EXHIBIT (h)(3)
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
2004, by and between THE KENSINGTON FUNDS, a Delaware statutory trust (the
"Trust") and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability
company ("USBFS").
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 interest in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, USBFS is, among other things, in the business of administering
transfer and dividend disbursing agent functions for the benefit of its
customers; and
WHEREAS, the Trust desires to retain USBFS to provide transfer and
dividend disbursing agent services to each series of the Trust listed on Exhibit
A hereto (as amended from time to time) (each a "Fund", collectively the
"Funds").
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 USBFS AS TRANSFER AGENT
The Trust hereby appoints USBFS as transfer agent of the Trust on the
terms and conditions set forth in this Agreement, and USBFS hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement.
2. SERVICES AND DUTIES OF USBFS
USBFS shall perform all of the customary services of a transfer agent
and dividend disbursing agent for the Funds, and as relevant, agent in
connection with accumulation, open account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal
program), including but not limited to:
A. Receive and process all orders for the purchase, exchange,
and/or redemption of shares in accordance with Rule 22c-1 of
the Investment Company Act of 1940 ("the 1940 Act").
B. Process purchase orders with prompt delivery, where
appropriate, of payment and supporting documentation to the
Trust's custodian, and issue the appropriate number of
uncertificated shares with such uncertificated shares being
held in the appropriate shareholder account.
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C. Arrange for issuance of shares obtained through transfers of
funds from Fund shareholders' accounts at financial
institutions and arrange for the exchange of shares for shares
of other eligible investment companies, when permitted by the
Fund's current prospectus ("Prospectus").
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Trust's
custodian.
E. Pay monies upon receipt from the Trust's custodian, where
relevant, in accordance with the instructions of redeeming
shareholders.
F. Process transfers of shares in accordance with the
shareholder's instructions.
G. Process exchanges between Funds and/or classes of shares of
Funds both within the same family of funds and with a First
American Money Market Fund, if applicable.
H. Prepare and transmit payments for dividends and distributions
declared by the Trust with respect to the Fund, after
deducting any amount required to be withheld by any applicable
laws, rules and regulations and in accordance with shareholder
instructions.
I. Make changes to shareholder records, including, but not
limited to, address changes in plans (e.g., systematic
withdrawal, automatic investment, dividend reinvestment).
J. Record the issuance of shares of the Fund and maintain,
pursuant to Rule 17Ad-10(e) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), a
record of the total number of shares of the Fund which are
authorized, issued and outstanding.
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies.
L. Mail shareholder reports and Prospectuses to current
shareholders.
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders.
N. Provide shareholder account information upon request and
prepare and mail confirmations and statements of account to
shareholders for all purchases, redemptions and other
confirmable transactions as agreed upon with the Trust.
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O. Mail requests for shareholders' certifications under penalties
of perjury and pay on a timely basis to the appropriate
federal authorities any taxes to be withheld on dividends and
distributions paid by the Trust, all as required by applicable
federal tax laws and regulations.
P. Provide a Blue Sky system that will enable the Trust to
monitor the total number of shares of the Fund sold in each
state. In addition, the Trust or its agent, including USBFS,
shall identify to USBFS in writing those transactions and
assets to be treated as exempt from the Blue Sky reporting for
each state. The responsibility of USBFS for the Trust's Blue
Sky state registration status is solely limited to the initial
compliance by the Trust and the reporting of such transactions
to the Trust or its agent.
Q. Answer correspondence from shareholders, securities brokers
and others relating to USBFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed
upon between USBFS and the Trust.
R. Reimburse the Fund each month for all material losses
resulting from "as of" processing errors for which USBFS is
responsible in accordance with the "as of" processing
guidelines set forth on Exhibit C hereto.
3. REPRESENTATIONS OF USBFS
USBFS represents and warrants to the Trust that:
A. It is a limited liability corporation duly organized, existing
and in good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act.
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to
authorize it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the
Securities Act of 1933, as amended, and the Exchange Act, the
1940 Act, and any laws, rules, and regulations of governmental
authorities having jurisdiction.
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4. REPRESENTATIONS OF THE TRUST
The Trust represents and warrants to USBFS that:
A. The Trust is an open-end investment company under the 1940
Act;
B. The Trust is a statutory trust organized, existing, and in
good standing under the laws of Delaware;
C. The Trust is empowered under applicable laws and by its
Declaration of Trust and Bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Declaration of Trust
have been taken to authorize it to enter into and perform this
Agreement;
E. The Trust will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all shares of the Trust being offered
for sale.
5. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B
hereto (as amended from time to time). The Trust shall pay all fees and
reimbursable expenses within thirty (30) calendar days following
receipt of the billing notice, except for any fee or expense subject to
a good faith dispute. The Trust shall notify USBFS in writing within
thirty (30) calendar days following receipt of each invoice if the
Trust is disputing any amounts in good faith. The Trust shall settle
such disputed amounts within ten (10) calendar days of the day on which
the parties agree to the amount to be paid. With the exception of any
fee or expense the Trust is disputing in good faith as set forth above,
unpaid invoices shall accrue a finance charge of one and one-half
percent (1 1/2%) per month, after the due date. Notwithstanding
anything to the contrary, amounts owed by the Trust to USBFS shall only
be paid out of assets and property of the particular Fund involved.
6. INDEMNIFICATION; LIMITATION OF LIABILITY
A. USBFS shall exercise reasonable care in the performance of its
duties under this Agreement. USBFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by the Trust in connection with matters to which this
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Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies
beyond USBFS's control, except a loss arising out of or
relating to USBFS's refusal or failure to comply with the
terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its
duties under this Agreement. Notwithstanding any other
provision of this Agreement, if USBFS has exercised reasonable
care in the performance of its duties under this Agreement,
the Trust shall indemnify and hold harmless USBFS from and
against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) which USBFS may sustain or incur or which may
be asserted against USBFS by any person arising out of any
action taken or omitted to be taken by it in performing the
services hereunder, except for any and all claims, demands,
losses, expenses, and liabilities arising out of or relating
to USBFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided
to USBFS by any duly authorized officer of the Trust, such
duly authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust
(the "Board of Trustees" or "Trustees").
USBFS shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) that the Trust may sustain or incur or that
may be asserted against the Trust by any person arising out of
any action taken or omitted to be taken by USBFS as a result
of USBFS's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, USBFS
shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues
beyond USBFS's control. USBFS will make every reasonable
effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of
USBFS. USBFS agrees that it shall, at all times, have
reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data
processing equipment to the extent appropriate equipment is
available. Representatives of the Trust shall be entitled to
inspect USBFS's premises and operating capabilities at any
time during regular business hours of USBFS, upon reasonable
notice to USBFS.
Notwithstanding the above, USBFS reserves the right to
reprocess and correct administrative errors at its own
expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold
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the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the
indemnitee will use all reasonable care to notify the
indemnitor promptly concerning any situation that presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to
defend the indemnitee against any claim that may be the
subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and
thereupon the indemnitor shall take over complete defense of
the claim, and the indemnitee shall in such situation initiate
no further legal or other expenses for which it shall seek
indemnification under this section. The indemnitee shall in no
case confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the indemnitee
except with the indemnitor's prior written consent.
7. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
prior, present, or potential shareholders (and clients of said
shareholders) and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may
not be withheld where USBFS may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to
divulge such information by duly constituted authorities, or when so
requested by the Trust.
Further, USBFS will adhere to the privacy policies adopted by the Trust
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified
from time to time (the "Act"). Notwithstanding the foregoing, USBFS
will not share any nonpublic personal information concerning any of the
Trust's shareholders with any third party unless specifically directed
by the Trust or allowed under one of the exceptions noted under the
Act.
8. ANTI-MONEY LAUNDERING PROGRAM
The Trust acknowledges that it has had an opportunity to review,
consider and comment upon the procedures provided by USBFS describing
various tools designed to promote the detection and reporting of
potential money laundering activity by monitoring certain aspects of
shareholder activity (the "Monitoring Procedures") as well as written
procedures for verifying a customer's identity (the "Customer
Identification Procedures"), together referred to as the "Procedures,"
and the Trust has determined that the Procedures, as part of the
Trust's overall anti-money laundering program, are reasonably designed
to prevent the Fund from being used for money laundering or the
financing of terrorist activities and to achieve compliance with the
applicable provision of the Bank Secrecy Act and the implementing
regulations thereunder.
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Based on this determination, the Trust hereby instructs and directs
USBFS to implement the Procedures on the Trust's behalf, as such may be
amended or revised from time to time.
It is contemplated that these Procedures will be amended from time to
time by the parties as additional regulations are adopted and/or
regulatory guidance is provided relating to the Trust's anti-money
laundering responsibilities.
USBFS agrees to provide to the Trust:
(a) Prompt written notification of any transaction or combination
of transactions that USBFS believes, based on the Procedures,
evidence money laundering activity in connection with the
Trust or any shareholder of the Fund;
(b) Prompt written notification of any customer(s) that USBFS
reasonably believes, based upon the Procedures, to be engaged
in money laundering activity, provided that the Trust agrees
not to communicate this information to the customer;
(c) Any reports received by USBFS from any government agency or
applicable industry self-regulatory organization pertaining to
USBFS's anti-money laundering monitoring on behalf of the
Trust;
(d) Prompt written notification of any action taken in response to
anti-money laundering violations as described in (a), (b) or
(c); and
(e) A certified annual report of its monitoring and customer
identification activities on behalf of the Trust. USBFS shall
provide such other reports on the monitoring and customer
identification activities conducted at the direction of the
Trust as may be agreed to from time to time by USBFS and the
Trust.
The Trust hereby directs, and USBFS acknowledges, that USBFS shall (i)
permit federal regulators access to such information and records
maintained by USBFS and relating to USBFS's implementation of the
Procedures on behalf of the Trust, as they may request, and (ii) permit
such federal regulators to inspect USBFS's implementation of the
Procedures on behalf of the Trust.
9. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written
above and will continue in effect for a period of two years, after
which this Agreement may be terminated by either party upon giving 90
days prior written notice to the other party or such shorter period as
is mutually agreed upon by the parties. Subsequent to the initial
two-year term, this Agreement will renew automatically for an annual
period. However, this Agreement may be amended by mutual written
consent of the parties. At any point during the term of this Agreement,
should the Trust determine that as a result of a corporate sale or
merger of USBFS or any regulatory action, sanction or investigation
that is reasonably deemed by the Trust to be harmful or unfavorable to
the Trust, this agreement will terminate and the expense of the
transfer of all relevant books,
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records, correspondence and other data to a successor shall be at the
expense of USBFS.
10. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of USBFS's duties or responsibilities hereunder is designated by the
Trust by written notice to USBFS, USBFS will promptly, upon such
termination and at the expense of the Trust, transfer to such successor
all relevant books, records, correspondence, and other data established
or maintained by USBFS under this Agreement in a form reasonably
acceptable to the Trust (if such form differs from the form in which
USBFS has maintained, the Trust shall pay any expenses associated with
transferring the data to such form), and will cooperate in the transfer
of such duties and responsibilities, including provision for assistance
from USBFS's personnel in the establishment of books, records, and
other data by such successor.
11. RECORDS
USBFS shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Trust, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. USBFS
agrees that all such records prepared or maintained by USBFS relating
to the services to be performed by USBFS hereunder are the property of
the Trust and will be preserved, maintained, and made available in
accordance with such applicable sections and rules of the 1940 Act and
will be promptly surrendered to the Trust on and in accordance with its
request. Further, federal examiners shall have access to information
and records relating to anti-money laundering activities performed by
USBFS hereunder and USBFS consents to any inspection authorized by law
or regulation in connection thereof.
12. 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 Securities and Exchange Commission thereunder.
13. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent, which may be USBFS, shall furnish to USBFS the
data necessary to perform the services described herein at such times
and in such form as mutually agreed upon. If USBFS is also acting in
another capacity for the Trust, nothing herein shall be deemed to
relieve USBFS of any of its obligations in such capacity.
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14. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party. Accordingly, this Agreement shall
not be assigned upon the transfer, assignment, or corporate sale or
merger of either party without the prior written consent of the other
party.
15. NOTICES
Any notice required or permitted to be given by either party to the
other 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 party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and 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 U.S. BANCORP FUND SERVICES, LLC
By: By:
-------------------------------- -----------------------------
Xxxx X. Xxxxxx Xxx X. Xxxxxxx
Title: President Title: President
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EXHIBIT A
TO THE
TRANSFER AGENT SERVICING AGREEMENT
FUND NAMES
Name of Series
Kensington Strategic Realty Fund
Kensington Select Income Fund
Kensington Real Estate Securities Fund
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EXHIBIT B
THE KENSINGTON FUNDS
TRANSFER AGENCY, FUND ACCOUNTING AND FUND ADMINISTRATION SERVICES
ANNUAL FEE SCHEDULE
The following is a combined fee schedule for all services provided by
U.S. Bancorp Fund Services LLC to The Kensington Funds.
ANNUAL FEE BASED ON TOTAL ASSETS OF THE FUND COMPLEX UP TO 4 FUNDS AND CLASSES
12 BASIS POINTS ON THE FIRST $1.25 BILLION 8 BASIS POINTS TO THE NEXT $1.75
BILLION 6 BASIS POINTS THEREAFTER
OUT OF POCKET COSTS INCLUDED IN BASIS POINTS OUT OF POCKETS AND FUND COSTS NOT INCLUDED IN
SERVICE FEE BASIS POINTS SERVICE FEE
-Shareholder Communication Stationery
- Statements, confirms, etc. -Printing of Prospectus, Annual/semi Reports, Advertising
- Postage and Sales Materials
-Shareholder Mailing and Inserting -Independent Legal and Audit
-NSCC - Fund/SERV, Networking Services -Insurance and Registration Fees
-Shareholder Web Access (FanWeb) -Board Member compensation and travel expenses
- set up/maintenance/activity -Proxies and Proxies Services
-Financial Advisor/Broker Web Access (Vision) -Literature Fulfillment Service
- inquiry/transactions activity -Marketing/Sales - internal wholesaling
-Voice Response Services -Licensing of Investment Advisor's Staff
- account inquiry/maintenance/ transactions - $1,500 per year per registered representative.
-Banking Services -Engagement of designers, free-xxxxx writers and public
- Draft Checking, ACH Cost relations firms
-800 Telephone Service Cost
-Anti-Money Laundering Service
-E-Delivery Statements/Compliance
-Security Pricing
-Corporate Action Services
-Manual Security Pricing
-XXXXX filings, retention of records
-US Bancorp Employee Board Meeting Travel ADDITIONAL FUNDS: Annual Fee Schedule to be
-Adhoc reports re-negotiated.
-Advertising Compliance Review/NASD Filings
-On-line internet access to U.S. Bancorp systems EFFECTIVE PERIOD FOR FEE SCHEDULE: 2 years for all
(TA 200, COLD, Image, Report Source, Vision, Fund services, with an option to extend the contract for an
Accounting) additional 3 years, provided the average account size is
-Sales Reporting greater than $20,000.
-Licensing of registered representatives up to 10.
-short term trading system and support SET-UP AND CONVERSION COST: None
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EXHIBIT C
TO THE
TRANSFER AGENT SERVICING AGREEMENT
AS OF PROCESSING POLICY
USBFS will reimburse each Fund for any net material loss that may exist
on the Fund's books and for which USBFS is responsible, at the end of each
calendar month. "Net Material Loss" shall be defined as any remaining loss,
after netting losses against any gains, which impacts a Fund's net asset value
per share by more than 1/2 cent. Gains and losses will be reflected on the
Fund's daily share sheet, and the Fund will be reimbursed for any net material
loss on a monthly basis. USBFS will reset the as of ledger each calendar month
so that any losses which do not exceed the materiality threshold of 1/2 cent
will not be carried forward to the next succeeding month. USBFS will notify the
advisor to the Fund on the daily share sheet of any losses for which the advisor
may be held accountable.
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