KINETICS PORTFOLIOS TRUST INVESTMENT ADVISORY AGREEMENT
THIS
INVESTMENT ADVISORY
AGREEMENT is made as of the 6th day of December,
2007,
by and between KINETICS PORTFOLIOS TRUST, a Delaware business trust (the
"Trust") on behalf of its series the Kinetics Multi-Disciplinary 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, as amended, (the "Investment Company Act");
WHEREAS,
the Adviser is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, (the “Advisers Act”) 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
Trust'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 Board of Trustees of
the
Trust 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 the Trust’s administrator (the
"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 Trust 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.
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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.
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3.
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Representations
of the Adviser.
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(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
Advisers Act, the Investment Company Act, 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.
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6.
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Expenses.
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(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 Administrator under the appropriate
agreements entered into with the Adviser or the 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 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.
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7.
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Investment
Advisory Fee.
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(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 third 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 not be paid to the Adviser for any fiscal year prior
to
the Portfolio’s payment of such year’s current expenses if such practice would
require the Adviser to waive, reduce or absorb current Portfolio expenses in
excess of the expense limitation in effect at the time the unreimbursed expense
was actually incurred.
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(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 Trust's Governing Documents and Applicable Laws. Nothing herein
contained
shall be deemed to require the Portfolio to take any action contrary to the
Trust’s 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 Board of Trustees retains 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 Administrator and to permit such
compliance inspections by the Administrator as shall be reasonably necessary
to
permit the Administrator to satisfy its obligations and respond to the
reasonable requests of the Trustees.
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11.
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Adviser's
Liabilities and Indemnification.
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(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
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.
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(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 Trust, or director 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 Advisers Act and has been approved by the Board of
Trustees of the Trust.
13.
Term.
This Agreement shall remain in effect with respect to the Portfolio until April
30, 2009, 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.
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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 Advisers Act 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. | |||
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on
behalf of its series, The Multi-Disciplinary Portfolio
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ |
By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
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Name:
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▇▇▇▇▇ ▇. ▇▇▇▇▇ |
Name:
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▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
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Title:
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President |
Title:
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President | |
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SCHEDULE
A
Annual
Fee
Rate
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The
Multi Disciplinary
Portfolio
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_____%
of average daily net assets
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