Exhibit (h)(5)
AGREEMENT OF THE JOINT INSUREDS
THIS AGREEMENT dated September 1, 1999 is hereby entered into
by and among THE INTERNET FUND, INC. and each series of KINETICS MUTUAL FUNDS,
INC., each as listed on Schedule A, as may be amended from time to time
(hereinafter referred to as the "Fund" or the "Funds").
WHEREAS, the Funds are management investment companies
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Rule 17g-1 under the Act requires each Fund to
provide and maintain in effect a bond against larceny and embezzlement by its
officers and employees; and
WHEREAS, Rule 17g-1 authorizes the Funds to secure a joint
insured bond naming each of them as insureds; and
WHEREAS, Rule 17g-1 also requires that each investment company
named as an insured in a joint bond enter into an agreement with the other named
insureds containing certain provisions regarding the respective shares to be
received by said insureds in the event recovery is received under the joint
insured bond as a result of a loss sustained by them; and
WHEREAS, the Board of Directors of each Fund, including a
majority of the Directors who are not "interested persons" of any Fund or any
series of such Fund as defined by Section 2(a)(19) of the Act, have given due
consideration to all factors relevant to the form, amount and ratable allocation
of premiums of such a joint insured bond and have determined that this joint
insured bond is in the best interest of each Fund and its respective
shareholders, and, accordingly, the majority of such Directors have approved the
amount, type, form and coverage of the joint insured bond and the portion of the
premium payable by each such Fund hereunder; and
WHEREAS, the Directors have determined, with respect to each
Fund, that the allocation of the proceeds payable under the joint insured bond
as set forth herein, which takes into account the minimum amount of coverage
required for each Fund by Rule 17g-1, is equitable.
NOW, THEREFORE, the parties hereto, in consideration of the
mutual covenants contained herein, hereby agree as follows:
1. JOINT INSURED BOND. The Funds shall maintain in effect a
joint fidelity insurance bond (the "Bond") from a reputable fidelity insurance
company authorized to do business in the place where the Bond is issued,
insuring each Fund against larceny and embezzlement and covering such of their
respective officers and employees who may, singly or jointly with others, have
access, directly or indirectly, to the particular Fund's securities or other
assets. The Bond shall name each Fund as an insured and shall comply with the
requirements for such bonds established by Rule 17g-1.
2. AMOUNT. The Bond shall be in a least the minimum amount
required by Rule 17g-1(d) to be maintained by the Funds, in accordance with the
policies of the staff of the Securities and Exchange Commission.
3. RATABLE ALLOCATION OF PREMIUMS. The Funds shall divide the
initial premium and any additional premiums which may become due under the Bond
among them based upon their relative net assets at the time of payment of the
premium involved.
4. RATABLE ALLOCATION OF PROCEEDS.
(a) If more than one of the Funds sustains a single
loss (including a loss sustained before the date hereof), for which recovery is
received under the Bond, each such Fund shall receive that portion of
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the recovery that is sufficient in amount to indemnify that Fund in full for the
loss sustained by it, unless the recovery is inadequate to fully indemnify all
such Funds sustaining a single loss.
(b) If the recovery is inadequate to fully indemnify
all Funds sustaining a single loss, the recovery
shall be allocated among such Funds as follows:
(i) Each of the Funds, to the extent it sustains a
loss, shall be allocated an amount equal to the lesser of its
actual loss or the minimum amount of the fidelity bond that it
would be required to maintain under a single insured bond
(determined as of the time of the loss in accordance with the
provisions of Rule 17g-1).
(ii) The remainder, if any, shall be allocated among
the Funds based upon their relative net assets at the time of
the loss (provided that, if such allocation would result in
any Fund receiving a portion of the recovery in excess of the
loss actually sustained by it, the aggregate of such excess
among such Funds shall be reallocated among the remaining
Funds not fully indemnified as a result of the foregoing
allocations, in proportion to the allocation percentages set
forth in this sub-provision).
5. CLAIMS AND SETTLEMENTS. Each Fund shall, within five (5)
days after the making of any claim under the Bond, provide the other Funds with
written notice of the amount and nature of such claim. Each Fund shall, within
five (5) days of the receipt thereof, provide the other Funds with written
notice of the terms of settlement of any claim made under the Bond by such Fund.
In the event that two (2) or more Funds shall agree to a settlement of a claim
made under the Bond with respect to a single loss, notice of the settlement
shall also include calculation of the amounts to be received under Paragraph 4
hereof. The officers of each Fund designated as responsible for filing notices
required by paragraph (g) of Rule 17g-1 under the Act shall give and receive any
notices required hereby with respect to such Fund.
6. MODIFICATIONS AND AMENDMENTS. Any Fund may increase the
amount of the Bond. Such Fund must give written notice thereof to the other
Funds to this Agreement and to the Securities and Exchange Commission in
accordance with Rule 17g-1. If, pursuant to Rule 17g-1, any Fund shall determine
that the coverage provided pursuant to this Agreement should otherwise be
modified, it shall so notify the other Funds hereto and indicate the nature of
the modification (including the treatment of any increase or return premium)
which it believes to be appropriate. If within sixty (60) days of such notice
any necessary amendments to this Agreement shall not have been made and the
request for modification shall not have been withdrawn, this Agreement shall
terminate (except with respect to losses occurring prior to such termination).
Any Fund may withdraw from this Agreement at any time and cease to be a Fund
hereto (except with respect to losses occurring prior to such withdrawal) by
giving not less than sixty (60) days prior written notice to the other parties
of such withdrawal. Upon withdrawal, a withdrawing Fund shall be entitled to
receive such portion of any premium rebated by the fidelity company with respect
to such withdrawal. Upon termination of the Bond, each insured shall receive any
premium rebated by the fidelity company with respect to such termination in
proportion to the premium paid by such insured, less any premium previously
refunded with respect to such insured.
7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York.
8. NO ASSIGNMENT. This Agreement is not assignable.
9. NOTICES. All notices and other communications hereunder
shall be addressed to the appropriate Fund at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
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10. COUNTERPARTS. This Agreement may be executed in two (2) or
more parts which together shall constitute a single agreement.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the day and year first above written.
THE INTERNET FUND, INC.
By:_______________________________________
Name:_____________________________________
Title:______________________________________
KINETICS MUTUAL FUNDS, INC.
on behalf of each series listed on Schedule A attached hereto
By:_______________________________________
Name:_____________________________________
Title:______________________________________
121437
SCHEDULE A
TO AGREEMENT OF THE JOINT INSUREDS
THE INTERNET FUND, INC.
KINETICS MUTUAL FUNDS, INC.
THE MEDICAL FUND
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