DISTRIBUTION AGREEMENT
AGREEMENT dated as of April 30, 2000, between Firsthand Funds (the "Fund"), an
open-end, management investment company organized as a trust under the laws of
the State of Delaware and ALPS Mutual Funds Services, Inc., a Colorado
corporation and a registered broker-dealer under the Securities Exchange Act of
1934, having its principal place of business in Denver, Colorado (the
"Distributor").
WHEREAS, the Fund wishes to employ the services of the Distributor in connection
with the promotion and distribution of the shares of each series of the Fund
(the "Shares"); and
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Documents - The Fund has furnished or will furnish, upon request, the
Distributor with copies of the Fund's Certificate of Incorporation, advisory
agreement, custodian agreement, transfer agency agreement, administration
agreement, current prospectuses and statements of additional information, and
all forms relating to any plan, program or service offered by the Fund. The Fund
shall furnish within a reasonable time period to the Distributor a copy of any
amendment or supplement to any of the above-mentioned documents. Upon request,
the Fund shall furnish promptly to the Distributor any additional documents
necessary or advisable to perform its functions hereunder. As used in this
Agreement the terms "registration statement", "prospectus" and "statement of
additional information" shall mean any registration statement, prospectus and
statement of additional information filed by the Fund with the Securities and
Exchange Commission ("SEC") and any amendments and supplements thereto that are
filed with the SEC.
2. Sales of Shares - The Fund grants to the Distributor the right to sell the
Shares as agent on behalf of the Fund, during the term of this Agreement,
subject to the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and of the laws governing the sale of securities in the various
states ("Blue Sky Laws"), under the terms and conditions set forth in this
Agreement. The Distributor shall have the right to sell, as agent on behalf of
the Fund, the Shares covered by the registration statement, prospectus and
statement of additional information for the Fund then in effect under the 1933
Act and 1940 Act.
3. Sales of Shares by the Fund - The rights granted to the Distributor shall
be nonexclusive in that the Fund reserves the right to sell Shares to investors
on applications received and accepted by the Fund.
4. Public Offering Price - Except as otherwise noted in the Fund's current
prospectuses and/or statements of additional information, all Shares sold to
investors by the Distributor or the Fund will be sold at the public offering
price. The public offering price for all accepted subscriptions will be the net
asset value per Share, as determined in the manner described in the Fund's
current prospectuses and/or statements of additional information.
5. Suspension of Sales - The Fund reserves the right to suspend sales and the
Distributor's authority to process orders for Shares on behalf of the Fund if,
in the judgment of the Fund, it is in the best interests of the Fund to do so.
Suspension will continue for such period as may be determined by the Fund.
6. Solicitation of Sales - In consideration of these rights granted to the
Distributor, the Distributor agrees to use its best efforts to solicit orders
for the sale of the Shares at the public offering price and will undertake such
advertising and promotion as it believes is reasonable in connection with such
solicitation. The Distributor shall review and file such materials with the SEC
and the National Association of Securities Dealers, Inc. (the "NASD") to the
extent required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the 1940 Act and the rules and regulations thereunder, and
by the rules of the NASD. This shall not prevent the Distributor from entering
into like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. The Distributor will act only on
its own behalf as principal should it choose to enter into selling agreements
with selected dealers or others.
7. Authorized Representations - The Distributor is not authorized by the Fund
to give any information or to make any representations other than those
contained in the registration statement or prospectuses and statements of
additional information, or contained in shareholder reports or other material
that may be prepared by or on behalf of the Fund for the Distributor's use.
Consistent with the foregoing, the Distributor may prepare and distribute sales
literature or other material as it may deem appropriate in consultation with the
Fund, provided such sales literature complies with applicable law and
regulation.
8. Registration of Shares - The Fund agrees that it will take all action
necessary to register the Shares under the 1933 Act and the 1940 Act (subject to
the necessary approval of its shareholders). The Fund shall make available to
the Distributor, at the Distributor's expense, such number of copies of its
prospectuses and statements of additional information as the Distributor may
reasonably request. The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Fund.
9. Distribution Fees and Expenses - The Distributor shall furnish, at its
expense and without cost to the Fund, the services of personnel to the extent
that such services are required to carry out its obligations under this
Agreement. Such personnel shall consist of one or more persons, during normal
business hours (7:00 a.m. to 6:00 p.m. Mountain Time), to respond to telephone
questions with respect to the Distributor's responsibilities to the Fund.
10. Fund Expenses - Unless otherwise agreed to by the parties hereto in
writing or by the Fund and the Fund's other agents, the Distributor shall not be
responsible for fees and expenses in connection with (a) filing of any
registration statement, printing and the distribution of any prospectus and
statement of additional information under the 1933 Act and/or the 1940 Act and
amendments prepared for use in connection with the offering of Shares for sale
to the public, preparing, setting in type, printing and mailing the prospectus,
statement of additional information and any supplements thereto sent to existing
shareholders, (b) preparing, setting in type, printing and mailing any report
(including annual and semi-annual reports) or other communication to existing
shareholders of the Fund, and (c) with the Blue Sky registration and
qualification of Shares for sale in the various states in which the officers of
the Fund shall determine it advisable to qualify such Shares for sale (including
registering the Fund as a broker or dealer or any officer of the Fund as agent
or salesman in any state).
11. Use of the Distributor's Name - The Fund shall not use the name of the
Distributor, or any of its affiliates, in any prospectus or statement of
additional information, sales literature, and other material relating to the
Fund in any manner without the prior written consent of the Distributor (which
shall not be unreasonably withheld); provided, however, that the Distributor
hereby approves all lawful uses of the names of the Distributor and its
affiliates in all prospectuses and statements of additional information of the
Fund and in all other materials which merely refer to accurate terms to their
appointment hereunder or which are required by the SEC, NASD, OCC or any state
securities authority.
12. Use of the Fund's Name - Neither the Distributor nor any of its affiliates
shall use the name of the Fund in any publicly disseminated materials, including
sales literature in any manner without the prior consent of the Fund (which
shall not be unreasonably withheld); provided, however, that the Fund hereby
approves all lawful uses of its name in any required regulatory filings of the
Distributor which merely refer in accurate terms to the appointment of the
Distributor hereunder, or which are required by the SEC, NASD, OCC or any state
securities authority.
13. Insurance - The Distributor agrees to maintain fidelity bond and liability
insurance coverages which are, in scope and amount, consistent with coverages
customary for distribution activities relating to the Fund. The Distributor
shall notify the Fund upon receipt of any notice of material, adverse change in
the terms or provisions of its insurance coverage. Such notification shall
include the date of change and the reason or reasons therefore. The Distributor
shall notify the Fund of any material claims against it, whether or not covered
by insurance, and shall notify the Fund from time to time as may be appropriate
of the total outstanding claims made by it under its insurance coverage.
14. Indemnification - The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act,
against any loss, liability, claim, damages or expenses (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon the
ground that the registration statement, prospectus, statement of additional
information, shareholder reports or other information filed or made public by
the Fund (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading under the 1933 Act, the
1940 Act or any other statute or the common law. However, the Fund does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no case
(i) is the indemnity of the Fund in favor of the Distributor or any person
indemnified to be deemed to protect the Distributor or any person against any
liability to the Fund or its security holders to which the Distributor or such
person would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Fund to be liable under its indemnity agreement contained in the paragraph with
respect to any claim made against the Distributor or any person indemnified
unless the Distributor or person, as the case may be, shall have notified the
Fund in writing of the claim promptly after the summons or other first written
notification giving information of the nature of the claims shall have been
served upon the Distributor or any such person (or after the Distributor or such
person shall have received notice of service on any designated agent). However,
failure to notify the Fund of any claim shall not relieve the Fund from any
liability which it may have to any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Fund 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, and if the Fund elects to assume the defense, the defense
shall be conducted by counsel chosen by the Fund. In the event the Fund elects
to assume the defense of any suit and retain counsel, the Distributor, officers
or directors or controlling person(s), defendant(s) in the suit, shall bear the
fees and expenses of any additional counsel retained by them. If the fund does
not elect to assume the defense of any suit, it will reimburse the Distributor,
officers or directors or controlling person(s) or defendant(s) in the suit for
the reasonable fees and expenses of any counsel retained by them. The Fund
agrees to notify the Distributor promptly of the commencement of any litigation
or proceeding against it or any of its officers in connection with the issuance
or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its officers and person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any loss,
liability, damages, claims or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any Shares, based upon the 1933 Act, the 1940 Act
or any other statute or common law, alleging (a) any wrongful act of the
Distributor or any of its employees or (b) that any sales literature,
advertisements, information, statements or representations used or made by the
Distributor or any of its affiliates or employees or that the registration
statement, prospectus, statement of additional information, (as from time to
time amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make the
statements not misleading, insofar as the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund by or
on behalf of the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Fund or any person indemnified to be deemed to protect the Fund
or any person against any liability to which the Fund or such person would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Fund or any person indemnified unless the Fund or
person, as the case may be, shall have notified the Distributor in writing of
the claim promptly after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
any such person (or after the Fund or such person shall have received notice of
service on any designated agent). However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may have
to the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor it 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, and if the Distributor elects to assume the
defense, the
defense shall be consulted by counsel chosen by it and satisfactory to the Fund,
to its officers and to any controlling person(s) or defendant(s) in the suit. In
the event that the Distributor elects to assume the defense of any suit and
retain counsel, the Fund or controlling person(s), defendant(s) in the suit,
shall bear the fees and expense of any additional counsel retained by them. If
the Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers or controlling person(s), defendant(s) in the suit,
for the reasonable fees and expenses of any counsel retained by them. The
Distributor agrees to notify the Fund promptly of the commencement of any
litigation or proceedings against it in connection with the Fund and sale of any
of the Shares.
15. Supplemental Information - The Distributor and the Fund shall regularly
consult with each other regarding the Distributor's performance of its
obligations under this Agreement. In connection therewith, the Fund shall submit
to the Distributor at a reasonable time in advance of filing with the SEC
reasonably final copies of any amended or supplemented registration statement
(including exhibits) under the 1933 Act and the 1940 Act; provided, however,
that nothing contained in this Agreement shall in any way limit the Fund's right
to file at any time such amendments to any registration statement and/or
supplements to any prospectus or statement of additional information, of
whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
The Distributor acknowledges that the only information provided to it by the
Fund is that contained in the registration statement, the prospectuses, the
statements of additional information and reports and financial information
referred to herein. Neither the Distributor nor any other person is authorized
by the Fund to give any information or to make any representations, other than
those contained in such documents and any sales literature or advertisements
specifically approved by appropriate representatives of the Fund.
16. Term - This Agreement shall become effective as of April 30, 2000, and
shall continue until two years from such date and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually (i) by the Fund's Board of Trustees or
(ii) by a vote of a majority of the outstanding voting securities of the
relevant Portfolios of the Fund (as defined in the 1940 Act), provided that in
either event the continuance is also approved by the majority of the Trustees of
the Fund who are not interested persons (as defined in the 0000 Xxx) of any
party to this Agreement by a vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without penalty
on sixty days' notice by the Fund's Board of Trustees, by vote of the holders of
a majority of the outstanding voting securities of the relevant Portfolios of
the Fund or by the Distributor. This Agreement shall automatically terminate in
the event of its assignment (as defined in the 1940 Act).
Upon the termination of this Agreement, the Distributor, at the Fund's expense
and direction, shall transfer to such successor as the Fund shall specify all
relevant books, records and other data established or maintained by the
Distributor under this Agreement.
17. Notice - Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by (i) telecopier (fax), or (ii)
registered or certified mail, postage prepaid, addressed by the party giving
notice to the other party at the last address furnished by the other party to
the party giving notice and, initially: if to the Fund at 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxx Xxxxxxxxx with a copy to: 000
Xxxxx Xxxxxx, Xxxx 0000, Xxx Xxxx, Xxxxxxxxxx 00000, Attn: General Counsel; and
if to the Distributor, at 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, 00000,
Attn: Xxxxxxx X. Xxxx, or such other telecopier (fax) number or address as may
be furnished by one party to the other.
18. Confidential Information - The Distributor, its officers, directors,
employees and agents will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and to prior or
present shareholders or to those persons or entities who respond to the
Distributor's inquiries concerning investment in the Fund, and will not use such
records and information for any purposes other than performance of its
responsibilities and duties hereunder. If Distributor is required by, but not
limited to, depositions, interrogatories, requests for information or documents,
subpoena, civil investigation, demand or other action, proceeding or process or
as otherwise required by law, statute, regulation, writ, decree or the like, to
disclose such information, Distributor will provide the Fund with prompt written
notice of any such request or requirement so that the Fund may seek an
appropriate protective order or other appropriate remedy and/or waive compliance
with this provision. If such order or other remedy is not sought, or obtained,
or waiver not received within a reasonable period following such notice, then
Distributor may without liability hereunder, disclose to the person, entity or
agency requesting or requiring the information, that portion of the information
that is legally required in the reasonable opinion of Distributor's counsel.
19. Limitation of Liability - The Distributor is expressly put on notice of
the limitation of shareholder, officer and Trustee liability as set forth in the
Certificate of Incorporation of the Fund and agrees that the obligations assumed
by the Fund under this contract shall be limited in all cases to the Fund and
its assets. The Distributor agrees that it shall not seek satisfaction of any
such obligation from the shareholders or any individual shareholder of the Fund.
Nor shall the Distributor seek satisfaction of any such obligation from the
Trustees, officers or any individual Trustee or officer of the Fund. The
Distributor understands that the rights and obligations of each series of the
Fund under the Fund's Certificate of Trust are separate and distinct from those
of any and all other series.
Any obligations of the Fund entered into in the name or on behalf thereof by any
of the Trustees or officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees or officers, shareholders, or representatives of the Fund personally,
but bind only the Fund property, and all persons dealing with any class of
Shares of the Fund must look solely to the Fund property belonging to such class
for the enforcement of any claims against the Fund.
20. Miscellaneous - Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed, interpreted and enforced in accordance with and
governed by the laws of the State of Delaware. 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.
This Agreement may not be changed, waived, discharged or amended except by
written instrument that shall make specific reference to this Agreement and
which shall be signed by the party against which enforcement of such change,
waiver, discharge or amendment is sought.
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together shall constitute one and the same instrument.
All activities by Distributor and its agents and employees as distributor of the
Shares shall comply with all applicable laws, rules and regulations including,
without limitation, all rules and regulations made or adopted by the SEC or any
securities association registered under the Exchange Act.
Distributor will promptly transmit any orders received by it for purchase,
redemption or exchange of the Shares to the Fund's transfer agent.
IN WITNESS WHEREOF, the Fund has executed this instrument in its name and
behalf, and the Distributor has executed this instrument in its name and behalf,
as of the date and year first above written.
FIRSTHAND FUNDS ALPS MUTUAL FUND SERVICES, INC.
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxxx
-------------------------------- ------------------------------
Xxxx Xxxxxxxxx Xxxxxx Xxxxxx
Title: Secretary Title: Chief Financial Officer
