DISTRIBUTION AGREEMENT
AGREEMENT
dated as of September 30, 2005, 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 Distributors, 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 Declaration of Trust, advisory agreement, custodian
agreement, transfer agency agreement, administration agreement, current
prospectuses and statement 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, plus a sales charge (if any) as
described in the Fund's current prospectuses and/or statements of additional
information. The Fund shall in all cases receive the net asset value per Share
on all sales. If a sales charge is in effect, the Distributor shall have the
right, subject to such rules or regulations of the SEC as may then be in effect
pursuant to Section 22 of the 1940 Act to pay a portion of the sales charge to
dealers who have sold Shares of the Fund. If a fee in connection with
shareholder redemptions is in effect, the Fund shall collect the fee on behalf
of the Distributor and, unless otherwise agreed upon by the Fund and the
Distributor, the Distributor shall be entitled to receive all of such
fees.
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 regulations.
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 shareholders of the Fund, and
(c) 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 the 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, 0CC 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, 0CC 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 therefor. 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 the date set forth above, and shall
continue until one year 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 Series 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 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' written notice by the Fund's Board of Trustees, by vote of the
holders of a majority of the outstanding voting securities of the relevant
Series 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: if to the Fund at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxxxxxxxxx
00000, Attn: Xxxx Xxxxxxxxx with a copy to: 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxxxxxxxxx 00000, Attn: General Counsel; and if to the Distributor, at
0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, 00000, Attn: General Counsel, 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 the Distributor is requested or 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, the 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
the 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 the
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 Declaration of
Trust 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
Declaration 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 the 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.
The
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 DISTRIBUTORS, INC. | ||||
| By: | /s/ Xxxx Xxxxxxxxx | By: | /s/ Xxxxxx X. May | ||
| Xxxx Xxxxxxxxx | Xxxxxx X. May | ||||
| Title: | Assistant Treasurer | Title: | Managing Director | ||
