PLACEMENT AGENCY AGREEMENT
BETWEEN
KINETICS PORTFOLIO TRUST
AND
KINETICS FUNDS DISTRIBUTOR, INC.
THIS AGREEMENT is made effective as of the 1st day of May,
2000, by and between KINETICS PORTFOLIO TRUST, a business trust organized under
the laws of the State of Delaware (the "Company") and KINETICS FUNDS
DISTRIBUTOR, INC., a ___________ corporation ("KFDI").
WHEREAS, the Company is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company, and its shares of beneficial interest (the "Shares") will be
issued pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, KFDI is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and under each
state's securities laws, and is also a member of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Company desires to retain KFDI as its private
placement agent in connection with the private placement of the Shares of each
current series of the Company (the "Fund" or the "Funds") and each subsequently
created series as may be listed on Schedule A (as amended from time to time)
attached hereto and KFDI is willing to act as private placement agent for the
Fund or Funds on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints KFDI as its agent
to be the private placement agent of the Fund's Shares and to hold itself out as
available to receive and accept orders for the purchase and redemption of the
Shares on behalf of the Fund, subject to the terms and for the period set forth
in this Agreement. KFDI hereby accepts such appointment and agrees to act
hereunder. The Company understands that any private placement activities
conducted on behalf of the Fund will be conducted primarily by employees of the
Fund's adviser, KINETICS ASSET MANAGEMENT, INC. ("Kinetics" or the "Adviser"),
who shall become registered representatives of KFDI.
2. SERVICES AND DUTIES OF KFDI.
(a) KFDI agrees to privately place Fund Shares on a
best efforts basis from time to time during the term of this Agreement as
agent for the Company and upon the terms described in the Company's Registration
Statement, as amended from time to time. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Company, and any supplements thereto, under the 1940 Act.
(b) KFDI, with the operational assistance of the
Fund's transfer agent, will hold itself available to receive purchase and
redemption orders satisfactory to KFDI for Shares and will accept such orders on
behalf of each Fund. Such purchase orders shall be deemed effective at the time
and in the manner set forth in the Registration Statement.
(c) KFDI and its registered personnel shall
provide to investors and potential investors only such information regarding a
Fund as the Fund shall provide or approve.
(d) The offering price of the Shares shall be the
price determined in accordance with, and in the manner set forth in, the
most-current Prospectus. The Fund shall make available to KFDI a statement of
each computation of net asset value and the details of entering into such
computation.
(e) KFDI in its sole discretion may repurchase
Shares offered for sale by the shareholders. Repurchase of Shares by KFDI
shall be at the price determined in accordance with, and in the manner set forth
in, the most current Prospectus. At the end of each business day, KFDI shall
notify, by any appropriate means, the Fund and its transfer agent of the orders
for repurchase of Fund Shares received by KFDI since the last such report, the
amount to be paid for such Shares, and the identity of the shareholders offering
Shares for repurchase. The Fund reserves the right to suspend such repurchase
right upon written notice to KFDI. KFDI further agrees to act as agent for the
Fund to receive and transmit promptly to the Fund's transfer agent shareholder
requests for redemption of Shares.
(f) KFDI shall not be obligated to sell any certain
number of Shares.
(g) KFDI shall prepare reports for the Board
regarding its activities under this Agreement as from time to time shall be
reasonably requested by the Board.
(h) KFDI shall at all times during the term of this
Agreement remain registered broker-dealer under the 1934 Act and with all
fifty (50) states, and shall also remain a member in good standing of the NASD.
KFDI shall immediately notify the Company in writing if it receives written
notification that such registrations or membership have been temporarily or
permanently suspended, limited or terminated.
(i) KFDI will serve as licensing/regulatory agent
for employees and other personnel of Kinetics, who will be registered as KFDI
broker-dealer representatives.
3. DUTIES OF THE FUND.
(a) The Company shall keep KFDI fully informed of
its affairs and shall provide to KFDI from time to time copies of all
information, financial statements, and other papers that KFDI may reasonably
request for use in connection with the private placement of Shares, including,
without limitation, certified copies of any financial statements prepared for
the Fund by its independent public accountant and such reasonable number of
copies of the most current Prospectus, Statement of Additional Information
("SAI"), and annual and interim reports as KFDI may request, and the Company
shall fully cooperate in the efforts of KFDI to privately place and arrange for
the private placement of Fund Shares.
(b) The Company shall maintain a currently
effective Registration Statement on Form N-1A with the Securities and Exchange
Commission (the "SEC"), satisfy proper notice filing and fee payment provisions
of applicable states and file such reports and other documents as may be
required under applicable federal and state laws. The Company shall notify KFDI
in writing of the states in which Fund Shares may be privately placed and shall
notify KFDI in writing of any changes to such information. The Fund shall bear
all expenses related to preparing and typesetting such Prospectuses, SAI and
other materials required by law and such other expenses, including printing and
mailing expenses, related to the Fund's communication with persons who are
shareholders.
(c) The Company shall not use any advertisements or
other sales materials that have not been (i) submitted to KFDI for its review
and approval, and (ii) if required, filed with the appropriate regulators.
(d) The Company represents and warrants that its
Registration Statement and any advertisements and sales literature (excluding
statements relating to KFDI and the services it provides that are based upon
written information furnished by KFDI expressly for inclusion therein) of the
Fund shall not contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and that all statements or information
furnished to KFDI pursuant to Section 3(a) hereof, shall be true and correct in
all material respects.
4. OTHER BROKER-DEALERS. KFDI in its discretion shall enter
into agreements to privately place Shares with such registered and qualified
retail dealers, as reasonably requested by the Company or Kinetics. In making
agreements with such dealers, KFDI shall act only as principal and not as agent
for the Company. The form of any such dealer agreement shall be mutually agreed
upon and approved by the Company and KFDI.
5. WITHDRAWAL OF OFFERING. The Company reserves the right at
any time to withdraw all offerings of any or all Shares by written notice to
KFDI at its principal office. No Shares shall be privately placed by either KFDI
or the Company under any provisions of this Agreement and no orders for the
private placement of Shares hereunder shall be accepted by the Company if the
Company's Shares are no longer issuable pursuant to an exemption from
registration under the 1933 Act or, if and so long as effectiveness of the
Registration Statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the 1940 Act, or if and so long as a
current prospectus as required by the 1940 Act is not on file with the SEC.
6. SERVICES NOT EXCLUSIVE. The services furnished by KFDI
hereunder are not to be deemed exclusive. KFDI shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. The Company reserves the right to (i) privately place Shares to
investors on applications received and accepted by the Fund; (ii) issue Shares
in connection with a merger, consolidation, or recapitalization of the Fund;
(iii) issue additional Shares to holders of Shares; or (iv) issue Shares in
connection with any offer of exchange permitted by Section 11 of the 1940 Act.
7. EXPENSES OF THE FUND. The Fund shall bear all costs and
expenses of registering the Shares with the SEC under the 1940 Act and
qualifying for exemptions to registration under state and other regulatory
bodies, and shall assume expenses related to communications with shareholders of
the Fund including, but not limited to, (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing, and
printing of Registration Statements and/or Prospectuses or SAIs; (iii) the
preparation and mailing of annual and interim reports, Prospectuses, SAIs, and
proxy materials to shareholders; (iv) such other expenses related to the
communications with persons who are shareholders of the Fund; and (v) the
qualifications of Shares for private placement under the securities laws of such
jurisdictions as shall be selected by the Fund pursuant to the Paragraph 3(b)
hereof, and the costs and expenses payable to each jurisdiction for continuing
qualification therein. KFDI does not assume responsibility for any expenses not
assumed hereunder.
8. STATUS OF KFDI. KFDI is an independent contractor
and shall be agent of the Company only with respect to the private placement
and redemption of Shares.
9. INDEMNIFICATION.
(a) The Company agrees to indemnify, defend, and
hold KFDI, its officers, and directors, and any person who controls KFDI
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, or liabilities, and expenses (including the
cost of investigating or defending such claims, demands, liabilities, and any
counsel fees incurred in connection therewith) that KFDI, its officers and
directors, or any such controlling person may incur under the 1933 Act, or under
common law or otherwise, arising out of or based upon any (i) alleged untrue
statement of a material fact contained in the Registration Statement,
Prospectus, SAI, or sales literature; (ii) alleged omission to state a material
fact required to be stated in the Company's registration statement or necessary
to make the statements therein not misleading; or (iii) failure by the Company
to comply with the terms of the Agreement; provided, that in no event shall
anything contained herein be so construed as to protect KFDI against any
liability to the Company or its shareholders to which KFDI would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations under this Agreement.
(b) The Company shall not be liable to KFDI under
this Agreement with respect to any claim made against KFDI or any person
indemnified unless KFDI or other such person shall have notified the Company in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon KFDI or such other person (or after KFDI or other person shall
have received notice of service on any designated agent). However, failure to
notify the Company of any claim shall not relieve the Company from any liability
that it may have to KFDI or any person against whom such action is brought
otherwise than on account of this Agreement.
(c) The Company shall be entitled to participate at
its own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any claims subject to this Agreement. If the Company
elects to assume the defense of any such claim, the defense shall be conducted
by counsel chosen by the Company and satisfactory indemnified defendants in the
suit whose consent shall not be unreasonably withheld. In the event that the
Company elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
counsel retained by them. If the Company does not elect to assume the defense of
a suit, it will reimburse the indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified defendants. The Company
agrees to promptly notify KFDI of the commencement of any litigation or
proceedings against it or any of its officers and directors in connection with
the issuance or private placement of any of its Shares.
(d) KFDI agrees to indemnify, defend, and hold the
Company, its officers and directors, and any person who controls the Company
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities, and expenses (including the
cost of investigating or defending against such claims, demands, or liabilities,
and any counsel fees incurred in connection therewith) that the Company, its
directors and officers, or any such controlling person may incur under the 1933
Act, or under common law or otherwise, resulting from KFDI' willful misfeasance,
bad faith, or gross negligence in the performance of its obligations and duties
under this Agreement, or arising out of or based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
KFDI to the Company for use in the Registration Statement, Prospectus, or SAI
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated in any such document or
necessary to make such information not misleading.
(e) KFDI shall be entitled to participate, at its
own expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if KFDI elects to assume the defense, the
defense shall be conducted by counsel chosen by KFDI and satisfactory to the
indemnified defendants whose approval shall not be unreasonably withheld. In the
event that KFDI elects to assume the defense of any suit and retain counsel, the
defendants in the suit shall bear the fees and expenses of any additional
counsel retained by them. If KFDI does not elect to assume the defense of any
suit, it will reimburse the indemnified defendants in the suit for the
reasonable fees and expenses of any counsel retained by them.
10. DURATION AND TERMINATION.
(a) This Agreement shall become effective on the
date first written above or such later date as indicated in Schedule A and, will
continue in effect for a minimum of one year from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Company's Board
who are neither interested persons (as defined in the 0000 Xxx) of the Company
("Independent Directors") or KFDI cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(b) Notwithstanding the foregoing, this
Agreement may be terminated in its entirety at any time, without the
payment of any penalty, by vote of the Board, by vote of a majority of the
Independent Directors, or by vote of a majority of the outstanding voting
securities of the Fund on sixty (60) days' written notice to KFDI or by KFDI at
any time, without the payment of any penalty, on sixty (60) days' written notice
to the Company. This Agreement will automatically terminate in the event of its
assignment.
11. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged, or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought. This Agreement may be
amended with the approval of the Board or of a majority of the outstanding
voting securities of the Fund; provided, that in either case, such amendment
also shall be approved by a majority of the Independent Directors.
12. LIMITATION OF LIABILITY. The Board and shareholders of the
Fund shall not be personally liable for obligations of the Company in connection
with any matter arising from or in connection with this Agreement. This
Agreement is not binding upon any director, officer, or shareholder of the Fund
individually, and no such person shall be individually liable with respect to
any action or inaction resulting from this Agreement.
13. NOTICE. Any notice required or permitted to be given
by either party to the other shall be deemed sufficient upon receipt in writing
at the other party's principal offices.
14. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
15. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the 1940 Act (without
regard, however, to the conflicts of law principles). To the extent that the
applicable laws of the state of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated as of the day and year
first above written.
KINETICS PORTFOLIO TRUST KINETICS FUNDS DISTRIBUTOR, INC.
By:_________________________________ By:_________________________________
Print:_______________________________ Print:______________________________
Title:_______________________________ Title:______________________________
Date:_______________________________ Date:_______________________________
Attest:______________________________ Attest:_____________________________
Print:_______________________________ Print:______________________________
SCHEDULE A
TO THE
PLACEMENT AGENCY AGREEMENT
BETWEEN
KINETICS PORTFOLIO TRUST
AND
KINETICS FUNDS DISTRIBUTOR, INC.
Pursuant to Section 1 of the Placement Agency Agreement between KINETICS
PORTFOLIO TRUST (the "Company") and KINETICS FUNDS DISTRIBUTOR, INC. ("KFDI"),
the Company hereby appoints KFDI as its agent to be the private placement agent
of the Company with respect to its following series:
THE INTERNET FUND
THE INTERNET EMERGING GROWTH FUND
THE INTERNET GLOBAL GROWTH FUND
THE INTERNET INFRASTRUCTURE FUND
THE INTERNET NEW PARADIGM FUND
THE MEDICAL FUND
THE MID EAST GROWTH FUND
THE SMALL CAP OPPORTUNITIES FUND
THE U.S. GOVERNMENT SECURITIES FUND
Dated: May 1, 2000
