KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Internet Portfolio (the
"Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York corporation (the
"Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth inthe Portfolio's governing documents, including,
without limitation, the Fund'sCertificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws,as amended, the prospectus and statement of
additional information; and suchother limitations, policies and procedures as
the Trustees may impose from timeto time in writing to the Adviser. In providing
such services, the Adviser xxxxxxx all times adhere to the provisions and
restrictions contained in the federalsecurities laws, applicable state
securities laws, the Internal Revenue Code,the Uniform Commercial Code and other
applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i)furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfoliosecurities for the Portfolio, including the taking of such steps as may
benecessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct ordersto an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser'sprimary consideration in effecting a securities
transaction will be execution atthe most favorable price. In selecting a
broker-dealer to execute eachparticular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6.EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall beresponsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b)The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Portfolio; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to th
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10.REPORTS AND ACCESS. The Adviser agrees to supply
such information to the Sub-Administrator and to permit such compliance
inspections by the Sub-Administrator as shall be reasonably necessary to
permit the Sub-Administrator to satisfy its obligations and respond to the
reasonable requests of the Trustees.
11.ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement shall
be held or made invalid by a court decision, statute or rule, or shall be
otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Internet Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
129261
SCHEDULE A
ANNUAL FEE RATE
The Internet Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Internet Infrastructure
Portfolio (the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York
corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution
of the broker-dealer to the investment performance of the Portfolio on a
continuing basis. The price to the Portfolio in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management
of the Portfolio, and (ii) the costs of any special Board of Trustees meetings
or shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash,securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings
of the Portfolio's shareholders and Board of Trustees that are properly payable
by the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Internet Infrastructure Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Internet Infrastructure Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Internet Emerging Growth
Portfolio (the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York
corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall
not constitute an agreement not to require payment of any future compensation
or reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify
and hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Internet Emerging Growth Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Internet Emerging Growth Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Internet Global Growth Portfolio
(the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York corporation
(the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the
Investment Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Internet Global Growth Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Internet Global Growth Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Internet New Paradigm Portfolio
(the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York corporation
(the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Internet New Paradigm Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Internet New Paradigm Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Medical Portfolio (the
"Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York corporation (the
"Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and ther
applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations
with respect to the investment of the Portfolio's assets and the purchase and
sale of portfolio securities for the Portfolio, including the taking of such
steps as may be necessary to implement such advice and recommendations (I.E.,
placing the orders); (ii) manage and oversee the investments of the Portfolio,
subject to the ultimate supervision and direction of the Board of Trustees;
(iii) vote proxies for the Portfolio, file ownership reports under Section 13 of
the Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly)brokerage or research services to the Adviser an amount of commission
for effecting a portfolio transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction, if
the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with respect to the
Portfolio. The Adviser is further authorized to allocate the orders placed by it
on behalf of the Portfolio to such brokers or dealers who also provide research
or statistical material, or other services, to the Portfolio, the Adviser, or
any affiliate of either. Such allocation shall be in such amounts and
proportions as the Adviser shall determine, and the Adviser shall report on such
allocations regularly to the Portfolio, indicating the broker-dealers to whom
such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to bein the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to
supply such information to the Sub-Administrator and to permit such
compliance inspections by the Sub-Administrator as shall be reasonably
necessary to permit the Sub-Administrator to satisfy its obligations and
respond to the reasonable requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an
"Indemnified Party") against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating and defending any alleged loss,
liability, claim, damage or expenses and reasonable counsel fees incurred in
connection therewith) arising out of the Indemnified Party's performance or
nonperformance of any duties under this Agreement provided, however, that
nothing herein shall be deemed to protect any Indemnified Party against any
liability to which such Indemnified Party would otherwise be subject by reason
of willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties under
this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Medical
Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Medical Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Small Cap Opportunities
Portfolio (the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York
corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly
or indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfoliotransactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder services
agent and accounting services agent; interest charges on any borrowings; costs
and expenses of pricing and calculating its daily net asset value and of
maintaining its books of account required under the Investment Company Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
the Portfolio's shareholders and Board of Trustees that are properly payable by
the Portfolio; salaries and expenses of officers and fees and expenses of
members of the Board of Trustees or members of any advisory board or committee
who are not members of, affiliated with or interested persons of the Adviser or
the Sub-Administrator; insurance premiums on property or personnel of the
Portfolio which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Portfolio or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Portfolio; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14.TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall
not be affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Small Cap Opportunities Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Small Cap Opportunities Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Middle East Growth Portfolio
(the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York corporation
(the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a)GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b)BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the
order promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management
of the Portfolio, and (ii) the costs of any special Board of Trustees meetings
or shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the Adviser
or the Sub-Administrator, as the case may be; fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Portfolio including all fees and expenses of its custodian, shareholder
services agent and accounting services agent; interest charges on any
borrowings; costs and expenses of pricing and calculating its daily net asset
value and of maintaining its books of account required under the Investment
Company Act; taxes, if any; a pro rata portion of expenditures in connection
with meetings of the Portfolio's shareholders and Board of Trustees that are
properly payable by the Portfolio; salaries and expenses of officers and fees
and expenses of members of the Board of Trustees or members of any advisory
board or committee who are not members of, affiliated with or interested persons
of the Adviser or the Sub-Administrator; insurance premiums on property or
personnel of the Portfolio which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the
Portfolio or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Portfolio; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply
such information to the Sub-Administrator and to permit such compliance
inspections by the Sub-Administrator as shall be reasonably necessary to
permit the Sub-Administrator to satisfy its obligations and respond to the
reasonable requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e)No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Middle
East Growth Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
129268
SCHEDULE A
ANNUAL FEE RATE
The Middle East Growth Portfolio 1.25% of average daily net assets
KINETICS PORTFOLIOS TRUST
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 1st day
of May, 2000, by and between KINETICS PORTFOLIOS TRUST, a Delaware business
trust (the "Trust") on behalf of its series the Kinetics Government Money Market
Portfolio (the "Portfolio") and KINETICS ASSET MANAGEMENT, INC., a New York
corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Trust, on behalf of the Portfolio, desires to
retain the Adviser to render advice and services to the Portfolio pursuant to
the terms and provisions of this Agreement, and the Adviser desires to furnish
said advice and 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. APPOINTMENT OF ADVISER. The Trust hereby employs the
Adviser and the Adviser hereby accepts such employment, to render investment
advice and related services with respect to the assets of the Portfolio for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Board of Trustees.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as
investment adviser to the Portfolio and shall supervise investments of the
Portfolio in accordance with the investment objective, policies and restrictions
of the Portfolio as set forth in the Portfolio's governing documents, including,
without limitation, the Fund's Certificate of Trust, as amended, Declaration of
Trust, as amended, and Bylaws, as amended, the prospectus and statement of
additional information; and such other limitations, policies and procedures as
the Trustees may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Portfolio with advice and recommendations with
respect to the investment of the Portfolio's assets and the purchase and sale of
portfolio securities for the Portfolio, including the taking of such steps as
may be necessary to implement such advice and recommendations (I.E., placing the
orders); (ii) manage and oversee the investments of the Portfolio, subject to
the ultimate supervision and direction of the Board of Trustees; (iii) vote
proxies for the Portfolio, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Portfolio, and take other actions on
behalf of the Portfolio; (iv) maintain the books and records required to be
maintained by the Portfolio except to the extent arrangements have been made for
such books and records to be maintained by Firstar Mutual Fund Services LLC, a
Wisconsin limited liability company (the "Sub-Administrator") or another agent
of the Portfolio; (v) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the
Portfolio's assets which the Board of Trustees or the officers of the Portfolio
may reasonably request; and (vi) render to the Board of Trustees such periodic
and special reports with respect to the Portfolio's investment activities as the
Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Adviser shall be responsible
for decisions to buy and sell securities for the Portfolio, for broker-dealer
selection, and for negotiation of brokerage commission rates, provided that the
Adviser shall not direct orders to an affiliated person of the Adviser without
general prior authorization to use such affiliated broker or dealer from the
Board of Trustees. The Adviser's primary consideration in effecting a securities
transaction will be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the Adviser may take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Portfolio on a continuing
basis. The price to the Portfolio in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Portfolio to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Portfolio. The Adviser is further authorized to allocate the orders placed
by it on behalf of the Portfolio to such brokers or dealers who also provide
research or statistical material, or other services, to the Portfolio, the
Adviser, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Adviser shall determine, and the Adviser shall report on
such allocations regularly to the Portfolio, indicating the broker-dealers to
whom such allocations have been made and the basis therefor. The Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
or dealers to execute portfolio transactions, subject to the requirements of
best execution, I.E., that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.
On occasions when the Adviser deems the purchase or sale of
a security to be in the best interest of the Portfolio as well as of other
clients (to the extent that the Adviser may, in the future, have other clients),
the Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Portfolio as contemplated
by this Agreement.
(b) The Adviser shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all
times in conformance with the Investment Advisers Act of 1940, the Investment
Company Act of 1940, and any other applicable state and/or self-regulatory
organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Portfolio in any way, or in any way be deemed an agent for the
Portfolio. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Portfolio under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the
Portfolio, the Adviser shall be responsible for (i) providing the personnel,
office space and equipment reasonably necessary for the investment management of
the Portfolio, and (ii) the costs of any special Board of Trustees meetings or
shareholder meetings convened for the primary benefit of the Adviser. If the
Adviser has agreed to limit the operating expenses of the Portfolio, the Adviser
shall also be responsible on a monthly basis for any operating expenses that
exceed the agreed upon expense limitation.
(b) The Portfolio is responsible for and has assumed
the obligation for payment of all of its expenses, other than as stated in
Subparagraph 6(a) above, including but not limited to: investment advisory,
administrative and sub-administrative fees payable to the Adviser or the
Sub-Administrator under the appropriate agreements entered into with the
Adviser or the Sub-Administrator, as the case may be; fees and expenses
incurred in connection with the issuance, registration and transfer of its
shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Portfolio including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the
Investment Company Act; taxes, if any; a pro rata portion of expenditures in
connection with meetings of the Portfolio's shareholders and Board of Trustees
that are properly payable by the Portfolio; salaries and expenses of officers
and fees and expenses of members of the Board of Trustees or members of any
advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the Sub-Administrator; insurance premiums
on property or personnel of the Portfolio which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Portfolio or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses (including legal fees) of registering and maintaining registration
of its shares for sale under federal and applicable state and foreign securities
laws; all expenses of maintaining and servicing shareholder accounts, including
all charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Portfolio; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) The Adviser may voluntarily absorb certain
Portfolio expenses or waive the Adviser's own advisory fee.
(d) To the extent the Adviser incurs any costs by
assuming expenses which are an obligation of the Portfolio as set forth
herein, the Portfolio shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Portfolio is obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
Portfolio to the extent of the Adviser's actual costs for providing such
services. In determining the Adviser's actual costs, the Adviser may take into
account an allocated portion of the salaries and overhead of personnel
performing such services.
7. INVESTMENT ADVISORY FEE.
(a) The Portfolio shall pay to the Adviser, and the
Adviser agrees to accept, as full compensation for all investment and advisory
services furnished or provided to the Portfolio pursuant to this Agreement, an
annual investment advisory fee at the rate set forth in Schedule A to this
Agreement.
(b) The investment advisory fee shall be accrued
daily by the Portfolio and paid to the Adviser on the first business day of the
succeeding month.
(c) The initial fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement and shall be prorated as set forth below. If this
Agreement is terminated prior to the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The fee payable to the Adviser under this
Agreement will be reduced to the extent of any receivable owed by the Adviser
to the Portfolio and as required under any expense limitation applicable to the
Portfolio.
(e) The Adviser voluntarily may reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Portfolio under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment and shall
not constitute an agreement to reduce any future compensation or reimbursement
due to the Adviser hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any
Portfolio expense absorbed by the Adviser voluntarily or pursuant to an agreed
upon expense cap shall be reimbursed by the Portfolio to the Adviser, if so
requested by the Adviser, no later than the fifth fiscal year succeeding the
fiscal year of the withholding, reduction or absorption if the aggregate amount
actually paid by the Portfolio toward the operating expenses for such fiscal
year (taking into account the reimbursement) do not exceed the applicable
limitation on Portfolio expenses. Such reimbursement may be paid prior to the
Portfolio's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current
Portfolio expenses.
(g) The Adviser may agree not to require
payment of any portion of the compensation or reimbursement of expenses
otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short position in the
shares of the Portfolio. This prohibition shall not prevent the purchase of such
shares by any of the officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or employees shall borrow
from the Portfolio or pledge or use the Portfolio's assets in connection with
any borrowing not directly for the Portfolio's benefit. For this purpose,
failure to pay any amount due and payable to the Portfolio for a period of more
than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH THE PORTFOLIO'S GOVERNING DOCUMENTS AND
APPLICABLE LAWS. Nothing herein contained shall be deemed to require the
Portfolio to take any action contrary to its Certificate of Trust, as amended,
Declaration of Trust, as amended, Bylaws, as amended, or any applicable statute
or regulation, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Portfolio.
In this connection, the Adviser acknowledges that the Trustees retain ultimate
plenary authority over the Portfolio and may take any and all actions necessary
and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Sub-Administrator and to permit such compliance inspections
by the Sub-Administrator as shall be reasonably necessary to permit the
Sub-Administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the
statements in the Portfolio's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials), except
for information supplied by the Sub-Administrator or the Portfolio or another
third party for inclusion therein.
(b) The Adviser shall be liable to the Portfolio for
any loss (including brokerage charges) incurred by the Portfolio as a result of
any improper investment made by the Adviser.
(c) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Portfolio or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Portfolio.
(d) Each party to this Agreement shall indemnify and
hold harmless the other party and the shareholders, directors, trustees,
officers and employees of the other party (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be
construed to protect any Trustee or officer of the Portfolio, or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Portfolio's employment of the Adviser is not an exclusive arrangement. The
Portfolio may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in any way be limited or
restricted from having, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting, provided,
however, that the Adviser expressly represents that it will undertake no
activities which will adversely affect the performance of its obligations to the
Portfolio under this Agreement; and provided further that the Adviser will
adhere to a code of ethics governing employee trading and trading for
proprietary accounts that conforms to the requirements of the Investment Company
Act and the Investment Advisers Act of 1940 and has been approved by the
Portfolio's Board of Trustees.
13. TERM. This Agreement shall become effective on September
1, 1999 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for the Portfolio at least annually by (i) the Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Portfolio and (ii) the vote of a majority of the Trustees of the Portfolio
who are not parties to this Agreement nor interested persons thereof, cast in
person at a meeting called for the purpose of voting on such approval. The terms
"majority of the outstanding voting securities" and "interested persons" shall
have the meanings as set forth in the Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the
Portfolio at any time without payment of any penalty, by the Board of Trustees
or by vote of a majority of the outstanding voting securities of the Portfolio,
upon sixty (60) days' written notice to the Adviser, and by the Adviser upon
sixty (60) days' written notice to the Portfolio. In the event of a termination,
the Adviser shall cooperate in the orderly transfer of the Portfolio's affairs
and, at the request of the Board of Trustees, transfer any and all books and
records of the Portfolio maintained by the Adviser on behalf of the Portfolio.
(b) This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act.
15. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision, statute or rule, or shall
be otherwise rendered invalid, the remainder of this Agreement shall not be
affected thereby.
16. CAPTIONS. The captions in this Agreement are included
for convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers, all on the day
and year first above written.
KINETICS PORTFOLIOS TRUST KINETICS ASSET MANAGEMENT, INC.
on behalf of its series, The Kinetics Government Money Market Portfolio
By:_________________________________ By:_________________________________
Name: Name:
Title: Title:
SCHEDULE A
ANNUAL FEE RATE
The Kinetics Government Money Market Portfolio 0.50% of average daily net assets
