FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of ______, 2002,
by and between Kinetics Portfolios Trust, a Delaware business 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 providing fund
administration services for the benefit of its customers; and
WHEREAS, the Trust desires to retain USBFS to provide fund administration
services for 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 Administrator
The Trust hereby appoints USBFS as administrator 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 provide the following fund administration services for the
Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's or its
affiliate's own offices).
c. Non-investment-related statistical and research data as
needed.
(3) Coordinate the Trust's Board of Trustees' (the "Board of
Trustees" or the "Trustees") communication:
a. Establish meeting agendas.
b. Prepare reports for the Board of Trustees based on
financial and administrative data.
c. Evaluate independent auditor.
d. Secure and monitor fidelity bond and director and officer
liability coverage, and make the necessary Securities and
Exchange Commission (the "SEC") filings relating thereto.
e. Prepare minutes of meetings of the Board of Trustees and
Fund shareholders.
f. Recommend dividend declarations to the Board of Trustees,
prepare and distribute to appropriate parties notices
announcing declaration of dividends and other distributions
to shareholders.
g. Provide personnel to serve as officers of the Trust if so
elected by the Board of Trustees, attend Board of Trustees
meetings and present materials for Directors' review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist independent
auditors.
b. Provide information to the SEC and facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Fund.
(6) Pay Fund expenses upon written authorization from the
Trust.
(7) Monitor arrangements under shareholder services or similar plan.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act requirements,
including:
(i) Asset diversification tests.
(ii) Total return and SEC yield calculations.
(iii) Maintenance of books and records under Rule 31a-3.
(iv) Code of Ethics for the disinterested Trustees of the
Fund.
b. Monitor Fund's compliance with the policies and investment
limitations of the Trust as set forth in its current
prospectus (the "Prospectus") and statement of additional
information (the "SAI").
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions.
(2) Blue Sky Compliance:
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the registration of the securities of the Corporation so
as to enable the Trust to make a continuous offering
of its shares in all states.
b. Monitor status and maintain registrations in each state.
c. Provide information regarding material developments in state
securities regulation.
(3) SEC Registration and Reporting:
a. Assist Corporate counsel in updating the Prospectus and SAI
and in preparing proxy statements and Rule 24f-2 notices.
b. Prepare annual and semiannual reports, Form N-SAR filings
and Rule 24f-2 notices.
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's shares and ensure that such
shares are properly registered with the SEC and the
appropriate state authorities.
g. File Rule 24f-2 notices.
(4) IRS Compliance:
a. Monitor the Trust's status as a regulated investment company
under Subchapter M, including without limitation, review of
the following:
(i) Asset diversification requirements.
(ii) Qualifying income requirements.
(iii) Distribution requirements.
b. Calculate required distributions (including excise tax
distributions).
C. Financial Reporting:
(1) Provide financial data required by the Fund's Prospectus and SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of
Trustees, the SEC, and independent auditors.
(3) Supervise the Trust's custodian and fund accountants in the
maintenance of the Trust's general ledger and in the preparation
of the Fund's financial statements, including oversight of
expense accruals and payments, of the determination of net asset
value of the Trust's net assets and of the Trust's shares, and of
the declaration and payment of dividends and other distributions
to shareholders.
(4) Compute the yield, total return and expense ratio of each class
of each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Trust's management of
any proposed adjustments.
(6) Prepare monthly financial statements, which include without
limitation the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
f. Schedule of Capital Gains and Losses.
(7) Prepare quarterly broker security transaction summaries.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate federal and state
tax returns including, without limitation, Forms 1120/8610 with
any necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to Directors and other
service providers.
(4) Monitor wash losses.
(5) Calculate eligible dividend income for corporate shareholders.
3. Compensation
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit A 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 the assets and property of
the particular Fund involved.
4. 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 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.
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 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.
5. 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 of the Trust (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, when 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 ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 to any third party unless specifically directed by the Trust
or allowed under one of the exceptions noted under the Act.
6. 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 one year. Subsequent to
the initial one-year term, this Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However,
this Agreement may be amended by mutual written consent of the parties.
7. Records
USBFSshall 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.
8. 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.
9. 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.
10. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for the other party to this Agreement, or to conduct business
in the name, or for the account, of the other party to this Agreement.
11. Data Necessary to Perform Services
The Trust or its agent 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.
12. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
13. 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
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and notice to the Trust shall be sent to:
Kinetics Portfolios Trust
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▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
Kinetics Portfolios Trust U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ________________________________
Title: __________________________ Title: ______________________________
Administration Services
Annual Fee Schedule
Master Portfolios
Exhibit A
Separate Series of Kinetics Portfolios Trust
Name of Series
The Internet Portfolio
The Medical Portfolio
The Internet Emerging Growth Portfolio
The New Paradigm Portfolio
The Small Cap Opportunities Portfolio
The Kinetics Government Money Market Portfolio
The Energy Portfolio
Domestic Equity and Money Market Portfolios
The Internet Portfolio, The Medical Portfolio, The Internet Emerging Growth
Portfolio, The New Paradigm Portfolio, The Small Cap Opportunities Portfolio,
The Energy Portfolio and The Kinetics Government Money Market Portfolio shall
incur the following fee schedule:
