KINETICS PORTFOLIOS TRUST INVESTMENT SUBADVISORY AGREEMENT
THIS
INVESTMENT SUBADVISORY AGREEMENT (the “Agreement”) is made as of the
5th day of March, 2007, by and between KINETICS
ASSET
MANAGEMENT, INC., a New York Corporation (the “Adviser”) and AQUA TERRA ASSET
MANAGEMENT LLC, a Pennsylvania limited liability company (the
“Subadviser”).
W
I T N E S S E T H :
WHEREAS,
the Adviser is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended (the “Act”), and is engaged in the business of providing
investment advice to investment companies and other clients; and
WHEREAS,
the Subadviser is a majority-owned subsidiary of Boenning & Scattergood
Holdings, Inc. (“Boenning”), is registered as an investment adviser under the
Act and is engaged in the business of rendering investment advisory services;
and
WHEREAS,
the Adviser desires to retain the Subadviser to assist in furnishing investment
advisory services to The Water Infrastructure Portfolio (the “Portfolio”), a
series of Kinetics Portfolios Trust (the “Trust”), a Delaware business trust,
pursuant to the terms and provisions of this Agreement, and the Subadviser
desires to assist the Adviser in furnishing said services.
NOW,
THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. Duties
of the Subadviser. The Adviser hereby engages the
services of the Subadviser as permitted by and in furtherance of its Investment
Advisory Agreement with the Trust pertaining to the
Portfolio. Pursuant to this Agreement and subject to the
oversight and review of the Adviser, the Subadviser will manage the investment
and reinvestment of the assets of the Portfolio. The Subadviser will
determine in its sole discretion, and subject to the oversight and review of
the
Adviser, the securities to be purchased or sold for the Portfolio, will make
available to the Adviser records concerning its activities for the Portfolio
which the Subadviser is required to maintain, and will render regular reports
to
the Adviser and to officers and Trustees of the Trust concerning its discharge
of the foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the supervision of
the Board of Trustees of the Trust and in compliance with such
policies as the Board of Trustees of the Trust may from time to time establish
and which the Adviser shall communicate in writing to Subadviser, and in
compliance with (a) the investment objectives, policies, and limitations for
the
Portfolio set forth in the Trust’s current prospectus(es) and statement(s) of
additional information as provided to Subadviser, and (b) applicable laws and
regulations.
The
Subadviser shall have no power, authority, responsibility, or obligation
hereunder to take any action with regard to any claim or potential claim in
any
bankruptcy proceedings, class action securities litigation, or other litigation
or proceeding affecting securities held at any time in the Portfolio, including
without limitation, to file proofs of claim or other documents related to such
proceedings (the “Litigation”), or to investigate, initiate, supervise, or
monitor the Litigation involving Portfolio assets, and the Adviser acknowledges
and agrees that no such power, authority, responsibility or obligation is
delegated to Subadviser hereunder.
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The
Subadviser represents and warrants to the Adviser that it will manage the
Portfolio in compliance with all applicable federal and state laws
governing its investments. Without limiting the foregoing, the
Subadviser represents and warrants (1) that the Subadviser’s management of the
Portfolio will be designed to allow the Portfolio to qualify as a “regulated
investment company” as defined in subchapter M, chapter 1 of the Internal
Revenue Code of 1986, as amended (the “Code”), and (2) compliance with (a)
provisions of the Act and rules adopted thereunder that relate to the investment
of Portfolio assets, including depositing those assets in custody with
institutions designated by the Trust to the extent the Subadviser has the
authority over such assets; and (b) federal and state securities laws applicable
to Subadviser’s Portfolio management
responsibilities. Notwithstanding the foregoing, the
Adviser shall, subject to the Subadviser’s compliance with its obligations under
this Agreement, remain responsible for the Portfolio’s overall compliance with
the Investment Company Act of 1940, as amended (the “1940 Act”), the Code and
all other applicable federal and state laws and regulations. The
Adviser will provide the Subadviser with a copy of those portions of the minutes
of the meetings of the Trust’s Board of Trustees to the extent they may
materially affect the duties of the Subadviser, and with copies of any financial
statements or reports made by the Trust to its shareholders and any further
materials or information which the Subadviser may reasonably request to enable
it to perform its obligations under this Agreement.
The
Subadviser further represents and warrants that to the extent any statement
or
omissions made in any Registration Statement for shares of the Trust, or any
amendment or supplement thereto, are made in reliance upon and in conformity
with material information furnished in writing by the
Subadviser expressly for use therein, such portion of
the Registration Statement and any amendments or
supplements thereto will not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein not misleading. The Adviser agrees to
notify the Subadviser in advance of any such statements it intends to use in
the
Registration Statement and any amendments or supplements thereto, and will
only
include such statements of the Subadviser upon the consent of the
Subadviser. The Adviser acknowledges and agrees that,
provided that the Subadviser has complied with the second preceding sentence,
the Registration Statement, and any amendment or supplement thereto, will at
all
times be in compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust, including without
limitation, the 1940 Act and the rules and
regulations thereunder and that the Subadviser shall have
no liability in connection therewith.
The
Adviser agrees to provide the Subadviser with such assistance as may be
reasonably requested by the Subadviser in connection with its activities under
this Agreement, including without limitation, information concerning the
Portfolio, its funds available, or to become available, for investment and
generally as to the conditions of the Portfolio or the Portfolio’s
affairs.
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The
Subadviser accepts such engagement and agrees, at its own expense, to render
the
services set forth herein and to provide the office space, furnishings,
equipment and personnel required by it to perform such services on the terms
and
for the compensation provided in this Agreement.
In
reliance on the exemption under Rule 17a-10 of the 1940 Act, the Subadviser
(and
any affiliated person of the Subadviser) hereby agrees it will not consult
with
any other subadviser of the Portfolio, or any affiliated person of
such subadviser, concerning transactions for the Portfolio in securities or
other assets and each such subadviser shall be limited to providing investment
advice with respect to only the discrete portion of the Portfolio, as may be
determined from time to time by the Adviser or the Board of Trustees of the
Trust.
2. Portfolio
Transactions. (a) The Subadviser shall be
responsible for decisions to buy and sell securities for the Portfolio, however,
the Adviser shall be responsible for the execution of such buy and sell
decisions, as well as the selection of broker-dealers, and for the negotiation
of brokerage commissions rates.
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3. Compensation
of the Subadviser. Except as provided in the last
sentence of this Section 3, the Subadviser shall not be entitled to receive
any
payment from the Trust and shall look solely and exclusively to the Adviser
for
payment of all fees for the services rendered, facilities furnished and expenses
paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay to the Subadviser a fee at the annual
rate set forth in Schedule A hereto with respect to the
Portfolio. Such fee shall be accrued daily and paid monthly as soon
as practicable after the end of each month, but not later than thirty (30)
days
after the end of a particular month (i.e., the applicable annual fee rate
divided by 365 applied to each prior day’s net assets in order to calculate the
daily accrual). If the Subadviser shall provide its services under
this Agreement for less than the whole of any month, the foregoing compensation
shall be prorated. For purposes of this Agreement,
the Portfolio’s “net assets” shall be determined as provided in the Trust’s
Registration Statement.
The
Subadviser shall be responsible for its own expenses in performing its duties
hereunder but shall not be responsible for the expenses of the Adviser, the
Trust or the Portfolio. Without limiting the generality of the
foregoing, the Subadviser shall not be responsible for brokerage commissions;
transfer taxes or fees; custody fees of the Portfolio; expenses for legal,
accounting and auditing services; taxes and governmental fees; costs of printing
and distributing shareholder reports, proxy materials, prospectuses and stock
certificates; payment for Portfolio pricing services; registration and filing
fees of the Securities and Exchange Commission (“ SEC”); expenses of registering
or qualifying securities of the Trust or Porfolio for sale in the various
states; and freight and other charges in connection with the shipment of the
Portfolio’s securities. The Adviser, shall reimburse, or shall cause
the Trust to reimburse, the Subadviser for any expenses of the Trust, the
Portfolio or the Adviser as may be reasonably incurred as specifically provided
for in this Agreement or as specifically agreed to in advance by the
Adviser.
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4. Reports. The
Adviser and the Subadviser agree to furnish to each other, if applicable,
current prospectuses, statements of additional information, proxy statements,
reports of shareholders, certified copies of their financial statements, and
such other information with regard to their affairs and that of the Trust
relating to the services provided herein, as each may
reasonably request and which are reasonably
available.
5. Status
of the Subadviser. The services of the Subadviser to the
Adviser and the Trust are not to be deemed exclusive, and both the Adviser
and
Subadviser shall be free to render similar services to others and to use the
same or other information and investment strategy utilized in the performance
of
services to the Trust for such other fund, portfolio, firm, individual or
account. Nothing herein shall prevent the
Subadviser, its principals and affiliates from trading in financial
instruments or other investments for their own accounts or for other accounts
the Subadviser or its affiliates manage. The Subadviser shall be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Trust
in
any way or otherwise be deemed an agent of the Trust.
6.
Advertising. (a) Neither the Adviser,
the Trust nor any of their respective affiliates shall
make reference to or use the name of the Subadviser or any of its affiliates,
except as provided herein and except for references concerning the identity
of
and services provided by the Subadviser to the Portfolio, which references
shall
not differ in substance from those included in the prospectuses and this
Agreement, in any advertising or promotional materials without the prior
approval of the Subadviser, which approval shall not be unreasonably
withheld or delayed.
(b) Neither
the Subadviser nor any affiliate of it shall make reference to or use the name
of the Trust, the Adviser or any of their respective affiliates, except for
references concerning the identity of the Trust or the Adviser, which references
shall not differ in substance from those included in the prospectuses and this
Agreement, in any advertising or promotional materials without the prior
approval of the Adviser, which approval shall not be unreasonably withheld
or
delayed.
(c)
The Subadviser shall have no liability for any advertising materials prepared
exclusively by the Adviser and/or Trust, without reliance on any statement
or
omission to make any statement by the Subadviser. Likewise, the
Adviser shall have no liability for any advertising materials prepared
exclusively by the Subadviser,without reliance on any statement or omission
to make any statement by the Adviser.
7. Proxy
Voting. The Subadviser shall have no
responsibilities in connection with proxy voting for the Portfolio unless it
is
affirmatively requested to make a proxy voting recommendation, in which case
the
Subadviser’s sole responsibility shall be to make such a
recommendation.
8. Certain
Records. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the 1940
Act, all records relating to its investments of the Portfolio, and the
Subadviser’s duties and obligations under Section 1 hereof, that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 of the
1940 Act and any other applicable rules. Copies of any records
required to be maintained and preserved pursuant to the provisions of Rule
31a-1, Rule 31a-2 or other applicable rules promulgated under the 1940 Act
which
are prepared or maintained by the Subadviser on behalf of the Trust will be
provided promptly to the Trust or the Adviser on request.
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The
Subadviser agrees that all accounts, books and other records maintained and
preserved by it as required hereby shall be subject at any time, and from time
to time, to such reasonable periodic, special and other examinations by the
SEC,
the Trust’s auditors, the Trust or any representative of the Trust, the Adviser,
or any governmental agency or other instrumentality having regulatory authority
over the Trust.
9.
Liability of the Adviser and
Subadviser. (b) In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of obligations or
duties (“disabling conduct”) hereunder on the part of the Subadviser (and its
officers, directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Subadviser), the Subadviser
shall
not be subject to liability to the Adviser, the Portfolio, the
Trust or any of their respective officers, directors, agents, employees,
controlling persons or shareholders for any act or omission in the course of,
or
connected with, rendering services hereunder, including without limitation,
any
error of judgment or mistake of law or for any loss suffered by any of them
in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the 1940 Act concerning loss resulting
from
a breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall
indemnify and hold harmless the Subadviser and its officers, directors,
partners, members, managers, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Subadviser
(collectively, the “Indemnified Parties”) from any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) arising from the Subadviser’s providing services under this Agreement
or the sale of securities of the Trust.
(b) The
Subadviser agrees to indemnify and hold harmless the Adviser and its affiliates
and each of its directors and officers and each person, if any, who controls
the
Adviser within the meaning of Section 15 of the
Securities Act of 1933 (the “1933 Act”) against any and
all losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses), to which the Adviser or its affiliates or such
directors, officers or controlling person may become subject under the 1933
Act,
under other statutes, at common law or otherwise, which are caused by
Subadviser’s disabling conduct with respect to the performance of its
obligations under this Agreement; provided, however, that in no case does the
Subadviser's indemnity in favor of any person apply to protect such other person
against any liability if such person’s actions or omissions
constituted willful misfeasance, bad faith, or gross
negligence in the performance of his, her or its duties or by reason of his,
her
or its reckless disregard of obligations and duties under this
Agreement.
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10.
Confidentiality. The Subadviser will not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized in this Agreement or as reasonably
required to perform its responsibilities under this Agreement,
and will keep confidential any non-public information obtained
directly
as a result of this service relationship, and the Subadviser shall disclose
such
non-public information only if the Adviser or the Board of Trustees of the
Trust
has authorized such disclosure by prior written consent, or if such information
is or hereafter otherwise is known by the Subadviser or has been disclosed,
directly or indirectly, by the Adviser or the Trust to others, becomes
ascertainable from public or published information or trade sources, or if
such
disclosure is expressly required or requested by applicable statutory,
regulatory or governmental authorities or
self-regulatory organization or duly authorized subpoena, or to the extent
such
disclosure is reasonably required by auditors or attorneys of the Subadviser
in
connection with the performance of their professional services or as may
otherwise be contemplated by this Agreement. Notwithstanding the
foregoing, the Subadviser may disclose the total return earned by the Portfolio
and may include such total return in the calculation of composite performance
information. The Adviser acknowledges that it and the
Trust have adopted policies and procedures reasonably designed to protect the
confidentiality of the Trust’sportfolio holdings information, and that these
procedures provide for the oversight of compliance by the
Adviser. The Subadviser shall disclose its trading instructions upon
reasonable request by the Adviser. The Adviser further
acknowledges and agrees that the trading instructions of the Subadviser are
the
property of the Subadviser and agree that each of the Adviser and Trust will
keep confidential and will not disseminate such instructionsor any
information, documents, statements, agreements or
workpapers provided to the Adviser or the Trust hereunder, except to the extent
such information is expressly required or requested by applicable federal or
state regulatory authorities or a duly authorized subpoena.
11.
Term of the Agreement. This Agreement shall
continue in full force and effect with respect to the Portfolio until April
30,
2008, unless sooner terminated as hereinafter provided and from year
to year thereafter so long as such continuance is specifically approved at
least
annually (i) by the vote of a majority of those Trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, cast
in
person at a meeting called for the purpose of voting on such approval, and
(ii)
by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With
respect to the Portfolio, this Agreement may be terminated at any time, without
payment of a penalty by the Portfolio or the Trust, by vote of a majority of
the
Trustees of the Trust, or by vote of a majority of the outstanding voting
securities of the Portfolio, voting separately from any other series of the
Trust, or by the Adviser, on not less than 30 nor more than 60 days' written
notice to the Subadviser. With respect to the Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on not less than 90 days' written notice to the Adviser and
the Trust. This Agreement shall automatically terminate in the event
of its assignment (as defined by the 1940 Act). This Agreement will
also terminate in the event that the Investment Advisory Agreement by and
between the Trust and the Adviser is terminated. The terms “majority
of the outstanding voting securities” and “interested persons” shall have the
meaning as set forth in the 1940 Act.
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12. Severability. This
Agreement constitutes the entire Agreement between the parties
hereto. 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.
13.Amendments. This
Agreement may be amended by mutual consent in writing, but the consent of the
Trust must be obtained in conformity with the requirements of the 1940
Act.
14.Governing
Law. This Agreement shall be construed
in accordance with the laws of the State of New York and the applicable
provisions of the 1940 Act. To the extent the applicable laws 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. 15. Notices. All
notices shall be in writing and deemed properly given when delivered or mailed
by United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
| Adviser: | Kinetics Asset Management, Inc. | ||
| 00 Xxx Xxxxxxxx | |||
| Xxxxxx Xxxxxx, XX 00000 | |||
| Attn: Xxxxxx Xxxxxxxx | |||
| Subadviser: | Aqua Terra Asset Management LLC | ||
| Suite 300, Four Tower Bridge | |||
| 000 Xxxx Xxxxxx Xxxxx | |||
| Xxxx Xxxxxxxxxxxx, XX 00000-0000 | |||
IN
WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement as of the date first above
written.
| Subadviser: | AQUA TERRA ASSET MANAGEMENT LLC | ||
| By: /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxx | |||
| Title: President | |||
| Adviser: | KINETICS ASSET MANAGEMENT, INC. | ||
| By: /s/ Xxxxxx Xxxxxxxx | |||
| Name: Xxxxxx Xxxxxxxx | |||
| Title: CFO & Co-founder | |||
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