EXHIBIT (e)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this 12th day of August,
2004, by and between THE KENSINGTON FUNDS, a Delaware statutory trust (the
"Trust") and QUASAR DISTRIBUTORS, LLC, a Delaware limited liability company (the
"Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and is authorized to issue shares of beneficial interests ("Shares") in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust desires to retain the Distributor as principal
underwriter in connection with the offering and sale of the Shares of each
series listed on Appendix A hereto (as amended from time to time) (each a
"Fund", collectively the "Funds"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, this Agreement has been approved by a vote of the Trust's
board of trustees ("Board of Trustees" or the "Board") and its disinterested
trustees in conformity with Section 15(c) of the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter for
the Trust on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF QUASAR AS THE DISTRIBUTOR
The Trust hereby appoints the Distributor as its agent for the sale and
distribution of Shares of the Funds, on the terms and conditions set forth in
this Agreement, and the Distributor hereby accepts such appointment and agrees
to perform the services and duties set forth in this Agreement.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR
A. The Distributor agrees to sell Shares of the Funds on a best
efforts basis as agent for the Trust during the term of this
Agreement, upon the terms and at the current offering price
(plus sales charge, if any) described in the Prospectus. As
used in this Agreement, the term "Prospectus" shall mean the
current prospectus, including the statement of additional
information, as amended or supplemented, relating to the Funds
and included in the currently effective registration statement
or post-effective amendment thereto (the "Registration
Statement") of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 0000 Xxx.
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B. During the continuous public offering of Shares of the Funds,
the Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of Shares of
the Funds and will accept such orders on behalf of the Trust.
Such purchase orders shall be deemed effective at the time and
in the manner set forth in the Prospectus.
C. The Distributor, with the operational assistance of the
Trust's transfer agent, shall make Shares available for sale
and redemption through the National Securities Clearing
Corporation's Fund/SERV System.
D. In connection with all matters relating to this Agreement, the
Distributor agrees to comply with the requirements of the 1933
Act, the 1934 Act, the 1940 Act, the regulations of the NASD
and all other applicable federal or state laws and
regulations. The Distributor acknowledges and agrees that it
is not authorized to provide any information or make any
representations other than as contained in the Prospectus and
any sales literature specifically approved by the Trust and
the Distributor.
E. The Distributor agrees to cooperate with the Trust or its
agent in the development of all proposed advertisements and
sales literature relating to the Funds. The Distributor agrees
to review all proposed advertisements and sales literature for
compliance with applicable laws and regulations, and shall
file with appropriate regulators, those advertisements and
sales literature it believes are in compliance with such laws
and regulations. The Distributor agrees to furnish to the
Trust any comments provided by regulators with respect to such
materials and to use its best efforts to obtain the approval
of the regulators to such materials.
F. The Distributor, at its sole discretion, may repurchase Shares
offered for sale by shareholders of the Funds. Repurchase of
Shares by the Distributor shall be at the price determined in
accordance with, and in the manner set forth in, the
Prospectus. At the end of each business day, the Distributor
shall notify, by any appropriate means, the Trust and its
transfer agent of the orders for repurchase of Shares received
by the Distributor since the last report, the amount to be
paid for such Shares and the identity of the shareholders
offering Shares for repurchase. The Trust reserves the right
to suspend such repurchase right upon written notice to the
Distributor. The Distributor further agrees to act as agent
for the Trust to receive and transmit promptly to the Trust's
transfer agent, shareholder requests for redemption of Shares.
G. The Distributor may, in its discretion, enter into agreements
with such qualified broker-dealers as it may select, in order
that such broker-dealers also may sell Shares of the Funds.
The form of any dealer agreement shall be mutually agreed upon
and approved by the Trust and the Distributor. The Distributor
may pay a portion of any applicable sales charge, or allow a
discount to a selling broker-dealer, as described in the
Prospectus or, if not so described, as agreed upon with the
broker-dealer, subject to the terms of Section 5 below. The
Distributor shall include in the forms of agreement with
selling broker-dealers a provision for the forfeiture by them
of their sales charge or discount with respect to Shares sold
by them and redeemed, repurchased or tendered for redemption
within seven (7) business days after the date of confirmation
of such purchases.
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H. The Distributor shall devote its best efforts to effect sales
of Shares of the Funds but shall not be obligated to sell any
certain number of Shares.
I. The Distributor shall prepare reports for the Board regarding
its activities under this Agreement as from time to time shall
be reasonably requested by the Board, including reports
regarding the 12b-1 payments.
J. The services furnished by the Distributor hereunder are not to
be deemed exclusive and the Distributor shall be free to
furnish similar services to others so long as its services
under this Agreement are not impaired thereby. The Trust
recognizes that from time to time, officers and employees of
the Distributor may serve as directors, trustees, officers and
employees of other entities (including investment companies),
that such other entities may include the name of the
Distributor as part of their name and that the Distributor or
its affiliates may enter into distribution, administration,
fund accounting, transfer agent or other agreements with such
other entities.
3. DUTIES AND REPRESENTATIONS OF THE TRUST
A. The Trust represents that it is duly organized and in good
standing under the law of its jurisdiction of organization and
is registered as an open-end management investment company
under the 1940 Act. The Trust agrees that it will act in
material conformity with its Declaration of Trust, its
By-Laws, its Registration Statement, as may be amended from
time to time, and the resolutions and other instructions of
its Board. The Trust agrees to comply in all material respects
with the 1933 Act, the 1940 Act and all other applicable
federal and state laws and regulations. The Trust represents
and warrants that this Agreement has been duly authorized by
all necessary action by the Trust under the 1940 Act, state
law and the Trust's Declaration of Trust and By-Laws.
B. The Trust, or its agent, shall take or cause to be taken, all
necessary action to register Shares of the Funds under the
1933 Act and to maintain an effective Registration Statement
for such Shares in order to permit the sale of Shares as
herein contemplated. The Trust authorizes the Distributor to
use the Prospectus, in the form furnished to the Distributor
from time to time, in connection with the sale of Shares.
C. The Trust represents and agrees that all Shares to be sold by
it, including those offered under this Agreement, are validly
authorized and, when issued in accordance with the description
in the Prospectus, will be fully paid and nonassessable. The
Trust further agrees that it shall have the right to suspend
the sale of Shares of any Fund at any time in response to
conditions in the securities markets or otherwise, and to
suspend the redemption of Shares of any Fund at any time as
permitted by the 1940 Act or the rules of the Securities and
Exchange Commission ("SEC"), including any and all applicable
interpretation of such by the staff of the SEC. The Trust
shall advise the Distributor promptly of any such
determination.
D. The Trust agrees to advise the Distributor promptly in
writing:
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(i) of any material correspondence or other communication by
the SEC or its staff relating to the Funds, including requests by the
SEC for amendments to the Registration Statement or Prospectus;
(ii) in the event of the issuance by the SEC of any stop-order
suspending the effectiveness of the Registration Statement then in
effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the Prospectus or which requires
the making of a change in such Prospectus in order to make the
statements therein not misleading; and
(iv) of all actions taken by the SEC with respect to any
amendments to any Registration Statement or Prospectus, which may from
time to time be filed with the SEC.
E. The Trust shall file such reports and other documents as may
be required under applicable federal and state laws and
regulations. The Trust shall notify the Distributor in writing
of the states in which the Shares may be sold and shall notify
the Distributor in writing of any changes to such information.
F. The Trust agrees to file from time to time, such amendments to
its Registration Statement and Prospectus as may be necessary
in order that its Registration Statement and Prospectus will
not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
G. The Trust shall fully cooperate in the efforts of the
Distributor to sell and arrange for the sale of Shares and
shall make available to the Distributor a statement of each
computation of net asset value. In addition, the Trust shall
keep the Distributor fully informed of its affairs and shall
provide to the Distributor, from time to time, copies of all
information, financial statements and other papers that the
Distributor may reasonably request for use in connection with
the distribution of Shares, including without limitation,
certified copies of any financial statements prepared for the
Trust by its independent public accountants and such
reasonable number of copies of the most Prospectus, statement
of additional information and annual and interim reports to
shareholders as the Distributor may request. The Trust shall
forward a copy of any SEC filings, including the Registration
Statement, to the Distributor within one business day of any
such filings. The Trust represents that it will not use or
authorize the use of any advertising or sales material unless
and until such materials have been approved and authorized for
use by the Distributor. Nothing in this Agreement shall
require the sharing or provision of materials protected by
privilege or limitation of disclosure, including any
applicable attorney-client privilege or trade secret
materials.
H. The Trust represents and warrants that its Registration
Statement and any advertisements and sales literature prepared
by the Trust or its agent (excluding statements relating to
the Distributor and the services it provides that are based
upon written information furnished by the Distributor
expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and that all statements or
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information furnished to the Distributor pursuant to this
Agreement shall be true and correct in all material respects.
4. DUTIES AND REPRESENTATIONS OF THE DISTRIBUTOR
A. The Distributor represents that it is duly organized and in
good standing under the law of its jurisdiction of
organization, is registered as a broker-dealer under the 1934
Act and is a member in good standing of the NASD. The
Distributor agrees that it will act in material conformity
with its Articles of Organization and its By-Laws, as may be
amended from time to time. The Distributor agrees to comply in
all material respects with the 1933 Act, the 1934 Act, the
1940 Act, and all other applicable federal and state laws and
regulations. The Distributor represents and warrants that this
Agreement has been duly authorized by all necessary action by
the Distributor under the Distributor's Articles of
Organization and By-Laws.
B. The Distributor agrees to advise the Company promptly in
writing of the initiation of any proceedings against it by the
SEC or its staff, the NASD or any state regulatory authority.
5. COMPENSATION
A. Fees. The Distributor, as distributor of Class A Shares of the
Funds under this Agreement, shall receive from the Funds in
accordance with the Service and Distribution Plans attached as
Schedule A hereto a distribution fee at the rate and upon the
terms and conditions set forth in such Plans.
The Distributor, as distributor of Class B and Class C Shares
of the Funds under this Agreement, shall receive (i)
distribution fees as commissions for the sale of Class B and
Class C Shares (the "Distribution Fees") which shall accrue
daily in an amount equal to the product of (A) the daily
equivalent of 0.75% per annum multiplied by (B) the net asset
value of Class B and Class C shares outstanding on such day,
and (ii) shareholder service fees in amounts up to 0.25% per
annum of the average net asset value of Class B and Class C
Shares upon the terms and conditions set forth in the Service
and Distribution Plans attached as Schedule A hereto. In
accordance with the Service and Distribution Plans, the Funds
shall pay to the Distributor or, at the Distributor's
direction, to a third-party, the Distributor's Allocable
Portion (as defined in Section 5.C. below) of the Distribution
Fees.
These fees shall be accrued daily and shall be paid monthly in
arrears on or prior to the 10th business day of the following
month, or at such time(s) as the Distributor shall reasonably
request.
B. Sales Charges. Shares of a Fund may be subject to a sales
load, subject to the limit on asset-based sales charges set
forth in NASD Conduct Rule 2830 (and any successor provision
thereto). 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 charge ("CDSC") 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,
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"Front-end Load Shares", or Shares that are sold subject to a
contingent deferred sales load, "CDSC Shares"). Funds that
issue Front-End Load Shares shall hereinafter be referred to
collectively as "Front-End Load Funds". Funds that issue CDSC
Shares shall hereinafter be referred to collectively as "CDSC
Funds". Front-end Load Funds and CDSC Funds may individually
or collectively be referred to as "Load Funds". Under this
Agreement, the following provisions shall apply with respect
to the sale of, and payment for, Load Shares.
(i) The 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 5.D. hereof. The
Distributor shall also have the right to sell Load Shares to
dealers against orders therefore at the public offering price
less a concession, which concession shall not exceed the
amount of the sales charge or underwriting discount, if any,
referred to in Section 5.D. below.
(ii) Prior to the time of delivery of any Load Shares by a
Load Fund to, or on the order of, the Distributor, the
Distributor shall pay or cause to be paid to the Load Fund or
to its order an amount equal to the applicable net asset value
of such Shares.
(iii) The Funds agree to withhold from redemption proceeds
of the Class B and Class C Shares, the Distributor's Allocable
Portion of any CDSCs payable with respect to the Class B and
Class C Shares, as provided in the Funds' Prospectus, and to
pay the same over to the Distributor or, at the Distributor's
direction to a third-party, at the time the redemption
proceeds are payable to the holder of such shares redeemed.
Payment of these CDSC amounts to the Distributor is not
contingent upon the adoption or continuation of any Service
and Distribution Plan.
C. Allocable Portion. For purposes of this Agreement, the term
"Allocable Portion" of Distribution Fees and CDSCs payable
with respect to Class B and Class C Shares shall mean the
portion of such Distribution Fees and CDSC allocated to the
Distributor in accordance with the Allocation Schedule
attached hereto as Appendix B.
The Distributor shall be considered to have completely earned
the right to the payment of its Allocable Portion of the
Distribution Fees and the right to payment of its Allocable
Portion of the CDSCs with respect to each CDSC Share upon the
settlement date of such CDSC Share taken into account in
determining the Distributor's Allocable Portion of
Distribution Fees.
The provisions set forth in Section 3 of the Service and
Distribution Plan (in effect on the date hereof) relating to
Class B Shares, together with the related definitions are
hereby incorporated into this Section 5.C. by reference with
the same force and effect as if set forth herein in their
entirety.
For the avoidance of doubt, the Distribution Fees and CDSCs in
respect of the Shares of the Funds (including any Free Shares
(as defined in the Allocation Schedule attached as Appendix B)
issued in respect of such Shares and Shares issued in one or
more free exchanges for any such Shares) which were issued
under any predecessor distribution agreement, including the
Distribution Agreement between the Trust and BISYS Fund
Services Limited Partnership, shall continue to be payable
under this
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Agreement and shall be included in the Distributor's Allocable
Portion of the Distribution Fees and CDSCs. Nothing herein is
intended to affect the assignment of the rights in such
Distribution Fees and CDSCs to any third-party assignee.
D. Public Offering Price. The public offering price of a Load
Shares shall be the net asset value of such Load Share, plus
any applicable sales charge, all as set forth in the
Prospectus of the Load Fund. The net asset value of Shares
shall be determined in accordance with the Prospectus of the
Load Fund.
6. EXPENSES
A. The Trust or the Fund shall bear all costs and expenses in
connection with the registration of its Shares with the SEC
and its related compliance with state securities laws, as well
as all costs and expenses in connection with the offering of
the Shares and communications with shareholders of its Funds,
including but not limited to: (i) fees and disbursements of
its counsel and independent public accountants; (ii) costs and
expenses of the preparation, filing, printing and mailing of
Registration Statements and Prospectuses and amendments
thereto, as well as related advertising and sales literature;
(iii) costs and expenses of the preparation, printing and
mailing of annual and interim reports, proxy materials and
other communications to shareholders of the Funds; and (iv)
fees required in connection with the offer and sale of Shares
in such jurisdictions as shall be selected by the Trust
pursuant to Section 3(E) hereof.
B. The Distributor shall bear the expenses of registration or
qualification of the Distributor as a dealer or broker under
federal or state laws and the expenses of continuing such
registration or qualification. The Distributor does not assume
responsibility for any expenses not expressly assumed
hereunder.
7. INDEMNIFICATION
A. The Trust shall indemnify, defend and hold the Distributor and
each of its present or former members, officers, employees,
representatives and any person who controls or previously
controlled the Distributor within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses
(including the costs of investigating or defending any alleged
losses, claims, demands, liabilities, damages or expenses and
any reasonable counsel fees incurred in connection therewith)
(collectively, "Losses") that the Distributor, each of its
present and former members, officers, employees or
representatives or any such controlling person, may incur
under the 1933 Act, the 1934 Act, any other statute (including
Blue Sky laws) or any rule or regulation thereunder, or under
common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement of a material
fact contained in the Registration Statement or any
Prospectus, as from time to time amended or supplemented, or
in any annual or interim report to shareholders, or in any
advertisements or sales literature prepared by the Trust or
its agent, or arising out of or based upon any omission, or
alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or based upon the Trust's failure to comply
with the terms of this Agreement or applicable law; provided,
however, that the Trust's obligation to indemnify the
Distributor and any of the foregoing indemnitees shall not be
deemed to cover any Losses arising out of any untrue statement
or alleged untrue statement or
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omission or alleged omission made in the Registration
Statement, Prospectus, annual or interim report, or any such
advertisement or sales literature in reliance upon and in
conformity with information relating to the Distributor and
furnished to the Trust or its counsel by the Distributor in
writing and acknowledging the purpose of its use for the
purpose of, and used in, the preparation thereof. The Trust's
agreement to indemnify the Distributor, and any of the
foregoing indemnitees, as the case may be, with respect to any
action, is expressly conditioned upon the Trust being notified
of such action or claim of loss brought against the
Distributor, or any of the foregoing indemnitees, within a
reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been
served upon the Distributor, or such person, unless the
failure to give notice does not prejudice the Trust. Such
notification shall be given by letter or by telegram addressed
to the Trust's President, but the failure so to notify the
Trust of any such action shall not relieve the Trust from any
liability which the Trust may have to the person against whom
such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission,
otherwise than on account of the Trust's indemnity agreement
contained in this Section 7(A).
B. The Trust shall be entitled to participate at its own expense
in the defense, or if it so elects, to assume the defense of
any suit brought to enforce any such Losses, but if the Trust
elects to assume the defense, such defense shall be conducted
by counsel chosen by the Trust and approved by the
Distributor, which approval shall not be unreasonably
withheld. In the event the Trust elects to assume the defense
of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the reasonable
fees and expenses of any additional counsel retained by them.
If the Trust does not elect to assume the defense of any such
suit, or in case the Distributor does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Trust,
or if under prevailing law or legal codes of ethics, the same
counsel cannot effectively represent the interests of both the
Trust and the Distributor, and each of its present or former
members, officers, employees, representatives or any
controlling person, the Trust will reimburse the indemnified
person or persons named as defendant or defendants in such
suit, for the reasonable fees and expenses of any counsel
retained by Distributor and them. The Trust's indemnification
agreement contained in Sections 7(A) and 7(B) herein shall
remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Distributor, and
each of its present or former members, officers, employees,
representatives or any controlling person, and shall survive
the delivery of any Shares and the termination of this
Agreement. This agreement of indemnity will inure exclusively
to the Distributor's benefit, to the benefit of each of its
present or former members, officers, employees or
representatives or to the benefit of any controlling persons
and their successors. The Trust agrees promptly to notify the
Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or
trustees in connection with the issue and sale of any of the
Shares.
C. The Trust shall advance attorneys' fees and other expenses
incurred by any person in defending any claim, demand, action
or suit which is the subject of a claim for indemnification
pursuant to this Section 7 to the maximum extent permissible
under applicable law.
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D. The Distributor shall indemnify, defend and hold the Trust and
each of its present or former trustees, officers, employees,
representatives and any person who controls or previously
controlled the Trust within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and all
Losses that the Trust, each of its present or former trustees,
officers, employees, representatives, or any such controlling
person may incur under the 1933 Act, the 1934 Act, any other
statute (including Blue Sky laws) or any rule or regulation
thereunder, or under common law or otherwise, arising out of
or based upon any untrue, or alleged untrue, statement of a
material fact contained in the Trust's Registration Statement
or any Prospectus, as from time to time amended or
supplemented, or arising out of or based upon Distributor's
failure to comply with the terms of this Agreement or
applicable law, or the omission, or alleged omission, to state
therein a material fact required to be stated therein or
necessary to make the statement not misleading, but only if
such statement or omission was made in reliance upon, and in
conformity with, written information relating to the
Distributor and furnished to the Trust or its counsel by the
Distributor for the purpose of, and used in, the preparation
thereof. The Distributor's agreement to indemnify the Trust,
and any of the foregoing indemnitees, is expressly conditioned
upon the Distributor being notified of any action or claim of
loss brought against the Trust, and any of the foregoing
indemnitees, such notification to be given by letter or
telegram addressed to the Distributor's President, within a
reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been
served upon the Trust or such person unless the failure to
give notice does not prejudice the Distributor, but the
failure so to notify the Distributor of any such action shall
not relieve the Distributor from any liability which the
Distributor may have to the person against whom such action is
brought by reason of any such untrue, or alleged untrue,
statement or omission, otherwise than on account of the
Distributor's indemnity agreement contained in this Section
7(D).
E. The Distributor shall be entitled to participate at its own
expense in the defense or if it so elects, to assume the
defense of any suit brought to enforce any such loss, claim,
demand, liability, damage or expense, but if the Distributor
elects to assume the defense, such defense shall be conducted
by counsel chosen by the Distributor and approved by the
Trust, which approval shall not be unreasonably withheld. In
the event the Distributor elects to assume the defense of any
such suit and retain such counsel, the indemnified defendant
or defendants in such suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, or in
case the Trust does not, in the exercise of reasonable
judgment, approve of counsel chosen by the Distributor, or
reasonable fees and expenses of any if under prevailing law or
legal codes of ethics, the same counsel cannot effectively
represent the interests of both the Trust and the Distributor,
and each of its present or former members, officers,
employees, representatives or any controlling person, the
Distributor will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the counsel
retained by the Trust and them. The Distributor's
indemnification agreement contained in Sections 7(D) and 7(E)
herein shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Trust, and each of its present or former trustees, officers,
employees, representatives or any controlling person, and
shall survive the delivery of any Shares and the termination
of this Agreement. This Agreement of indemnity will inure
exclusively to the Trust's benefit, to the benefit of
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each of its present or former trustees, officers, employees or
representatives or to the benefit of any controlling persons
and their successors. The Distributor agrees promptly to
notify the Trust of the commencement of any litigation or
proceedings against the Distributor or any of its officers or
trustees in connection with the issue and sale of any of the
Shares.
F. No person shall be obligated to provide indemnification under
this Section 6 if such indemnification would be impermissible
under the 1940 Act, the 1933 Act, the 1934 Act or the rules of
the NASD; provided, however, in such event indemnification
shall be provided under this Section 7 to the maximum extent
so permissible. The provisions of this Section 7 shall survive
the termination of this Agreement.
8. OBLIGATIONS OF THE TRUST
This Agreement is executed by and on behalf of the Trust and the
obligations of the Trust hereunder are not binding upon any of the trustees,
officers or shareholders of the Trust individually, but are binding only upon
the Trust and with respect to the Funds to which such obligations pertain.
9. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control, and nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or order of the SEC thereunder.
10. DURATION AND TERMINATION
A. This Agreement shall become effective with respect to each
Fund listed on Appendix A hereof as of the date hereof and,
with respect to each Fund not in existence on that date, on
the date an amendment to Appendix A to this Agreement relating
to that Fund is executed. Unless sooner terminated as provided
herein, this Agreement shall continue in effect for two (2)
years from the date hereof. Thereafter, if not terminated,
this Agreement shall continue in effect automatically as to
each Fund for successive one-year periods, provided such
continuance is specifically approved at least annually by: (i)
the Trust's Board; or (ii) the vote of a "majority of the
outstanding voting securities" of a Fund, and provided that in
either event, the continuance is also approved by a majority
of the Trust's Board who are not "interested persons" of any
party to this Agreement, by a vote cast in person at a meeting
called for the purpose of voting on such approval.
B. Notwithstanding the foregoing, this Agreement may be
terminated, without the payment of any penalty, with respect
to a particular Fund: (i) through a failure to renew this
Agreement at the end of a term, (ii) upon mutual consent of
the parties; or (iii) upon no less than sixty (60) days'
written notice, by either the Trust upon the vote of a
majority of the members of its Board who are not "interested
persons" of the Trust and have no direct or indirect financial
interest in the operation of this Agreement or by vote of a
"majority of the outstanding voting securities" of a Fund, or
by the Distributor. The terms of this Agreement shall not be
waived, altered, modified, amended or
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supplemented in any manner whatsoever except by a written
instrument signed by the Distributor and the Trust. If
required under the 1940 Act, any such amendment must be
approved by the Trust's Board, including a majority of the
Trust's Board who are not "interested persons" of any party to
this Agreement, by a vote cast in person at a meeting for the
purpose of voting on such amendment. This Agreement will
automatically terminate in the event of its assignment.
C. Sections 7, 9, 11 and 12 shall survive termination of this
Agreement.
D. This Agreement has been approved in anticipation of the
Distributor's transfer of its Allocable Portion (but not its
obligations under this Agreement) of Distribution Fees and
CDSCs to a third party pursuant to a "Purchase and Sale
Agreement" in order to raise funds to cover distribution
expenditures, and such transfer will not constitute an
assignment or cause a termination of this Agreement.
11. CONFIDENTIALITY
The Distributor agrees on behalf of its employees to treat all records
relative to the Trust and prior, present or potential shareholders of the Trust
as confidential, and not to use such records for any purpose other than
performance of the Distributor's responsibilities and duties under this
Agreement, except after notification and prior approval by the Trust, which
approval shall not be unreasonably withheld, and may not be withheld where the
Distributor may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Trust. Records and information that have become
known to the public through no wrongful act of the Distributor or any of its
employees, agents or representatives shall not be subject to this paragraph.
In accordance with Regulation S-P, the Distributor will not disclose
any non-public personal information, as defined in Regulation S-P, received from
the Trust or any Fund regarding any Fund shareholder; provided, however, that
the Distributor may disclose such information to any party as necessary in the
ordinary course of business to carry out the purposes for which such information
was disclosed to the Distributor, or as may be required by law. The Distributor
agrees to use reasonable precautions to protect and prevent the unintentional
disclosure of such non-public personal information.
12. ANTI-MONEY LAUNDERING PROGRAM
The Distributor represents and warrants that it: (i) has adopted an
anti-money laundering compliance program ("AML Program") that satisfies the
requirements of all applicable laws and regulations; (ii) undertakes to carry
out its AML Program to the best of its ability; and (iii) will promptly notify
the Trust if an inspection by the appropriate regulatory authorities of its AML
Program identifies any material deficiency, and (vi) will promptly remedy any
material deficiency of which it learns.
13. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
11
Any provision of this Agreement which may be determined by competent authority
to be prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" shall have
the same meaning as such terms have in the 1940 Act.
14. NOTICES
Any notice required or permitted to be given by any party to the others
shall be in writing and shall be deemed to have been given on the date delivered
personally or by courier service, or three (3) days after sent by registered or
certified mail, postage prepaid, return receipt requested, or on the date sent
and confirmed received by facsimile transmission to the other parties'
respective addresses as set forth below:
Notice to the Distributor shall be sent to:
Quasar Distributors, LLC
Attn: President
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
notice to the Trust shall be sent to:
The Kensington Funds
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
THE KENSINGTON FUNDS QUASAR DISTRIBUTORS, LLC
By: By:
-------------------------------------- ------------------------------
Xxxx X. Xxxxxx Xxxxx X. Xxxxxxxxx
Title: President Title: President
12
APPENDIX A
TO THE
DISTRIBUTION AGREEMENT
FUND NAMES
SEPARATE SERIES OF THE KENSINGTON FUNDS
Name of Series
Kensington Strategic Realty Fund
Kensington Select Income Fund
Kensington Real Estate Securities Fund
00
XXXXXXXX X
TO THE
DISTRIBUTION AGREEMENT
ALLOCATION SCHEDULE
The following relates solely to Class B and Class C Shares of the Funds
and allocations of each such Class B and Class C Shares are made on Class bases.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in
respect of Class B and Class C Shares shall be 100% until such time as the
Distributor shall cease to serve as exclusive distributor of Shares of the
Funds; thereafter, collections that constitute CDSCs and Distribution Fees
relating to Class B and Class C Shares shall be allocated among the Distributor
and any successor distributor ("Successor Distributor") in accordance with this
Schedule.
Defined terms used in this Schedule and not otherwise defined herein
shall have the meanings assigned to them in the Distribution Agreement between
The Kensington Funds and Quasar Distributors, LLC (the "Distribution
Agreement"), of which this Schedule is a part. As used herein the following
terms shall have the meanings indicated:
"CDSC Share" means each Class B and Class C Share issued under
circumstances which would normally give rise to an obligation of the holder of
such share to pay a CDSC upon redemption of such Share (including any Class B
Shares and Class C Shares issued in connection with a permitted free exchange),
and any such Share shall continue to be a CDSC Share of the applicable Fund
prior to the redemption (including a redemption in connection with a permitted
free exchange) or conversion of such Share, even though the obligation to pay
the CDSC may have expired or conditions for waivers thereof may exist.
"Date of Original Issuance" means in respect of any CDSC Share, the
date with reference to which the amount of the CDSC payable on redemption
thereof if any, is computed.
"Free Share" means, in respect of a Fund, each Class B and Class C
Share of the Fund, other than a CDSC Share (including, without limitation, any
Class B and Class C Shares issued in connection with the reinvestment of
dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which
the Fund issued Shares.
"Net Asset Value" means the net asset value determined as set forth in
the Prospectus of each Fund.
PART I: ATTRIBUTION OF CLASS B AND CLASS C SHARES
Class B and Class C Shares that are outstanding from time to time,
shall be attributed to the Distributor and each Successor Distributor in
accordance with the following rules;
(1) CDSC Shares:
(a) CDSC Shares attributed to the Distributor shall be those
CDSC Shares the date of Original Issuance of which occurred after the
Inception Date of the applicable Fund and on
14
or prior to the date the Distributor ceased to be exclusive distributor
of Class B and Class C Shares of the Funds. For the avoidance of doubt,
all CDSC Shares issued during periods in which BISYS Fund Services
Limited Partnership served as distributor under the Distribution
Agreement or any predecessor agreement together with all Free Shares
and CDSC Shares derived from such CDSC Shares, whether pursuant to one
or more permitted free exchanges or otherwise, shall be attributed to
the Distributor.
(b) CDSC Shares attributable to each Successor Distributor
shall be those CDSC Shares the Date of Original Issuance of which
occurs after the date such Successor Distributor became the exclusive
distributor of Class B and Class C Shares and on or prior to the date
such Successor Distributor ceased to be the exclusive distributor of
Class B and Class C Shares of the Fund.
(c) A CDSC Share of a Fund issued in consideration of the
investment of proceeds of the redemption of a CDSC Share of another
Fund (the "Redeeming Fund") in connection with a permitted free
exchange, is deemed to have a Date of Original Issuance identical to
the Date of Original Issuance of the CDSC Share of the Redeeming Fund,
and any such CDSC Share will be attributed to the Distributor or the
Successor Distributor based upon such Date of Original Issuance in
accordance with rules (a) and (b) above.
(2) Free Shares:
Free Shares of a Fund outstanding on any date shall be attributed to
the Distributor or a Successor Distributor, as the case may be, in the same
proportion that the CDSC Shares of a Fund outstanding on such date are
attributed to each on such date; provided that if the Distributor and its
transferees reasonably determine that the transfer agent is able to produce
monthly reports that track the Date of Original Issuance for such Free Shares,
then such Free Shares shall be allocated pursuant to clause 1(a), (b) and (c)
above.
PART II: ALLOCATION OF CDSCs
CDSCs in respect of the redemption of CDSC Shares shall be allocated to
the Distributor or a Successor Distributor depending upon whether the related
redeemed CDSC Share is attributable to the Distributor or such Successor
Distributor, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that
Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect of
all Class B and Class C Shares of a Fund during any calendar month allocable to
the Distributor or a Successor Distributor is determined by multiplying the
total of such Distribution Fee by the following fraction:
(A + C)/2
---------
(B + D)/2
15
where:
A= The aggregate Net Asset Value of all Class B and Class C Shares of a
Fund attributed to the Distributor or such Successor Distributor, as
the case may be, and outstanding at the beginning of such calendar
month
B= The aggregate Net Asset Value of all Class B and Class C Shares of a
Fund at the beginning of such calendar month
C= The aggregate Net Asset Value of all Class B and Class C Shares of a
Fund attributed to the Distributor or such Successor Distributor, as
the case may be, and outstanding at the end of such calendar month.
D= The aggregate Net Asset Value of all Class B and Class C Shares of a
Fund at the end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is
able to produce automated monthly reports that allocate the average Net Asset
Value of the CDSC Shares of a Fund among the Distributor and any Successor
Distributor in a manner consistent with the methodology detailed in Part I and
Part III(1) above, the portion of the Distribution Fee accrued in respect of all
such Class B and Class C Shares of a Fund during a particular calendar month
will be allocated to the Distributor or a Successor Distributor by multiplying
the total of such Distribution Fee by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B and Class C shares of a
Fund for such calendar month attributed to the Distributor or a
Successor Distributor, as the case may be
B= Total average Net Asset Value of all such Class B and Class C Shares of
a Fund for such calendar month
PART IV: ADJUSTMENT OF DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
DISTRIBUTOR'S ALLOCABLE PORTION
The parties to the Distribution Agreement recognize that, if the terms
of any Distribution Agreement, any distribution plan, any prospectus, or any
applicable laws and regulations change so as to disproportionately reduce, in a
manner inconsistent with the intent of this Distribution Agreement, the amount
of the Distributor's Allocable Portion or any Successor Distributor's Allocable
Portion had no such change occurred, the definitions of the Distributor's
Allocable Portion and/or the Successor Distributor's Allocable Portion in
respect of the Class B and Class C Shares relating to a Fund shall be adjusted
by agreement among the relevant parties; provided, however, if the Distributor,
the Successor Distributor and the Trust cannot agree within thirty (30) days
after the date of any such change in applicable laws and regulations or in any
Distribution Agreement, distribution plan, prospectus or Conduct Rules, they
shall submit the question to arbitration in accordance with the NASD Code of
Arbitration Procedures and the decision reached by the arbitrator shall be final
and binding on each of them.
16
SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
SERVICE AND DISTRIBUTION PLAN
SCHEDULE A
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U.S. BANCORP FUND SERVICES, LLC
17
