Exhibit (e)
DISTRIBUTION AGREEMENT
BETWEEN
KINETICS MUTUAL FUNDS, INC.
AND
T.O. XXXXXXXXXX SECURITIES, INC.
THIS AGREEMENT is made effective as of the 1st day of
September, 1999, by and between KINETICS MUTUAL FUNDS, INC., a Maryland
corporation (the "Company") and T.O. XXXXXXXXXX SECURITIES, INC., a corporation
organized and existing under the laws of the State of Connecticut ("TORS").
WHEREAS, the Company is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company, and will register one (1) or more distinct series of shares
of common stock ("Shares") for sale to the public under the Securities Act of
1933, as amended (the "1933 Act"), and will qualify the Shares for sale to the
public under various state securities laws; and
WHEREAS, TORS is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and under each
state's securities laws, and is also a member of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Company desires to retain TORS as principal
underwriter and national distributor in connection with the offering and sale of
the Shares of THE MEDICAL FUND (the "Fund") and each subsequently created series
as may be listed on Schedule A (as amended from time to time) attached hereto
and TORS is willing to act as principal underwriter and national distributor for
the Fund or Funds on the terms and conditions hereinafter set forth. (The Fund
and each subsequently created series each being referred to hereinafter as a
"Fund" or the "Funds".)
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints TORS as its agent
to be the principal underwriter and national distributor of the Fund's Shares
and to hold itself out as available to receive and accept orders for the
purchase and redemption of the Shares on behalf of the Fund, subject to the
terms and for the period set forth in this Agreement. TORS hereby accepts such
appointment and agrees to act hereunder. The Company understands that any
solicitation activities conducted on behalf of the Fund will be conducted
primarily by employees of the Fund's adviser, KINETICS ASSET MANAGEMENT, INC.
("Kinetics" or the "Adviser"), who shall become registered representatives of
TORS.
2. SERVICES AND DUTIES OF TORS.
(a) TORS agrees to distribute Fund Shares on a best
efforts basis from time to time during the term of this Agreement as agent
for the Company and upon the terms described in the Company's Registration
Statement, as amended from time to time. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Company, and any supplements thereto, under the 1933 Act and
the 0000 Xxx.
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(b) TORS, with the operational assistance of the
Fund's transfer agent, will hold itself available to receive purchase and
redemption orders satisfactory to TORS for Shares and will accept such orders on
behalf of the Fund. Such purchase orders shall be deemed effective at the time
and in the manner set forth in the Registration Statement.
(c) TORS, with the operational assistance of the
Fund's transfer agent, shall make Shares available through the National
Securities Clearing Corporation's Fund/SERV System.
(d) TORS and its registered personnel shall provide
to investors and potential investors only such information regarding a Fund as
the Fund shall provide or approve. TORS shall review and file all proposed
advertisements and sales literature with regulators, as appropriate, and consult
with the Fund regarding any comments provided by regulators with respect to such
materials.
(e) The offering price of the Shares shall be the
price determined in accordance with, and in the manner set forth in, the
most-current Prospectus. The Fund shall make available to TORS a statement of
each computation of net asset value and the details of entering into such
computation.
(f) TORS in its sole discretion may repurchase Shares
offered for sale by the shareholders. Repurchase of Shares by TORS shall be
at the price determined in accordance with, and in the manner set forth in, the
most current Prospectus. At the end of each business day, TORS shall notify, by
any appropriate means, the Fund and its transfer agent of the orders for
repurchase of Fund Shares received by TORS since the last such report, the
amount to be paid for such Shares, and the identity of the shareholders offering
Shares for repurchase. The Fund reserves the right to suspend such repurchase
right upon written notice to TORS. TORS further agrees to act as agent for the
Fund to receive and transmit promptly to the Fund's transfer agent shareholder
requests for redemption of Shares.
(g) TORS shall not be obligated to sell any certain
number of Shares.
(h) TORS shall prepare reports for the Board
regarding its activities under this Agreement as from time to time shall be
reasonably requested by the Board.
(i) TORS shall at all times during the term of this
Agreement remain registered broker-dealer under the 1934 Act and with all fifty
(50) states, and shall also remain a member in good standing of the NASD. TORS
shall immediately notify the Company in writing if it receives written
notification that such registrations or membership have been temporarily or
permanently suspended, limited or terminated.
(j) TORS will serve as licensing/regulatory agent for
employees and other personnel of Kinetics, who will
be registered as TORS broker-dealer representatives.
3. DUTIES OF THE FUND.
(a) The Company shall keep TORS fully informed of its
affairs and shall provide to TORS from time to time copies of all information,
financial statements, and other papers that TORS may reasonably request for
use in connection with the distribution of Shares, including, without
limitation, certified copies of any financial statements prepared for the Fund
by its independent public accountant and such reasonable number of copies of the
most current Prospectus, Statement of Additional Information ("SAI"), and annual
and interim
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reports as TORS may request, and the Company shall fully cooperate in the
efforts of TORS to distribute and arrange for the distribution of Fund Shares.
(b) The Company shall maintain a currently effective
Registration Statement on Form N-1A with the Securities and Exchange
Commission (the "SEC"), satisfy proper notice filing and fee payment provisions
of applicable states and file such reports and other documents as may be
required under applicable federal and state laws. The Company shall notify TORS
in writing of the states in which Fund Shares may be sold and shall notify TORS
in writing of any changes to such information. The Fund shall bear all expenses
related to preparing and typesetting such Prospectuses, SAI and other materials
required by law and such other expenses, including printing and mailing
expenses, related to the Fund's communication with persons who are shareholders.
(c) The Company shall not use any advertisements or
other sales materials that have not been (i) submitted to TORS for its review
and approval, and (ii) if required, filed with the appropriate regulators.
(d) The Company represents and warrants that its
Registration Statement and any advertisements and sales literature (excluding
statements relating to TORS and the services it provides that are based upon
written information furnished by TORS expressly for inclusion therein) of the
Fund 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 information
furnished to TORS pursuant to Section 3(a) hereof, shall be true and correct in
all material respects.
4. OTHER BROKER-DEALERS. TORS in its discretion shall enter
into agreements to sell Shares to such registered and qualified retail dealers,
as reasonably requested by the Company or Kinetics. In making agreements with
such dealers, TORS shall act only as principal and not as agent for the Company.
The form of any such dealer agreement shall be mutually agreed upon and approved
by the Company and TORS.
5. WITHDRAWAL OF OFFERING. The Company reserves the right at
any time to withdraw all offerings of any or all Shares by written notice to
TORS at its principal office. No Shares shall be offered by either TORS or the
Company under any provisions of this Agreement and no orders for the purchase of
Shares hereunder shall be accepted by the Company if and so long as
effectiveness of the Registration Statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act, or if and so long as a current prospectus -as required by Section 5(b)(2)
of the 1933 Act is not on file with the SEC.
6. SERVICES NOT EXCLUSIVE. The services furnished by TORS
hereunder are not to be deemed exclusive. TORS shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. The Company reserves the right to (i) sell Shares to investors on
applications received and accepted by the Fund; (ii) issue Shares in connection
with a merger, consolidation, or recapitalization of the Fund; (iii) issue
additional Shares to holders of Shares; or (iv) issue Shares in connection with
any offer of exchange permitted by Section 11 of the 1940 Act.
7. EXPENSES OF THE FUND. The Fund shall bear all costs and
expenses of registering the Shares with the SEC and state and other regulatory
bodies, and shall assume expenses related to communications with shareholders of
the Fund including, but not limited to, (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing, and
printing of Registration Statements and/or Prospectuses or SAIs; (iii)
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the preparation and mailing of annual and interim reports, Prospectuses,
SAIs, and proxy materials to shareholders; (iv) such other expenses related to
the communications with persons who are shareholders of the Fund; and (v) the
qualifications of Shares for sale under the securities laws of such
jurisdictions as shall be selected by the Fund pursuant to the Paragraph 3(b)
hereof, and the costs and expenses payable to each jurisdiction for continuing
qualification therein. In addition, the Fund shall bear all costs of preparing,
printing, mailing, and filing any advertisements and sales literature. TORS does
not assume responsibility for any expenses not assumed hereunder.
8. COMPENSATION. As compensation for the services performed
and the expenses assumed by TORS under this Agreement including, but not
limited to, any commissions paid for sales of Shares, TORS shall be entitled to
the fees and expenses set forth in Schedule B to this Agreement which are
payable promptly after the last day of each month.
9. STATUS OF TORS. TORS is an independent contractor and shall
be agent of the Company only with respect to the sale and redemption of Shares.
10. INDEMNIFICATION.
(a) The Company agrees to indemnify, defend, and
hold TORS, its officers, and directors, and any person who controls TORS
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, or liabilities, and expenses (including the
cost of investigating or defending such claims, demands, liabilities, and any
counsel fees incurred in connection therewith) that TORS, its officers and
directors, or any such controlling person may incur under the 1933 Act, or under
common law or otherwise, arising out of or based upon any (i) alleged untrue
statement of a material fact contained in the Registration Statement,
Prospectus, SAI, or sales literature; (ii) alleged omission to state a material
fact required to be stated in the Company's registration statement or necessary
to make the statements therein not misleading; or (iii) failure by the Company
to comply with the terms of the Agreement; provided, that in no event shall
anything contained herein be so construed as to protect TORS against any
liability to the Company or its shareholders to which TORS would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations under this Agreement.
(b) The Company shall not be liable to TORS under
this Agreement with respect to any claim made against TORS or any person
indemnified unless TORS or other such person shall have notified the Company in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon TORS or such other person (or after TORS or other person shall
have received notice of service on any designated agent). However, failure to
notify the Company of any claim shall not relieve the Company from any liability
that it may have to TORS or any person against whom such action is brought
otherwise than on account of this Agreement.
(c) The Company 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 claims subject to this Agreement. If the Company
elects to assume the defense of any such claim, the defense shall be conducted
by counsel chosen by the Company and satisfactory indemnified defendants in the
suit whose consent shall not be unreasonably withheld. In the event that the
Company elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
counsel retained by them. If the Company does not elect to assume the defense of
a suit, it will reimburse the indemnified
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defendants for the reasonable fees and expenses of any counsel retained by
the indemnified defendants. The Company agrees to promptly notify TORS of the
commencement of any litigation or proceedings against it or any of its officers
and directors in connection with the issuance or sale of any of its Shares.
(d) TORS agrees to indemnify, defend, and hold the
Company, its officers and directors, and any person who controls the Company
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities, and expenses (including the
cost of investigating or defending against such claims, demands, or liabilities,
and any counsel fees incurred in connection therewith) that the Company, its
directors and officers, or any such controlling person may incur under the 1933
Act, or under common law or otherwise, resulting from TORS' willful misfeasance,
bad faith, or gross negligence in the performance of its obligations and duties
under this Agreement, or arising out of or based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
TORS to the Company for use in the Registration Statement, Prospectus, or SAI
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated in any such document or
necessary to make such information not misleading.
(e) TORS 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 the claim, but if TORS elects to assume the defense, the
defense shall be conducted by counsel chosen by TORS and satisfactory to the
indemnified defendants whose approval shall not be unreasonably withheld. In the
event that TORS elects to assume the defense of any suit and retain counsel, the
defendants in the suit shall bear the fees and expenses of any additional
counsel retained by them. If TORS does not elect to assume the defense of any
suit, it will reimburse the indemnified defendants in the suit for the
reasonable fees and expenses of any counsel retained by them.
11. DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date
first written above or such later date as indicated in Schedule A and, will
continue in effect for a minimum of one year from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Company's Board
who are neither interested persons (as defined in the 0000 Xxx) of the Company
("Independent Directors") or TORS cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement may
be terminated in its entirety at any time, without the payment of any
penalty, by vote of the Board, by vote of a majority of the Independent
Directors, or by vote of a majority of the outstanding voting securities of the
Fund on sixty (60) days' written notice to TORS or by TORS at any time, without
the payment of any penalty, on sixty (60) days' written notice to the Company.
This Agreement will automatically terminate in the event of its assignment.
(c) The Company and TORS acknowledge that TORS has
entered into an exclusive servicing agreement with FIRSTAR MUTUAL FUND
SERVICES, LLC ("FMFS"), and that termination of any of the services provided by
FMFS to the Fund may result in a termination of this Agreement in accordance
with Section 11(b). The Company and TORS also acknowledge that TORS shall not be
responsible for the performance of any duties provided by FMFS, nor for any fees
or expenses attendant to such duties.
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12. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged, or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought. This Agreement may be
amended with the approval of the Board or of a majority of the outstanding
voting securities of the Fund; provided, that in either case, such amendment
also shall be approved by a majority of the Independent Directors.
13. LIMITATION OF LIABILITY. The Board and shareholders of the
Fund shall not be personally liable for obligations of the Company in connection
with any matter arising from or in connection with this Agreement. This
Agreement is not binding upon any director, officer, or shareholder of the Fund
individually, and no such person shall be individually liable with respect to
any action or inaction resulting from this Agreement.
14. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient upon receipt in writing at
the other party's principal offices.
15. 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall 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.
16. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the 1940 Act (without
regard, however, to the conflicts of law principles). To the extent that the
applicable laws of the state of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated as of the day and year
first above written.
KINETICS MUTUAL FUNDS, INC. T.O. XXXXXXXXXX SECURITIES, INC.
By:_________________________________ By:_________________________________
Print:_______________________________ Print:______________________________
Title:_______________________________ Title:______________________________
Date:_______________________________ Date:_______________________________
Attest:______________________________ Attest:_____________________________
Print:_______________________________ Print:______________________________
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SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BETWEEN
KINETICS MUTUAL FUNDS, INC.
AND
T.O. XXXXXXXXXX SECURITIES, INC.
Pursuant to Section 1 of the Distribution Agreement between KINETICS MUTUAL
FUNDS, INC. (the "Company") and T.O. XXXXXXXXXX SECURITIES, INC. ("TORS"), the
Company hereby appoints TORS as its agent to be the principal underwriter of the
Company with respect to its following series:
The Medical Fund
Dated: September 1,1999
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SCHEDULE B
TO THE
DISTRIBUTION AGREEMENT
BETWEEN
KINETICS MUTUAL FUNDS, INC.
AND
T.O. XXXXXXXXXX SECURITIES, INC.
As compensation pursuant to Section 8 of the Distribution Agreement between
Kinetics Mutual Funds, Inc. (the "Company") and T.O. Xxxxxxxxxx Securities, Inc.
("TORS"), Kinetics Asset Management, Inc. ("Kinetics") hereby agrees to pay to
TORS the sum of:
1. an annual fee of $16,000 for The Medical Fund, the
first series of the Company, and $12,000 for each
series or class thereafter or one basis (.01%) point
of the average daily net assets of each series,
computed daily and paid monthly, whichever is
greater;
2. an annual compliance fee of $500 for each employee of
Kinetics, who is designated by Kinetics to become a
series 6 or series 7 registered representative of
TORS (compliance costs for other types of licenses
may vary), as well as the ongoing license fees and
incidental costs associated with such registrations;
3. the compensation paid by TORS to such registered
representatives in accordance with compensation
schedules, as agreed upon by TORS and Kinetics from
time to time;
4. the reasonable fees associated with listing and
maintaining shares on the National Securities
Clearing Corporation's Fund/SERV System, on a "pass
through" basis, as agreed upon by TORS and Kinetics
and as reflected in the attached NSCC fee schedule,
which may change without notice;
5. incidental expenses associated with printing and
distribution advertising and sales literature;
6. fees for legal review of advertisements and sales
literature at the rate of $150 per job for the first
ten (10) pages of an advertisement and $20 per page
thereafter, plus NASD filing fees which are billed on
an out of pocket basis;
7. plus out of pocket expenses including, but not
limited to, travel expenses and retention of records.
Dated: September 1,1999
KINETICS ASSET MANAGEMENT, INC. T.O. XXXXXXXXXX SECURITIES, INC.
By:_________________________________ By:_________________________________
Name: Xxxxxx X. Xxxxxx Name:_________________________
Title: President Title:________________________
121386.3
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