EXHIBIT (h)(1)
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this fifteenth day of February, 1999,
by and between Kinetics Asset Management, Inc., a New York Corporation
consisting of The Internet Fund (hereinafter referred to as the "Fund") and
Firstar Mutual Fund Services, LLC, a corporation organized under the laws of the
State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, The Fund are an open-ended management investment companies which are
registered under the Investment Company Act of 1940;
WHEREAS, FMFS is a LLC and, among other things, is in the business of providing
fund administration services for the benefit of its customers;
NOW, THEREFORE, the Fund and FMFS do mutually promise and agree as follows:
I. Appointment of Administrator
The Fund hereby appoints FMFS as Administrator of the Fund on the terms
and conditions set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and duties set
forth in this Agreement in consideration of the compensation provided
for herein.
II. Duties and Responsibilities of FMFS
A. General Fund Management
1. Act as liaison among all fund service providers
2. Coordinate board communication by:
a. Assisting fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and
administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and director and
officers liability coverage, and
making the necessary SEC filings relating thereto
e. record board minutes
3. Audits
a. Prepare appropriate schedules and assist independent
auditors
b. Provide information to SEC and facilitate audit
process
c. Provide office facilities
4. Assist in overall operations of the Fund
B. Compliance
1. Regulatory Compliance
a. Monthly, quarterly and intra month spot checks as
needed to monitor compliance with
Investment Company Act of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics
b. Periodically monitor Fund's compliance with the
policies and investment limitations of
the Fund as set forth in its prospectus and statement
of additional information
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings
(including initial filings) relating to the
registration of the securities of the Funds so as to
enable the Funds to make a continuous offering of its
shares
b. Monitor status and maintain registrations in each
state
3. SEC Registration and Reporting
a. Update prospectus and statement of additional
information; proxy statements, and
Rule 24f-2 notice. Submit to firm's counsel as needed.
b. Prepare Annual and semiannual reports
4. IRS Compliance
a. Monthly, quarterly and intra month spot checks as
needed to monitor the Fund's status as a regulated
investment company under Subchapter M through review
of the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
C. Financial Reporting
1. Provide financial data required by the fund's prospectus and
statement of additional information
2. Prepare financial reports for shareholders, the board, the
SEC, and independent auditors
3. Supervise the Fund's Custodian and Fund Accountants in the
maintenance of the Fund'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 Fund's net assets
and of the Fund's shares, and of the declaration and payment
of dividends and other distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate 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 directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate
shareholders
III. Compensation
The Fund agrees to pay FMFS for performance of the duties listed in
this Agreement and the fees and out-of-pocket expenses as set forth in
the attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Fund and FMFS.
The Fund agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
IV. Additional Series
In the event that Kinetics Asset Management a New York Corporation
which is organized as a series fund currently offering one fund: The
Internet Fund, establishes one or more series of shares with respect to
which it desires to have FMFS render fund administration services,
under the terms hereof, it shall so notify FMFS in writing, and if FMFS
agrees in writing to provide such services, such series will be subject
to the terms and conditions of this Agreement, and shall be maintained
and accounted for by FMFS on a discrete basis. The fund currently
covered by this Agreement is The Internet Fund.
V. Performance of Service; Limitation of Liability
A. FMFS shall exercise reasonable care and to act in good faith
in the performance of its duties under this Agreement. FMFS shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with matters to which this Agreement
relates, including losses resulting from mechanical breakdowns or the
failure of communication or power supplies beyond FMFS's control,
except a loss resulting from FMFS'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, the
Fund shall indemnify and hold harmless FMFS from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which FMFS may sustain or incur or which
may be asserted against FMFS by any person other than the Fund arising
out of any action taken or omitted to be taken by it in performing the
services hereunder (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction for a proper
corporate purpose provided to FMFS by any duly authorized officer of
the Fund, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Directors of the Fund.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FMFS's control. FMFS 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 FMFS. FMFS
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 Funds shall be entitled
to inspect FMFS's premises and operating capabilities at any time
during regular business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS 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 Fund may
be asked to indemnify or hold FMFS harmless, the Fund shall be fully
and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FMFS will use all
reasonable care to notify the Fund promptly concerning any situation
which presents or appears likely to present the probability of such a
claim for indemnification against the Fund. The Fund shall have the
option to defend FMFS against any claim which may be the subject of
this indemnification. In the event that the Fund so elects, it will so
notify FMFS and thereupon the Fund shall take over complete defense of
the claim, and FMFS shall in such situation initiate no further legal
or other expenses for which it shall seek indemnification under this
section. FMFS shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify FMFS except
with the Fund's prior written consent.
C. FMFS shall indemnify and hold the Fund harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which may be asserted against
the Fund by any person arising out of any action taken or omitted to be
taken by FMFS as a result of FMFS's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence, or willful
misconduct.
VI. Confidentiality
FMFS agrees on behalf of itself and its employees and agents to treat
confidentially all information relating to the Fund's business which is
received by FMFS during the course of rendering any service hereunder.
The Agent agrees on behalf of itself and its employees and agents to
treat confidentially all records and other information relative to the
Fund and its shareholders and shall not disclose to any other party,
except after prior notification to and approval in writing by the Fund,
which approval shall not be unreasonably withheld and may not be
withheld where the Agent may be exposed to civil or criminal contempt
proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities.
VII. Data Necessary to Perform Service
The Fund's or its agent, which may be FMFS, shall furnish to FMFS the
data necessary to perform the services described herein at times and in
such form as mutually agreed upon.
VIII. Terms of 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. The 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.
IX. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the
Fund by written notice to FMFS, FMFS will promptly, upon such
termination and at the expense of the Fund, transfer to such successor
all relevant books, records, correspondence, and other data established
or maintained by FMFS under this Agreement in a form reasonably
acceptable to the Fund (if such form differs from the form in which
FMFS has maintained, the Fund 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 FMFS's personnel in the establishment of books, records, and other
data by such successor.
X. Choice of Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin.
XI. Notices
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FMFS shall be sent to Mutual Fund Services located
at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 and notice to
the Fund shall be sent to The Internet Fund/Kinetics Asset Management
Inc. 000 Xxx Xxxxx Xxxxxx Xxxxx Xxxxxxx, XX 00000.
XII. Records
FMFS 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 Fund but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the Investment Company Act of 1940 as amended
(the "Investment Company Act"), and the rules thereunder. FMFS agrees
that all such records prepared or maintained by FMFS relating to the
services to be performed by FMFS hereunder are the property of the Fund
and will be preserved, maintained, and made available with such section
and rules of the Investment Company Act and will be promptly
surrendered to the Fund on and in accordance with its request.
[Directors and Shareholders shall not be personally liable for
obligations of the Fund in connection with any matter arising from or
in connection with this agreement.]
XIII. This servicing agreement can not be assigned without consent of The
Internet Fund.
XIV. FMFS assumes no responsibilities for work done prior to our acceptance
date for custody, fund accounting, fund administration, transfer agency
and fulfillment.
Kinetics Asset Management Firstar Mutual Fund Services, LLC
By: /S/ XXXXXXXX X. XXXXX By: /S/ XXX X.
XXXXXXX
Title: PRESIDENT Title: President
Date: 2/17/99 Date:
2/26/99
Attest: /S/ XXXXXXX X. XXXXXXXXX Attest: /S/ XXXX
ROCK
