights
of Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above)
with respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to a Portfolio arising
from the use of such Book-Entry System or Domestic Securities Depository, if and
to the extent that such Portfolio has not been made whole for any such loss or
damage.
3.11. FOREIGN SECURITIES DEPOSITORIES. (a) Unless otherwise instructed
in Written Instructions, Custodian may place and maintain Foreign Assets of the
Trust with an Eligible Foreign Securities Depository, provided that it has
delivered to the Trust an analysis of the
-8-
custody risks associated with maintaining assets with such Eligible Securities
Depository. Custodian shall monitor such custody risks on a continuing basis and
promptly notify the Trust of any material change in such risks.
(b) In performing its obligations under Section 3.11(a) above,
Custodian shall exercise reasonable care, prudence and diligence. In the
exercise of such care, prudence and diligence, Custodian may rely upon
assessments, determinations and monitoring made and performed with respect to an
Eligible Foreign Securities Depository by Citibank, N.A. or such other operator
of a global custody system as from time to time may be employed by Custodian and
approved by the Trust.
3.12. RELATIONSHIP WITH SECURITIES DEPOSITORIES. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.13. PAYMENTS FROM CUSTODY ACCOUNT. Upon receipt of Proper
Instructions with respect to a Portfolio but subject to its right to foreclose
upon and liquidate collateral pledged to it pursuant to Section 9.3 below,
Custodian shall make payments from the Custody Account of such Portfolio, but
only in the following cases, provided, FIRST, that such payments are in
connection with the clearance and/or custody of securities or other assets,
SECOND, that there are sufficient funds in such Custody Account, whether
belonging to such Portfolio or advanced to it by Custodian in its sole and
absolute discretion as set forth in Section 3.19 below, for Custodian to make
such payments, and, THIRD, that after the making of such payments, such
Portfolio would not be in violation of any margin or other requirements agreed
upon pursuant to Section 3.19 below:
(a) For the purchase of securities for such Portfolio but only
(i) in the case of securities (other than options on securities, futures
contracts and options on futures contracts), against the delivery to Custodian
(or any sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.21 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities
-9-
Depository, in accordance with the conditions set forth in Section 3.10 above,
and (ii) in the case of options, futures contracts and options on futures
contracts, against delivery to Custodian (or such sub-custodian) of evidence of
title thereto in favor of such Portfolio, the Custodian, any such sub-custodian,
or any nominee referred to in Section 3.21 below;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.14(f) below, of securities owned by such Portfolio;
(c) For transfer in accordance with the provisions of any
agreement among the Trust, Custodian and a securities broker-dealer, relating to
compliance with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of such
Portfolio;
(d) For transfer in accordance with the provisions of any
agreement among the Trust, Custodian and a futures commission merchant, relating
to compliance with the rules of the Commodity Futures Trading Commission and/or
any contract market (or any similar organization or organizations) regarding
margin or other deposits in connection with transactions of such Portfolio;
(e) For the funding of any time deposit (whether certificated or
not) or other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial
institution of loan participations, but only if Custodian has in its possession
a copy of the agreement between the Trust and such banking or other financial
institution with respect to the purchase of such loan participations and
provided that Custodian shall receive and retain such participation certificate
or other evidence of participation (if any) as such banking or other financial
institution may deliver with respect to any such loan participation;
-10-
(g) For the purchase and/or sale of foreign currencies or of
options to purchase and/or sell foreign currencies, for spot or future delivery,
for the account of such Portfolio pursuant to contracts between the Trust and
any banking or other financial institution (including Custodian, any
sub-custodian appointed pursuant to this Agreement and any affiliate of
Custodian);
(h) For transfer to a securities broker-dealer as margin for a
short sale of securities for such Portfolio, or as payment in lieu of dividends
paid on securities sold short for such Portfolio;
(i) (For the payment as provided in Article IV below of any
dividends, capital gain distributions or other distributions declared on the
Shares of such Portfolio;
(j) For the payment as provided in Article IV below of the
redemption price of the Shares of such Portfolio;
(k) For the payment of any expense or liability incurred by such
Portfolio, including but not limited to the following payments for the account
of such Portfolio: interest, taxes, and administration, investment advisory,
accounting, auditing, transfer agent, custodian, trustee, legal and distribution
and service (12b-1)fees, and other operating expenses of such Portfolio; in all
cases, whether or not such expenses are to be in whole or in part capitalized or
treated as deferred expenses; and
(l) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of such Portfolio, and naming the person or
persons to whom such payment is to be made.
3.14. DELIVERIES FROM CUSTODY ACCOUNT. Upon receipt of Proper
Instructions with respect to a Portfolio but subject to its right to foreclose
upon and liquidate collateral pledged to it pursuant to Section 9.3 below,
Custodian shall release and deliver securities and other assets from the Custody
Account of such Portfolio, but only in the following cases, provided, FIRST,
that such deliveries are in connection with the clearance and/or custody of
securities or other assets,
-11-
SECOND, there are sufficient amounts and types of securities or other assets in
such Custody Account for Custodian to make such deliveries, and, THIRD, that
after the making of such deliveries, such Portfolio would not be in violation of
any margin or other requirements agreed upon pursuant to Section 3.19 below:
(a) Upon the sale of securities for the account of such Portfolio
but, subject to Section 3.15 below, only against receipt of payment therefor or,
if such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or
other similar offers for securities of such Portfolio; provided that, in any
such case, the funds or other consideration for such securities is to be
delivered to Custodian;
(c) To the issuer thereof or its agent when such securities are
called, redeemed or otherwise become payable, provided that in any such case the
funds or other consideration for such securities is to be delivered to
Custodian;
(d) To the issuer thereof or its agent for exchange for a
different number of certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such case, the
new securities are to be delivered to Custodian;
(e) To the securities broker through whom securities are being
sold for such Portfolio, for examination in accordance with the "street
delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new securities and
funds, if any, are to be delivered to Custodian;
-12-
(g) In the case of warrants, rights or similar securities, to the
issuer of such warrants, rights or similar securities, or its agent, upon the
exercise thereof, provided that, in any such case, the new securities and funds,
if any, are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any
loans of securities for such Portfolio pursuant to any securities loan agreement
entered into by the Trust, but only against receipt by Custodian of such
collateral as is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings
from such lender by such Portfolio that require a pledge of assets of such
Portfolio, but only against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of such Portfolio or
the Trust;
(k) For delivery in accordance with the provisions of any
agreement among the Trust, Custodian and a securities broker-dealer, relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions of such Portfolio;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, Custodian, and a futures commission merchant,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding margin or other deposits in connection with
transactions of such Portfolio;
(m) For delivery to a securities broker-dealer as margin for a
short sale of securities for such Portfolio;
(n) To the issuer of American Depositary Receipts or
International Depositary Receipts (hereinafter, collectively, "ADRs") for such
securities, or its agent, against a written receipt therefor adequately
describing such securities, provided that such securities are delivered
-13-
together with instructions to issue ADRs in the name of Custodian or its nominee
and to deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or its agent,
against a written receipt therefor adequately describing such ADRs, provided
that such ADRs are delivered together with instructions to deliver the
securities underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of such Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
3.15. DELIVERY PRIOR TO FINAL PAYMENT. When instructed by the Trust to
deliver securities of a Portfolio against payment, Custodian shall be entitled,
but only if in accordance with generally accepted market practice, to deliver
such securities prior to actual receipt of final payment therefor and,
exclusively in the case of securities in physical form, prior to receipt of
payment therefor. In any such case, such Portfolio shall bear the risk that
final payment for such securities may not be made or that such securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and Custodian shall have no liability for any of the foregoing.
3.16. CREDIT PRIOR TO FINAL PAYMENT. In its sole discretion and from
time to time, Custodian may credit the Custody Account of a Portfolio, prior to
actual receipt of final payment thereof, with (A) proceeds from the sale of
securities of such Portfolio which it has been instructed to deliver against
payment, (B) proceeds from the redemption of securities or other assets in such
Custody Account, and (C) income from securities, funds or other assets in such
Custody Account. Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is not actually
received in full. Custodian may, in its sole discretion and from time to time,
permit a Portfolio to use funds so credited to its Custody Account in
anticipation of actual receipt of final payment. Any funds so used shall
constitute an advance subject to Section 3.19 below.
-14-
3.17. DEFINITION OF FINAL PAYMENT. For purposes of this Agreement,
"final payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, xxxx, xxxx or other encumbrance.
3.18. PAYMENTS AND DELIVERIES OUTSIDE THE UNITED STATES.
Notwithstanding anything to the contrary that may be required by Section 3.13 or
Section 3.14 above, or elsewhere in this Agreement, in the case of securities
and other assets maintained outside the United States and in the case of
payments made outside the United States, Custodian and any sub-custodian
appointed pursuant to this Agreement may receive and deliver such securities or
other assets, and may make such payments, in accordance with the laws,
regulations, customs, procedures and practices applicable in the relevant local
market outside the United States.
3.19. CLEARING CREDIT. Custodian may, in its sole discretion and from
time to time, advance funds to the Trust to facilitate the settlement of a
Portfolio's transactions in the Custody Account of such Portfolio. Any such
advance (a) shall be repayable immediately upon demand made by Custodian, (b)
shall be fully secured as provided in Section 9.3 below, and (c) shall bear
interest at such rate, and be subject to such other terms and conditions, as
Custodian and the Trust may agree.
3.20. ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Trust, Custodian shall with respect to all securities and
other assets held for a Portfolio:
(a) Subject to Section 8.4 below, receive into the Custody
Account of such Portfolio any funds or other property, including payments of
principal, interest and dividends, due and payable on or on account of such
securities and other assets;
(b) Deliver securities of such Portfolio to the issuers of such
securities or their agents for the transfer thereof into the name of such
Portfolio, Custodian or any of the nominees referred to in Section 3.21 below;
(c) Endorse for collection, in the name of such Portfolio,
checks, drafts and other negotiable instruments;
-15-
(d) Surrender interim receipts or securities in temporary form
for securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws of the United
States, or the laws or regulations of any other taxing authority, in connection
with the transfer of such securities or other assets or the receipt of income or
other payments with respect thereto;
(f) Receive and hold for such Portfolio all rights and similar
securities issued with respect to securities or other assets of such Portfolio;
(g) As may be required in the execution of Proper Instructions,
transfer funds from the Custody Account of such Portfolio to any demand deposit
account maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase and transfer of, and
other dealings in, such securities and other assets.
3.21. REGISTRATION AND TRANSFER OF SECURITIES. All securities held for
a Portfolio that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for a Portfolio may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Trust shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.21 provided, any securities or other assets delivered to Custodian which are
registered in the name of a Portfolio.
3.22. RECORDS. (a) Custodian shall maintain complete and accurate
records with respect to securities, funds and other assets held for a Portfolio,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of securities and all
receipts and disbursements of funds; (ii) ledgers (or other records)
-16-
reflecting (A) securities in transfer, if any, (B) securities in physical
possession, (C) monies and securities borrowed and monies and securities loaned
(together with a record of the collateral therefor and substitutions of such
collateral), (D) dividends and interest received, and (E) dividends receivable
and interest accrued; and (iii) canceled checks and bank records related
thereto. Custodian shall keep such other books and records with respect to
securities, funds and other assets of a Portfolio which are held hereunder as
the Trust may reasonably request.
(b) All such books and records maintained by Custodian for a
Portfolio shall (i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and Exchange Commission,
(ii) be the property of such Portfolio and at all times during the regular
business hours of Custodian be made available upon request for inspection by
duly authorized officers, employees or agents of the Trust and employees or
agents of the Securities and Exchange Commission, and (iii) if required to be
maintained under the 1940 Act, be preserved for the periods prescribed therein.
3.23. ACCOUNT REPORTS BY CUSTODIAN. Custodian shall furnish the Trust
with a daily activity statement, including a summary of all transfers to or from
the Custody Account of each Portfolio (in the case of securities and other
assets maintained in the United States, on the day following such transfers). At
least monthly and from time to time, Custodian shall furnish the Trust with a
detailed statement of the securities, funds and other assets held for each
Portfolio under this Agreement.
3.24. OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Trust
with such reports as the Trust may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.25. PROXIES AND OTHER MATERIALS. (a) Unless otherwise instructed by
the Trust, Custodian shall promptly deliver to the Trust all notices of
meetings, proxy materials (other than proxies) and other announcements, which it
receives regarding securities held by it in the Custody Account of a Portfolio.
Whenever Custodian or any of its agents receives a proxy with respect to
securities in the Custody Account of a Portfolio, Custodian shall promptly
request instructions from the Trust on how such securities are to be voted, and
shall give such proxy, or
-17-
cause it to be given, in accordance with such instructions. If the Trust timely
informs Custodian that the Trust wishes to vote any such securities in person,
Custodian shall promptly seek to have a legal proxy covering such securities
issued to the Trust. Unless otherwise instructed by the Trust, neither Custodian
nor any of its agents shall exercise any voting rights with respect to
securities held hereunder.
(b) Unless otherwise instructed by the Trust, Custodian shall
promptly transmit to the Trust all other written information received by
Custodian from issuers of securities held in the Custody Account of any
Portfolio. With respect to tender or exchange offers for such securities or with
respect to other corporate transactions involving such securities, Custodian
shall promptly transmit to the Trust all written information received by
Custodian from the issuers of such securities or from any party (or its agents)
making any such tender or exchange offer or participating in such other
corporate transaction. If the Trust, with respect to such tender or exchange
offer or other corporate transaction, desires to take any action that may be
taken by it pursuant to the terms of such offer or other transaction, the Trust
shall notify Custodian (i) in the case of securities maintained outside the
United States, such number of Business Days prior to the date on which Custodian
is to take such action as will allow Custodian to take such action in the
relevant local market for such securities in a timely fashion, and (ii) in the
case of all other securities, at least five Business Days prior to the date on
which Custodian is to take such action.
3.26. CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep the books
of account of a Portfolio and/or to compute the value of the assets of a
Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1. TRANSFER OF FUNDS. From such funds as may be available for the
purpose in the Custody Account of a Portfolio, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of such
Portfolio or to pay dividends or other distributions to holders of Shares of
such Portfolio, Custodian shall transfer each amount specified in such Proper
Instructions to such account of such Portfolio or of an agent thereof (other
than Custodian), at such bank, as the Trust may designate therein with respect
to such amount.
-18-
4.2. SOLE DUTY OF CUSTODIAN. Custodian's sole obligation with respect
to the redemption of Shares of a Portfolio and the payment of dividends and
other distributions thereon shall be its obligation set forth in Section 4.1
above, and Custodian shall not be required to make any payments to the various
holders from time to time of Shares of a Portfolio nor shall Custodian be
responsible for the payment or distribution by the Trust, or any agent
designated in Proper Instructions given pursuant to Section 4.1 above, of any
amount paid by Custodian to the account of the Trust or such agent in accordance
with such Proper Instructions.
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish
and maintain a segregated account or accounts for and on behalf of any
Portfolio, into which account or accounts may be transferred funds and/or
securities, including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the
Trust, Custodian and a securities broker-dealer (or any futures commission
merchant), relating to compliance with the rules of The Options Clearing
Corporation or of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions of such Portfolio,
(b) for purposes of segregating funds or securities in connection
with securities options purchased or written by such Portfolio or in connection
with financial futures contracts (or options thereon) purchased or sold by such
Portfolio,
(c) which constitute collateral for loans of securities made by
such Portfolio,
(d) for purposes of compliance by such Portfolio with
requirements under the 1940 Act for the maintenance of segregated accounts by
registered management investment companies in connection with reverse repurchase
agreements, when-issued, delayed delivery and firm commitment transactions, and
short sales of securities, and
-19-
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of such Portfolio.
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1. TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make from the Custody Account of such Portfolio the transfers of
funds and deliveries of securities which such Portfolio is required to make
pursuant to the Master Repurchase Agreement and shall receive for the Custody
Account of such Portfolio the transfers of funds and deliveries of securities
which the seller under the Master Repurchase Agreement is required to make
pursuant thereto. Custodian shall make and receive all such transfers and
deliveries pursuant to, and subject to the terms and conditions of, the Master
Repurchase Agreement.
6.2. COLLATERAL. Custodian shall daily xxxx to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of a Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such xxxx-to-market.
6.3. EVENTS OF DEFAULT. Custodian shall promptly notify the Trust of
any event of default under the Master Repurchase Agreement (as such term "event
of default" is defined therein) of which it has actual knowledge.
6.4. MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Repurchase Agreement. The Trust
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
-20-
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1. TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make from the Custody Account of such Portfolio the transfers of
funds and deliveries of securities which such Portfolio is required to make
pursuant to the Master Securities Loan Agreement and shall receive for the
Custody Account of such Portfolio the transfers of funds and deliveries of
securities which the borrower under the Master Securities Loan Agreement is
required to make pursuant thereto. Custodian shall make and receive all such
transfers and deliveries pursuant to, and subject to the terms and conditions
of, the Master Securities Loan Agreement.
7.2. COLLATERAL. Custodian shall daily xxxx to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
7.3. DEFAULTS. Custodian shall promptly notify the Trust of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4. MASTER SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges
its receipt from the Trust of a copy of the Master Securities Loan Agreement.
The Trust shall provide Custodian, prior to the effectiveness thereof, with a
copy of any amendment to the Master Securities Loan Agreement.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1. STANDARD OF CARE. Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to any Portfolio or the Trust for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim which
does not arise from willful misfeasance, bad faith or negligence on the
-21-
part of Custodian. Custodian shall be entitled to rely on and may act upon
advice of counsel in all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. In no event shall Custodian
be liable for special, incidental or consequential damages, even if Custodian
has been advised of the possibility of such damages, or be liable in any manner
whatsoever for any action taken or omitted upon instructions from the Trust or
any agent of the Trust.
8.2. ACTUAL COLLECTION REQUIRED. Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
8.3. NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent
that it is in the exercise of reasonable care, Custodian shall not be
responsible for the title, validity or genuineness of any assets or evidence of
title thereto received or delivered by it or its agents.
8.4. LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Trust whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for a Portfolio is not timely received
by it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
8.5. EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account of any
Portfolio and is not a fiduciary to any Portfolio or the Trust. In particular,
Custodian shall not be under any obligation at any time to monitor or to take
any other action with respect to compliance by any Portfolio or the Trust with
the 1940 Act, the provisions of the Trust's trust instruments and by-laws, or
any Portfolio's investment objectives, policies and limitations as in effect
from time to time.
-22-
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION. Each Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any federal, state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that securities or other assets in the Custody Account of such Portfolio are
registered in the name of any such nominee, or (b) from any action or inaction,
with respect to such Portfolio, by Custodian or such sub-custodian or nominee
(i) at the request or direction of or in reliance on the advice of the Trust or
any of its agents, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement with respect to such
Portfolio, provided that Custodian, any such sub-custodian or any nominee of any
of them shall not be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from willful
misfeasance, bad faith or negligence on the part of Custodian or any such
sub-custodian or nominee.
9.2. INDEMNITY TO BE PROVIDED. If the Trust requests Custodian to take
any action with respect to securities or other assets of a Portfolio, which may,
in the opinion of Custodian, result in Custodian or its nominee becoming liable
for the payment of money or incurring liability of some other form, Custodian
shall not be required to take such action until such Portfolio shall have
provided indemnity therefor to Custodian in an amount and form satisfactory to
Custodian.
9.3. SECURITY. As security for the payment of any present or future
obligation or liability of any kind which a Portfolio may have to Custodian with
respect to or in connection with the Custody Account of such Portfolio or this
Agreement, or which such Portfolio may otherwise have to Custodian, the Trust
hereby pledges to Custodian all securities, funds and other assets of every kind
which are in such Custody Account or otherwise held for such Portfolio pursuant
to this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such securities, funds and other assets.
-23-
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance
of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; strikes; epidemics; riots; power failures; computer
failure and any such circumstances beyond its reasonable control as may cause
interruption, loss or malfunction of utility, transportation, computer (hardware
or software) or telephone communication service; accidents; labor disputes; acts
of civil or military authority; actions by any governmental authority, DE JURE
or DE FACTO; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1. REPRESENTATIONS WITH RESPECT TO PORTFOLIOS. The Trust represents
and warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other instrument, restriction
or provision applicable to it or such Portfolio or by which it or such
Portfolio, or their respective assets, may be bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of each Portfolio, enforceable
against it in accordance with its terms.
11.2. REPRESENTATIONS OF CUSTODIAN. Custodian represents and warrants
that (a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
-24-
ARTICLE XII
COMPENSATION OF CUSTODIAN
Each Portfolio shall pay Custodian such fees and charges as are set
forth in Exhibit E hereto, as such Exhibit E may from time to time be revised by
Custodian upon 14 days' prior written notice to the Trust. Any annual fee or
other charges payable by a Portfolio shall be paid monthly by automatic
deduction from funds available therefor in the Custody Account of such
Portfolio, or, if there are no such funds, upon presentation of an invoice
therefor. Out-of-pocket expenses incurred by Custodian in the performance of its
services hereunder for any Portfolio and all other proper charges and
disbursements of the Custody Account of such Portfolio shall be charged to such
Custody Account by Custodian and paid in the same manner as the annual fee and
other charges referred to in this Article XII.
ARTICLE XIII
TAXES
13.1. TAXES PAYABLE BY PORTFOLIOS. Any and all taxes, including any
interest and penalties with respect thereto, which may be levied or assessed
under present or future laws or in respect of the Custody Account of any
Portfolio or any income thereof shall be charged to such Custody Account by
Custodian and paid in the same manner as the annual fee and other charges
referred to in Article XII above.
13.2. TAX RECLAIMS. Upon the written request of the Trust, Custodian
shall exercise, on behalf of any Portfolio, any tax reclaim rights of such
Portfolio which arise in connection with foreign securities in the Custody
Account of such Portfolio.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1. AUTHORIZED PERSONS. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication which is
reasonably believed by Custodian to have been given or signed on behalf of the
Trust by one of the Authorized Persons designated by the Trust in Exhibit B
hereto, as it may from time to time be revised. The Trust may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance
-25-
with Section 14.4 below, but no revision of Exhibit B hereto shall be effective
until Custodian actually receives such notice.
14.2. INVESTMENT ADVISERS. Custodian may also rely upon and act in
accordance with any Written or Oral Instructions given with respect to a
Portfolio which are reasonably believed by Custodian to have been given or
signed by one of the persons designated from time to time by any of the
investment advisers of such Portfolio who are specified in Exhibit C hereto(if
any) as it may from time to time be revised. The Trust may revise Exhibit C
hereto at any time by notice in writing to Custodian given in accordance with
Section 14.4 below, and each investment adviser specified in Exhibit C hereto
(if any) may at any time by like notice designate an Authorized Person or remove
an Authorized Person previously designated by it, but no revision of Exhibit C
hereto (if any) and no designation or removal by such investment adviser shall
be effective until Custodian actually receives such notice.
14.3. ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance
with Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by an Authorized Person to effect such
transaction. Custodian shall incur no liability to any Portfolio or the Trust in
acting upon Oral Instructions. To the extent such Oral Instructions vary from
any confirming Written Instructions, Custodian shall advise the Trust of such
variance but unless confirming Written Instructions are timely received, such
Oral Instructions shall govern.
-26-
14.4. ADDRESSES FOR NOTICES. Unless otherwise specified herein, all
demands, notices, instructions, and other communications to be given hereunder
shall be sent, delivered or given to the recipient at the address, or the
relevant telephone number, set forth after its name hereinbelow:
If to the Trust:
THE KENSINGTON FUNDS
for [INSERT NAME OF PORTFOLIO]
x/x Xxxxx Xxxx Xxxxxxxx
0000 Xxxxxxx Xxxx (Xxx 0000)
Xxxxxxxx, XX 00000
Attention: XXXXX XXXXXXXX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
KENSINGTON INVESTMENT GROUP
0 Xxxxxx Xxx (Xxx 000X)
Xxxxxx, XX 00000
Attention: XXXX XXXXXX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Custodian:
CUSTODIAL TRUST COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: VICE PRESIDENT - TRUST OPERATIONS
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5. REMOTE CLEARANCE. With the prior consent in writing of Custodian,
the Trust may give Remote Clearance Instructions (as defined hereinbelow) and
Bulk Input Instructions (as defined hereinbelow) for the receipt, delivery or
transfer of securities, provided that such Instructions are given in accordance
with the procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been given by an Authorized Person, and
Custodian is hereby irrevocably authorized to act in accordance therewith. For
purposes of this Agreement, "Remote Clearance Instructions" means instructions
that are input directly via a remote terminal which is located on the premises
of the Trust, or of an investment adviser named in Exhibit C hereto, and is
linked to Custodian; and "Bulk Input Instructions" means instructions that are
input by bulk
-27-
input computer tape delivered to Custodian by messenger or transmitted to it via
such transmission mechanism as the Trust and Custodian shall from time to time
agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement with respect to one or
more of the Portfolios by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than sixty (60)
days after the date of the giving of such notice. Upon the date set forth in
such notice this Agreement shall terminate with respect to each Portfolio
specified in such notice, and Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date (a) deliver directly to the
successor custodian or its agents all securities (other than securities held in
a Book-Entry System or Securities Depository) and other assets then owned by
such Portfolio and held by Custodian as custodian, and (b) transfer any
securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of such Portfolio, provided that such Portfolio shall have
paid to Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled.
ARTICLE XVI
LIMITATION OF LIABILITIES
To the extent that the trustees of the Trust are regarded as entering
into this Agreement, they do so only as trustees of the Trust and not
individually. The obligations under this Agreement of the Trust or any Portfolio
shall not be binding upon any trustee, officer or employee of the Trust
individually, or upon any holder of Shares individually, but shall be binding
only upon the assets and property of such Portfolio. Such trustees, officers,
employees and holders, when acting in such capacities, shall not be personally
liable under this Agreement, and Custodian shall look solely to the assets and
property of each Portfolio for the performance of this Agreement with respect to
such Portfolio and the payment of any claim against such Portfolio under this
Agreement.
-28-
ARTICLE XVII
MISCELLANEOUS
17.1. BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
17.2. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3. REFERENCES TO CUSTODIAN. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statement of additional information for a Portfolio and such other
printed matter as merely identifies Custodian as custodian for a Portfolio. The
Trust shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
17.4. NO WAIVER. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5. AMENDMENTS. This Agreement cannot be changed orally and, except
as otherwise provided herein with respect to the Exhibits attached hereto, no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
17.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
-29-
17.7. SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
17.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9. JURISDICTION. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise. Each of the parties hereto
irrevocably waives its right to trial by jury in any suit, action or proceeding
with respect to this Agreement.
17.10. HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
-30-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
THE KENSINGTON FUNDS
for each of the series identified on Exhibit A hereto
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------
CUSTODIAL TRUST COMPANY
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------
-31-
EXHIBIT A
PORTFOLIOS
- KENSINGTON STRATEGIC REALTY FUND
- KENSINGTON SELECT INCOME FUND
- KENSINGTON REAL ESTATE SECURITIES FUND
-32-
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Custody Accounts of the Portfolios.
NAME SIGNATURE
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
-33-
EXHIBIT C
INVESTMENT ADVISERS
ALL PORTFOLIOS
KENSINGTON INVESTMENT GROUP, INC.
-34-
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
FOREIGN SUB-CUSTODIAN COUNTRY(IES) SECURITIES DEPOSITORIES
--------------------- ------------ -----------------------
None None None
-35-
EXHIBIT E
CUSTODY FEES AND TRANSACTION CHARGES
DOMESTIC FEES. Each Portfolio shall pay Custodian the following fees
for assets maintained by such Portfolio in the United States ("Domestic Assets")
and charges for transactions by such Portfolio in the United States, all such
fees and charges to be payable monthly (for purposes only of calculating and
levying such fees and charges, all assets and transactions in any tri-party
custody account that Custodian may maintain for such Portfolio shall be deemed
to be, or to have occurred, in the Custody Account):
(1) an annual fee of the greater of 0.015% (1.5 basis points) per annum
of the value of the Domestic Assets in the Custody Account of such Portfolio or
$5,000, any such percentage fee to be based upon the total market value of such
Domestic Assets as determined on the last Business Day of the month for which
such fee is charged;
(2) a transaction charge of $6 for each receive or deliver of
book-entry securities into or from the Custody Account of such Portfolio (but
not for any such receive or deliver of book-entry securities loaned by such
Portfolio or constituting collateral for a loan of securities, or any such
receive or deliver in a repurchase transaction representing (a) a cash sweep
investment for such Portfolio's account or (b) the investment by such Portfolio
of cash collateral for a loan of securities);
(3) a transaction charge of $25 for each receive or deliver into or
from such Portfolio's Custody Account of securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account of such Portfolio which represents a cash sweep investment for such
Portfolio's account, computed on the basis of a 360-day year and for the actual
number of days such repurchase transaction is outstanding at a rate of 0.10%
(ten basis points) per annum on the amount of the purchase price paid by such
Portfolio in such repurchase transaction;
-36-
(5) a charge of $8 for each "free" transfer of funds from the Custody
Account of such Portfolio;
(6) a charge of $5 for each check written by Custodian to make a
payment from such Portfolio's Custody Account; and
(7) a service charge for each holding of securities or other assets of
such Portfolio that are sold by way of private placement or in such other manner
as to require services by Custodian which in its reasonable judgment are
materially in excess of those ordinarily required for the holding of publicly
traded securities in the United States.
INTERNATIONAL FEES. Each Portfolio shall pay Custodian fees for assets
maintained by such Portfolio outside the United States ("Foreign Assets") and
charges for transactions by such Portfolio outside the United States (including,
without limitation, charges for funds transfers and tax reclaims) in accordance
with such schedule of fees and charges for each country in which Foreign Assets
of such Portfolio are held as Custodian shall from time to time provide to the
Trust. Any asset-based fee shall be based upon the total market value of the
applicable Foreign Assets as determined on the last Business Day of the month
for which such fee is charged.
-37-
