ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
KINETICS PORTFOLIOS TRUST
AND
KINETICS ASSET MANAGEMENT, INC.
(i)
TABLE OF CONTENTS
1. Duties of the Administrator...........................................
2. Compensation of the Administrator.....................................
3. Indemnification.......................................................
4. Reports...............................................................
5. Delegation of Certain Duties to Sub-Administrator.....................
6. Activities of the Administrator.......................................
7. Confidentiality.......................................................
8. Duration and Termination of the Agreement.............................
9. Assignment............................................................
10. Governing Law.........................................................
11. Amendments to this Agreement..........................................
12. Merger of Agreement...................................................
13. Notices...............................................................
14. Regarding the Administrator...........................................
SCHEDULE A.....................................................................
SCHEDULE B.....................................................................
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is dated as of ______________, 2000 by and
between KINETICS PORTFOLIOS TRUST (the "Trust"), a Delaware business trust,
having an office and place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxx Xxxx 00000 on behalf of each of the series listed on Schedule A to this
Agreement, as amended from time to time (each a "Portfolio" and collectively the
"Portfolios"), and KINETICS ASSET MANAGEMENT, INC., a New York corporation,
having its place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx
00000 (the "Administrator").
BACKGROUND
WHEREAS, the Trust is an open-end management investment
company registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in
providing administrative services to mutual funds and possesses facilities
sufficient to provide such services; and
WHEREAS, the Trust, on behalf of the Portfolios, desires to
avail itself of the experience, assistance and facilities of the Administrator
and to have the Administrator perform for the Portfolios certain services
appropriate to the operations of the Portfolios and the Administrator is willing
to furnish such services in accordance with the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
TERMS
Subject to the terms and conditions set forth in this
Agreement, the Portfolios hereby employ and appoint the Administrator to act as
the Trust's administrator for the Portfolios' authorized and issued shares of
beneficial interest, ("Shares").
1. DUTIES OF THE ADMINISTRATOR.
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The Administrator agrees that it will provide all
administrative services necessary and customary to administer a mutual fund,
and will provide the Portfolios with the necessary office space, communication
and data processing facilities and personnel to perform such services for the
Portfolios, including:
A. GENERAL PORTFOLIO MANAGEMENT.
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(1) Act as liaison among the Portfolios' service providers.
(2) Coordinate board communication by:
(a) establishing all meeting agendas;
(b) preparing and presenting board reports and
collateral materials;
(c) supervising preparation of board minutes; and
(d) evaluating independent auditors and Trust
counsel for board review and approval.
(3) Coordinate all operations of the Portfolios.
B. AUDITS.
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(1) Provide central coordination of interactions with SEC
and other regulatory agencies.
(2) Provide office facilities to assist audit process.
C. SEC REGISTRATION.
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(1) Update prospectus, statement of additional information and
proxies as required.
(2) Coordinate updates with Trust Counsel.
(3) Coordinate printing and distribution of required
prospectus updates and proxies.
D. TREASURY SERVICES.
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(1) Provide staff to act as officers and signatories to
the Portfolios to authorize official documents.
(2) Review and approve all Portfolio expense items.
(3) Maintain overall expense accrual targets for
fiscal reporting periods and coordinate with
Portfolio Accountant.
E. DUTIES OF SUB-ADMINISTRATOR - FIRSTAR MUTUAL FUND SERVICES LLC
("FMFS").
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(1) Financial Reporting.
(a) Prepare Annual and Semi-Annual Reports.
(b) Prepare Financial Highlights and Expense
Summary for prospectus updates.
(c) Prepare Rule 24f-2 Notice.
(d) Prepare financial reports and schedules
for the Portfolios' independent auditors.
(e) Prepare financials as required by the
Administrator for inclusion in bond reports.
(f) Supervise maintenance of the Portfolios' general
ledger and the preparation of financial statements,
expense accruals and payments, net asset value
determination and the declaration and payment of
dividends and other distributions to shareholders.
F. TAX REPORTING.
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(1) Prepare and file on a timely basis federal
and state tax returns, including forms
1120/8610 with any necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File 1099 Miscellaneous for payments to trustees and other
service promotions.
(4) Monitor wash sales in portfolio.
(5) Calculate eligible dividend income for corporate
shareholders.
G. PORTFOLIO REGULATORY COMPLIANCE.
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(1) Monthly, quarterly and intra-month spot
checks as needed to monitor compliance with
Investment Company Act of 1940 requirements.
(a) Asset diversification tests.
(b) Total return and SEC yield calculations.
(c) Maintenance of books and records under Rule 31a-3.
(d) Code of ethics.
(2) Periodically monitor each Portfolio's
compliance with the policies and investment
limitations of the Portfolios as set forth
in their prospectuses and statements of
additional information.
(3) Calculate required distributions (including excise tax
distributions).
1.1 ESTABLISHMENT OF PROCEDURE. Procedures applicable
to certain of these services may be established from time to time by agreement
between the Portfolios and the Administrator.
1.2 INDEPENDENT CONTRACTOR. The Administrator shall, for
all purposes herein, be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Portfolios in any way or otherwise be deemed an agent of the
Portfolios.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed
by the Administrator as set forth herein for the Portfolios, the Administrator
shall be entitled to receive and the Portfolios each agree to pay the
Administrator the fees and reimburse those of out-of-pocket expenses set forth
on the fee schedule attached hereto as Schedule B.
3. INDEMNIFICATION.
The Administrator shall not be responsible for, and
the Portfolios shall indemnify and hold the Administrator harmless from and
against, any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions of the Administrator required
to be taken or taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct or violation of
applicable law.
(b) The Portfolios' refusal or failure to
comply with the terms of this Agreement, or which arise out of the Portfolios'
lack of good faith, negligence or willful misconduct or violation of applicable
law.
(c) The offer or sale of Shares in violation of
any requirement under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of such Shares
in such state, except if such sale is conducted with the knowledge of the
Administrator or against the written advice of the Administrator.
3.1 RELIANCE UPON AUTHORITY. At any time the
Administrator may apply to any officer of the Trust for instructions, and may
consult with the Trust's legal counsel with respect to any matter arising in
connection with the services to be performed by the Administrator under this
Agreement, and the Administrator shall not be liable and shall be indemnified by
the Portfolios for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel except if the Administrator
knew or should have known that such conduct was illegal or improper. The
Administrator shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Trust or its Advisor, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Administrator by machine readable input, telex, CRT data entry or other similar
means authorized by the Portfolios, and shall not be held to have notice of any
change of authority of any person, until receipt of written notice thereof from
the Portfolios.
3.2 FORCE MAJEURE, ETC. In the event either party is
unable to perform its obligations under the terms of this Agreement because of
acts of God, strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
3.3 CONSEQUENTIAL DAMAGES. Neither party to this
Agreement shall be liable to the other party for consequential damages under any
provision of this Agreement or for any act or failure to act hereunder.
3.4 LIABILITY OF ADMINISTRATOR. The Administrator shall
indemnify and hold the Portfolios harmless from and against, any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributable to the Administrator's negligence or
willful misconduct or violation of applicable law.
3.5 CLAIMS. In order that the indemnification provisions
contained in this Article shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification the defense of such claim.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent. The party seeking
indemnification shall notify the other party in a reasonable period of time
after reviewing any claim. A copy of the claim shall accompany such notice. The
other party shall have the right to choose counsel to defend against such claim
after consultation with the party seeking indemnification.
4. REPORTS.
The Administrator shall provide to the Board of
Trustees of the Portfolios, on a quarterly basis, a report, in such a form as
the Administrator and the Trust shall from time to time agree, representing
that, to its knowledge, the Portfolios were in compliance with all requirements
of applicable federal and state law, including without limitation, the rules and
regulations of the Securities and Exchange Commission and the Internal Revenue
Service, or specifying any instances in which the Portfolios were not so in
compliance. Whenever, in the course of performing its duties under this
Agreement, the Administrator determines, on the basis of information supplied to
the Administrator by the Portfolios, that a violation of applicable law has
occurred, or that, to its knowledge, a possible violation of applicable law may
have occurred or, with the passage of time, could occur, the Administrator shall
promptly notify the Trust and its counsel of such violation.
5. DELEGATION OF CERTAIN DUTIES TO SUB-ADMINISTRATOR.
It is understood and agreed by the parties that the
Administrator shall be entitled to delegate certain duties of the Administrator
as set forth under Section 1 hereof, including but not limited, to financial
reporting, tax reporting, portfolio compliance with the Investment Company Act
of 1940, and "blue sky" filing obligations to Firstar Mutual Funds Services LLC,
as sub-administrator, whose compensation shall be the sole responsibility of the
Administrator.
6. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar
services to others so long as its services hereunder are not impaired thereby.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf
of itself and its officers and employees, treat all transactions contemplated
by this Agreement, and all other information germane thereto, as Confidential
Information and such Confidential Information shall not be disclosed to any
person except as may be authorized by the Trust.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. This Agreement may be
terminated by either party upon ninety (90) days prior written notice to the
other party or such shorter period as is mutually agreed upon by the parties.
Upon termination of this Agreement, the
Administrator shall deliver all documentation and other property belonging to
the Portfolios, if any, including, but not limited to, all Shareholder records,
books stock ledgers, instruments and other documents (including computer or
other electronically stored information) made or accumulated in the performance
of its duties hereunder (which Administrator acknowledges are the property of
the Portfolios), along with a certified locator document clearly indicating the
complete contents therein, to such successor as may be specified in a notice of
termination or other instruction.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding
upon the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Trust without the
prior written consent of the Administrator, or by the Administrator without the
prior written consent of the Trust.
10. GOVERNING LAW.
The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New York as at the
time in effect and the applicable provisions of the 1940 Act. To the extent that
the applicable law of the State of New York or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties
hereto only if such amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect
to the subject matter hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall
be in writing, shall be deemed to have been given when delivered in person or
by certified mail, return receipt requested, or by telecopier and shall be given
to the following addresses (or such other addresses as to which notice is
given):
TO THE PORTFOLIOS: Kinetics Portfolios Trust
0000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
Attn: Xx. Xxx X. Xxxxxxxxxx
TO THE ADMINISTRATOR: Kinetics Asset Management, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.(000) 000-0000
Attn.: Xx. Xxx X. Xxxxxxxxxx
14. REGARDING THE ADMINISTRATOR.
The Administrator warrants and represents that it
is duly authorized and permitted to act as transfer agent and dividend
disbursing agent under all applicable laws and that it will immediately notify
the Trust of any revocation of such authority or permission or of the
commencement of any proceeding or other action which may lead to such
revocation.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first set forth above.
KINETICS PORTFOLIOS TRUST, KINETICS ASSET MANAGEMENT, INC. on behalf of each
series listed on Schedule A
By: _____________________________ By: ________________________________
Name:____________________________ Name:______________________________
Title:_____________________________ Title:______________________________
SCHEDULE A
The following list comprises each of the series of KINETICS PORTFOLIOS TRUST
covered by the foregoing Agreement:
1. The Medical Portfolio
2. The Internet Portfolio
3. The Internet Global Growth Portfolio
4. The Internet Emerging Growth Portfolio
5. The Internet Infrastructure Portfolio
6. The Internet New Paradigm Portfolio
7. The Small Cap Opportunities Portfolio
8. The Kinetics Government Money Market Portfolio
9. The Middle East Growth Portfolio
SCHEDULE B
(a) ADMINISTRATIVE SERVICE FEE.
For the services rendered by the Administrator in its capacity as
administrator, as specified in Paragraph 1, "DUTIES OF THE ADMINISTRATOR", the
Portfolio shall pay the Administrator within ten (10) days after receipt of an
invoice from the Administrator at the beginning of each month 1/12th of 0.10%
per annum of the average net assets of the Portfolio:
(b) EXPENSES.
The Portfolio shall reimburse the Administrator for any direct
out-of-pocket expenses, incurred by the Administrator in connection with the
performance of its duties hereunder to include: costs for printing, and filing
with the SEC via XXXXX when applicable, portfolio documents (i.e. shareholder
transaction confirmation statements, periodic shareholder transaction
statements, redemption/dividend checks, envelopes, financial statements, forms
1099 and 5498, proxy statements, portfolio prospectus, initial 800-line
installation cost and monthly recurring invoice from AT&T for incoming calls,
postage, costs incurred by a mail fulfillment house utilized for mailing the
following (periodic shareholder account statements, semi-annual and annual
financial statements, proxy statement, portfolio prospectus), pro rata portion
(not to exceed $300) of annual SAS-70 audit letter, and any authorized courier
charges.
The Administrator shall provide the Portfolio with a monthly invoice of
such expenses and the Portfolio shall reimburse the Administrator within fifteen
(15) days after receipt thereof.
Portfolio management reserves the right to approve the selection of the
fulfillment house utilized or to utilize their internal facilities to
do the mailing.
(c) SPECIAL REPORTS.
All reports and /or analyses requested by the Portfolio, its auditors,
legal counsel, portfolio manager, or any regulatory agency having jurisdiction
over the Portfolio, that are not in the normal course of portfolio
administrative activities as specified in Section 1 of this Agreement shall be
subject to an additional charge, agreed upon in advance, based upon the
following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
